How the KHL's Financial Crisis Can Support NHL Expansion (and more)

Bee Sheriff

Bad Boy Postingâ„¢
Nov 9, 2013
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Tucson
After reading this article and it's comments, i began to wonder whether or not they had a valid point.

The article details James Mirtle's inside information detailing the financial struggles currently being faced in the KHL. The Russian Ruble is currently plummeting in value and this has lead to the possibly imminent folding of three KHL teams. Among the league, some coaches and players have not even been paid.

User c9castine left this comment with response from rmccleary97:
Wow.

We may see a big influx of these guys back into the NHL/AHL ranks in the next year or two….
So … you’re saying there might be enough of an influx of talent to support expansion?

I think they have great points. Should some teams, or even the league begin to collapse, the sudden flood of talent (at either level) would truly begin to push Bettman even further towards an expansion headed by more than just Las Vegas. Further than just free agent acquisitions, how would this affect prospects playing overseas in the league? How would this affect top talents of the league such as Sergei Mozyakin, Jan Kovar, and even our best friends Alexander Radulov and Ilya Kovalchuk?
 

SimplySensational

Heard of Hough
Mar 27, 2011
18,839
6
VA
Mirtle is doing the typical hockey writer thing. Using a well known event, to make up BS.

"Ovechkin only posts pictures of him not working out! Ovechkin doesn't work out!"
 

Swervin81

Leaf fan | YYZ -> SEA
Nov 10, 2011
36,452
1,526
Seattle, WA
I'd be very surprised if most of the top KHL guys (like Radulov/Kovalchuk) aren't contractually obligated to be paid in USD. Any competent agent would ensure this, given the Russian economy is basically a house of cards.

As for the teams themselves, if they operate in rubles, there will definitely be a collapse since the ruble has dropped about half its value from the start of the year. That could definitely lead to less jobs meaning more guys having to defect to other leagues. Not sure what this means for the high paid NHL-calibre KHLers though.
 

SilverSeven

Registered User
Apr 16, 2007
21,503
1
Ottawa, Ontario
I'd be very surprised if most of the top KHL guys (like Radulov/Kovalchuk) aren't contractually obligated to be paid in USD. Any competent agent would ensure this, given the Russian economy is basically a house of cards.

That just makes it less likely that the team can actually afford to pay them
 

Topgoon

Registered User
Aug 13, 2007
557
1
Toronto
I'd be very surprised if most of the top KHL guys (like Radulov/Kovalchuk) aren't contractually obligated to be paid in USD. Any competent agent would ensure this, given the Russian economy is basically a house of cards.

As for the teams themselves, if they operate in rubles, there will definitely be a collapse since the ruble has dropped about half its value from the start of the year. That could definitely lead to less jobs meaning more guys having to defect to other leagues. Not sure what this means for the high paid NHL-calibre KHLers though.

I think you've nailed it. The KHL teams likely generate revenue in ruble... but have to pay their key expenses in USD.

What does Russian bankruptcy look like? How much will players recover in salary?
 

Bee Sheriff

Bad Boy Postingâ„¢
Nov 9, 2013
24,513
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Tucson
Mirtle is doing the typical hockey writer thing. Using a well known event, to make up BS.

"Ovechkin only posts pictures of him not working out! Ovechkin doesn't work out!"

Except for the part where he claims to have inside information that three teams are on the verge. Take his source reliability as you will but it's what the man is saying.
 

HamiltonNHL

Parity era hockey is just puck luck + draft luck
Jan 4, 2012
20,124
10,634
Putin would just bail out the KHL.
What is the entire salary value of the KHL vs. Russia's GDP ?
Not much.
 

Zine

Registered User
Feb 28, 2002
11,958
1,774
Rostov-on-Don
Except for the part where he claims to have inside information that three teams are on the verge. Take his source reliability as you will but it's what the man is saying.

It's not exactly insider info that some teams are struggling. However, these teams aren't the ones paying top $$$ for higher end talent.
 

Bee Sheriff

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Nov 9, 2013
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Tucson
The top-90 highest paid KHL players have a salary of roughly 200 million dollars.

Russia might have larger problems than bailing out their hockey league though. The entire Russian banking system is in tatters.

Yeah, there's basically no coming out of this for the league and it's teams other than a sudden and unexpected economic boost (which isn't going to happen).
 

Bee Sheriff

Bad Boy Postingâ„¢
Nov 9, 2013
24,513
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Tucson
If the NHL wants to ripe on KHL crisis, they have about two years to expand, IMO.

I'm curious..being a Russian (or least your page says so), do you pay much attention the KHL and the nation's economy? (not to get too political, just meaning it's effect on the league) If so, how do you see this all playing out?
 

fedfed

@FedFedRMNB
Oct 28, 2010
4,143
0
Moscow City
I'd be very surprised if most of the top KHL guys (like Radulov/Kovalchuk) aren't contractually obligated to be paid in USD. Any competent agent would ensure this, given the Russian economy is basically a house of cards.

As for the teams themselves, if they operate in rubles, there will definitely be a collapse since the ruble has dropped about half its value from the start of the year. That could definitely lead to less jobs meaning more guys having to defect to other leagues. Not sure what this means for the high paid NHL-calibre KHLers though.

AFAIK, labour law prohibits Russian companies to pay employees in anything other than roubles.

Now the additional clauses could be made in a contract, somehow linking it to the exchange rate, but I am pretty sure that's against the practice of Standard Player's Contract.
 

fedfed

@FedFedRMNB
Oct 28, 2010
4,143
0
Moscow City
I'm curious..being a Russian (or least your page says so), do you pay much attention the KHL and the nation's economy? (not to get too political, just meaning it's effect on the league) If so, how do you see this all playing out?

