Profit Certainty

[Spezza]

The phrase Cost Certainty is really starting to get on my nerves. Lets call a spade a spade. What the owners want isn't what I'd call Cost Certainty it's called Profit Certainty. Now I'm not going to argue that the owners aren't entitled to a payback on their business. But, I would argue that if you think about all these arguements in terms of "Profit Certainty" instead of "Cost Certainty" that you might feel slightly different about both sides.

Instead of wondering how greedy players are being, we'd maybe be thinking more about how the owners want to get as large a profit as possible under this "Profit Certainty" system. That isn't to say that the players aren't looking to get as large a profit as they can. But we should realise that no side is whiter than snow, at the end of the day this is just an arguement about profit.

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[me2]

There is no guaranteed profit under the owners' system. If the players make 54% of revenue and the other expenses are >46% percent then owners lose money. If the owners wanted to get close to a guaranteed profit then they'd pay the players a percentage of revenue - expenditure.

Its a real possibility for low income teams to still lose money.

 

[chiavsfan]

You need a profit to stay in business...and over 50 percent of NHL teams are not pulling a profit. Why? Because in order to a competitive product on the ice, a Columbus would have to spend more than they usually would to keep up with a Detroit.

This is most definately a "cost certainty" measure (a salary cap). They are trying to make sure that all of these teams STAY in business...and that the players and their over inflated salaries continue to have jobs

 

[Sanderson]

Actually no, even the hard cap doesn't guarantee a profit for all teams. Speaking of profit certainty would be wrong.

Of course it's all about money, it's a business. Right now the ones who share the risks are awarded with losing money, while the ones who share no risks get the largest part of revenue.

 

[Crosbyfan]

There is no guaranteed profit under the owners' system. If the players make 54% of revenue and the other expenses are >46% percent then owners lose money. If the owners wanted to get close to a guaranteed profit then they'd pay the players a percentage of revenue - expenditure.

Its a real possibility for low income teams to still lose money.

Whereas a badly bungled big market team would become a cash cow.

The league as a whole would be HIGH profit at 54%.

 

[me2]

Whereas a badly bungled big market team would become a cash cow.

The league as a whole would be HIGH profit at 54%.

There is no certainty of profit, even for the big teams. It'd take some incredibly massive stupidity for them not to though.

 

[barnburner]

There is no "profit certainty" involved. (except on the players side).
The league needs a cba that makes it possible for all teams to have
the ability - thru good sound management of their revenues and costs - to be
able to compete for the Cup without being forced to incur huge losses.
Badly run teams will still flounder, and will go by the wayside, but at least
the majority will have the OPPORTUNITY to be successful and provide
a good product for the fans.

 

[AH]

There is no such thing as "profit certainty" in any business. You have a right to persue profit as a businessman, but it's not a given right.

 

[The Maltais Falcon]

It's funny how the PA and the supporters of its position have ridiculed the owners for their idiotic business decisions over the last CBA and their inability to create and stick to budgets and make profits are crying foul now that the owners are trying to do just exactly that.

 

[SuperUnknown]

Whereas a badly bungled big market team would become a cash cow.

The league as a whole would be HIGH profit at 54%.

With the investments required, the NHL as a whole should pull at least $200M in profits. Heck, look at companies with a Beta of 2+ on the stock market, $200M out of $2B would be underperforming compared with other companies that share a similar risk.

 

[BLONG7]

With the investments required, the NHL as a whole should pull at least $200M in profits. Heck, look at companies with a Beta of 2+ on the stock market, $200M out of $2B would be underperforming compared with other companies that share a similar risk.

Exactly, but these companies might pay their employees 10% of their total revenue...pro sports and a real business are like apples and oranges...Pro sports athletes hold their bosses hostage by having agents negotiate their own contracts and withhold their services if they don't get what they want, whereas we could never do that to our companies...

 

[Spezza]

Of course it's all about money, it's a business. Right now the ones who share the risks are awarded with losing money, while the ones who share no risks get the largest part of revenue.

Good point. A player however does take some risk, although not financial they risk severe physical injury. I'd argue that the ones who deserve the largest part of the revenue are the ones who add the most value to the league. I'd look at the principal of scarcity. I think the players bring more to the league than the owners but I'm sure others would argue the other way.

 

[Spezza]

Exactly, but these companies might pay their employees 10% of their total revenue...pro sports and a real business are like apples and oranges...Pro sports athletes hold their bosses hostage by having agents negotiate their own contracts and withhold their services if they don't get what they want, whereas we could never do that to our companies...

Well we could, but then our bosses might go else where to get someone to provide the service that we offer. They might be better, they might be worse. It just depends on the market for whatever services we offer.

 

[SuperUnknown]

Exactly, but these companies might pay their employees 10% of their total revenue...pro sports and a real business are like apples and oranges...Pro sports athletes hold their bosses hostage by having agents negotiate their own contracts and withhold their services if they don't get what they want, whereas we could never do that to our companies...

A business is a business. How it looks on the inside doesn't matter. In our economic system, investment risk needs to be rewarded. The expected revenue depends on the risk. Take engineering, accouting firms (and others). Most of their expenses come from salaries.

Sooner or later, pro sports companies will have to behave like regular companies or fade in obscurity.

 

[Spezza]

There is no "profit certainty" involved. (except on the players side).
The league needs a cba that makes it possible for all teams to have
the ability - thru good sound management of their revenues and costs - to be
able to compete for the Cup without being forced to incur huge losses.
Badly run teams will still flounder, and will go by the wayside, but at least
the majority will have the OPPORTUNITY to be successful and provide
a good product for the fans.

