How much of an impact can an individual teams financial success have on the cap?

Discussion in 'Fugu's Business of Hockey Forum' started by Dustin, Aug 18, 2017.

View Users: View Users
  1. Dustin

    Dustin Registered User

    Joined:
    Sep 24, 2014
    Messages:
    4,230
    Likes Received:
    748
    Trophy Points:
    94
    Say a large team like NYR, Leafs or Montreal won the cup, would their success have any bearing on future cap increases?
     
  2. MNNumbers

    MNNumbers Registered User

    Joined:
    Nov 17, 2011
    Messages:
    5,082
    Likes Received:
    567
    Trophy Points:
    119
    Assume that all regular season revenues are the same.

    Then, the only difference is the increased revenue from the home games for the large market teams.

    Let's say that the Leafs have the max, 16 home games. At about 20,000 fans a game, that would be 320,000 tickets sold. Let's just say that each ticket sells for $100 more in Toronto than it could anywhere else. That means 32M more dollars of league wide revenue.

    League wide revenue sees about 35% of playoff ticket revenue go to the revenue sharing program, so, let's call that 1/3. There goes about 10.5M of the extra already, leaving about 22M of extra $$.

    The CBA requires 1/2 to go the players, so that would be 11M to the players. That gets spread over 31 teams, so you are down to 330K per team.

    Now, you might say, 'Wait a minute. Leafs playoff tickets will sell for WAYYY more than that. But, even if you say that every ticket sells for $400 more than in other markets, it's still only about 1 -1.5M difference in the salary cap situation.

    So, yes, it can affect it. But, not much.
     
  3. Dustin

    Dustin Registered User

    Joined:
    Sep 24, 2014
    Messages:
    4,230
    Likes Received:
    748
    Trophy Points:
    94
    Does the league not get any percentage of profit from merchandise sold? Advertisments based around just the team? Serious question.
     
  4. Riptide

    Riptide Registered User Sponsor

    Joined:
    Dec 29, 2011
    Messages:
    33,677
    Likes Received:
    2,895
    Trophy Points:
    156
    Location:
    Yukon
    The NHL (the league) is actually a Not For Profit company. Meaning that the entity known as the "NHL" doesn't turn a profit. The NHL pays their employees and covers their expenses, and everything remaining goes back to the (now) 31 teams.

    So there are advertisements that get paid to the NHL directly (aka not going directly to the individual teams), but they don't get to keep the money.
     
  5. MNNumbers

    MNNumbers Registered User

    Joined:
    Nov 17, 2011
    Messages:
    5,082
    Likes Received:
    567
    Trophy Points:
    119
    Any marketing would also be part of HRR according to the CBA. But, from the above calculation, you can see that there would have to be A LOT of merchandise sold as a result of a playoff run to affect the salary cap very much. A LOT.
     
  6. Dustin

    Dustin Registered User

    Joined:
    Sep 24, 2014
    Messages:
    4,230
    Likes Received:
    748
    Trophy Points:
    94
    Thanks guys. Just wondered and it's pretty obvious I have little understanding of the financial aspect oh how the league is run. I can certainly say I have a little bit more today thanks to you guys.
     
  7. mouser

    mouser Business of Hockey

    Joined:
    Jul 13, 2006
    Messages:
    21,618
    Likes Received:
    2,160
    Trophy Points:
    187
    Location:
    South Mountain
    Revenue sharing redistribution isn't subtracted from HRR nor the salary cap.

    In your example that 35% would reduce Toronto's bottom line, but not the next season's salary cap.
     

Share This Page

monitoring_string = "358c248ada348a047a4b9bb27a146148"