I don't really watch a lot of the KHL games. I follow the economy and I follow the economy in sports.

I'm writing a blog post on how I see it playing out. It's 650 words long so far so... I think you'll have to wait a little;) I can send you a DM once it's up (tomorrow maybe).
 

fedfed

@FedFedRMNB
Oct 28, 2010
4,143
0
Moscow City
Except for the part where he claims to have inside information that three teams are on the verge. Take his source reliability as you will but it's what the man is saying.

Doesn't take Mirtle to know that. It's been well-documented. I can even name the three teams ;)

One has an interesting merger prospect though, or maybe even an expansion team moving into their arena this summer replacing them... fans are against it of course though.
 

Bee Sheriff

Bad Boy Postingâ„¢
Nov 9, 2013
24,513
33
Tucson
I don't really watch a lot of the KHL games. I follow the economy and I follow the economy in sports.

I'm writing a blog post on how I see it playing out. It's 650 words long so far so... I think you'll have to wait a little;) I can send you a DM once it's up (tomorrow maybe).

I'd be very interested, thank you :)

Doesn't take Mirtle to know that. It's been well-documented. I can even name the three teams ;)

One has an interesting merger prospect though, or maybe even an expansion team moving into their arena this summer replacing them... fans are against it of course though.

Its amazing how quickly the league has been blowing through its teams.
 

Surgeline

Registered User
Jan 10, 2012
3
0
OH
AFAIK, labour law prohibits Russian companies to pay employees in anything other than roubles.

Now the additional clauses could be made in a contract, somehow linking it to the exchange rate, but I am pretty sure that's against the practice of Standard Player's Contract.

Thats interesting..I had not heard that. I have friend who is really good freinds with a player from Avangard and this guy says Mozyakin gets paid in majority with property..land.
 

fedfed

@FedFedRMNB
Oct 28, 2010
4,143
0
Moscow City
Thats interesting..I had not heard that. I have friend who is really good freinds with a player from Avangard and this guy says Mozyakin gets paid in majority with property..land.
Hidden payments have been a problem for the KHL for a long time. But it's gotten a lot better now than it used to be 4-6 years ago.

http://izvestia.ru/news/556269 Linky (in Russian) proving that Russian companies can't pay employees in foreign currency. It's actually about the initiative that Russian companies' employees abroad may be allowed to receive money in foreign currency. It's from a year ago and I didn't hear about that initiative going anywhere.
 

LolClarkson*

Guest
After reading this article and it's comments, i began to wonder whether or not they had a valid point.

The article details James Mirtle's inside information detailing the financial struggles currently being faced in the KHL. The Russian Ruble is currently plummeting in value and this has lead to the possibly imminent folding of three KHL teams. Among the league, some coaches and players have not even been paid.

User c9castine left this comment with response from rmccleary97:



I think they have great points. Should some teams, or even the league begin to collapse, the sudden flood of talent (at either level) would truly begin to push Bettman even further towards an expansion headed by more than just Las Vegas. Further than just free agent acquisitions, how would this affect prospects playing overseas in the league? How would this affect top talents of the league such as Sergei Mozyakin, Jan Kovar, and even our best friends Alexander Radulov and Ilya Kovalchuk?

The U.S and its economy are doing a victory lap but this will not last long. The dollar will not sit high for ever either.
 

LolClarkson*

Guest
I think you've nailed it. The KHL teams likely generate revenue in ruble... but have to pay their key expenses in USD.

What does Russian bankruptcy look like? How much will players recover in salary?

Russia is a creditor with no net debt when you factor in forex reserves. So a Russian "bankruptcy" looks basically like it does now. Ruble is crashing but its just a market move. It will bounce back up. Remember in 2010 when Greece was supposedly going under and the Euro was going to end ? How long did that last ?
 

Dynamo81

Registered User
Mar 21, 2008
1,501
0
Aussie in Moscow
I'm curious..being a Russian (or least your page says so), do you pay much attention the KHL and the nation's economy? (not to get too political, just meaning it's effect on the league) If so, how do you see this all playing out?
I can try to answer as I have been working in Russia for the past 8-9 years. Granted it is early in the morning here so hopefully I make enough sense :laugh:

Economically Russia is well positioned to get through this. Many of the fundamentals are in place. They were in a lot bigger trouble in 1998 (When they defaulted) and in 2008 (During the GFC). Unlike most other countries in the world, Russia has a triple surplus in terms of the federal budget, which equalled 2.1 percent of GDP, or $32 billion, a $151 billion trade surplus for the past three quarters and a year-to-date current account surplus of $52 billion compared with only $26 billion this time last year.

They allowed the ruble to free-float which caused the devaluation to occur (As the ruble is closely linked with the oil price), in 2008-09 during the GFC they spent $200 Billion of their reserves to support the ruble, this time they decided to let the oil prices play out before intervening. However, it shouldn't have dropped this low, many were expecting the ruble to get to around 45 rubles to the dollar. Some market manipulation has occurred internally.

Compared to 1998 there is barely any panic, most people are carrying on with their normal lives, doing holiday shopping, I was at IKEA yesterday and it was packed with shoppers. The general consensus here is that "hey it's been worse things are still ok" Some people are jumpy but not that many. It is definitely a topic of discussion amongst citizens here but you don't have any shortage of goods, restaurants are still full etc. None of the main indicators of a financial crisis are really present.

Russia's economy will probably be in recession until around this time next year, although the Russian government has enough in reserves to survive a 5 year recession. All in all I am expecting Russia to be fine from this, in fact if it plays it's cards right (It was most of the time, hopefully the Central Bank does not print their way out of this) then Russia could be well positioned for the future once they get out of this.

If you have anymore questions just PM me as I don't think the moderators want a full discussion of Russia's economy to occur :laugh:
 

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