Forbes slams Levitt report

[FLYLine27*]

Or you could look at it this way.
The players, desperate enough to go over to Europe and start playing, are creating a ton of negative publicity for themselves. Most are playing for a fraction of their NHL salaries.
The players are starting to realize that a businessman/owner can make money till he's dead of old-age, whereas their earning power is roughly between the ages of 20-35. The owners, claiming they lose less money with lockout on, seem to be quite comfortable to let their other enterprises keep making money. A player who loses 3 million this year due to the lockout, does not have many chances to recoup those losses. An owner who loses 3million this year has the rest of his life to recoup the loss.
It also seems that the players are starting to recognize that there is about 20% of them who can ride this lockout out, all the mid-tier, low-tier players are starting to realize that their morgate payments are going to keep coming due, wether they are playing hockey for 1.3 million, or working at Home depot for 8 bucks an hour.

Seems to me that the players are a lot closer to caving

Im sorry but ill have to agree with Tom..the players will not cave. but then again niether will the Owners. Looks like this is going to be a lonnngggg lockout.

 

[MacDaddy TLC*]

Any creative accountant worth their salt could show profit or losses to represent the best interests of their client.

 

[chriss_co]

Just like Ted Saskin says time after time, "statistics and figures can be manipulated to argue any point"

Thats exactly what happened here. First, the guy for Forbes doesn't even include the total losses after taxes and interest. Of course the number is going to be smaller without those additional 'costs'.

And when he was talking about the rise in the values of hockey teams why didn't he take into account inflation? You could offset a large increase with inflation. Yes, the Sharks being bought for $50 million in 1990 has indeed grown. What about other sport franchises? We all know how impossible it is to buy an NFL team nowadays. Its incomparable to hockey.

And if the NHL is so rosy, why did we have 3 teams in the last 2-3 years file for bankruptcy? Why would owners, like Bryden, sell their team when they can (according to Forbes) make a whole pile of money aside from the team.

Face it, teams are losing money. What league includes real estate profits as part of their team's operating profits?!?! That is ridiculous. Use hockey revenues to determine profits. Not the perks that come with a team. No one else does so why should the NHL suddenly start?

Its quite comical how Saskin blasts Arthur Levitt because his report is deemed incorrect but that Forbes is a highly respectable magazine that has integrity. I'll bet you if Forbes can included ALL of the team related expenses the figures would be a lot larger and Saskin would be denying the report again as unfactual.

I will admit that there are facts in the article that does raise concern ie Islanders and their inclusion of only half of their cable company profits. But overall, the article's main arguements use statistics that have been manipulated in its favor.

 

[Pepper]

Forbes has been doing these reports on all pro sports for 6 years this is nothing new. Read the article, it will explain why large chunks of revenue where never used in the Levitt report.

Forbes doesn't have access to the books - all info they publish is educated guessing.

 

[Cully9]

Now what? What's the plan? The players are going to cave? Who believes that?
Tom

Here's why the owners believe the players will cave: they're still offering the best deal on the planet.

There isn't another league in the world offering players an average salary of $1.3-million. If the NHL was a brand new league starting from scratch today, with a salary cap, how many players would still prefer to play in Europe for a fraction of the money? Right now, it's easy for Bob Goodenow to tap into the competitive nature of his drones and have them believe that they just can't give in -- after all, these guys have all beaten long odds to get where they are and their competitiveness played no small part in that. However, after a season goes by, or two seasons, guys are going to look at the money that they've lost -- that they will never, ever get back -- and it might even register with them. For some of the brighter ones, they might even recognize it now.

If the NHL opened the doors under a cap today, what reason is there to believe that at least 600 NHLPA members (more than half) wouldn't sign on?

 

[tantalum]

This is the world of corporate finance not you checking account. Let me explain, let's look at the Pheonix Coyotes, there asset valuation is up 14% over last year which represents over a 17 million dollar increase. So the corporate bottom line has increased 17 million, but the posted a 7 million dollar loss. Bottom line, there corporate value has increase 10 million.

