Financial Health of the HFNHL; Revenue Generation by the numbers

[MatthewFlames]

What's wrong with play-off revenue being the reward is that if you've got a great team, and you're at the $64M cap and you don't make the playoffs you're loosing a ton of cash. If you make the first round and walk away with 5M along with other endorsements you might break even, but even then it's still an up-hill battle.

But isn't that just rewarding teams who took risk, salaried up and FAILED?

Shouldn't those teams pay for their failures? (although I do think that one season of failure leading to bankruptcy is too much... which in the present system it is.. unless you've got 40+ mils in the account)

So as a poor team I have to stay poor to support these teams competitiveness?

Because that's what I think I just read....

The reason why alot of teams are having issues selling is that not enough teams are buying... any team within the top 12 of the conference at the mid-point of the season should be fighting for a play-off spot... that's not going to happen if the risk/reward system isn't there for them. If you're not making the playoffs your best bet is to shed salary as fast as you can so that you can atleast break even.

LOL.

Okay - so the fact that there is no cash flow for 20 teams has nothing to do with it? Or the cap?

It think those two facts are far greater than the two teams who are shedding because they've got 62 million plus salaries and are facing bankruptcy because they may not make the playoffs (Blackhawks and Canes)....

And yes, the reason that these teams shed salary is the financial condition of the league now - one bad season when you're competing and have serious salary for any of the 20 teams in the bottom half of the cash flow dooms you to years of miserable existence where money is a bigger worry than talent.

I think your perspective is completely off on what a lot of this discussion is about. I think you have to increase the risk/reward scenario. I did it - I took a risk of adding salary and it worked - I made the playoffs for the first time, and did so 3 out of 4 years. The problem was that the revenue wasn't enough that the second season of missing the playoffs I was bankrupt again and the next season I was rewarded with an abysmally poor income (2 million less than the next team, as you've mentioned).... and here I am again.... the reward for being a Western Conference finalist was so poor in comparison to the achievement...

As Drew has pointed out - and I know Nick has been on the bandwagon for a long time about - you want solutions that promote better GM behavior - you don't want bail-outs - you want something more sustainable - which I think abolishing the endorsements and having higher in sim revenue (or even using a modified version of what you're proposing ) is better for everyone. Especially for the competitiveness of the league.

 

[MatthewFlames]

I don't think anyone could look at the above table and agree that regular season revenue should be divided this way with very little relationship between performance and revenue.

How about ME!!

How about every one of the real life NHL Teams?

Does Toronto send a big fat check to the Coyotes every year? Cause last time I checked the Leafs made a bazillion more in the regular season than the Coyotes, even though the Coyotes actually make the playoffs. Performance has nothing to do with regular season revenue in the NHL, rather it has to do with location, history, arena size, the local populations love of the sport and a bunch of other factors. No reason why we can't have the same thing in our sim.

This is what the Star Points were supposed to help with. We need to check the revenue numbers against more than just performances as you've done. You need to see if SP affects things. You need to check arena size. You need to know if the GM paid any attention to ticket prices. You need to know whether the GM was chasing an endorsement and had extra low ticket prices because of it. Much more complex than your numbers show.

 

[Toronto_AGM_Adil]

But isn't that just rewarding teams who took risk, salaried up and FAILED?

Shouldn't those teams pay for their failures? (although I do think that one season of failure leading to bankruptcy is too much... which in the present system it is.. unless you've got 40+ mils in the account)

So as a poor team I have to stay poor to support these teams competitiveness?

Because that's what I think I just read....

what's your definition of rewarding? I think looking at a 5Mil loss... maybe breaking even is enough a punishment for guys not making the playoffs. I don't think we need crippling financial deficits.

Why would a team who's uncompetitive, fighting for a 1-5 draft spot getting paid more then teams in the 9-10 spot in the conference? If you add more revenue to the playoffs you just promote more of "compete or dump" strategy that you don't see in the NHL.

 

[Toronto_AGM_Adil]

How about ME!!

How about every one of the real life NHL Teams?

