NHL on solid financial ground overall

Discussion in 'Fugu's Business of Hockey Forum' started by beowulf, Jun 10, 2011.

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  1. beowulf

    beowulf Not a nice guy.

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    Article starts by talking about the failures in the southern US but also explains the benefits that have come from it and the overall continued increase in revue the league is seeing.

    http://www.foxbusiness.com/industries/2011/06/08/is-nhl-poised-to-make-northern-migration/?test=MM

    [​IMG]

    Some intersting placed listed as having potential for a relocated franchise like Boise.

     
  2. Buck Aki Berg

    Buck Aki Berg Done with this place

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    ....Boise?
     
  3. MoreOrr

    MoreOrr B4

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    That's very interesting. But a lot of that though is very much contingent on the Canadian dollar staying strong over the long-term. Can anyone guarantee that?

    And come on... Boise ?

    I assume if there's any kind of realistic consideration of a place like Boise, then Madison should be considered (perhaps more potential than Milwaukee), Grand Rapids, and Omaha.
     
  4. Killion

    Killion Registered User

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    Idaho. More than just Potatos.....
    Well..... OK, were not.
    But the potatos?, sure.......
     
  5. Drake1588

    Drake1588 UNATCO

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    Idaho is actually a fantastic winter sports destination. Whether the city would have the numbers to support a team is entirely another question, of course. Salt Lake City is a similar dynamic.
     
  6. LadyStanley

    LadyStanley RIP Fugu

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    My gut feeling from attending an ECHL ASG in Boise is that the city does a good job of supporting their team.

    Boise is a college town, so there might need to be some day-of-the-week shuffling to avoid game days.

    Seems to be more of a active-town than spectator town (actually doing, not watching).

    Not sure if they'd be willing to pay "NHL" prices for hockey. And the current hockey arena is way too small for NHL.

    (And where's the potential owner?)
     
  7. Hamilton Tigers

    Hamilton Tigers Registered User

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    From the article:

    Read more: http://www.foxbusiness.com/industri...sed-to-make-northern-migration/#ixzz1OtJVS2sG

    And that's the problem; the huge gap.

    Sure league revenues are up, but that's largely due to the traditional markets where ticket prices are higher than ever as are TV ratings. The non-traditional markets are, for the most part, dragging the league down considerably.
     
  8. jessebelanger

    jessebelanger Registered User

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    I agree the gap is an issue, certainly with the current structure of the salary cap. But I do not understand notion that teams with lower revenue "drag" the league down. Are the poor markets of FLA and PHX negatively impacting growth of larger markets?
     
  9. Hamilton Tigers

    Hamilton Tigers Registered User

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    The poor markets are negatively impacting their bottom line.

    Also, some that are so poor are killing franchise values and/or deterring investors.
     
  10. Buck Aki Berg

    Buck Aki Berg Done with this place

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    They drag the league down in that the top seven teams average over $34 million in profit, but with the bottom 16 figured in, it drops to an average of less than eight million dollars.

    It's kind of a fallacious argument, as it implies that there are thirty potential markets in the league that could pull in $34 million a year, and that simply isn't true. But it does validate the notion that you can't everything is perfect everywhere because there's a big number on the bottom line.
     
  11. RandR

    RandR Registered User

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    Isn't there some form of revenue sharing in the NHL? In other words, doesn't some money flow from the teams that are making a lot to the teams that are losing money?
     
  12. Buck Aki Berg

    Buck Aki Berg Done with this place

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    There are more than a few owners who don't entire enjoy writing those cheques.
     
  13. Hamilton Tigers

    Hamilton Tigers Registered User

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    Yeah, but the NHL's version is akin to putting a banadaid on a missing limb, with one or two decapitations thrown in too.
     
  14. RandR

    RandR Registered User

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    I agree completely (with both these last 2 points). I was asking the question to indirectly add an additional response to this earlier question:

    In other words, low-revenue teams do drag down the richer clubs and its partly because of revenue sharing.
     
  15. Fugu

    Fugu Guest

    Five years later, everyone sees it. Always, always has been about the revenue gap.


    Further to the other comments above, if you ask for the have's to send even more money to the have not's, their own franchise values start eroding. Their current value is based on their current revenues/costs which include the CBA as it stands right now. If you try to cleave off even more money, that may shore up the values of the bottom franchises but it comes at the expense of those on top. (Just like one of those conservation of mass thingies.) For example, if the top ten teams were saddled with a levy that took 30% of their revenues to pass on to the lower teams, that reduces the revenue they get to keep, costs grow as a percentage of these revenues, etc. Their franchise value has to be adjusted downward.
     
  16. No Fun Shogun

    No Fun Shogun 34-38-61-10-13-15

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    If the NHL expands or relocates to Boise, the league's in a heap of trouble. 'nuff said.
     
  17. Confucius

    Confucius Registered User

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    People are P'od that the league wouldn't put teams where cities have lots of interest. Canada, some Northern U S markets. So fans say screw them and support other leagues, or openly support the idea of another league to compete with the NHL. I can see that.:nod:
     
  18. KevFu

    KevFu Registered User

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    I don't understand why everyone gets fired up about revenue sharing.

