KHL business aspects discussion

[Acallabeth]

I think it's reasonable to make a specific thread for these things and to discuss hockey in hockey threads.

So, the head of players' union Kovalenko gave some details on teams' debt in today's interview:

- There are 9 teams that still haven't paid full money to players: Admiral, Barys, Dynamo Minsk, Dynamo Moscow, Lada, Medvescak, Sibir, Slovan, Sochi. He specifically stated that Dynamo Moscow and Sochi have paid the basic salaries, but not bonuses (in contradiction to the officials' claims of having erased the debts).
- 2 teams have paid the last of their dept in recent weeks: Amur and Kuznya.
- PU still gives the clubs time until July.

http://www.russia-hockey.ru/articles/kovalenko/delo_tcesti_deviat_clubov/

An important aspect is that the KHL can't allow the teams in dept participate in the championsip, according to points 42.1.3 and 54.1.3 of their own legal regulations, moreover, the deadline is stated on May 31st.

http://www.khl.ru/documents/KHL_legal_regulations_2014-2017_current.pdf

Shame! Shame!

In other news, head of Novokuznetsk admitted today that EVRAZ couldn't provide the amount of cabbage the team requested, so Kuznya will probably look to grow new Kaprizovs.

http://news.sportbox.ru/Vidy_sporta/Hokkej/KHL/spbnews_NI638014_Metallurgu_urezali_finansirovanije

Also a reminder that the KHL salary cap is 950 wooden roubles this season with a 20% luxury tax. The principle of off-cap salaries has been abolished, the only contract that is still active under that rule is Kovalchuk.

Click to read more...

 

[Jussi]

I think it's reasonable to make a specific thread for these things and to discuss hockey in hockey threads.

So, the head of players' union Kovalenko gave some details on teams' debt in today's interview:

- There are 9 teams that still haven't paid full money to players: Admiral, Barys, Dynamo Minsk, Dynamo Moscow, Lada, Medvescak, Sibir, Slovan, Sochi. He specifically stated that Dynamo Moscow and Sochi have paid the basic salaries, but not bonuses (in contradiction to the officials' claims of having erased the debts).
- 2 teams have paid the last of their dept in recent weeks: Amur and Kuznya.
- PU still gives the clubs time until July.

http://www.russia-hockey.ru/articles/kovalenko/delo_tcesti_deviat_clubov/

An important aspect is that the KHL can't allow the teams in dept participate in the championsip, according to points 42.1.3 and 54.1.3 of their own legal regulations, moreover, the deadline is stated on May 31st.

http://www.khl.ru/documents/KHL_legal_regulations_2014-2017_current.pdf

Shame! Shame!

In other news, head of Novokuznetsk admitted today that EVRAZ couldn't provide the amount of cabbage the team requested, so Kuznya will probably look to grow new Kaprizovs.

Not sure if I should even ask for a clarification.

http://news.sportbox.ru/Vidy_sporta/Hokkej/KHL/spbnews_NI638014_Metallurgu_urezali_finansirovanije

Also a reminder that the KHL salary cap is 950 wooden roubles this season with a 20% luxury tax. The principle of off-cap salaries has been abolished, the only contract that is still active under that rule is Kovalchuk.

What is that in dollars/euros?

 

[hansomreiste]

I think it's already time for Kuznya to step down and keep producing talents far from prying eyes of KHL monsters and fans. I know not every team will be able to fight for Gagarin Cup but Kuznya is consistently far from being competitive and this will probably never ever change. If teams like MNK will be a part of KHL, then what's the point of running VHL?

Not sure if I should even ask for a clarification.

What is that in dollars/euros?

It's close to 13.5 wooden Euros. I will assume that wooden here is million. Billion is out of question, thousand would be too small. 950 million Roubles today is exactly 13.36 million Euros or 14.89 million USD.

 

[Acallabeth]

I think it's already time for Kuzyna to step down and keep producing talents far from prying eyes of KHL monsters and fans. I know not every team will be able to fight for Gagarin Cup but Kuzyna is consistently far from being competitive and this will probably never ever change. If teams like MNK will be a part of KHL, then what's the point of running VHL?

