October BOG 2023; estimated 24-25 cap $87-88m

[TheLegend]

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[LadyStanley]

Expansion.

Arizona contract with Ballys is done.

 

[Squiffy]

5% hike seems locked in, only question is more or not.

 

[FriendlyGhost92]

If they stick to 5% hikes we'll be doing this for probably the next 5 years at least.

Revenue averages about a $200M increase every season since the salary cap was implemented. A $6.2B projection next year means the cap should be set right around $96.9M. 5% hikes will take awhile to catch up to that.

 

[Squiffy]

24-25 cap will be based on 22-23 HRR though, not the coming years HRR. We're told HRR last season was "in the range" of $6B, depending on exactly what that means ($5.7B? $6B even?) a one time 10%, or less, cap hike for next year might catch it up depending on the exact number that shakes out. Max the cap can rise to next year is about $92m, barring a new agreement between NHL and PA.

They should be able to catch the cap up to HRR by 25-26 at the worst if they aren't interested in slow playing it. Can't see why the PA wouldn't want to, we'll see if the League is amenable.

 

[LadyStanley]

Expansion probably a matter of when not IF. Obviously Arizona situation needs to be resolved. SLC, Houston, Atlanta, QC among the front runners.

Perhaps Sphere could host draft.

 

[rsteen]

If they stick to 5% hikes we'll be doing this for probably the next 5 years at least.

Revenue averages about a $200M increase every season since the salary cap was implemented. A $6.2B projection next year means the cap should be set right around $96.9M. 5% hikes will take awhile to catch up to that.

Vegas and now Arizona have lost their RSN deals, Pittsburgh had to buy their RSN, and there are 11 Bally shoes still to drop. Plus the general state of the cost of living, and we might not see the average revenue increase you're talking about over the next couple of years.

 

[Major4Boarding]

For those who have thought that the expansion process hasn’t started, as Daly and Bettman recently stated it hasn’t, well … it has.

Remember - the definition is “formal”.

 

[TheLegend]

For those who have thought that the expansion process hasn’t started, as Daly and Bettman recently stated it hasn’t, well … it has.

Remember - the definition is “formal”.

Just like the last time.

…. and the time before.

 

[mouser]

If they stick to 5% hikes we'll be doing this for probably the next 5 years at least.

Revenue averages about a $200M increase every season since the salary cap was implemented. A $6.2B projection next year means the cap should be set right around $96.9M. 5% hikes will take awhile to catch up to that.

A couple thing to understand when estimating the salary cap:

a) The cap is based on HRR from two years prior. So the 2024-25 cap will be based on HRR from 2022-23, not the 2023-24 HRR.

b) You can’t simply use 50% of HRR to calculate the salary cap. The players receive a significant amount of non-salary compensation which is included in the 50% share the players receive. The non-salary compensations includes things like insurance (personal and family) as well as pension/401k contributions. This means the salary cap will be calculated on less then 50% of HRR.

The league doesn‘t publish how much in non-salary benefits the players receive. I believe it’s somewhere between $150m and $250m at this time.

 

[Squiffy]

A couple thing to understand when estimating the salary cap:

a) The cap is based on HRR from two years prior. So the 2024-25 cap will be based on HRR from 2022-23, not the 2023-24 HRR.

b) You can’t simply use 50% of HRR to calculate the salary cap. The players receive a significant amount of non-salary compensation which is included in the 50% share the players receive. The non-salary compensations includes things like insurance (personal and family) as well as pension/401k contributions. This means the salary cap will be calculated on less then 50% of HRR.

The league doesn‘t publish how much in non-salary benefits the players receive. I believe it’s somewhere between $150m and $250m at this time.

So I realize we are guessing here, but are you reading the same as me that the conditions under the MoU likely largely exist for the increased bump? As I said, the 5% seems locked in, then you need the NHL & PA to agree to more.

Surely the PA desires it, their members have taken it off COVID. What I am having trouble mapping out is if the League wants to agree. With escrow capped at 6%.. is there a reverse escrow if players make less then 50% of HRR?

If so the League happily agrees to a bump as far as HRR can allow. If not, if you're the League you'd keep it artificially low, right?

 

[mouser]

So I realize we are guessing here, but are you reading the same as me that the conditions under the MoU likely largely exist for the increased bump? As I said, the 5% seems locked in, then you need the NHL & PA to agree to more.

Surely the PA desires it, their members have taken it off COVID. What I am having trouble mapping out is if the League wants to agree. With escrow capped at 6%.. is there a reverse escrow if players make less then 50% of HRR?

If so the League happily agrees to a bump as far as HRR can allow. If not, if you're the League you'd keep it artificially low, right?