By the way do people realize these companies supply most of the information themselves to Forbes. Companies trip over themselves to make and stay on the Forbes fortune 500 list. Companies who come off that list see losses and struggle to get back on that list. Why, because in the financial world the Forbes magazine is a bible.

Really? It's not my checking account?

The FACTS of this story are this: Forbes does not have access to the numbers. These essentially are their estimates based as they say on "speaking with bankers, broadcast sources and league sources while studying arena leases, ticket sales and prices". And even with their estimates it has over half the teams losing money...more when taxes are accounted for.

``I can't really comment on the numbers, because I don't know where they come from,'' Stars president Jim Lites told the Dallas Morning News. ``Forbes has never once asked for one number concerning our business.''

The fact is the story does not hold hockey club profitability as it's main thesis but instead the thesis is that hockey teams can help build the framework of a larger commercial success. Both the team and commercial success may benefit from each other but that doesn't mean periphery assets not directly realted to game night should be included on the NHL teams revenues as it doesn't mean the NHL teams revenues should be included as part of the bar or hotel revenues next door. Those beneficial results are already reflected in increased ticket sales (and concessions, parking etc..) and increased exposure for the team (perhaps a bigger TV deal, more press means more fans means more ticket sales) while the bar and hotel sell more beer and more nights in the hotel. That is how these things are reflected in the bottom line. BUt just because owner A is making money with the hotel or movie theater or whatever DOES not mean he doesn't have a right to make moeny with the NHL club as a SEPARATE entity and business.

It's all well and good to say "but his other holdings in the area are making money" when talking about the individual owner BUT the fact is the team entity is NOT making money. That's the issue. You can't honestly tell me that a prospective sports team owner will even seriously look at Phoenix or LA or various other teams that are operating at a loss. Why? Because that owner is not going to get all the periphery revenues UNLESS he buys all those periphery assets. I.E. HE WILL LOSE MONEY IF HE BUYS THE TEAM. Now take it further...if the LA owner sells just the Kings and keeps everything else these things you and Forbes talk about will not be reflected in the new Kings owners revenues. So why would they be just because they are owned by the same guy? Saskins thinks the owners other holdings have bearing on this issue as do you. Sorry but Saskins and you are completely and utterly WRONG. Just because the Kings may benefit from the commercial district does not mean anything other than the increased ticket revenues should be included as NHL revenue. It just doesn't and indeed CAN'T work that way JUST because it is the same owner. I'm sure the players are making profits on their investments other than their career. Some even own a bar or restaurant that benefits from the team being present and their celebrity. I guess by this strange logic of Saskins they can afford to perhaps pay the team to play hockey instead of the other way around. You know take a loss on that part of their business as their other investments after all are making money.

From Fischler:
"Believe it or not, it took a visit to a Staten Island bar mitzvah for me to be convinced that the NHL's work stoppage is NOT the fault of ownership.

It is precisely the fault of a patently myopic Players' Association leadership which refuses to acknowledge the obvious; the NHL is bleeding big-bucks and needs more than a band-aid to save it.

How did this remarkable insight come about at a bar mitzvah?

Well, there I was at the appetizing table, dishing up some cole slaw and potato salad when the proud father, Marc Gold, introduced me to a young gentleman from Westchester County.

Turns out he's part-owner of the Tampa Bay Devil Rays and I congratulated him on being in the same town as the Stanley Cup champion Lightning.

"Funny you should mention that," the well-heeled investor replied. "My group actually was interested in buying an NHL team before we got into baseball.

"We checked the NHL numbers and they were awful. In fact, they were so bad right across the entire league spectrum that we decided that it was ridiculous to consider such a move. To an investor, hockey just doesn't work."

No, the man was not planted there by NHL propagandists to sway my opinion against the Players' Association. He was a real, live sports millionaire who loves hockey as a sport, but certainly not as a vehicle for making a profit.

Fischler

I.E. if you are just buying a team it doesn't make a bunch of sense for most of them as the team does not make money. BUt of course I'm sure the owners were hiding the number from prospective owners as well

In the end it doesn't matter because no matter whose numbers you believe...the NHL's (which by the way the NHLPA have access to and haven't put forth a differing report) or the Forbes numbers the business is losing a bunch of money. Over half the teams are not making money...before taxe expenses etc.