    Yeah, it isn't "fair". But tons of things aren't fair in life, and it doesn't affect us as fans AT ALL. With spending capped as a percentage of revenues, that $12 million isn't going to go out and buy a franchise free agent and improve the roster.

    The revenue sharing payments doesn't drive up ticket prices. Prices are set at what the market will bear. If the Leafs didn't write the $12 million check/cheque, they're not going to lower their gate revenue $12 million and pass the savings on to the fans.

    It's a billionaire handing dough to a hundred-millionaire. Who cares?

    And that's true in all leagues. MLB, NFL and NBA have revenue sharing. The NFL shares TICKET REVENUE 60-40 with the visiting team. NFL merchandise is an even split. Doesn't matter which jersey you buy, the profit is split 32 ways. MLB doesn't give an even cut of the national TV revenue to each team, they give the poorer teams a bigger cut.

    That's just life. Pure capitalism doesn't work because each team requires other member clubs to play.

    Sure, but at what detriment? Thanks to the salary cap, the disparity between richest clubs and poorest clubs payroll is tighter than ever. The competitive advantage isn't as vast as it once was, which makes for a better game/product for all the markets.

    Naturally, there's some owners who are willing to spend to win, but there's also been plenty who are giddy at the idea of capping player expenses.

    In 2006, the Leafs put a league-high $9 million in revenue sharing into the pot for the poor teams. But their player expenses dropped $16 million from 2004 to 2006 when they added the cap.

    The Leafs operating income rose from $14 mil in 2004 to $42 mil in 2006 ($83m in 2010) thanks to capped player spending and increased revenue.

    Oh those poor Maple Leafs, writing such a big cheque to the poor teams. That cheque is smaller than what they wrote to their own players pre-salary cap.

    The new CBA has made a more competitive league and the owners more money. These owners didn't make their billions by being stupid. They knew what they were doing when they made this financial structure.
     
  19. WWAD

    WWAD Registered User

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    Boise would actually be about perfect........if it had double the population - educated, upscale population, several company headquarters, no other pro sports to compete with, only 400 miles from Canada :sarcasm:.

    It is only the 104th largest metro in the US, though. There is no chance in hell of a team ever coming there. Hartford has a better chance, and their chance is nil.
     
  20. No Fun Shogun

    No Fun Shogun 34-38-61-10-13-15

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    heh, more like quadruple the population....
     
  21. AdmiralsFan24

    AdmiralsFan24 Registered User

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    Quadruple the metro area and it's nearly 2.5 million. Double would be fine.
     
  22. GSC2k2*

    GSC2k2* Guest

    1. You have zero evidence of your statement that league revenues are up "largely due to the traditional markets".

    2. If you do the math, it does not support the suggestion that NHL revenue growth of the type experienced in recent years, including this year, can be fueled by a few "traditional markets". Notwithstanding that a few markets have maredly higher than average revenues, the NHL revenue base is simply too diversified for overall revenue to be impacted by only a few "traditional" markets. It simply does not work mathematically.

    3. The suggestion that the revenue gap between franchises is a "problem" is a spiel that has been put forth by certain posters who have gone on and on and on about it without ever being able to identify how it is a problem and, even more importantly, how it is not fully addressed by the rather elegant solutions provided by the NHL's revenue sharing mechanism. To the extent that there are team salary ranges they are not really caused by the "revenue gap".

    The "revenue gap" is effectively negated by the coupling of the twin tools of the NHL salary range and revenue sharing mechanism.
     
  23. Melrose Munch

    Melrose Munch Registered User

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    Boise would be fine.
     
  24. Fugu

    Fugu Guest


    Their operating income rose in 2010 due to capped player spending and increased revenues? You forgot to mention an increase in revenue transfer payments, by the way. I'm disappointed, KevFu, because I know you know these numbers have increased, but you only illustrate 2006? It's like you wish to obfuscate? Could that be possible?

    And in 2010, what do you reckon the Leafs paid into revenue transfer?

    We know their cap hit total was around $58 MM, but I think actual spending was a smidge higher.

    Their spending the three years before the lockout:
    48.7
    54.9
    61.8

    You want to take another shot at the post you made with more than a single year as a data point?
     
  25. Fugu

    Fugu Guest

    Do you have any evidence that they're not, or at least the actual amounts?

    Really. To which math are you referring? Creative?

    Which markets exactly have markedly higher than average revenues? I presume by average you're referring to actual average, which is what again? $77 MM or something? I don't remember.



    Having teams earning more 2-3X more than the lowest earners isn't a problem? How exactly are teams in the NHL losing $20 MM or more per year? Why are franchise values for some hovering at $100MM, assuming anyone is actually found to buy a team?

    The only spiel being put forth is your continued effort to attack the messengers because you know you have no answer for the message.

    Yes, when the NHL's revenue transfer program fails, they turn to the taxpayer. Quite elegant indeed.
     

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