Loonie above 1.04

[Confucius]

Can you explain how your example ties into the hockey ticket situation? Are you suggesting that (for instance) Florida send more tickets to Toronto?

Send more teams

 

[Fixed to Ruin]

Can you explain how your example ties into the hockey ticket situation? Are you suggesting that (for instance) Florida send more tickets to Toronto?

I didn't think he meant hockey tickets but hockey teams.

 

[Bear of Bad News]

Send more teams

I see. I largely agree, with these two quantifiers:

(1) Your solution would maximize revenue in the short term at the expense of revenue in the long term.

(2) Hockey tickets are not interchangeable (as gasoline is) - people would prefer the Leafs to a new team.

 

[Fixed to Ruin]

I see. I largely agree, with these two quantifiers:

(1) Your solution would maximize revenue in the short term at the expense of revenue in the long term.

(2) Hockey tickets are not interchangeable (as gasoline is) - people would prefer the Leafs to a new team.

(1) I think there is enough demand in the Toronto area, that a second team in Toronto makes sense. As long as the team isn't located in Hamilton i think the impact to other teams in negligible in the long run. A second Toronto team should out perform any of the bottom feeders even 50 years down the road.

(2) I agree with this point. A leaf ticket will always be at a premium than any other ticket. However, using the gasoline example, some people put premium in their cars, others put regular. A gas station can make money selling regular as a second team in Toronto can make money even if the Leafs are there. If I use baseball as an example, Chicago has had the Cubs forever, yet the While Soxs look like they are doing ok. The White Soxs would be more profitable in Chicago than if they we're located in Edmonton.

 

[New User Name]

I see. I largely agree, with these two quantifiers:

(1) Your solution would maximize revenue in the short term at the expense of revenue in the long term.

(2) Hockey tickets are not interchangeable (as gasoline is) - people would prefer the Leafs to a new team.

(1) How so? I can guess what your answer will be though.

(2) WRONG! There are enough people in the GTA that would make a second Toronto area team, probably in the top 3 in the league.

 

[Bear of Bad News]

(1) How so?

(3) WRONG!

Thanks for the response, particularly to point (3), which I don't recall stating.

 

[New User Name]

Thanks for the response, particularly to point (3), which I don't recall stating.

forget it

 

[5lidyzer19]

The solution is put enough teams in the area and force the price down. The average fan can't afford Leaf prices.

And why would the league or the Leafs want to do that? The Leafs are going to maximize their revenues on those able to and willing to pay the most. The average fan can watch on TV and add to the teams revenue that way. The Leafs still get both groups.

I'd imagine that "solution" also wouldn't be very popular with the owners who wield the leagues power. It basically says to current and perspective owners, that if I invest and pay top dollar for a mature hockey market, the NHL is just going to add another team and ruin my ability to maximize revenues and the value of my investment.

 

[5lidyzer19]

http://www.cbc.ca/news/business/story/2011/07/04/loonie-markets.html

Uh Oh.

The cap we go even higher next season.

10/25/2006.

Nevertheless, the dollar has remained the world's currency anchor. As long as this anchor rests firmly on the ocean floor, stability is guaranteed for the national economies that invest in the dollar. But if that anchor should tear itself loose and begin to drift freely in the ocean of global finance, the chaos that ensues would result in trouble for more than just exchange rates.

Experts have often forecast the effects of a dollar meltdown. That way, The dollar crisis would spread from the world of currencies to the real world of factories, businesses and household accounts within days.

Major and minor private investments yield lower returns. People would start to save, the economy would falter and eventually shrink. The first mass layoffs would arrive soon afterwards. US citizens would have to once more drastically reduce their level of consumption, as unemployment and waves of bankruptcy would shake up the country. Millions of households would become unable to pay back their bank loans. Then real estate prices and share values would begin to drop, having been overpriced for years and used as mortgages for consumer credit. When the real estate bubble bursts, consumption inevitably dwindles even further. The hunger for imports would fade, causing problems for exporting countries as well. It would only be a matter of days before newspapers would once more feature a term that seemed to have disappeared decades ago: world economic crisis.

The only way to fight a weak dollar is to strengthen it. Many people no longer care whether the US currency still justifies the faith people seem to have in it. The new game, which amounts to playing with fire, works exactly the other way around: The dollar deserves the faith it gets because otherwise it loses that faith. Dollars are bought so they don't have to be sold. The dollar is strong because that's the only thing that can prevent it from growing weak. Reality is ignored because only by ignoring it can the dream come true. Or, to put it still more clearly: Behaving irrationally has become rational behavior.