Does Toronto send a big fat check to the Coyotes every year? Cause last time I checked the Leafs made a bazillion more in the regular season than the Coyotes, even though the Coyotes actually make the playoffs. Performance has nothing to do with regular season revenue in the NHL, rather it has to do with location, history, arena size, the local populations love of the sport and a bunch of other factors. No reason why we can't have the same thing in our sim.

This is what the Star Points were supposed to help with. We need to check the revenue numbers against more than just performances as you've done. You need to see if SP affects things. You need to check arena size. You need to know if the GM paid any attention to ticket prices. You need to know whether the GM was chasing an endorsement and had extra low ticket prices because of it. Much more complex than your numbers show.

Good point on SP... i'll run some numbers on financials for this year and see what I get (unless someone beats me to it). I don't think starpoints is helping much, but lets see. As for matching the randomness of the NHL... i think the sim does that already pretty well, we don't need to create unfair imbalances in the game between GM's as well.

 

[Toronto_AGM_Adil]

Okay - so the fact that there is no cash flow for 20 teams has nothing to do with it? Or the cap?

It think those two facts are far greater than the two teams who are shedding because they've got 62 million plus salaries and are facing bankruptcy because they may not make the playoffs (Blackhawks and Canes)....

And yes, the reason that these teams shed salary is the financial condition of the league now - one bad season when you're competing and have serious salary for any of the 20 teams in the bottom half of the cash flow dooms you to years of miserable existence where money is a bigger worry than talent.

I think your perspective is completely off on what a lot of this discussion is about. I think you have to increase the risk/reward scenario. I did it - I took a risk of adding salary and it worked - I made the playoffs for the first time, and did so 3 out of 4 years. The problem was that the revenue wasn't enough that the second season of missing the playoffs I was bankrupt again and the next season I was rewarded with an abysmally poor income (2 million less than the next team, as you've mentioned).... and here I am again.... the reward for being a Western Conference finalist was so poor in comparison to the achievement...

As Drew has pointed out - and I know Nick has been on the bandwagon for a long time about - you want solutions that promote better GM behavior - you don't want bail-outs - you want something more sustainable - which I think abolishing the endorsements and having higher in sim revenue (or even using a modified version of what you're proposing ) is better for everyone. Especially for the competitiveness of the league.

increasing playoff per game is interesting.. problem is that you're going to get guys winning hte playoffs who will become crazy rich... i'm not sure if you're doing much more then making the rich richer again. Another option maybe to add a bonus for making the playoffs... maybe $5-10mil. But don't we already have that with endorsements?

This doesn't sound like any change from our exisitng system... we keep on propogating a system that doesn't work well and leads to financial debates every year. 2-3 years ago we had this debate, said revenue needed to go up and added flat TV revenue to compensate.... i'm tired of us adding flat revenue increases, let's add revenue that will promote competitiveness in the league

 

[Dryden]

To the Pay for Points arguers (nice work on that Adil) - whats wrong with just letting the playoff revenue be the reward for good performance. And in fact, as I've suggested, raising the slider even more so playoff teams make more revenue per game than usual. Not suggesting 10 million a game. But 1.4 million or 1.5 million instead of 1.1 that's made in the regular season.

For the record, I'm against any handout. Its even been suggested moving the slider this season. I'm not against that but am happy to wait until next season for changes (since 29 teams will survive the season with some cash). This GM isn't arguing for any handouts. Just a change in the way revenue is distributed - in a more even and balanced way that doesn't punish poor teams (like endorsements do now)

I agree. Boring. I know. I still say raise the slider now. Little extra money never hurt anybody

 

[Hossa]

On one of you other points about being annoyed about teams prospecting the answer is yes. I have the benefit of hindsight to know it's nearly a guaranteed failed approach that will send the team into bankruptcy, or at least close. You've also been around long enough to know that of the many GM's that have tried that only one GM has really succeeded (Josh). Even then he did it by reversing strategy part way in by trading away stockpiled prospects for established players. It's a largely doomed strategy for two reasons - enough of the "can't miss" prospects do miss that in the end the assets you traded away for all those picks never make up for the few that pan out. Secondly if you do get lucky enough to hit the jackpot on more than 2 you can't afford to keep them together or you don't have enough cap room left to fill in the rest of the team (see Pittsburgh, Anaheim's current delema, etc.). In the meantime for every GM that abandons that folly another will take their place thereby ensuring a continued separation of have and have not teams and sub par level of competition in the league.

