Is Revenue Sharing the real battle?

[CGG]

So your saying that MLB's system is better than the NFL because they have a luxury tax while the NFL has revenue sharing? I don't think so. Revenue sharing, is, in fact, a cap in itself, because it forces teams to share its revenues with other teams instead of allowing them to spend it on their own team.

Revenue sharing also helps avoid trust issues with what the numbers are, since 30 owners will be policing each other, wanting a cut of Chicago's luxury box suites, for example, that are reported to be $0.

 

[tantalum]

Flip it around, if the owners are guaranteed 45% of all revenues, why bother with a salary cap, abolishing arbitration, rookie contracts, reduced qualifying offers and a rollback? Why should they care if they spend 60% in salaries if they'll get 5% of that back at the end of the year from an escrow account? Who cares if salaries inflate when the chunk of the players salary over 55% goes right back to the owners? So what if Florida can only afford a $10M payroll and Toronto can afford $70M, at the end of the day the owners will have their 45%.

The thing is under the PA's proposal there is not guarantee of the owners getting 45 %. There is no escrow fund. There is no correction based on the percentage the players get. If there was what you say would indeed be true. Who cares they'll get it back but that isn't the case. What you have is simply a moving window cap that ranges from 43 to 71 %. There is no guarantee that the bulk of NHL teams won't spend that 71 % next year or the year after the "correction" making it so the owners do not recover the money. Furthermore I would argue that if revenues drop the percentage going to players will actually rise due to long term contracts and those contracts still being valid for comparison to the FA's. Now before you go off and say that it is illogical that every team spends 71 % it may very well be BUT with extensive revenue sharing what you have is a team that could afford the lower end payroll can now afford more...they may not spend all that revenue sharing on payroll but they will most likely spend some of it. The average payroll was too high last season and all this does is shift some money the higher payroll teams no longer spend to the lower payroll teams to spend. There is nothing in that PA framework that prevents the same percentage of revenues they got in 2003/4 from being paid out. That's a problem. You can have 25 responsible GM's but unfortunately this is an industry that one bad contract does indeed escalate the salaries of other players of similar calibre and in turn all players are moved up a notch. Teams can still get into a keeping up with the Jones's visvious circle that happened under the old CBA.

 

[tantalum]

Revenue sharing also helps avoid trust issues with what the numbers are, since 30 owners will be policing each other, wanting a cut of Chicago's luxury box suites, for example, that are reported to be $0.

So you've seen the league URO's have you to say what a team has reported where?

 

[tantalum]

Why set up a structure on the assumption that revenues will only be $1 billion? What happens if you do that and it turns out that the new rules have fans coming in by the millions and revenues are over $2 billion?

Responsible estimations and ESCROW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[lazaer]

not quite sure if anyone posted this but i thought that 8 teams could squash any proposal. My question is are there 8 teams out there that would vote against significant revenue sharing? Off the top of my head i can think of the big market teams that would vote against it:

New York
Toronto
Philly
Colorado
Detroit
Dallas

and the possible opposed list would (IMO) include:

St. louis - they lose a ton of money i thought so i'm not sure why they would be opposed to revenue sharing but i'll put 'em in for good measure
New Jersey
Boston - don't think their owner would share anything at anytime
Chicago - same as above

umm...... this list is longer than i thought. Anyways what do you guys think? Are there any more teams out there that would oppose high revenue sharing if it meant a SC or linkage? Both sides gotta give something, i think the players have done their share by agreeing to some sort of cap. Now the owners need to step up because scab hockey would be horrible for the game IMO.

 

[I in the Eye]

The key for the NHL is getting a deal without loopholes. That's why they're fighting against revenue sharing so much. Otherwise, a season was wasted for nothing.

To me, the key for the NHL is getting a deal that will reasonably satisfy their economic concerns, with as minimal hardship and casualties as possible...

