PecaFan said:
Except the point of the article is to point out how extensive revenue sharing is bad. Guaranteed profits leads to complacency, unfairness in that some are generating all the revenue but are not able to keep it, etc.
The NFL is starting to see that the NHL has the right idea. This just confirms that a cap with reduced revenue sharing is the correct way to go.
Exactly, there are big problems with high revenue sharing. High revenue sharing is to sports what communism is to economy. Lower productivity and efficiency for two reasons:
1- You don't have to optimize your revenue streams, you can sit on the ones you have and "leech" the rest on revenue sharing.
2- A profitable business occasion without revenue sharing can become non-profitable with revenue sharing, which means you won't develop the revenue streams to their potential if there's a cost associated to it (because you pay the costs alone while you share the revenues).
Also, in the NHL, sharing ticket revenue is almost not possible and wouldn't help all teams equally. Why?
1- Teams play more games against their division/conference. If their division is rich, the impact of the revenue sharing is minor. However, if one "rich" team was playing in a division with only poor teams, the revenues of the rich team would be greatly impacted since they would reap almost nothing from the poor teams while paying out for every game at home. Besides, this means that you share the bulk of your revenues with your greatest rivals. Ie: Calgary plays what, once every two years in Philadelphia? This means they would receive once every two years 40% of the ticket sales there. When playing Edmonton and other "poor" teams they wouldn't receive much more than what they generate.
2- Teams could cut ticket price and expense just to share less. Say a team can cut marketing expanses by $4M and this means they'll generate $6M less at the gates. That team saves money in 60/40 sharing scheme (since their costs go down $4M and their revenues $3.6M). Does this makes sense? Absolutely not. Apply this to everything else that's shared.
Collectively generated revenues, like national tv deals, merchandising up to a point should be shared, but not ticket revenues, etc.