 

[SuperUnknown]

Because quite simply, the owner would not have the arena if it were not for his team. You seem to think that the owners have invested their hard earned money in these arenas. Wrong, read the article again over 19 billion dollar in facilities have been built and owners of major league franchises have paid less than 1/3 of that. The tax payer pays the rest. What do the tax payers get, a guarentee that there team stays in the city.

Generalisations like that make you look bad. There are owners who paid for their arenas (example #1, Montreal). Also, while it was popular during the 90s to give arenas to teams, this has changed lately and the taxpayers dollars are much harder to come up with to finance arenas.

Also, you look like the perfect spin-doctor. Instead of putting a straight-up argument, you usually spin things around to "support" whatever you want. You contradict yourself through several posts, but always spinning it your way. You purposely use extreme examples while keeping quiet on the examples that don't support what you want (sharks guy who made some money vs the devils guy who lost $50M in assets value over 2-3 years?).

As to the Forbes, well their numbers have consistently been wrong on franchise values. The prices that franchises are sold at are very seldomly close to the Forbes values. The true test is the market, not some theoretical number you come up with. Plus, most of their claims of what is "hockey revenue" is ludicrous. They're talking like the NHL teams are currently a jewel for TV channels (when hockey's rating is lower than Poker and many other things), like the NHL teams are carrying NBA teams on their backs (hahahaha....). The real estate exploits of some owners are the exception, not the rule. The facts are that even if you include all kind of bogus revenue streams (LA Clippers rent? WTH!!!??? I guess AEG wouldn't pull that in if the LA Kings were moved to another city...) and use vague estimations, the Forbes still comes up with a $100M loss for an industry, before amortization (which kind of negates the fact some NHL teams didn't pay their rink), before loans, etc.

In a post, you even claim that investments in bonds and such aren't reported in the team's earnings. I find that hard to swallow, especially for a canadian team. Tell me who their auditor is so that I know they do a real crappy job (and tell the CCRA, I'm sure they'll be all over it).

As to the players not trusting the owners, well then why not go play for someone else? Would you work for someone you don't trust? Imo, it's a given that if you work for another party, you need to have a certain level of trust...

You write that the Phoenix Coyotes had asset valuation going up 14%. Can you provide details? Which assets? Why? Also, if you go into asset valuation, you're going to have to include debts and so on on top of the usual loss, otherwise it doesn't make any sense. (side note: I'm not really surprised though that you would skip certain details)

In today's NHL, the best run teams are the Minessota Wild, the Chicago Blackhawks. Why? Because they make a profit even though on ice they aren't the best, and since about 50% of the teams can't make the playoffs every year, financially it is the best way to run your team. Is it your wish to have more teams run like them? Do you really think that is what the NHL should become? I find that hard to swallow.

The market is changing daily. The way entities are managed is also evolving on a daily basis. Today, each "center" must contribute to the overall profit. If the hockey team doesn't make you money, ditch it and replace it with something else that brings you more profit (or cut the loss).

As a fan, I want a stable NHL, where the franchises will stay and be competitive every year in the same cities. That can only be achieved through a remake of the financial operations of the NHL as a whole. Whether the players agree or not, I could care less honestly.

P.S.: One glaring proof that the NHL is not "economically viable" (as in the risk/reward return rate is a very bad one) is that when teams are for sale they have a hard time finding a local buyer. What this means is that local investors (which are plenty everywhere in NA) feel they can invest their money in something else that will give them a better rate of return. When not even a single local entity/group/holding is interested in buying the local hockey team, you're in a very bad position...

 

[vanlady]

Generalisations like that make you look bad. There are owners who paid for their arenas (example #1, Montreal). Also, while it was popular during the 90s to give arenas to teams, this has changed lately and the taxpayers dollars are much harder to come up with to finance arenas.

Also, you look like the perfect spin-doctor. Instead of putting a straight-up argument, you usually spin things around to "support" whatever you want. You contradict yourself through several posts, but always spinning it your way. You purposely use extreme examples while keeping quiet on the examples that don't support what you want (sharks guy who made some money vs the devils guy who lost $50M in assets value over 2-3 years?).