As a fan who will not gain $-wise in this dispute, it is my view that both sides should end up agreeing to and accepting a deal that both consider fair (i.e. 'livable')... As a fan, I don't care if one side wins a total victory (i.e. a deal that contains no 'loopholes' - where one side's 'loophole' is another side's accepted idea/point)... For a deal to happen, IMO, there has to be 'loopholes' (i.e. negotiation of 'give and take')... The ass**** in me (not the fan) thinks it would be nice to see Goodenow have his face rubbed in his own piss - by not giving him anything he wants (i.e. no 'loopholes')... IMO, Goodenow is smug and arrogant... The ass**** in me would devilishly smile if he got his ass handed to him... I can afford to be an ass**** (I'm just a fan)... The NHL can't... It is going to be extremely costly (in terms of money, time, risk) to get a deal with 'no loopholes'... Not only is it going to be extremely costly, but it is also not necessary for a fair (livable) deal to happen... There does not need to be a clear 'winner' and a clear 'loser' for the NHL to reasonably satisfy their economic concerns... Reportedly, the NHL has gotten the NHLPA to accept a hard cap framework thanks to the NHL's pressure to date - there is no good reason, IMO, that a deal cannot be forthcoming in the coming weeks/months - with some give and take as to the specifics...

There comes a point when the time and effort needed to get everything you want costs more than the benefits of eventually getting everything you want... I don't know when this point is (I don't know with the in's and out's of the business of hockey), but I think that this point is sooner rather than later... IMO, the longer this labour dispute drags out, the worse it is for everybody... I'm all for the NHL still exerting pressure now to get more of what they want - who cares at this point, IMO, it's the off-season... Squeeze all you can get for the time being... but be prepared to accept 'loopholes'...

For a deal to get done 'soon' (i.e. preferably before next season, perhaps the middle of next season), IMO, will mean a negotiated deal that will also involve elements that the players want ('loopholes') - i.e. revenue sharing that may be used to help pay for salaries - not just for marketing... What the numbers look like (what is available for salary), IMO, is up to the NHL and the NHLPA to negotiate and decide... IMO, some of the revenue-sharing $ should be used for salary (it'll help eventually get this deal done)... If the NHL goes for a home run at this point (Revenue Nazis - no soup for you, NHLPA!), they are just showing off - at the games expense...

 

[John Flyers Fan]

not quite sure if anyone posted this but i thought that 8 teams could squash any proposal. My question is are there 8 teams out there that would vote against significant revenue sharing? Off the top of my head i can think of the big market teams that would vote against it:

No eight teams can't squash a deal.

 

[tantalum]

To me, the key for the NHL is getting a deal that will reasonably satisfy their economic concerns, with as minimal hardship and casualties as possible...

I don't disagree with really anything you say but the part I have trouble understanding is how 54-57% of revenues (or so) GUARANTEED isn't a fair deal to the players. Seems to me that the league has provided a framework that does indeed meet the leagues financial needs (some teams would need some revenue sharing to reach those minimal levels). Seems to me that a 55-45 split is equitable.

 

[Lanny MacDonald*]

Flip it around, if the owners are guaranteed 45% of all revenues, why bother with a salary cap, abolishing arbitration, rookie contracts, reduced qualifying offers and a rollback? Why should they care if they spend 60% in salaries if they'll get 5% of that back at the end of the year from an escrow account? Who cares if salaries inflate when the chunk of the players salary over 55% goes right back to the owners? So what if Florida can only afford a $10M payroll and Toronto can afford $70M, at the end of the day the owners will have their 45%.

Exactly! So if the players wish to escrow the money then there is no problem. The owners can go a head and spend like drunken sailors and then get their money back at the end of the year! That's all the owners want, just like the players, is a guarantee that they won't have to spend more than 55% of revenues and will get their 45% for operations and profits. So why the hell atre the players not willing to do that? Its been on the table, but they walked away. The players refuse to get into that escrow situation because they know it will not aid escalation in any shape or form. The players will have to pay it back in the end which means no escalation.

 

[I in the Eye]

I don't disagree with really anything you say but the part I have trouble understanding is how 54-57% of revenues (or so) GUARANTEED isn't a fair deal to the players.

I have trouble understanding it either... But unfortunately, what we think doesn't matter... IMO, the reality is that the NHLPA doesn't think it's fair (for whatever reason) - thus, both the NHL and the NHLPA have to work on it (give and take) until an acceptable deal (one that both sides can agree to) gets done... The NHL can't dictate to the NHLPA what the NHLPA must consider fair or unfair - and visa versa...

 

[PecaFan]

As a fan, I don't care if one side wins a total victory (i.e. a deal that contains no 'loopholes' - where one side's 'loophole' is another side's accepted idea/point)... For a deal to happen, IMO, there has to be 'loopholes' (i.e. negotiation of 'give and take')...