I agree, it is in the interests of the league to have competitive balance. Whatever system is in place the teams that make good decisions will do well and those that make bad decisions will flounder. Perhaps I'm misunderstanding, but the proposed CBA doesn't garuntee competitive balance. The league can't garuntee that teams will make good decisions all the time. It seems to me that it just lessens the impact a bad decision will have on the bottom line.

Anyway, I'm ranting a bit now. The purpose of my post was just to put a different spin on things. I don't care who is perceived to have won. I just want to watch some quality hockey again

 

[kerrly]

I agree, it is in the interests of the league to have competitive balance. Whatever system is in place the teams that make good decisions will do well and those that make bad decisions will flounder. Perhaps I'm misunderstanding, but the proposed CBA doesn't garuntee competitive balance. The league can't garuntee that teams will make good decisions all the time. It seems to me that it just lessens the impact a bad decision will have on the bottom line.

Anyway, I'm ranting a bit now. The purpose of my post was just to put a different spin on things. I don't care who is perceived to have won. I just want to watch some quality hockey again

By competitive balance, they mean each team has every chance to be successful as any other team in the league. It would be an equal playing field. Every team in the league won't have a perfect .500 record. The teams that are poorly managed will sink to the bottom and the others will rise to the top.

 

[gerbilanium]

The owners want guaranteed profits. What other business are you guaranteed profits? Businesses should be forced to live and die on their own accord. They should not be propped up with gaurantees reinforcing bad business decisions.

The players do not get gauranteed profits, oh wait yes they do, nevermind........

 

[wazee]

Good point. A player however does take some risk, although not financial they risk severe physical injury. I'd argue that the ones who deserve the largest part of the revenue are the ones who add the most value to the league. I'd look at the principal of scarcity. I think the players bring more to the league than the owners but I'm sure others would argue the other way.

The players and the league need each other...but I would argue the players need the owners more that visa versa.

Look at it this way...How many places are there where hockey players can make as much money as they make in the NHL?

None, right?

Now, how many places could the owners put their money where they could make a return at least as great as they make on hockey?

There must be a whole bunch given that most owners made their millions/billions with non-hockey businesses.

So tell me...who needs who more?

 

[IslesRule]

Profit certainty and cost certainty are not even close to being the same. If the owners wanted profit certainty they would propose sharing income not revenues. That like the film business, the actors will only accept a percentage of the gross revenuse not the net, after all expenses.

 

[PeterSidorkiewicz]

Question, I am against the hard cap but I wouldn't mind a soft cap at all. Well here is my question, if the NHL does get a hard cap will the cap move accordingly to how the NHL does for the year? Like if they have a cap of 42 million and the season turns out to be awful, next year they make the cap lets say 34 million. I know this is what they do in the NFL they move the cap accordingly. If that is the case as a player I could see why I would want no part in this, especially if theres a lack of trust with the owners. And especially if you're a Chicago Blackhawk.

 

[kerrly]

Question, I am against the hard cap but I wouldn't mind a soft cap at all. Well here is my question, if the NHL does get a hard cap will the cap move accordingly to how the NHL does for the year? Like if they have a cap of 42 million and the season turns out to be awful, next year they make the cap lets say 34 million. I know this is what they do in the NFL they move the cap accordingly. If that is the case as a player I could see why I would want no part in this, especially if theres a lack of trust with the owners. And especially if you're a Chicago Blackhawk.

Yep thats the way it works. The percentage of revenues from the previous season, will be what is used in each season. Of course you used the reference to revenues dropping, but don't forget that if they rise, the players reap the benefits as well.

 

[SuperUnknown]

Question, I am against the hard cap but I wouldn't mind a soft cap at all. Well here is my question, if the NHL does get a hard cap will the cap move accordingly to how the NHL does for the year? Like if they have a cap of 42 million and the season turns out to be awful, next year they make the cap lets say 34 million. I know this is what they do in the NFL they move the cap accordingly. If that is the case as a player I could see why I would want no part in this, especially if theres a lack of trust with the owners. And especially if you're a Chicago Blackhawk.

The cap is global and moves accordingly with the league revenues. So whether you play in Chicago or elsewhere, you're affected just the same.

Also, in the real world, that's how the salary market works. When the economy is booming, the salaries rise, when the economy is bad, salaries are reduced (and there are layoffs). The NHL would work just the same, if the sport is more popular, salaries would rise and if the sport tumbles, the salaries will diminish. It makes sense, unless you'd rather see the league fold and go bankrupt.

 

[PeterSidorkiewicz]

This has nothing to do with money this has to do with product. And when I look at the NFL with the cap compared to the NFL before the hard cap I can honestly say I enjoyed the NFL product much more before their salary cap. To me the NFL has TOO much parity where its so ridiculuous that your team can be total crap to almost superbowl worthy in a year. And I know the Patriots have shown you can have dynasties and such with a hard cap, but im talking the league as a whole. I just think its pretty much awful, although im sure many people will disagree with me. This is why I like the NBA's soft cap system where big teams like the lakers can continue to be big market teams. But the smaller market teams such as the Suns and Spurs can be awesome as well too. Plus in the NBA's system it seems they have it setup where it rewards teams through drafting and building your team rather than going out and signing free agents. I just prefer the NBA's system way more than the NFL's, and I dont like basketball one bit.