As to the Forbes, well their numbers have consistently been wrong on franchise values. The prices that franchises are sold at are very seldomly close to the Forbes values. The true test is the market, not some theoretical number you come up with. Plus, most of their claims of what is "hockey revenue" is ludicrous. They're talking like the NHL teams are currently a jewel for TV channels (when hockey's rating is lower than Poker and many other things), like the NHL teams are carrying NBA teams on their backs (hahahaha....). The real estate exploits of some owners are the exception, not the rule. The facts are that even if you include all kind of bogus revenue streams (LA Clippers rent? WTH!!!??? I guess AEG wouldn't pull that in if the LA Kings were moved to another city...) and use vague estimations, the Forbes still comes up with a $100M loss for an industry, before amortization (which kind of negates the fact some NHL teams didn't pay their rink), before loans, etc.

In a post, you even claim that investments in bonds and such aren't reported in the team's earnings. I find that hard to swallow, especially for a canadian team. Tell me who their auditor is so that I know they do a real crappy job (and tell the CCRA, I'm sure they'll be all over it).

As to the players not trusting the owners, well then why not go play for someone else? Would you work for someone you don't trust? Imo, it's a given that if you work for another party, you need to have a certain level of trust...

You write that the Phoenix Coyotes had asset valuation going up 14%. Can you provide details? Which assets? Why? Also, if you go into asset valuation, you're going to have to include debts and so on on top of the usual loss, otherwise it doesn't make any sense. (side note: I'm not really surprised though that you would skip certain details)

In today's NHL, the best run teams are the Minessota Wild, the Chicago Blackhawks. Why? Because they make a profit even though on ice they aren't the best, and since about 50% of the teams can't make the playoffs every year, financially it is the best way to run your team. Is it your wish to have more teams run like them? Do you really think that is what the NHL should become? I find that hard to swallow.

The market is changing daily. The way entities are managed is also evolving on a daily basis. Today, each "center" must contribute to the overall profit. If the hockey team doesn't make you money, ditch it and replace it with something else that brings you more profit (or cut the loss).

As a fan, I want a stable NHL, where the franchises will stay and be competitive every year in the same cities. That can only be achieved through a remake of the financial operations of the NHL as a whole. Whether the players agree or not, I could care less honestly.

P.S.: One glaring proof that the NHL is not "economically viable" (as in the risk/reward return rate is a very bad one) is that when teams are for sale they have a hard time finding a local buyer. What this means is that local investors (which are plenty everywhere in NA) feel they can invest their money in something else that will give them a better rate of return. When not even a single local entity/group/holding is interested in buying the local hockey team, you're in a very bad position...

I will correct my statement for you. The strong majority of US teams.

If you had read the article you would have found the team valuations and there percentage of increase in a single year. For those of you that want to rebuff those valuations I suggest you look to the Thrashers as a perfect example of just how close Forbes is. The Thrashers, arena and basketball team sold for 250 million, Time Warner kept a percentage of the team and the over all valuation for the teams and arena is 308 million, guess what Forbes is only 3 million off, in corporate terms that is nothing it is less than 1% of the deal.

IMO the best fiscally run teams in the NHL are Vancouver, Toronto and yes Minnesota. Coaching does not equate to how a team is fiscally run.

In many cases owners can't just replace teams. In most cities in the US the leases and government funding are directly tied to the team.

As for the sale of teams, did the Thrashers just not get sold? Isn't a new owner for Vancouver waiting to see if the new CBA contains revenue sharing before signing (by the way if the new CBA does contain revenue sharing the deal falls through), by the way the reason McCaw was having problems selling Vancouver, he wanted to keep the arena. Why aren't teams selling, look at Nashville, when the team moved to the city it received one of the best leases in the NHL. The Preds got 100% of all arena revenue and a lucrative by out clause at the end, what did the owners do just before putting the team up for sale? Transfered that lucrative lease to a holding company called Powers Management, the holding company is not part of the sale. Don't beleive me Google is a wonderful tool.

And finally my favorite, if you don't trust em go play for someone else. The NHL would cease to exist.