"Give and take" or "negotiation" is not a loophole. A loophole is a trick where you don't actually live up to what you agreed to. IE, if you agree that you can't get more than 60% in salary, but you end up doing so, then you didn't "give" in your negotiation. Or, if you agree to share 55% of revenue, but don't report all the revenue because of some tricky wording. You've circumvented the process.

It's absolutely paramount that none of this is allowed to happen.

 

[hockeydadx2*]

#1. It's not sheer luck that he owns a team in Philadelphia.

#2. Size of the market doesn't mean everything, while it helps, if market size meant everything Colorado would be in the middle of the pack revenue wise.



Not sure luck, perhaps, but back when the first expansion took place market size wasn't nearly as important, especially for hockey. Pro sports in general was simply not as much of a big-money operation back then, as it eventually evolved into what it is today. He paid the same amount to get in as did St. Louis and Pittsburgh. Today, though, his market size is extremely useful, especially given the role of Comcast.

##3. Ed Snider PRIVATELY built what is now the Wachovia Center, and therefore should get all the revenues that come with it.

Kudos for not using public money for that. He certainly deserves the revenues. But didn't he already have corporate backing, the type that can only come with a very large market? I don't remember when Comcast got involved financially. At any rate, if they weren't involved yet, then he made a very savvy investment indeed.



Philadelphia is certainly not close to a city like Toronto in terms of being a hockey mad place (I'll argue that Detroit and the whole "Hockeytown" thing is highly overrated).

The whole Philly only has 17,000 hockey fans is also ridiculous. Just in the last 10 years over 25 brand new ice rinks have been built. Now more than 80% of all suburban high schools have ice hockey teams.
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Nevertheless, if you've got kids who play youth hockey, you would know that if the Jr. Flyers (arguably the best youth program in your area) sent a Tier I elite team to Detroit, they would find a dozen teams that at the very least would compete hard with them; most of the best Detroit area teams would crush the Jr. Flyers. And these are the best local organizational teams in the Philly area. If you are going to use rinks and kids' teams as any measure, there is no comparison. Only Boston and Minnesota really are on the same level, in terms of numbers of kids playing, as Detroit. In Pittsburgh, where I live now, 80% of the high schools have teams also, and frankly the Pgh HS teams are better, as evidenced by the results of the state championship games collectively over the last five years. Not even close, in fact. But, with the population difference, does that in any way translate that Pgh has more hockey fans, as counted, than Philly? No chance, not with the size difference.

But we digress.....
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The Flyers are not 4th in Philadelphia.

In Philly the Eagles are a clear cut #1, and command more attention than the other 3 teams put together. The Flyers are above the 76ers ... and have been above the Phillies for most of the last 20 years (in large part due to the fact they suck).

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I disagree kindly with you here. I am in Philly a lot. My family members have season tickets to all of the pro sports teams, and I use them a lot. I listen to WiP, and I read Philly.com. I still vacation in Stone Harbor. In other words, even though I don't live in Philly anymore I am still very much in touch. I'd say the Flyers are still well into 4th place among the other local teams. Of course this is just my opinion, and you are entitled to yours; in fact, it has always pained me to admit it, but I think even the Sixers have a larger fan base than the Flyers by a fair margin, mainly because the Sixers reach into the suburbs well, but the Flyers are invisible in the inner city (except the Northest, if you call them inner city).



I'm not arguing that there shouldn't be big time revenue sharing, but that if I'm a big market owner at this point I see very few reasons it would benefit me as an owner.

All comparisons to the NFL should stop and stop immediately. Massive revenue sharing and a low salary cap will never get the NHL to be a tenth of what the NFL has. If comparisons have to be made use MLB or the NBA.


The NFL and its new TV deal is larger than the national TV deals that the NBA, MLB, NHL, Nascar, NCAA Basketball Tournament and the PGATour have COMBINED.

Size of sport has nothing to do with it. It's the business plan that is important. Comparisons to the NFL business plan certainly are valid, and should not be discarded.

 

[John Flyers Fan]

I don't disagree with really anything you say but the part I have trouble understanding is how 54-57% of revenues (or so) GUARANTEED isn't a fair deal to the players. Seems to me that the league has provided a framework that does indeed meet the leagues financial needs (some teams would need some revenue sharing to reach those minimal levels). Seems to me that a 55-45 split is equitable.