Yeah, when even the team's and city's officials surrender like that, it's time to leave. Novokuznetsk isn't the wealthiest city, Evraz isn't going to experience an explosive profit growth, fans aren't going to pay three times as much for tickets, so the situation isn't going to change. The funding uncertainty has been arising since 2012 every summer, the team always owes the players some money, and you can't even have ambitions for playoffs with ~200M budget. Would be sad to see the Kuznya school used much less, of course.

 

[Go Donbass]

On the subject of Kuznya. Their new logo:

 

[malkinfan]

In other news, head of Novokuznetsk admitted today that EVRAZ couldn't provide the amount of cabbage the team requested, so Kuznya will probably look to grow new Kaprizovs.

Laughed for a solid 20 seconds

 

[Yakushev72]

Just from the standpoint of the health of Russian hockey, having a productive program in the Kuzbass is vital. But without some kind of revenue-sharing agreement like they have in the NHL and other NA sports leagues, the poorer communities will never be able to generate the revenue to afford talented players. Since nearly every marketable talent in the KHL dreams of the big money of the NHL, it is hard to build a league that has value to investors. The only apparent solution is to greatly increase the number of talented youth who are developed into top level hockey players. That is certainly quite possible, but only with investment. So where will the investment come from?

 

[SoundAndFury]

But without some kind of revenue-sharing agreement like they have in the NHL and other NA sports leagues, the poorer communities will never be able to generate the revenue to afford talented players.

Main flaw of this line of thinking is the fact that KHL isn't generating anything worth talking about.

 

[vorky]

Just from the standpoint of the health of Russian hockey, having a productive program in the Kuzbass is vital. But without some kind of revenue-sharing agreement like they have in the NHL and other NA sports leagues, the poorer communities will never be able to generate the revenue to afford talented players. Since nearly every marketable talent in the KHL dreams of the big money of the NHL, it is hard to build a league that has value to investors. The only apparent solution is to greatly increase the number of talented youth who are developed into top level hockey players. That is certainly quite possible, but only with investment. So where will the investment come from?

KHL has revenue sharing, here is a model

KHL shares only tv money (not money from league sponsors), 80% of these tv money is shared, league keeps 20%. Clubs can not use these money to pay player/GM/coach etc salary for example, money can be used for arena/tv broadcast developing (new HD cameras etc), fan programs (for example pre game show), etc. I agree with KHL here because clubs have to develop/make better the product, when the product is lets say "on NHL level", then the clubs can use the money for other things.

KHL shared 114M rubles for 14/15 season. It was first time when the league shared revenue with clubs. League plans to share 204M rubles for 15/16 season. It is almost 80% increase within one season. I guess 16/17 will be even more because there will be new tv agreement with asia/china. KHL´s plan is to change bussiness model of league/clubs. Now it is not healthy, KHL is too dependent on sponsorship agreements (usually money from local goverment or state company), I believe it is 70-90% (depends on club). KHL wants to change it to be more dependent on tv contracts (like it is in other world sport leagues). It is not easy to change the bussiness model because russian tv market as main KHL market is not so lucrative now (lets hope new MatchTV will change it within years). That is one of reasons why KHL wants to be more "international"/expand to Europe/Asia. If I understand KHL leadership, they consider asian market will be very lucrative in future.

I am not 100% sure how much money KHL earns from tv contracts, you can not just calculate 114M+20%. If I know KHL pays for making international tv signal and it is paid in USD or Euro (not sure here, but for sure it is NOT paid in rubles), so expensive now for obvious reasons. Maybe there are other things which KHL has to pay?? I dont know. So, lets say KHL earns X money, minus "international signal/other payments" and then you have this 114M rubles.