Yes, there is a "reverse Escrow". If the players end up with less than 50% of HRR after the season ends then the teams have to pay the players an additional amount to bring their total compensation up to 50% of HRR.

The extra $'s in compensation to be paid are sourced equally from all 32 teams, and distributed to the players in amounts proportional to their NHL compensation for the season. For example, a player who earned $2m in the NHL that season will receive twice as much as a player who earned $1m.


The reverse Escrow has only happened twice in NHL history:

2005-06: players received an extra 0.4%
2007-08: players received an extra 0.48%

 

[StreetHawk]

For those who have thought that the expansion process hasn’t started, as Daly and Bettman recently stated it hasn’t, well … it has.

Remember - the definition is “formal”.

I don't expect anymore "formal" expansion open bid processes like they had for the Nash/ATL/Min/CBS process or even back to when only LV/QC applied.

Because of the red tape and money of building a new arena, kind of have to work with the different parties on their timelines. NHL has virtually exhausted all non NBA markets now since the early 90's expansion.
SJ, TB, OTT, Ana, Nas, Min (in St. Paul), CBS, LV, SEA. Only expansion into an NBA market was FLA & ATL. Relocation, only Carolina landed in a non NBA with the NBA in Charlotte. Colorado, Dallas, Arizona all landed with NBA markets. And ATL moved to Win.

Of the cities that Weekes listed in the USA, only SD would not have an NBA team (Utah, Houston, Atlanta have NBA teams, as would Portland, Milwaukee and others not listed). So, the NHL is either talking to the NBA owner about adding the NHL team or they have to do what is going on in the ATL burbs of a new arena. But, as a 2nd arena in that area, those proposals to be green lighted may need to have the NHL approve a team first before the entire project development is approved. Liked how Seattle okayed the Oak View Group renovation plan only after the NHL awarded them an expansion team.

So, I expect most of this expansion talk to be done behind the scenes vs an open bid process.

 

[FriendlyGhost92]

A couple thing to understand when estimating the salary cap:

a) The cap is based on HRR from two years prior. So the 2024-25 cap will be based on HRR from 2022-23, not the 2023-24 HRR.

b) You can’t simply use 50% of HRR to calculate the salary cap. The players receive a significant amount of non-salary compensation which is included in the 50% share the players receive. The non-salary compensations includes things like insurance (personal and family) as well as pension/401k contributions. This means the salary cap will be calculated on less then 50% of HRR.

The league doesn‘t publish how much in non-salary benefits the players receive. I believe it’s somewhere between $150m and $250m at this time.

1. I actually didn't know this. So it'd be based on roughly $6B revenue rather than $6.2B.

2. That's why I said "Right around" though. There's definitely extra factors, but in large part, cutting it in half and dividing by 32 gets you there. It's not exact for sure, but it's a very close ballpark. (And probably wont matter for the next few years if they stick to 5% maximums)

Vegas and now Arizona have lost their RSN deals, Pittsburgh had to buy their RSN, and there are 11 Bally shoes still to drop. Plus the general state of the cost of living, and we might not see the average revenue increase you're talking about over the next couple of years.

AZ's RSN was bringing in $14M a year, which ***THIS MESSAGE SPONSORED BY BetMGM*** is a drop in the bucket. Obviously Bally's other networks falling will play a role in ***SIGN UP FOR DRAFT KINGS NOW AND PLACE A $1 BET ON THE WINNING TEAM TO SCORE 1 GOAL FOR A $200 PAYOUT*** revenue loss and maybe production costs to go up, but those losses will be ***LOG IN TO FANDUEL AND PLACE YOUR BETS NOW*** canceled out (And then some) by massive revenue increases in certain advertising/sponsorships.

 

[rsteen]

AZ's RSN was bringing in $14M a year, which ***THIS MESSAGE SPONSORED BY BetMGM*** is a drop in the bucket. Obviously Bally's other networks falling will play a role in ***SIGN UP FOR DRAFT KINGS NOW AND PLACE A $1 BET ON THE WINNING TEAM TO SCORE 1 GOAL FOR A $200 PAYOUT*** revenue loss and maybe production costs to go up, but those losses will be ***LOG IN TO FANDUEL AND PLACE YOUR BETS NOW*** canceled out (And then some) by massive revenue increases in certain advertising/sponsorships.

Yes, but that was the Coyotes. They're not exactly a hot TV property. Likely all the other 11 teams have larger deals.

 

[Golden_Jet]

If they stick to 5% hikes we'll be doing this for probably the next 5 years at least.

Revenue averages about a $200M increase every season since the salary cap was implemented. A $6.2B projection next year means the cap should be set right around $96.9M. 5% hikes will take awhile to catch up to that.