 

[shakes]

Why do you think you have never heard of Levitt doing one of these reports before? Because the US senate pointed the finger directly at Levitt for the collapse of Enron and Worldcom when he headed the SCC. He isn't doing audits all over the US, give your head a shake.

http://www.findarticles.com/p/articles/mi_m1571/is_8_18/ai_83699604

Quoted as this article seems to have been missed by the masses here. Not trying to question they guy's integrity here but come on... the man is linked to Enron.

Any creative accountant worth their salt could show profit or losses to represent the best interests of their client.

People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.

 

[gary69]

According to Forbes the Hawks made $9m last year. So Wirtz must be a great manager. There should be more Wirtz running this league not less. Then again $9m operating income (according to Forbes) isn't much of a return on an enterprise supposedly worth $178m. Poor old Bill Wirtz, he runs his team like a business, makes a profit (at least according to Forbes) and slagged by the fans as a cheapskate.

I don't follow Hawks financies so closely, but if this true, there's nothing wrong with Wirtz in THIS respect, sticking to budget he feels he can afford/wants to spend. You can question the fans, though.

As for the whole concept of this thread, it's understandable that players, who basically just want to play hockey, don't want to get too deep into each franchise's and each owner's businesses. They are not primarily aspiring to become businessman, lawyers or accountants, nor they want the NHLPA to be forced to hire more lawyers and accountants just to keep track of what owners are doing with their businesses, whether they are lying, hiding revenues for tax purposes or whatever.

The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.

But the players are likely to negotiatiate even this, if the owners really need help to run their business properly. But it's understandable, that they don't see this as their first option or duty.

 

[EJsens1]

People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.

It really is comments like that that piss me off. Would it make you feel better if Levitt reported $10 million less then the total the NHL is missing??? It baffles me when people say, look, there is another 2-3 million not reported there, etc. Its one thing to miss-represent a million here or there, but to claim losses of over $200-$300 million is the point. For the people that say the owners are lying about the numbers, are they really going to put themselves out on the line and claim losses of hundreds of millions of dollars, fearing that someone might call them out and catch there act??? Get real!!!

 

[SuperUnknown]

Quoted as this article seems to have been missed by the masses here. Not trying to question they guy's integrity here but come on... the man is linked to Enron.

People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.

George W Bush is linked to Enron. He still got a 2nd mandate.

As to taxes, well the accountant's job is to get the most back within legal boundaries. Just as when they do an audit, they do it within certain boudaries (set by some national accountant board...).

I read the Levitt report, and by an accountant standards, it's pretty solid and paints a fairly good overall situation (and not a team by team analysis). I'm sure some teams bend the numbers more than others, I'm sure some teams try to hide some revenues, but hey, what's important is the health of all the teams, not just of a few here and there. Overall, the numbers are calculated using business standards way of calculating them, which means that they're calculated so they are comparable to other business ventures (not hockey) and should be to compare the rate of return on investment. The Levitt report did include where the numbers were from, how they were calculated, etc. The Forbes number are just that, numbers and the only explanation is "hearsay" (banker told us and so on).

 

[Digger12]

And finally my favorite, if you don't trust em go play for someone else. The NHL would cease to exist.

You didn't address his question at all.

Why the heck should the players care if the NHL ceases to exist? If they can't trust them and likely never will, get the hell away from the crooks and go further their careers in Europe and/or Russia. I'm sure the team owners over there are paragons of virtue and keep everything above board.

But then I guess if there's no NHL, there's not much need for an NHLPA or a Bob Goodenow to lead them...is there?

 

[SuperUnknown]

The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.

This is a marked contradiction though in the player's claims. They say they want the owners to deal with the business part, claiming they are the experts. On the other hand, they blame the current problems on the owners, claiming they mismanaged and mishandled the situation.

So either the owners are experts or poor managers. Either the players know the business side or they don't (and then don't judge the owner's performance and still believe they are experts, and as such that there really is a problem).

You can't always have the best of both worlds. Either you settle one way or the other.

 

[PecaFan]

According to Forbes the NHL is losing 93 million, not hundreds of millions.