I think there are more teams than just the Sabres. This pretty closely describes my approach, which included several years of high draft picks, and building a team around cheap prospects from those draft years. I also went from the bottom to the top in bank balance, although deep playoff runs post-rebuild helped that.

Of course, in my case, like Buffalo, I made trades to move around assets and speed up the process, but I still built a core through the 2003-2005 drafts (Malkin, Staal, Laich, Stafford, Price, Letang, Callahan and so on...). To some extent Colorado and Florida employed similar approaches around the same period of time. They're all hybrid approaches, but building up a cheap prospect base is still at the foundation.

That's not to say it's the solution financially though. I can only speak to my own experience, but without having ever looked back too closely, I would imagine the playoff success was a bigger factor than cheap rosters, although a couple years with both were probably golden.

 

[Dr.Sens(e)]

Besides the slider, I think it's also important to gauge what the league cash flow is like after each year, and I know in past we have looked at this to determine that the net cash flow after the season, playoffs and endorsements is still such that the league is breaking even at least. In general though, I think having a cash float of $35M to $40M per team is probably ok too, given we are at higher expenses that are partly recouped through end of seasons endorsements and playoffs, so having a bit more cash float to cover the fact the league is running at higher revenue and expense rates just makes sense.

But of note, over the last few seasons, it's not like the rich have really been getting richer. The top teams lose even more money during the regular season and needs to cash in on playoffs and endorsements just to get close to breaking even (the teams that go far in the playoffs, obviously always cash in). But I know for my Blues, with first round exits pretty much every year, I am paying for the fact I'm pushing towards the cap each year. I get maybe $10M from endorsements and playoffs combined, which is probably about what I'm paying in salaries more than the mid-tier teams.

 

[Ohio Jones]

I'm still unclear on the logistics of how your proposal is meant to be implemented, Adil. Turn tickets and in-game revenue sliders to zero. Everybody gets a flat $40m cash infusion to start the year. At the end of the year, add your $200k per win (or whatever it is) to each team. Is that right?

As far as the proposed slider adjustment goes, the issue is that we haven't made running changes each year to maintain league average revenues at least equal the NHL salary floor, which should be our base level of both competitiveness and compensation. If the slider is up around that level, capped teams who miss the playoffs will still lose money - and so they should - but not the bucket loads they're losing now. And pretty much everyone else will make some money. Isn't that supposed to be the goal? It'll allow struggling teams to get of the mat in 2-3 ears instead of 8-10. It'll reward teams that make the playoffs - with the teams who do it more efficiently with a cheaper roster benefitting that much more. And it won't completely-in-one-fell-swoop obliterate the bank accounts of the high-spending bubble teams.

Either way I think we need to test the proposals against some test seasons to see what the trends look like.

 

[MatthewFlames]

we don't need to create unfair imbalances in the game between GM's as well.

Create? They already exist. A fair balance would have been to give my team 50 million when I took over the franchise. But I got a team with no money and have never had money. Don't tell me about fair or unfair.

 

[MatthewFlames]

Besides the slider, I think it's also important to gauge what the league cash flow is like after each year, and I know in past we have looked at this to determine that the net cash flow after the season, playoffs and endorsements is still such that the league is breaking even at least. In general though, I think having a cash float of $35M to $40M per team is probably ok too, given we are at higher expenses that are partly recouped through end of seasons endorsements and playoffs, so having a bit more cash float to cover the fact the league is running at higher revenue and expense rates just makes sense.

But of note, over the last few seasons, it's not like the rich have really been getting richer. The top teams lose even more money during the regular season and needs to cash in on playoffs and endorsements just to get close to breaking even (the teams that go far in the playoffs, obviously always cash in). But I know for my Blues, with first round exits pretty much every year, I am paying for the fact I'm pushing towards the cap each year. I get maybe $10M from endorsements and playoffs combined, which is probably about what I'm paying in salaries more than the mid-tier teams.

I do think one of the problems is actually CASH FLOW - not the balance at the end of the season.

If you say that 40 million per team is okay, then that's 1.2 Billion. Right now in the league there is only 671 million. That's only 20 million per team. We are projected to lose another 120 million in cash before the season.