But if things have become that obvious, why aren't investors recoiling in fear? Why do foreigners, US presidents of all stripes and even Federal Reserve presidents known for their seriousness allow themselves to get involved in such a risky game, when the risk is that of destroying everything? Why aren't those mechanisms of market regulation functioning that are supposed to represent the advantage of the capitalist system over planned economies?

The answer is terrifyingly simple: Everyone knows how dangerous the game is, but continuing to play it strikes them as less dangerous than quitting. After all, what's to be gained from overreacting? Investors allowed themselves to get caught in the dollar trap years ago, and there's no easy way out. If they start taking their dollar bills and government bonds to the market themselves, they would lose money -- either gradually or all at once. They would like to avoid both scenarios, at least for a time.

Last century, the United States already suffered from one deep economic crisis that gradually spread to the rest of the world. The Great Depression lasted 10 years and brought mass unemployment and starvation to the United States. Today's investors face a difficult choice, one they're not to be envied for. They can see the relative weakness of the US economy and they're registering the tectonic shifts in the world economy. They know that a great statistical effort is being made to prolong the American dream.

The United States is an economic giant on steroids -- doped so its decline in performance doesn't become too apparent. The faith investors have in the figure has actually helped create it. After all, the purchasing price of a government bond feeds almost directly into state consumption, just as the purchasing price of a share makes companies more inclined to consume. It also extends the credit basis of millions of private households -- which in turn boosts consumption. In this way, the expectations of investors -- including the expectation that the United States will continue to grow -- transform into certainties almost all by themselves. In other words, the capital of trust creates the very growth rates it needs in order to justify itself.

For capital market investors, reality isn't reality until the majority of investors are convinced it is reality and have begun reacting accordingly. Right now, everyone is watching everyone else closely. Everyone knows the dream of the stable economic superpower has ended, but everyone is keeping his eyes shut just a little longer.

So who will be the first to destroy the dollar illusion? Aren't all investors bound together by an invisible link, since every attack on the key currency would lead to a loss of value for them, perhaps even destroying a large part of their financial assets? Why should the central banks of Japan or Beijing throw their dollars onto the market? What could make US pension funds wilfully destroy their wealth, held in dollars? What sense would it make to send the United States into a deep crisis when that crisis could drag all the other states along?

The underlying motive is the same as the one that once prompted investors to buy dollars -- fear. This time it is fear that someone else may be faster, fear that the dollar's strength won't last, fear that every day spent waiting may be one day too long. It's fear that the herd instinct of global financial markets will set in and overtake those who can't keep up.

These days, the dollar is making a lot of people uncomfortable. One morning many dollar-owners will wake up and look at the facts about the US economy without their rose-colored glasses -- just as private investors woke up one day and took an unflinching look at the New Economy, only to see companies whose market value couldn't be justified by even the most dramatic of profit increases.

Much the same fate is in store for the dollar and for dollar loans. The United States has sold more security than it has to offer. The expectations traded will turn out to be valueless because they can't be met. Just as the New Economy was unable to provide investors with either the growth or the profits that had been predicted for investors, currency traders will one day have to admit that the economy backing the currency they sold is weaker than they claimed.

The dependence of foreign central banks on the dollar will defer its crash, but it won't prevent it. Today's snowdrift will become tomorrow's avalanche. The masses of snow are already accumulating at breathtaking speed. The avalanche could happen tomorrow, in a few months or years from now. Much of what people today think is immortal will be buried by the global currency crisis -- perhaps even the leadership role of the United States.

Incidentally, the commission that former US President Bill Clinton created to investigate the negative balance of trade concluded in clear terms that the government has to do whatever it can to put an end to the growing disparity between imports and exports. It demanded that the public give up its optimism and return to realism, that people start saving again and that the state reduce its imports in order to prevent too hard a crash landing.

None of that has been done. In fact, what is being done is the opposite of everything the experts recommended. Debt is growing, imports are increasing and an optimism now lacking every basis in reality has become official state policy. Lester Thurow, a member of Clinton's commission, draws the sober conclusion that no one will believe the US balance of trade could produce a crisis "until it happens."


http://www.spiegel.de/international/0,1518,440054,00.html

 

[5lidyzer19]

Flash forward to the fall of 2008. The financial system was brought to its knees. Spearheaded by the breakdown of the bretton woods 2 system which was implimented in 1971 (when Bretton Woods 1 collapsed 1945-1971). The U.s left the gold standard and signed a special agreement with OPEC's to use their oil reserves as our backing. (worth 26 times the value of all gold ever mined and a commodity that's actually needed.)