Tha argument is always going to be about the percentage. The NFL will give 65.5% to the players in 2005.

The other key is you're giving them 54% of what ???

 

[John Flyers Fan]

Size of sport has nothing to do with it. It's the business plan that is important. Comparisons to the NFL business plan certainly are valid, and should not be discarded.

So when are the owners going to share a ton of revenue ??? ... and then agree to give 65.5% of revenues to the players ala the NFL ???

 

[tantalum]

I have trouble understanding it either... But unfortunately, what we think doesn't matter... IMO, the reality is that the NHLPA doesn't think it's fair (for whatever reason) - thus, both the NHL and the NHLPA have to work on it (give and take) until an acceptable deal (one that both sides can agree to) gets done... The NHL can't dictate to the NHLPA what the NHLPA must consider fair or unfair - and visa versa...

Actually it is completely the leagues perogative to dictate that the PA must consider fair when in fact it is. If this was some unreasonable number of 35 % of something I'd say fine you owners are being jerks. But I honestly believe that the numbers the league is offering is pretty much as much as they can give and what the players can reasonably expect. So as far as I'm concerned dictate away. This isn't so much a negotiation IMO but waiting for the PA to come to their collective senses.

 

[Lanny MacDonald*]

So when are the owners going to share a ton of revenue ??? ... and then agree to give 65.5% of revenues to the players ala the NFL ???

When they have a multi-billion dollar TV contract. Another question that the pro-PA has yet to answer is what percentage of revenues OUTSIDE the broadcast and advertizing deals are NFL owners really sharing? The money moving around the NFL is pretty minimal once you take out the broadcast and sponsorship deals. For the most part, moneys generate in the local market stay in the local market.

 

[tantalum]

So when are the owners going to share a ton of revenue ??? ... and then agree to give 65.5% of revenues to the players ala the NFL ???

When they get a multi billion dollars in TV deals each year and the huge amounts of sponsorship money. You see an NHL that makes $3 bil can afford to give a larger percentage in salary than a $2 billion NHL as the fixed costs remain the same. The NHL probably can't afford that large of a percentage like the NFL can which is why they aren't offering anything near it. I have no problem with an escalator of the percentage based on revenue levels and the league probably wouldn't either. But the union hasn't asked for that. They've been offered a cut of profits directly to the players which come close to achieving the same thing but to PA thought that was insulting. I don't see the NFL offering that now or in the near future.

 

[tantalum]

Tha argument is always going to be about the percentage. The NFL will give 65.5% to the players in 2005.

The other key is you're giving them 54% of what ???

Then negotiate the percentage and don't try to weasel out of it with a loophole which is what the PA is trying to do.

Negotiate what revenues should be included and the cap calculation. The league has already proposed what they think should be included based on the URO's. The players want some more here and there, fine negotiate it. No problem. That is the negotiation that the owners have wanted. That is the negotiation that the NFL and NBA unions took part in and reap the benefits from. That is what the next NFL negotiation is going to be based on...the PA wanting more revenue streams added to the calculation.

 

[Morbo]

When they have a multi-billion dollar TV contract. Another question that the pro-PA has yet to answer is what percentage of revenues OUTSIDE the broadcast and advertizing deals are NFL owners really sharing? The money moving around the NFL is pretty minimal once you take out the broadcast and sponsorship deals. For the most part, moneys generate in the local market stay in the local market.

Wrong.

They share 40% of the gate as well.

 

[tantalum]

Wrong.

They share 40% of the gate as well.

And how much of the global revenue pool is that? It's a small number which is what the poster said.

 

[John Flyers Fan]

Not sure luck, perhaps, but back when the first expansion took place market size wasn't nearly as important, especially for hockey. Pro sports in general was simply not as much of a big-money operation back then, as it eventually evolved into what it is today. He paid the same amount to get in as did St. Louis and Pittsburgh. Today, though, his market size is extremely useful, especially given the role of Comcast.

Obviously all things being equal it helps to be in a larger city, but being in a larger city in and of itself doesn't guarantee you anything.


##3. Ed Snider PRIVATELY built what is now the Wachovia Center, and therefore should get all the revenues that come with it.

Kudos for not using public money for that. He certainly deserves the revenues. But didn't he already have corporate backing, the type that can only come with a very large market? I don't remember when Comcast got involved financially. At any rate, if they weren't involved yet, then he made a very savvy investment indeed.