This is why we get mid-season financial panic. Which is why the revenue needs to come as we play out the season and not just another top up like the endorsements at the end of the season.

EDIT: And with some teams having multiples of 3 of the 20 million, you can see why there is no cash for the other end of the spectrum.

 

[Dryden]

And there's the problem. How many owners are original here? Not every GM gets lucky and takes over a team like the Ducks. Most get a team obliterated by some goof who gets kicked out the league. Not everyone is the Wings who've probably been responsible since the get go. So the decks not the same. Regardless, all we ask is an opportunity to have revenues raised. Not handouts for teams but the chance for bottom feeders to make money quicker. Benefits the whole league.

Why is it so hard to comprehend that NHL salaries rise and so do ours. So if hfnhl salaries rise why is hfnhl revenue not rising? Raise the slider.

I'm going to turn I to Andy Dufrense and say it till its done.

 

[Dempsey]

How many GM's are actually tinkering with ticket prices for the best results of revenue per game? In the playoffs you can start bumping up ticket prices as you go deeper, too. I was making almost 2 million per home game in the finals last year.

I wonder how many teams have 100% attendance on some of the different arena sections but aren't raising ticket prices like they could.

 

[Toronto_AGM_Adil]

I'm still unclear on the logistics of how your proposal is meant to be implemented, Adil. Turn tickets and in-game revenue sliders to zero. Everybody gets a flat $40m cash infusion to start the year. At the end of the year, add your $200k per win (or whatever it is) to each team. Is that right?

As far as the proposed slider adjustment goes, the issue is that we haven't made running changes each year to maintain league average revenues at least equal the NHL salary floor, which should be our base level of both competitiveness and compensation. If the slider is up around that level, capped teams who miss the playoffs will still lose money - and so they should - but not the bucket loads they're losing now. And pretty much everyone else will make some money. Isn't that supposed to be the goal? It'll allow struggling teams to get of the mat in 2-3 ears instead of 8-10. It'll reward teams that make the playoffs - with the teams who do it more efficiently with a cheaper roster benefitting that much more. And it won't completely-in-one-fell-swoop obliterate the bank accounts of the high-spending bubble teams.

Either way I think we need to test the proposals against some test seasons to see what the trends look like.

The way I would implement this is leave the slider at 50 right now... at the end of the season teams cash in a pay for points endorsement cash out. The sim add's a variability to the finances today that's +/-4M from the 43M average. To me that's the least amount of work for everyone.

In regards to Matt's point about cashflow... there is a point here that teams get paid revenue slowly throught the season and then there'a large payout at the end. If we want to avoid this issue, we run mid-season check-point for a performance payout half-way through the season. This get's rid of the cash-flow issue.

I'm all for a large payout getting into the play-offs. I think this is a great idea, the only change i'd make is a single payout of $5M for just making the playoffs since that provides a larger incentive to get in then just the $3-5M they currently get for round 1. That being said, if everybody likes the idea of just increasing the slider for playoffs i'll stand behind that idea first rather then staying pat.

I do feel that bubble teams should be making less revenue then the cap if they do not make the playoffs ... i just don't want to see bubble teams making the same revenue as a bottom 5 team even though they're fielding a more competitive payroll. If we increase the slider a 45M payroll finishing last place will walk away with 53M (assuming we add 10M to the sldier) and a profit of 8M. Meanwhile a 64M payroll finishing in 9th spot out of the playoffs will make 53M and have a -11M in debt. I think it should be more like 48M revenue (+3M bank balance) for the crappy team and 58M in revenue for the bubble team (-6M bank balance).

 

[Toronto_AGM_Adil]

Create? They already exist. A fair balance would have been to give my team 50 million when I took over the franchise. But I got a team with no money and have never had money. Don't tell me about fair or unfair.

did i say create? okay. i'll rephrase that... i should have said, "why are we propegating team imbalances"... it's one think to inherit someone else's mistake, it's another to have the deck stacked against you (even if it's slight)

 

[MatthewFlames]

did i say create? okay. i'll rephrase that... i should have said, "why are we propegating team imbalances"... it's one think to inherit someone else's mistake, it's another to have the deck stacked against you (even if it's slight)

I'm sorry I'm so snippy at you Adil. Forgive me. This **** gets me all riled up. I'm glad we've been friends for all these years.