Every country that is worth a damn needs oil. The way to buy Opec's oil is to get dollars. Other countries get dollars by exporting to the U.s. IE keeping their currency artifically low.

Basically, the United States created "globalism" to dollarize the world. We make dollars (paper) and everyone else makes things (real goods/resources) that dollars can buy. From us having an (intentional) trade deficit, the other countries would build up dollar reserves. They would then invest these reserves in U.s treasuries, which allowed us to consume more (with intentional budget deficits). This setup created even bigger trade deficits...which meant more dollars floating out. Bingo. You guessed it. Foreign central banks needed to hold even more reserves (to prop up the dollar and keep their currencies low to maintain their export based economies). We were more than happy to supply the budget deficit and extra consumption. This loop has been keeping the U.s artifically doped for nearly 4 decades like the article above outlines. It was a form of colonizing the world more slick than the British could have ever dreamed of.

Now this system of building up the rest of the world at the same time we take advantage of them to increase our standard of living, is falling apart at the seams. Bretton woods 2 1971-2008. Within the next 20 years, the Dollar will most likely be replaced as the sole reserve currency and the system we installed after our victory in ww2 while we were the only unwrecked nation on Earth will be over.

Put simply, the Federal Reserve is positioned to declare war on Bretton Woods 2. November 3, 2010. Mark it on your calendars.

So perhaps Bretton Woods does not end because foreign governments are unwilling to bear ever increasing levels of currency and interest rate risk or due to the collapse of private intermediaries in the US, but because it has delivered the threat of deflation to the US, and that provokes a substantial response from the Federal Reserve. A side effect of the next round of quantitative easing is an attack on the strong dollar policy.

Consider the enormity of the situation at hand. The Federal Reserve is poised to crank up the printing press for the sake of satisfying their domestic mandate. One mechanism, perhaps the only mechanism, by which we can expect meaningful, sustained reversal from the current set of imbalances is via a significant depreciation of the dollar. The rest of the world appears prepared to fight the Fed because they know no other path.

Bad things happen when you fight the Fed. You find yourself on the wrong side of a whole bunch of trades.

Bottom Line: The time may finally be at hand when the imbalances created by Bretton Woods 2 now tear the system asunder. The collapse is coming via an unexpected channel; rather than originating from abroad, the shock that sets it in motion comes from the inside, a blast of stimulus from the US Federal Reserve. And at the moment, the collapse looks likely to turn disorderly quickly. If the Federal Reserve is committed to quantitative easing, there is no way for the rest of the world to stop to flow of dollars that is already emanating from the US. Yet much of the world does not want to accept the inevitable, and there appears to be no agreement on what comes next.

I've recently taken to using the phrase, "Saved by WWII" when seeing the analogy between now and the 1930s. Then the world was in disarray, based on economic constraints rooted in WWI reparations, the expansion and bursting of the stock market, and world wide abject poverty.

Saved by a war that cost 50 million lives? What was the option? The starvation of the poorest had begun in Eastern Europe, and revolution was in the air in this country. No one can contemplate the extent of the disaster that is coming now, since we don't conceptualize WWII as being caused by economics.

Perhaps it's time to promote this explanation, so it would be clearer just what kind of a precipice we are now looking over.

 

[sh724]

The solution is put enough teams in the area and force the price down. The average fan can't afford Leaf prices.

Ok so you move one team to Toronto you have helped 1 team and hurt several other teams. Moving a team thats losing money to a market that will create huge profits will hurt the majority of teams in the league. The leafs made 122 million in profit last season obviously a new team would drop that number so lets say the leafs only make 90 million now but the new team goes from losing 10 mil a year to making 50 million. That would be roughly 30 mil more into the salary cap equation jumping the cap a lot more than the increase in market growth. The more teams you move the more this issue is compounded. Any time a team sees a huge jump in profits it will have an adverse affect on every other team, some teams will be able to cope with the change but most will not. The more teams you move the more you will have to move in the future.

 

[sh724]

(1) I think there is enough demand in the Toronto area, that a second team in Toronto makes sense. As long as the team isn't located in Hamilton i think the impact to other teams in negligible in the long run. A second Toronto team should out perform any of the bottom feeders even 50 years down the road.

(2) I agree with this point. A leaf ticket will always be at a premium than any other ticket. However, using the gasoline example, some people put premium in their cars, others put regular. A gas station can make money selling regular as a second team in Toronto can make money even if the Leafs are there. If I use baseball as an example, Chicago has had the Cubs forever, yet the While Soxs look like they are doing ok. The White Soxs would be more profitable in Chicago than if they we're located in Edmonton.