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The problem of hockey is the lack of "world hockey market with players". NHL takes all best players for peanuts, so nonNHL clubs (I mean euro) are not able to keep best players and are not able to sell own developed players to NHL clubs either (because NHL does not pay appropriate - real transfer - money). Look at soccer how the market should work. Lets look at latest example of Hulk - Zenit sold Hulk to chinese club, will receive transfer fee and will share some % of this transfer fee with other clubs where Hulk played. I consider this soccer model as fair for small clubs, because these weak clubs/leagues are not able to keep best players but on the other hand they gets real transfer money for developing the players. It is a shame hockey does not work like that.

 

[Yakushev72]

KHL has revenue sharing, here is a model

KHL shares only tv money (not money from league sponsors), 80% of these tv money is shared, league keeps 20%. Clubs can not use these money to pay player/GM/coach etc salary for example, money can be used for arena/tv broadcast developing (new HD cameras etc), fan programs (for example pre game show), etc. I agree with KHL here because clubs have to develop/make better the product, when the product is lets say "on NHL level", then the clubs can use the money for other things.

KHL shared 114M rubles for 14/15 season. It was first time when the league shared revenue with clubs. League plans to share 204M rubles for 15/16 season. It is almost 80% increase within one season. I guess 16/17 will be even more because there will be new tv agreement with asia/china. KHL´s plan is to change bussiness model of league/clubs. Now it is not healthy, KHL is too dependent on sponsorship agreements (usually money from local goverment or state company), I believe it is 70-90% (depends on club). KHL wants to change it to be more dependent on tv contracts (like it is in other world sport leagues). It is not easy to change the bussiness model because russian tv market as main KHL market is not so lucrative now (lets hope new MatchTV will change it within years). That is one of reasons why KHL wants to be more "international"/expand to Europe/Asia. If I understand KHL leadership, they consider asian market will be very lucrative in future.

I am not 100% sure how much money KHL earns from tv contracts, you can not just calculate 114M+20%. If I know KHL pays for making international tv signal and it is paid in USD or Euro (not sure here, but for sure it is NOT paid in rubles), so expensive now for obvious reasons. Maybe there are other things which KHL has to pay?? I dont know. So, lets say KHL earns X money, minus "international signal/other payments" and then you have this 114M rubles.

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The problem of hockey is the lack of "world hockey market with players". NHL takes all best players for peanuts, so nonNHL clubs (I mean euro) are not able to keep best players and are not able to sell own developed players to NHL clubs either (because NHL does not pay appropriate - real transfer - money). Look at soccer how the market should work. Lets look at latest example of Hulk - Zenit sold Hulk to chinese club, will receive transfer fee and will share some % of this transfer fee with other clubs where Hulk played. I consider this soccer model as fair for small clubs, because these weak clubs/leagues are not able to keep best players but on the other hand they gets real transfer money for developing the players. It is a shame hockey does not work like that.

I think you are correct - it all comes down to being able to retain quality players. People buy tickets and watch TV games to see great players make great plays. There are few opportunities to see great players in the KHL these days, which means revenues will continue to be low. Low revenue means negative growth, and you can see how the problems just keep building. But I still believe that the KHL must save what it can by letting failed franchises go.

 

[hansomreiste]

I think you are correct - it all comes down to being able to retain quality players. People buy tickets and watch TV games to see great players make great plays. There are few opportunities to see great players in the KHL these days, which means revenues will continue to be low. Low revenue means negative growth, and you can see how the problems just keep building. But I still believe that the KHL must save what it can by letting failed franchises go.

That may sound too absurd or Trumpy but seriously, Americans have to be stopped on how much they can pay for players. Just look at NBA salary cap after new deal. There will be no growth for international hockey when every good player is just snapped up in a terribly unfair environment and when Swedes, Russians, Latvians, Czechs etc. will have to do with very small leagues deprived of its stars, then NHL won't have good players to sign either. I am not against NHL or players earning much more there, that's perfectly fine but the gap is just huge and this somehow has to be controlled. We need to have at least three or four major leagues so that we can speak of ice hockey - when it turns into NHL vs others very sharply, things suck.

 

[Killion]

...when it turns into NHL vs others very sharply, things suck.

Unfortunately I dont see the NHL changing its predatory practices anytime soon hansomrieste and yes I agree, this a systemic problem that affects hockey globally.

