Profitable teams in KHL

[Vicente]

Almost all MLS teams operate at losses. I think there are only three profitable teams(maybe less), and yet the league is still expanding. Nevertheless I have a great time cheering for the Vancouver Whitecaps.
I do not see how this situation is dissimilar from the KHL.

Yes the executives of both KHL and MLS see the future market potential in their respective regions and don't care about losses now - which are not that dramatically - if they can expect to earn so much more money in the future.

Also the development of both leagus is pretty similar. Both started with extremly cheap tickets and now certain teams are increasing ticket prices and cover a good portion of their costs by that. You can't just go to places like Nizhnekamsk and tell people to pay 30 euro for a hockey game. People need to love the game before they invest so much money.

 

[Latgale_fan]

I'd say that Omsk and Slovan could be the most profitable because the first one owns its own arena and Slovan gets by far the most money out of tickets, merch etc.

The ownership of arena is very important since if you own it, you don't have to pay huge amounts for ''rent''... You can just keep your revenue and also gain some from other things happening in arena like concerts, other sports etc.

I'd say that in today's economy a club like SKA or Kazan cannot earn in Russia due to the big budget, but Slovan and Riga's budgets are actually comparable to European top club budgets (if not smaller in some cases), so if KHL managed to create and sell a good tv product and such teams managed their own arenas and had Slovan's prices for games, they could be profitable... maybe with the help of a few local sponsors but anyway.

I think that's the model for teams like Riga, Slovan, Medvescak, Jokerit, Lev etc. To push the league into creating more revenue from TV and merchandise and share some of league's sponsoring profit to clubs, to try to somehow gain the ownership of the arena (or get a smaller fee for using it) and increase the work with local sponsors and merchandising more. Russian clubs can do what they want with millions but as Dynamo Moscow showed you can still compete with an average budget.

PS: Riga's not profitable, as sponsor money for the club falls under ''advertizing''. Itera Latvia (daughter company of Gazprom) buys advertizing space on jerseys for a few millions of euros and that's that. If some day they decide not to do it I don't know what happens... if we do not introduce ''state sponsored team''... Sure the club makes some money from smalll local sponsors, tickets and merchandise but I don't know if what they're left with is a profit... Maybe if bigger clubs are unable even to stick with the money their sponsors give and go into minuses then yeah, it's a profitable club

 

[Latgale_fan]

You can't just go to places like Nizhnekamsk and tell people to pay 30 euro for a hockey game. People need to love the game before they invest so much money.

plus, they also need to be sure that after they invest so much money they still have some left to buy food, pay bills and 46 inch tv. As I'm pretty sure hockey will come only as the fourth most necessary thing after food, bills and household items...

 

[Holden Caulfield]

Ok, And now imagine the difference between 6,8 AND 8,2 millions. It is 1 400 000 €.
Now lets say, we take 7 500 000 €. Its still in your range. To 10 millions we need 2 500 000 €.
Do you really think, that Slovan Bratislava has such great supporters, they buy t-shirts and hockey souvenirs for 2 MILIONS €? I dont think so.

And not all season 2012/2013 was with this prices. At the beginning was it only for 10 € (basic ticket).

And other. GM Maros Krajci said, that if the team dont want to loose money for ice rink, it must be full in the house. Only for ice rink for one game.

There's more ways to generate money than souvenirs past the ticket price.

What about TV deal? Was their 0 Slovan games on TV? What about sponsorships? No companies were affliated with Slovan this season? Luxury boxes? I don't know what rink is like, but is their no coporate seating? How about concessions at the games? Nobody buys beer or anything else when attending games? etc, etc.

 

[vorky]

There's more ways to generate money than souvenirs past the ticket price.

What about TV deal? Was their 0 Slovan games on TV? What about sponsorships? No companies were affliated with Slovan this season? Luxury boxes? I don't know what rink is like, but is their no coporate seating? How about concessions at the games? Nobody buys beer or anything else when attending games? etc, etc.

Income was 0

 

[Holden Caulfield]

Income was 0

Really? Just curious, I know you know waaay more KHL than I do, but how could Slovan be generating 0 off of a TV deal?

 

[vorky]

Really? Just curious, I know you know waaay more KHL than I do, but how could Slovan be generating 0 off of a TV deal?

Because KHL sells tv rights for all games, not clubs (like in NHL where clubs sell their home games to local tv). So KHL gets all income, but does not share it with clubs. Clubs want league to share it (and sponsorship deals as well), there is discussion among clubs/league how to share it. I am sure, league will share the tv revenue in future. Currents KHL bylaws ends after this season, we will see if league includes revenue sharing to new one. I would not be suprised, if there was revenues sharing since 14/15.

 

[alko]

There's more ways to generate money than souvenirs past the ticket price.

What about TV deal? Was their 0 Slovan games on TV? What about sponsorships? No companies were affliated with Slovan this season? Luxury boxes? I don't know what rink is like, but is their no coporate seating? How about concessions at the games? Nobody buys beer or anything else when attending games? etc, etc.

sponsorships is something different. In reality, every team in Slovakia is breething only with help from sponsors.

 

[Holden Caulfield]

Because KHL sells tv rights for all games, not clubs (like in NHL where clubs sell their home games to local tv). So KHL gets all income, but does not share it with clubs. Clubs want league to share it (and sponsorship deals as well), there is discussion among clubs/league how to share it. I am sure, league will share the tv revenue in future. Currents KHL bylaws ends after this season, we will see if league includes revenue sharing to new one. I would not be suprised, if there was revenues sharing since 14/15.