I Disagree if you take a team that is losing money and increase their profits by 50 mil in one year it will have a huge impact on the salary cap which would hurt most teams in the league and if the cap continues to increase every year it will take an extremely long time for the market to catch up if ever since the cap already is increasing as fast as or faster than the market every year.

 

[Nashvols]

I have no problem with rev sharing, provided they charge the same price for tickets in all locations. Charging more for tickets in one city so fans in another city can attend games at cheaper prices just seems wrong. Let the market level out, teams will eventually locate to the most profitable locations.

On that logic, shouldn't housing be the same in all cities?

 

[sh724]

On that logic, shouldn't housing be the same in all cities?

I believe its called communism but we do not live in China

 

[Melrose Munch]

I believe its called communism but we do not live in China

I guess the cap is communism then.

 

[sh724]

I guess the cap is communism then.

No I was not talking about the cap I was talking about the comment all cities should charge the same amount for tickets.

The cap is a limited form of capitalism in that teams can do whatever they want to make money but only to a certain extent

 

[Kaner Coffee]

(1) I think there is enough demand in the Toronto area, that a second team in Toronto makes sense. As long as the team isn't located in Hamilton i think the impact to other teams in negligible in the long run. A second Toronto team should out perform any of the bottom feeders even 50 years down the road.

(2) I agree with this point. A leaf ticket will always be at a premium than any other ticket. However, using the gasoline example, some people put premium in their cars, others put regular. A gas station can make money selling regular as a second team in Toronto can make money even if the Leafs are there. If I use baseball as an example, Chicago has had the Cubs forever, yet the While Soxs look like they are doing ok. The White Soxs would be more profitable in Chicago than if they we're located in Edmonton.

Before I began my response: "WHITE SOX"

This is not an applicable analogy. Yes, the Cubs were founded before the Sox, but they are both very old and well established in Chicago sports culture with distinct, loyal fan bases. Nobody is going to switch allegiances because of ticket prices. I am a Cubs fan because my father was, and I have no interest in rooting for the Sox.

It isn't just how old the teams are that matters, though. It is the presence of natural fan bases for each team. The Cubs have the North side, and the Sox have the South side. The Mets, for example, were founded more recently-in 1961. They were able to gain a large fan base right away because they replaced the recently departed Dodgers and Giants, whose fans hated the Yankees.

If a second NHL team moved to Toronto, it would not have an established fan base. It would be similar to the Los Angeles NBA situation. The Clippers moved to LA in 1984 and didn't gain a fan base. LA is bigger than Toronto and loves basketball as much as Toronto loves hockey, but nobody in LA cares about the Clippers. And they certainly didn't decrease ticket prices for the Lakers.

I guess my point is that just because Toronto is big and the people there love hockey, a second team wouldn't necessarily succeed financially, and wouldn't necessarily decrease Leafs ticket prices.

Also, lol at "Soxs"

 

[5lidyzer19]

I have no problem with rev sharing, provided they charge the same price for tickets in all locations. Charging more for tickets in one city so fans in another city can attend games at cheaper prices just seems wrong. Let the market level out, teams will eventually locate to the most profitable locations.

1. No business, including the NHL, will ever charge the same prices in all locations. Different places have different purchasing power, ect ect. It's not realistic in anyway. I don't know what ticket prices are in Toronto, but I'll throw out a guess of $140 on average. If the average ticket was $140 in Florida, their attendence would plummet and revenue would fall even more than if they just kept the prices where they are now.


2. Charging more in Toronto or New York is not done so fans in another location can have cheaper tickets.


3. You say that the market should level out and to move to the most profitable locations, but those locations wouldn't be considered most profitable because you want them to charge the same for tickets. Which means means they can't take advantage of their stronger/larger market because their revenues are artifically constrained for "fairness". A black market would exsist(or should I say expand?) since the tickets would still maintain their large value. Basically, instead of the owners getting rich in Toronto, ticket agencies and individuals would be making large profits by getting the actual market value.

 

[5lidyzer19]

Before I began my response: "WHITE SOX"

This is not an applicable analogy. Yes, the Cubs were founded before the Sox, but they are both very old and well established in Chicago sports culture with distinct, loyal fan bases. Nobody is going to switch allegiances because of ticket prices. I am a Cubs fan because my father was, and I have no interest in rooting for the Sox.

It isn't just how old the teams are that matters, though. It is the presence of natural fan bases for each team. The Cubs have the North side, and the Sox have the South side. The Mets, for example, were founded more recently-in 1961. They were able to gain a large fan base right away because they replaced the recently departed Dodgers and Giants, whose fans hated the Yankees.