 

[Yakushev72]

Unfortunately I dont see the NHL changing its predatory practices anytime soon hansomrieste and yes I agree, this a systemic problem that affects hockey globally.

I agree. It will be most problematic to try to form a "major league" anywhere in the World, even in Europe, where good hockey abounds, when salaries in the NHL become more and more ridiculous in regard to merely above average players accruing fabulous wealth, and there is no compensation at all for the foreign hockey systems that financed development of the talent. Its like Bangladeshi labor - they go to the places where the pay dwarfs domestic options.

Simply put, the only option for KHL survival is to accelerate the rate and degree of talent developed. In Russia, there are still only a handful of schools that develop talent, so a major increase is quite possible, providing there is investment in rinks and schools. Without growth of domestic talent, the NHL will succeed in crushing any prospective rivals in Europe.

 

[Jussi]

I agree. It will be most problematic to try to form a "major league" anywhere in the World, even in Europe, where good hockey abounds, when salaries in the NHL become more and more ridiculous in regard to merely above average players accruing fabulous wealth, and there is no compensation at all for the foreign hockey systems that financed development of the talent. Its like Bangladeshi labor - they go to the places where the pay dwarfs domestic options.

Simply put, the only option for KHL survival is to accelerate the rate and degree of talent developed. In Russia, there are still only a handful of schools that develop talent, so a major increase is quite possible, providing there is investment in rinks and schools. Without growth of domestic talent, the NHL will succeed in crushing any prospective rivals in Europe.

Outside of Russia, parents finance the development.

 

[Jussi]

Unfortunately I dont see the NHL changing its predatory practices anytime soon hansomrieste and yes I agree, this a systemic problem that affects hockey globally.

The big difference between football and hockey is that clubs control the market in the former, players in the latter.

 

[stars33]

Now that Datsyuk is in the KHL. Does anybody think a KHL game of the week showing mostly SKA st. Petersburg games would interest a sports network such as Fox sports? I know One world sports carries the KHL but fox sports does a better job with international sports. I mean they are showing Copa Libatordores and the Bundesliga.

 

[Yakushev72]

Outside of Russia, parents finance the development.

Parents buy skates and equipment, and they may help with maintenance of outdoor rinks of some kind, but do they build indoor rinks and hire coaches, pay rink maintenance fees, and so on? I think not. Its likely paid for with tax money from the general public, or from a combination of government and private investment, as NHL clubs do in the United States. So even in rich countries like Finland, Sweden, the USA and Canada, where there is a lot of extra money to throw around, its still a public venture to a large degree.

In Finland and Sweden, the main goal of hockey programs is to send the best across the ocean to the NHL. They are Bangladeshes by choice. By joining the KHL, at least one Finnish club has shown some consciousness about developing talent to entertain the local fans. The issue is really whether the NHL will be able to squeeze the KHL out and reinforce its monopoly over the sport.

 

[Yakushev72]

Now that Datsyuk is in the KHL. Does anybody think a KHL game of the week showing mostly SKA st. Petersburg games would interest a sports network such as Fox sports? I know One world sports carries the KHL but fox sports does a better job with international sports. I mean they are showing Copa Libatordores and the Bundesliga.

The KHL would certainly welcome such an arrangement, but I don't think there is much interest or demand for KHL hockey in North America. If Datsyuk has a lot of success in the World Cup, it is possible that there might be more interest generated, but again, even with SKA, there is only Datsyuk and Kovalchuk, both in their later years, and not much else that would attract TV viewers across the ocean.

 

[Jussi]

Parents buy skates and equipment, and they may help with maintenance of outdoor rinks of some kind, but do they build indoor rinks and hire coaches, pay rink maintenance fees, and so on? I think not. Its likely paid for with tax money from the general public, or from a combination of government and private investment, as NHL clubs do in the United States. So even in rich countries like Finland, Sweden, the USA and Canada, where there is a lot of extra money to throw around, its still a public venture to a large degree.