The calculation has changed in the MOU, now based on previous 2 seasons, moving forward.

 

[Squiffy]

Yes, there is a "reverse Escrow". If the players end up with less than 50% of HRR after the season ends then the teams have to pay the players an additional amount to bring their total compensation up to 50% of HRR.

The extra $'s in compensation to be paid are sourced equally from all 32 teams, and distributed to the players in amounts proportional to their NHL compensation for the season. For example, a player who earned $2m in the NHL that season will receive twice as much as a player who earned $1m.


The reverse Escrow has only happened twice in NHL history:

2005-06: players received an extra 0.4%
2007-08: players received an extra 0.48%

Interesting, thank you.

Then you’d guess, at least to me, that all parties would be interested in bumping it as close to what HRR dictates is the cap ought to be as possible.

 

[FriendlyGhost92]

Yes, but that was the Coyotes. They're not exactly a hot TV property. Likely all the other 11 teams have larger deals.

When Detroit re-upped with Bally it was reported that the Tigers' contract was worth $50M/year previously, and that the Red Wings received "Much less".

I don't think it's gonna impact it that much. And that's if individual teams can't find another local broadcaster. (I think they just need to say screw it and bring it all in house... But production costs may scare them from that)

 

[edog37]

Expansion probably a matter of when not IF. Obviously Arizona situation needs to be resolved. SLC, Houston, Atlanta, QC among the front runners.

Perhaps Sphere could host draft.

QC isn’t getting a team.

 

[LadyStanley]

Sharks/NBC Sports Bay Area started remote producing their games a few years ago as a cost cutting measure.

The director may still be on site, choosing which camera angles to use for game footage. But the production, broadcasting and intermission segments are done at HQ.

 

[mouser]

2. That's why I said "Right around" though. There's definitely extra factors, but in large part, cutting it in half and dividing by 32 gets you there. It's not exact for sure, but it's a very close ballpark. (And probably wont matter for the next few years if they stick to 5% maximums)

Ignoring the $150m to $250m in non-salary benefits is going to leave any cap estimates off by roughly $5m to $7m. So it's a pretty significant difference.

 

[rsteen]

When Detroit re-upped with Bally it was reported that the Tigers' contract was worth $50M/year previously, and that the Red Wings received "Much less".

I don't think it's gonna impact it that much. And that's if individual teams can't find another local broadcaster. (I think they just need to say screw it and bring it all in house... But production costs may scare them from that)

Detroit's is 30M a year https://www.playmichigan.com/sports-betting/nhl/red-wings-value/

The local broadcasters and streaming aren't going to make up the revenue shortfall immediately, because the RSN deals are overpriced due to cable bundling meaning the costs are spread across far more people than are actually interested in sports.

 

[Golden_Jet]

1. I actually didn't know this. So it'd be based on roughly $6B revenue rather than $6.2B.

2. That's why I said "Right around" though. There's definitely extra factors, but in large part, cutting it in half and dividing by 32 gets you there. It's not exact for sure, but it's a very close ballpark. (And probably wont matter for the next few years if they stick to 5% maximums)



AZ's RSN was bringing in $14M a year, which ***THIS MESSAGE SPONSORED BY BetMGM*** is a drop in the bucket. Obviously Bally's other networks falling will play a role in ***SIGN UP FOR DRAFT KINGS NOW AND PLACE A $1 BET ON THE WINNING TEAM TO SCORE 1 GOAL FOR A $200 PAYOUT*** revenue loss and maybe production costs to go up, but those losses will be ***LOG IN TO FANDUEL AND PLACE YOUR BETS NOW*** canceled out (And then some) by massive revenue increases in certain advertising/sponsorships.

You keep missing the part it’s based off the previous 2 seasons as well now.
Also less RSN money now.

Detroit's is 30M a year https://www.playmichigan.com/sports-betting/nhl/red-wings-value/

The local broadcasters and streaming aren't going to make up the revenue shortfall immediately, because the RSN deals are overpriced due to cable bundling meaning the costs are spread across far more people than are actually interested in sports.

Ottawa is at around $33 million, year 9 of a 12 year deal.
Agree will take a bit to make up the shortfall

 

[TheLegend]

QC isn’t getting a team.

Never say never.

 

[Squiffy]

So mostly, 24/25 cap wise, to summarize, we expect the 5% bump at least, and we will all just be guessing until the official announcement on or about June 1st 2024 if they want to do more.

To me it seems like conditions exist to get to a bigger bump, and absent any factors expected to significantly effect HRR in 23/24 it would seem to be in the mutual benefit of the NHL and PA to agree to do so.

However, there is a factor that exists that could significantly effect 23/24 HRR, that being the dogs breakfast of the RSN’s in some markets.

Fair statement?