If a second NHL team moved to Toronto, it would not have an established fan base. It would be similar to the Los Angeles NBA situation. The Clippers moved to LA in 1984 and didn't gain a fan base. LA is bigger than Toronto and loves basketball as much as Toronto loves hockey, but nobody in LA cares about the Clippers. And they certainly didn't decrease ticket prices for the Lakers.

I guess my point is that just because Toronto is big and the people there love hockey, a second team wouldn't necessarily succeed financially, and wouldn't necessarily decrease Leafs ticket prices.

Also, lol at "Soxs"

That's interesting what you say about the special situations that baseball teams in Chicago and New York had to be successful. Kind of a culture (north vs south) and we had and now want a baseball team that's "anything but the Yankees".

I agree with you that it's not as simple as throwing another team in a good market. The Dallas Cowboys, Chicago Bears, and Pittsburgh Steelers have large, passionate fanbases who are profitable. I would highly doubt that if any of those places added a second team that people would flock over and support it. It's just not that easy. It may succeed, but it would definately be a Clipper situation.

 

[Melrose Munch]

No I was not talking about the cap I was talking about the comment all cities should charge the same amount for tickets.

The cap is a limited form of capitalism in that teams can do whatever they want to make money but only to a certain extent

Yes the Cap is commnism because it forces everyone to spend close together when sharing profits.

(See how crazy that is. Its as crazy as saying people paying the same is. You just don't brand something with a label.)

 

[tarheelhockey]

How would you feel if every state paid $4 per gallon for gas and your state paid $12. More gas should be sent to your state to ease the demand, would that not seem fair? Pretty smug to say don't buy gas, it's that simple.

That's kind of a wacky comparison because gas prices are affected by factors that have nothing to do with supply and demand -- tax rates, foreign affairs, natural disasters, etc.

Assuming gas prices were absolutely supply-demand dependent as hockey tickets are, the solution would not be to wreck other states' economies by forcing them into gas shortages. The solution would be to explore ways to increase the abundance of gas in my own state, or find ways around it such as building public transit. Either increase supply or reduce the demand. But fundamentally you have a local issue there, not a national one.

In other words, if Toronto wants lower prices for the Leafs they have two options that won't come at a price for another market: either get an expansion team, or expand their local sporting options. Part of the problem here is that the Raptors are also an MLSE property in the same arena, the Jays are hopeless and the city hasn't responded well to the NFL. If any of those other teams were putting pressure on the Leafs, it would go a long way toward breaking their monopoly over the market.

 

[ColdSteel2]

Maybe...
but maybe some of the owners dont want this system for making the cap limits....
there are quite a few teams that are struggling with making mpney at the cap floor let alone going higher then that.

So they'll increase the spread between the limit and the floor to 25M-30M or make it a percentage and everything is fixed.

 

[5lidyzer19]

If any of those other teams were putting pressure on the Leafs, it would go a long way toward breaking their monopoly over the market.

What makes people think that the NHL and its owners want to end this "monopoly"? Do you really think the powerful ownership of the Leafs and the other successful markets would vote to relocate or expand into their own established markets? Why would the owner of Boston or Montreal or Detroit vote for Toronto's owner to lose some of its franchise value and future revenue streams and open themselves up to this same floodgate? It's not going to happen. In addition to voting, isn't their territory rights and rediculous fees to prevent/strongly discourage this exact scenario?

 

[tarheelhockey]

What makes people think that the NHL and its owners want to end this "monopoly"? Do you really think the powerful ownership of the Leafs and the other successful markets would vote to relocate or expand into their own established markets? Why would the owner of Boston or Montreal or Detroit vote for Toronto's owner to lose some of its franchise value and future revenue streams and open themselves up to this same floodgate? It's not going to happen. In addition to voting, isn't their territory rights and rediculous fees to prevent/strongly discourage this exact scenario?

That's an entirely separate question, really. But the short answer is: the NHL doesn't have territory rights and fees in relation to other leagues.

 

[sh724]

Yes the Cap is commnism because it forces everyone to spend close together when sharing profits.

(See how crazy that is. Its as crazy as saying people paying the same is. You just don't brand something with a label.)

It is not communism at all revenue sharing is socialism. In true communism every player would earn the same amount, all merch would be the same, all food, parking, drinks, tickets, etc etc etc. All owners would make the same amount of profit regardless of what the team brought in. Season tickets would not exist. Under comunism every team would have the exact same total salaries and not havea $16 million range

Sharing profits is socialism, evenly splitting of profits is communism