In Finland and Sweden, the main goal of hockey programs is to send the best across the ocean to the NHL. They are Bangladeshes by choice. By joining the KHL, at least one Finnish club has shown some consciousness about developing talent to entertain the local fans. The issue is really whether the NHL will be able to squeeze the KHL out and reinforce its monopoly over the sport.

Communities/cities/towns build the rinks and charge for using them, ice time fees are included in the season fee/license fee which every player aka parent must pay every year. Meaning parents pay for the development. Only the highest age group A-juniors and mainly those affiliated with Liiga teams get equipment and such for free from the teams.

The rinks/arenas are often multipurpose arenas or as in my hometown, built on top an an artificial rink and used for something else in the summer and if they're modern enough, used by the local basketball/volleyball/floorball team if they play in higher level domestic league.

Jokerit haven't done jack**** in developing Finnish players to NHL since joining the KHL. Besides, even Jokerit have tried to market themselves as a gateway tp NHL, there's a reason why players only sign 1-2 year deals with them.

 

[Killion]

Parents buy skates and equipment, and they may help with maintenance of outdoor rinks of some kind, but do they build indoor rinks and hire coaches, pay rink maintenance fees, and so on? I think not. Its likely paid for with tax money from the general public, or from a combination of government and private investment, as NHL clubs do in the United States. So even in rich countries like Finland, Sweden, the USA and Canada, where there is a lot of extra money to throw around, its still a public venture to a large degree.

In Finland and Sweden, the main goal of hockey programs is to send the best across the ocean to the NHL. They are Bangladeshes by choice. By joining the KHL, at least one Finnish club has shown some consciousness about developing talent to entertain the local fans. The issue is really whether the NHL will be able to squeeze the KHL out and reinforce its monopoly over the sport.

They do indirectly as their taxes go in part to cover those costs as do Registration Fee's & often a small surcharge of a few dollars paid at the gate that players & their parents are required to pay every time they enter a public (or private) facility. At the amateur level of course, hockey is supposed to be not for profit, strictly developmental, however in North America that is not always the case. In Toronto for example, which is home to the Worlds largest minor hockey program, the Greater Toronto Hockey League (app 2800 teams, 40,000+ registered players from Single A to AA & AAA) there was a huge controversy a few years back when a businessman started buying up AAA Teams from Atom through Midget, charging exorbitant Registration Fee's ($10,000+ per kid), paying Coaches (ex NHL'r Rick Vaive for eg was reputedly receiving as much as $60,000 a season to Coach a team) & so on. The interest wasnt in "developing players" it was in "Winning" and thereby attracting players & their "Hockey Moms & Dads" who wanted little Bobby on the "Winning Team", drafted into the CHL, off to Junior & then hopefully the NHL.

Obviously you need to be making extremely good money to be putting your kid into hockey, elite amateur in Canada or the US. Not unusual to drop $15,000 per kid per season including some Power Skating Camps & so on, and of course equipment costs just insane. $300++ for a stick alone. And God help you if your kids a goalie. It wasnt always like this of course, amateur hockey the purview of the wealthy upper middle-classes. It was until the early 80's easily accessible & affordable. It still can be at the House League & Rep Team Levels but thats basically about B or C Level hockey. Has a ceiling. Most kids done by 15 at Bantam. Over the past 10yrs or so, really since about the mid-90's, the GTHL AAA & AA teams at the Pee Wee-Bantam-Minor Midget age groups have had an influx of Russians (the odd Swede, Finn) who's families are well enough off to send their kids to Toronto as "Foreign Students", many also taking part-time residency, or sending them to Private Schools that have full wing Hockey Academys' as they'll then receive the kind of training thats not available in Russia. Advanced levels. So many in fact that the GTHL imposed an "import restriction" on the teams. Pretty crazy huh? Were talking about a kids game & league here (one I played in back in the 60's & early 70's). Even more odious is the creation of the "Pay-To-Play" so called "Junior A" Leagues in Canada & the US, no import restrictions, mostly Russian kids who werent good enough to get Drafted in the CHL Midget Draft charged 10's of 1000's to play in these Outlaw Leagues in the hopes they'll be scouted by an OHL Team, by the NCAA or the NHL, European or given a shot at the AHL or ECHL levels. So there they are, 16, 17 years old. Parachuted into some backwater Podunk town in the US or Canada, dont speak much if any English, struggle with school, isolated really from the community at large, their folks paying huge dollars towards a dream that will for the vast majority never come to fruition. And these kids are good players, late bloomers if you will, but never blooming, out of the game by 19 or 20, returning home unhappy, disillusioned. The lack of a proper, advanced & sophisticated elite development league & program in Russia is a void filled by unscrupulous promoters in North America who are selling dreams of NHL Glory to Russians. And were talking serious $$$ here. $40,000, $50,000, $75,000 a season per player.