Forbes conveniently leaves off little things like "interest" and "taxes", as if they don't exist. Not to mention they don't even ask to see any of the books, and all their numbers are educated guesses at best.

Yes, I phrased that poorly. I was trying to say the league still collectively loses over a hundred million a year. Once again, we have *independent* confirmation of just how bad the NHL is bleeding, and how things need to be changed, and you PA types can't even see it.

And while you're at it, could I trouble you to send me the links of the Eagleson fall, and how his secretaries had to go into witness protection and how Goodenow risked his life...you've mentioned these before. I'm not doubting you, I just can't find any info about it. Thanks.

Heh, good post. You've noticed that too eh? Vanlady leaves these little nuggets of "truths" and then totally disappears when called on them?

 

[copperandblue]

The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.

I agree with this statement completely.

If I was an NHL player, I would want the owners to control themselves individually as well. After all, the owners have proven that they are their own worst enemy. If I was short sighted, then all I would see is guys like Iilitch or Dolan or Hicks shelling money out of pocket to my benefit.

Ta hell with the other 20 teams trying to keep up. They will pay what they can afford and I would look to cash in with the guys that are willing to compensate me over and above what the game can actually support.

Now since I am not a player and am trying my hardest to see things longterm, I say the NHL needs to protect themselves from themselves and unfortunately the owners have created such a mess with the cooperation of the players that something drastic has to be done.

 

[shakes]

It really is comments like that that piss me off. Would it make you feel better if Levitt reported $10 million less then the total the NHL is missing??? It baffles me when people say, look, there is another 2-3 million not reported there, etc. Its one thing to miss-represent a million here or there, but to claim losses of over $200-$300 million is the point. For the people that say the owners are lying about the numbers, are they really going to put themselves out on the line and claim losses of hundreds of millions of dollars, fearing that someone might call them out and catch there act??? Get real!!!

Oh My.. did you even read what you wrote? Yes is would make me feel better if he represented the books CORRECTLY. To say that its ok for Levitt to miss millions here and there is an asinine thing to say. If you are going into a barganing position with the books as your main evidence, then you better be damn sure they are correct or you generally find people tend not to believe you.

Also.. yes.. I do believe the owners have and would lie about the numbers. Don't get me wrong, its not like I think they are all making money, but I certainly believe they are including expenses that they shouldn't be and not including revenues where they should be.

George W Bush is linked to Enron. He still got a 2nd mandate.

I'm not sure if this point is rebutting my statement or agreeing with it.

 

[gary69]

Isn't a new owner for Vancouver waiting to see if the new CBA contains revenue sharing before signing (by the way if the new CBA does contain revenue sharing the deal falls through),

This only strengthens what I've been feeling all along, that Bettman's talk of "meaningful revenue sharing" is nothing but hot air.

 

[gr8haluschak]

This is directed to Vanlady, if you dispute the Levitt report soo much tell me what is missing on the 12 page balance sheet (i mean what revenues or expenditures are missing), after looking at it many times it seems to me it does what it is supose to do and that is FOCUSING on the NHL TEAM ONLY.

 

[Jets4Life]

As anyone in accounting and finance will tell you the profit and loss statements are smoke screens. If you want to know the real truth about the financial health of any business you look at the asset valuation. In the case of the NHL they have increased 31% over 6 years. Do you realize that kind of increase puts the NHL at the same level of increases as Microsoft through the 90's. Anyone in finance will tell you that any league that has increased by 31% CANNOT

I don't look at the GAAP (generally accepted accounting principles) of the NHL/NHLPA. I don't even look at the financial values of the teams to determine what ide I am on in the lockout. I look at the General disinterest of Americans when it come to hockey. The NHL just lost a big TV contract in the US, while singing a more lucrative one in Canada.

I look at Game 7 of the Stanley Cup final the past 2 years, and realize that hundreds of tickets were still available on gameday in Tampa and New Jersey. I look at the National and International media taking an interest in the NHL when small market Canadian teams like Calgary, and their fans, who revive the passion in the game. Calgary was like a Canadian mardi gras in Cowtown for two months. People flocked there during the later rounds from Canada and the US just for the festivities.

