Lanny MacDonald*
Guest
Now while all the PA lackies hurl insults at Gary Bettman and the ownership in regards to their hard stance on a cap, this may be a situation beyond their control. There is a theory brewing that this strategy may have been forced upon them by their bankers.
Now everyone knows that busines run on lines of credit and as long as you can prove that you have growth in your revenues you are certain to see that line of credit continue and likely grow with your business. But the minute that revenues begin to decline your banker is likely to restrict your line of credit and watch your ability to make your payments. For the other leagues with huge TV contracts this is not a problem as there is a guaranteed revenue stream the bank can count on to get its money. For the NHL, that revenue stream has disappeared. This is where the theory begins.
The NHL has long been a league that has counted on a solid relationship with its bankers. It was a great relationship when loans were covered with expansion fees and revenues were growing. Unfortunately as the revenues grew expenses grew with them, except at a greater level. Once the expansion revenues were gone those expenses were no longer hidden and began to have more of an impact. This is when the bankers started to get nervous. As the last few years proved, costs can run away on anyone in any industry, and the NHL is no different. The final blow was likely the TV contract, where guaranteed revenues disappeared. The bankers likely saw this as a sign of a huge drop in revenues and a devaluation of franchises (as seen in the last string of franchise sales). The bankers raised every red flag they could and likely met with the owners and the league. It is very likely that they banks have made demands of the NHL that they would of any customer in financial problems. Which brings us to today.
The NHL has supposedly been told by their bankers that they are to get a cost certainty solution for their financial crisis, and outline how that will allow the league's franchises to pay their bills, or said bankks will call their loans and force some franchises out of business. And how many of these franchises are supposedly in this position? Fifteen. Half of the league. And you can bet that those fifteen are not just the bottom fifteen. You can count on that half transcending the standings, transcending the popularity polls and transcending who you THINK the big spenders are. Every team could easily find themselves in this predicament and could easily find themselves having their loans called. This could be a huge problem and could be the driving force behind the NHL's actions and the ownership resolve. In short, it may not be the NHL driving the "cost certainty" bandwagon down the throats of the players alone, it may be that it is being driven down their throats as well.
http://www.theglobeandmail.com/servlet/story/RTGAM.20050205.wxshoalts0205/BNStory/Sports
Now everyone knows that busines run on lines of credit and as long as you can prove that you have growth in your revenues you are certain to see that line of credit continue and likely grow with your business. But the minute that revenues begin to decline your banker is likely to restrict your line of credit and watch your ability to make your payments. For the other leagues with huge TV contracts this is not a problem as there is a guaranteed revenue stream the bank can count on to get its money. For the NHL, that revenue stream has disappeared. This is where the theory begins.
The NHL has long been a league that has counted on a solid relationship with its bankers. It was a great relationship when loans were covered with expansion fees and revenues were growing. Unfortunately as the revenues grew expenses grew with them, except at a greater level. Once the expansion revenues were gone those expenses were no longer hidden and began to have more of an impact. This is when the bankers started to get nervous. As the last few years proved, costs can run away on anyone in any industry, and the NHL is no different. The final blow was likely the TV contract, where guaranteed revenues disappeared. The bankers likely saw this as a sign of a huge drop in revenues and a devaluation of franchises (as seen in the last string of franchise sales). The bankers raised every red flag they could and likely met with the owners and the league. It is very likely that they banks have made demands of the NHL that they would of any customer in financial problems. Which brings us to today.
The NHL has supposedly been told by their bankers that they are to get a cost certainty solution for their financial crisis, and outline how that will allow the league's franchises to pay their bills, or said bankks will call their loans and force some franchises out of business. And how many of these franchises are supposedly in this position? Fifteen. Half of the league. And you can bet that those fifteen are not just the bottom fifteen. You can count on that half transcending the standings, transcending the popularity polls and transcending who you THINK the big spenders are. Every team could easily find themselves in this predicament and could easily find themselves having their loans called. This could be a huge problem and could be the driving force behind the NHL's actions and the ownership resolve. In short, it may not be the NHL driving the "cost certainty" bandwagon down the throats of the players alone, it may be that it is being driven down their throats as well.
http://www.theglobeandmail.com/servlet/story/RTGAM.20050205.wxshoalts0205/BNStory/Sports
act.