Snider built the Wachovia Center on his own before Comcast purchased the 76ers, Flyers and the two buildings. Comcast bought in in 1996.

Nevertheless, if you've got kids who play youth hockey, you would know that if the Jr. Flyers (arguably the best youth program in your area) sent a Tier I elite team to Detroit, they would find a dozen teams that at the very least would compete hard with them; most of the best Detroit area teams would crush the Jr. Flyers. And these are the best local organizational teams in the Philly area. If you are going to use rinks and kids' teams as any measure, there is no comparison. Only Boston and Minnesota really are on the same level, in terms of numbers of kids playing, as Detroit. In Pittsburgh, where I live now, 80% of the high schools have teams also, and frankly the Pgh HS teams are better, as evidenced by the results of the state championship games collectively over the last five years. Not even close, in fact. But, with the population difference, does that in any way translate that Pgh has more hockey fans, as counted, than Philly? No chance, not with the size difference.

I'm not arguing that Philly is the #1 hockey market in the U.S. and if you're judging by quality of youth leagues it's well below New England, Minnesota, Buffalo and the Detroit area.

My point was that in 1967 there was next to no hockey market or any youth hockey being played in Philadelphia .. and that whatever is currently here, is because of Ed Snider and the Flyers.

The Flyers are not 4th in Philadelphia.

In Philly the Eagles are a clear cut #1, and command more attention than the other 3 teams put together. The Flyers are above the 76ers ... and have been above the Phillies for most of the last 20 years (in large part due to the fact they suck).

I disagree kindly with you here. I am in Philly a lot. My family members have season tickets to all of the pro sports teams, and I use them a lot. I listen to WiP, and I read Philly.com. I still vacation in Stone Harbor. In other words, even though I don't live in Philly anymore I am still very much in touch. I'd say the Flyers are still well into 4th place among the other local teams. Of course this is just my opinion, and you are entitled to yours; in fact, it has always pained me to admit it, but I think even the Sixers have a larger fan base than the Flyers by a fair margin, mainly because the Sixers reach into the suburbs well, but the Flyers are invisible in the inner city (except the Northest, if you call them inner city).

The 76ers are current;y drawing better than anytime in franchise history, in large part to having perhaps the most exciting player in the NBA. During the 80's the 76ers had trouble selling out playoff games.

Philadelphia is much more of a college basketball town than the NBA.

The Phillies saw a major renewed surge in interest last year with the opening of their new ballpark, but that has died off again in a big way this year. If the Phillies ever became successful they would become a clear cut #2, but for most of the last 20 years they've been #3 or 4.

 

[Morbo]

And how much of the global revenue pool is that? It's a small number which is what the poster said.

He also said that local revenues stayed local.

 

[John Flyers Fan]

When they have a multi-billion dollar TV contract. Another question that the pro-PA has yet to answer is what percentage of revenues OUTSIDE the broadcast and advertizing deals are NFL owners really sharing? The money moving around the NFL is pretty minimal once you take out the broadcast and sponsorship deals. For the most part, moneys generate in the local market stay in the local market.

The NFL shares EVERY TV DOALLAR. If the NHL put all national and local TV contracts together in one big pool and shared them as well as 40% of the gate ... I think you'd see the NHLPA satisfied.

BTW the NFL shared this money long before they got the contracts that were a 5% of what they get today.

 

[John Flyers Fan]

Then negotiate the percentage and don't try to weasel out of it with a loophole which is what the PA is trying to do.

Negotiate what revenues should be included and the cap calculation. The league has already proposed what they think should be included based on the URO's. The players want some more here and there, fine negotiate it. No problem. That is the negotiation that the owners have wanted. That is the negotiation that the NFL and NBA unions took part in and reap the benefits from. That is what the next NFL negotiation is going to be based on...the PA wanting more revenue streams added to the calculation.

... did you see Jacobs comments yesterday ... did he sound like a man willing to go from 54% up to 60%, let alone 65% ???

 

[tantalum]

... did you see Jacobs comments yesterday ... did he sound like a man willing to go from 54% up to 60%, let alone 65% ???

NO but those IMO are not realistic percentages for the PA to receive. I do think they'd go up to a 57 % average (42.5 cap would have been about 60% for an upper cap number). And they were again offered a 50/50 split of profits past a fairly reasonable level that was also put on the table to negotiate.