That is when it really hits home that it doesn't matter whether the NHL expands to Las Vegas or New Orleans. Nobody than a few diehards in both cities will notice. When the NHL removes the Quebec's and the Winnipeg's from the league, I view them more as a corporation, not a league. It may be business, but it takes away from the love of the game.

 

[Tom_Benjamin]

Forbes conveniently leaves off little things like "interest" and "taxes", as if they don't exist. Not to mention they don't even ask to see any of the books, and all their numbers are educated guesses at best.

Well, they say they did ask but got the brushoff:

"Neither the NHL nor former Securities & Exchange Commission Chairman Arthur Levitt Jr., who compiled a report on the league's finances for the owners, would speak with FORBES"

Forbes leaves off the interest because most of the time the debt is deliberate, the result of the way the purchase of the team was financed. I suppose some teams have debt that results from operating losses that have accumulated, but most of it is not. John McCaw lent Orca Bay money to build the rink and he lent the Canucks money to buy out the shareholders. The interest on both loans is paid to John McCaw. Should that count?

Taxes? Do money losing teams pay taxes? I thought they were a tax shelter, a benefit to the owner with lots of other income to offset.

Tom

 

[thinkwild]

Acording to the article you cited the average franchise value has increased by 31% over the last 6 years to $163 million. The average value of a team 6 years ago was $112.5 million. The average appreciation was $50.5 million. Forbes reports that the league lost $96 million last season and $123 the season before making the average loss $109.5. In a 30 team league that's an average $3.65 million loss per team per year. Over the course of 6 years it's $21.9 million per team. An owner who bought a team at the average price of $112.5 million six years ago and sold it for $163 million today realizes a $50.5 million gross profit. After deducting the $21.9 million loss incurred over those 6 years, there's a $28.6 million net profit. Investing $112.5 million in a 72 month CD with a 3.75% APY, yields approximately $28 million in interest. That's really conservative too. There's much better deals than that available for the high rollers. Even if we use Forbes numbers, the return on investment isn't acceptable.

But doesnt it make you wonder a money losing team is increasing in value? Awfully good trick.

Folks are running around here trying to paint this as positive news, when it's really just more bad news. This is like the private detective telling you "I'm sorry, I was wrong, you're wife didn't screw around with 200 other guys, it was only 100.". Woohoo! That's great! I knew she could be trusted!

Hardly. The Ranger, Caps and Blues made up a great deal of that, ie non cba related. Leonis even admits he meant to lose money and was ok with it.

Caps owner speaks

When our ownership group purchased the team five years ago, we were fully aware an improved economic system would stem from a new CBA. Given the collection of players on our roster at that time and taking into consideration our payroll, ticket prices and local-market needs, we estimated and planned to lose $15 million per year for five years, or $75 million before a new CBA would be in place. We lost much more than that. I’m careful not to give the perception that I’m blaming the players, because I’m not; they operated within the framework of the CBA.

He's not blaming the players, but Bettman is rolling those numbers into one league wide loss figure and using it as justification for why a cap is needed. But Leonsis intended and was happy with the loss as a good business decision. Other teams have paper losses because they have chosen to take advantage of new tax regulations allowing them windfall new depreciation abilities I think ive heard. Other teams are losing money because they are going to struggle until their new arenas are built. Startup costs. Others are losing money because they chose to spend too much.

But their overspending only hurt them. All the expansion teams have seen huge increases in franchise value over the period of time of this and are doing quite well. How do franchise values rise if the operational loss figures are truly represntative of their value? Ranger, Caps, and Blues lost money. Good, they should. Minny, Lanna Jawjuh, Nashville, and Columbus amost doubled their franchise values over the same span. It doesnt appear their decisions had as much effect on the lower spending teams as previously thought.
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The rest of the relatively miniscule amount of losses can be fixed by allocating a slightly higher percentage of board advertising to the team and follwing the players proposal, who's tweaks now seem more than adequate to solve the problems

$98mil loss amongst the teams? This might even be normal. It surely isnt hurting these billionaires. One $3mil free agent per team gets replaced with a prospect and problem solved.

That is the whole point. NO ONE is asking the players to trust the owners, not even the owners.