This is bad for hockey. So yes, Russia really needs to get its act together, laying the foundations with advanced amateur programs & if the IIHF wont play total hardball with the advanced amateur leagues in Canada & the US, with the CHL & NHL in not only protecting their talent but in receiving some serious compensation for pond jumpers, then the Russian Hockey Federation should do it themselves. And I mean get Draconian about it. Punishing. Set-up an advanced amateur system including clinics & camps etc etc, and if someone wants to drop $50,000 or whatever to send Boris to Ontario to play for the Toronto Red Wings Bantam AAA team then maybe the Toronto Red Wings organization & that kids Parents should be paying a "Transfer Fee" or whatever to the Russian amateur team he grew up playing with as well. Same thing with these Pay-To-Play Jr teams & leagues; while demanding one Hell of a lot more money from the CHL & NHL clubs drafting Russians. And if the players do just puddle jump, dont care, no loyalty, lift their ticket. Barred from ever playing for a National Team, in the KHL for life. Only lifted after paying a nice big fat fine with that money poured back into Russias own amateur & Junior program.

 

[Milos Krasic]

I don't think there is much interest or demand for KHL hockey in North America. .

Bingo. NA fans only care about the KHL in as much as "hey when's this guy coming to play in the NHL?".

There is no emotional attachment to the league itself of any significant numbers.

 

[stars33]

The KHL would certainly welcome such an arrangement, but I don't think there is much interest or demand for KHL hockey in North America. If Datsyuk has a lot of success in the World Cup, it is possible that there might be more interest generated, but again, even with SKA, there is only Datsyuk and Kovalchuk, both in their later years, and not much else that would attract TV viewers across the ocean.

I believe there is an interest in the KHL from N. American hockey fans. I think a game a week would be really cool especially on weekend morning.
3 point wins, 60 game season, big ice and exotic locations would be enticing to many hockey fans who are frustrated with Bettman's NHL.

 

[stars33]

Bingo. NA fans only care about the KHL in as much as "hey when's this guy coming to play in the NHL?".

There is no emotional attachment to the league itself of any significant numbers.

I watched many games the on ice product is very good and the fan atomsphere is excellent in many arenas. Spartak Moscow has a very rowdy soccer style crowd.
But the selling point with the KHL to North American fans is morning hockey. Games would be on from 5am to the latest 1pm. This does interfere with NHL viewing.
I am also a soccer fan and it great having various leagues to watch. The Gagarin cup final between CSKA Moscow v Metallurg MG was a great 7 game series. The series was played in mid April when the NHL was deciding playoff seeding. I found the Gagarin cup final more interesting.
Also the KHL season begins in late August.

 

[Jussi]

I believe there is an interest in the KHL from N. American hockey fans. I think a game a week would be really cool especially on weekend morning.
3 point wins, 60 game season, big ice and exotic locations would be enticing to many hockey fans who are frustrated with Bettman's NHL.

Yes, I'm sure all 10 of them would be happy.

 

[stars33]

Yes, I'm sure all 10 of them would be happy.

Sport leagues and franchises values have increased dramatically in the past 10 years.
Why? Because it is live entertainment that people still watch. Advertisers have been having a difficult time promoting their products in the on-demand age.
If marketed correctly I believe the KHL and even the champions hockey league could be introduced and embraced by North American hockey fans. It would be better than watching re-aired NHL games or highlight shows all morning long.