 

[MatthewFlames]

How many GM's are actually tinkering with ticket prices for the best results of revenue per game? In the playoffs you can start bumping up ticket prices as you go deeper, too. I was making almost 2 million per home game in the finals last year.

I wonder how many teams have 100% attendance on some of the different arena sections but aren't raising ticket prices like they could.

Very valid point. I am doing it constantly. Which is also why I made LESS last year. The 2 million dollar loss was off-set by achieving the 5.5 million dollar endorsement. I think...

 

[Ohio Jones]

The way I would implement this is leave the slider at 50 right now... at the end of the season teams cash in a pay for points endorsement cash out. The sim add's a variability to the finances today that's +/-4M from the 43M average. To me that's the least amount of work for everyone.

In regards to Matt's point about cashflow... there is a point here that teams get paid revenue slowly throught the season and then there'a large payout at the end. If we want to avoid this issue, we run mid-season check-point for a performance payout half-way through the season. This get's rid of the cash-flow issue.

I'm all for a large payout getting into the play-offs. I think this is a great idea, the only change i'd make is a single payout of $5M for just making the playoffs since that provides a larger incentive to get in then just the $3-5M they currently get for round 1. That being said, if everybody likes the idea of just increasing the slider for playoffs i'll stand behind that idea first rather then staying pat.

I do feel that bubble teams should be making less revenue then the cap if they do not make the playoffs ... i just don't want to see bubble teams making the same revenue as a bottom 5 team even though they're fielding a more competitive payroll. If we increase the slider a 45M payroll finishing last place will walk away with 53M (assuming we add 10M to the sldier) and a profit of 8M. Meanwhile a 64M payroll finishing in 9th spot out of the playoffs will make 53M and have a -11M in debt. I think it should be more like 48M revenue (+3M bank balance) for the crappy team and 58M in revenue for the bubble team (-6M bank balance).

Okay, I understand that better, thanks. I'd want to see test seasons of both proposals to see how the results differ, but I'm not opposed to this in theory as the manual aspect is pretty straight forward.

Regarding the playoffs, I actually prefer your recommendation of a flat bonus for all playoff teams to increasing the slider for the playoffs, as I think the slider increase will disproportionately help the teams that go deep when a) they're already well rewarded, b) they have the most home games to benefit from ticket price adjustments, and c) they tend to be the wealthier teams already.

But we absolutely have to test both proposals to entire that whayever we choose to do, we're giving struggling teams a legit chance to restore their finances, and that conversely we're not injecting excessive amounts of cash into the system.

 

[TorontoGM]

Soooo...is there a plan?

 

[kasper11]

Well, anyone know where our new commish is? He's been on the job for all of two weeks and has been conspicuously absent from this discussion.

The next step is really for him to decide. My suggestion would be:

1) Matt (time permitting) plays with the slider and sees if it is possible to generate revenue in line with the $50M average that he proposed earlier and what the variance would be.
2) Either a league-wide vote or admin vote takes place on three choices (unless someone puts forward another idea):
----a) Matt's plan of moving the revenue slider
----b) Adil's plan of point based bonuses
----c) Do nothing
3) The commish and admin team ratify the choice

 

[MatthewFlames]

Well, anyone know where our new commish is? He's been on the job for all of two weeks and has been conspicuously absent from this discussion.

The next step is really for him to decide. My suggestion would be:

1) Matt (time permitting) plays with the slider and sees if it is possible to generate revenue in line with the $50M average that he proposed earlier and what the variance would be.
2) Either a league-wide vote or admin vote takes place on three choices (unless someone puts forward another idea):
----a) Matt's plan of moving the revenue slider
----b) Adil's plan of point based bonuses
----c) Do nothing
3) The commish and admin team ratify the choice

Sorry Rich - I hadn't checked in to this thread - and I know I answered this in What's App. But for others - Brock stayed out of the discussion but didn't ignore. The various proposals have been put forward to the Admin team much as Rich outlined in the quoted post - although in greater detail - so we should have news on changes (if any) shortly.