By putting "cost certainty" on the table the owners have in reality invited the PA to bring in their own analysts to look at the books and NEGOTIATE what exactly is considered hockey revenue and what the players fair share should be.

The PA realizes this and still refuses to attempt to determine the scope of the problem, just like they refused the offer from Levitt to go over the report with his firm.

Why?

Because they have no desire to fix the problem, prefering to just gouge every penny they can get out of the sport.

They have put the UROs on the table, and they are not being told its negotiable. The players and owners had set up meetings years ago where they tried to determine the economic value of a franchises worth and revenues. They had many disagreements as the PA showed when they found $50mil in unreported revenue by the owners. While these meetings were going on, the owners hired Levitt on the sly. A year later he releases a report that says the NHLs UROs are a fair way of valuing the business. He didnt audit the teams. He didnt do an audit. He determined the generic one size fits all reporting requirements of the NHL served as fair way of representing the value of an NHL franchise for choosing something to model designated hockey revenues on. Not their real books. Those arent put forth. These UROs which the owner and president of Philly said doesnt match their REAL AUDITED Books.

Why should the players negotiate whether the UROs are a good approximation of the books. Why not use the real books?

And its not that the union wants the dog show revenue going to hockey. Its that when luxury boxes and advertising were sold by the team, how much of that was sold for the dog show. One equal events worth? That would be a fair way of representing the hockey business- to the owners anyway. Make piles of money on dog shows while making the players take less because hockey is lsoing money. Right! If the Hawks move, how many people would buy luxury boxes and for how much. If the Senators werent playing in their building, how much rink advertising revenue would the team get, how many luxury boxes would sell for all the dog shows and concerts?

It is strangely curious to me that Levitt is held up as unimpeachable, but Forbes and anyone putting forth their opposing ideas are personally attacked to destroy their credibilty instead of dealing with the issues or even accepting the possibility they could be right. Led by the media

 

[djhn579]

I wonder how accurate Forbe's numbers really are...

Perhaps the best example of the disparity is the Los Angeles Kings, a team that Forbes said made $7.5 million US two years ago. Reading that, a fan of the team who worked in the financial industry challenged the Kings to open their books to him.

Surprisingly, they did.

The fan emerged from the process and concluded that the Kings had in fact lost more than $11 million US that season, as opposed to the $7 million US profit as reported by Forbes.



http://tsn.ca/nhl/news_story.asp?ID=104470&hubName=nhl

 

[triggrman]

Why aren't teams selling, look at Nashville, when the team moved to the city it received one of the best leases in the NHL. The Preds got 100% of all arena revenue and a lucrative by out clause at the end, what did the owners do just before putting the team up for sale? Transfered that lucrative lease to a holding company called Powers Management, the holding company is not part of the sale. Don't beleive me Google is a wonderful tool.

You don't have a clue on Nashville. Are you ready for me to shoot holes through this BS too, just like I did you last statement on Nashville?

Nashville isn't for sale, it's just a minority interest in Nashville that's for sale. The reason? Gaylord Entertainment is pulling out of all of there Nashville interest record labels, Opry Mills (formally Opryland), and other small tourism sites they had around the Opryland area. The had less than 20% interest in the team that they are trying to sale. The banks have not approved the sale and will not guarantee the funds for the sale so Leopold has not excepted the deal. Funny if owning an NHL team is so lucrative why won't a bank secure the funds, especially with a company as big as Gaylord?

Nashville promised Craig Leopold control of the arena, cheap less and no facility operation cost to get him to bring a team here. Leisure Management was already in place, Leopold worked with Leisure Management until their contract ran out and he created Powers Management to replace Leisure Management.

Now the transfer of ownership after some sale of bonds and this buy out they supposedly have in the works as you say are totally new to me.

If you have some questions about Nashville, start with some of us first.

 

[Seachd]

Michael Ozanian, the author of the article, was on the radio in Calgary this afternoon. He mentioned how he didn't get any financial information from the league, and dug it up himself.

One of the most interesting things he said was that owning a hockey team is not a good business venture, if a team only focuses on hockey operations. In other words, teams that don't own their own buildings, or some other non-hockey source of revenue, are in rough shape.