Dont get this. Khl is just keeps money. Uh...khl is just the organization of clubs. Who gets money?

 

[Vicente]

Dont get this. Khl is just keeps money. Uh...khl is just the organization of clubs. Who gets money?

KHL uses the money for marketing, organization of the other leagues of this system VHL + MHL/MHL B etc and for some other stuff. There must be a solution in the future or other teams won't join the league.

 

[vorky]

Vicente replied

 

[adsfan]

It's not sinking anywhere, you need to haul your ass over to the Political Discussion board, amidst the Tea Bagger troll threads, you should be able to find some economic related threads or posters who could enlighten you(unless you can't find it from Google).

The econ debate is funny! I agree with you.

We could use some more people being hired for jobs that pay well in the US, although unemployment is at a 4 year low. However, the Dow is up 25% in the last year to 15,600 points. How misinformed are you two people in Sweden about the US? The US economy is growing slowly, maybe 2-3% a year, not shrinking!

I don't understand KHL economics and I haven't learned much by reading the previous postings. This is a whacky thread! I don't understand MLB either. I wish the KHL teams all success in growing the game of hockey regardless of what countries they reside in. That is the important thing, growing hockey for everybody who wants it.

 

[Vicente]

The econ debate is funny! I agree with you.

We could use some more people being hired for jobs that pay well in the US, although unemployment is at a 4 year low. However, the Dow is up 25% in the last year to 15,600 points. How misinformed are you two people in Sweden about the US? The US economy is growing slowly, maybe 2-3% a year, not shrinking!

I don't understand KHL economics and I haven't learned much by reading the previous postings. This is a whacky thread! I don't understand MLB either. I wish the KHL teams all success in growing the game of hockey regardless of what countries they reside in. That is the important thing, growing hockey for everybody who wants it.

As long as the money for a league or its franchises/teams is not from illegal sources and they can pay all their debts/all salaries for their employees I don't really care where the money comes from or if someone is burning his/her own money by having a team just for fun. But if in the future KHL wants to grow and also wants to be more independent from oligarchs, then a way to finance everything should be found.

Unlike in soccer/football how ever ppl want to call it here on hfboards, unfortunately the system doesn't really work and the majority of teams invest huge sums they can't cover... in a fair world teams like Manchester United, Liverpool FC, Chelsea FC, Valencia CF or FC Barcelona wouldn't even exist anymore because these 5 teams alone have debts of more than 3 bio euro.

 

[Latgale_fan]

I think this oligarch system can work in Russia, as the country will only become richer and the fact that companies and regions simply HAVE TO invest in local sports teams has long been ingrained in the culture of the place, so with increasing revenues from business, clubs budgets could also grow. Call it an unofficial tax, giving back to the community as some say.

It's a bit different with countries where sponsorship works by different principles. Yeah in Latvia for example there are also places where the local company/municipality sponsors a local team but that is not at all big money and I believe almost nobody in Latvia would tolerate the government or local company giving 8 million euros or more to a hockey club each year. There was already a scandal when a government owned company due to a strong basketball lobby started sponsoring VEF Riga basketball club and we are talking about thousands of euros there, not millions... And basketball, even football lobby is much stronger in the country than the hockey lobby due to the ineffective Latvian Hockey Federation. And I don't see it changing as yesterday in a basketball prep game we beat World silver medalist in basketball and our U20 team took silver in European Championship (I wonder how hockey U20s relegation down to Div I compares....). Basketball is certainly on a rise on all fronts.

Therefore Dinamo Riga is in a bit different situation than say Minsk. Of course it's not impossible that local sponsors could maintain the team but Latvia is a small country and in any way the sums (% of income) that companies allocate to sports teams here are much lower (and really mainly used for sponsorhip, not giving back money to community) than in Russia.

 

[loppa*]

Besides, both Russia and many other eastern european countries are on longterm great economic upswing, and everybody hopes that this will solve the bottom line sooner or later.

This is not necessarily true. Many eastern european nations are simply colonies of the West to lesser or greater extent.

Heck, check this out, http://www.wsws.org/en/articles/2013/06/13/russ-j13.html , things in russia do not seem to be too rosy.

We need to however keep in mind that traditionally the state spent a lot of money on sports in eastern europe. Hence this western idea of having such a business model on excessive consumption is not necessarily the way that things work there -traditionally and/or contemporarily.

One thing however is a fair say, I think... that profitability of clubs may increase somewhat as time goes on - how so is the question though. Well... through arenas. They are being built slowly and steadily. Nizni novgorod for example has an arena of about 5,000 capacity. That is not very big. They are building or will build one for two to three times that... http://english.pravda.ru/news/society/14-09-2012/122171-ice_arena_nizhny_novgorod-0/ - that is an old article, someone else may get a newer one if they want... but I think that a similar thing will happen in other cities. It is happening already in fact. So at least this alone will make clubs more profitable, and hence help finances of clubs. And others... Donetsk... dunno who else, but a couple big arenas are being built. Suppose they move spartak or atlant to sochi, there we go, a big arena out of nowhere, more capacity for attendance than in Moscow...



What I wonder though is how are the finances of Minsk's team since they opened their new arena. I am sure they're better, but any insight would be appreciated.



edit/add: For some fun...

The US economy is growing slowly, maybe 2-3% a year, not shrinking!

Health of the economy and health of the people have nothing to do with one another. In the US wages have been pretty stagnant since the 1970s. You know, real median wage as remained relatively constant while the wage at the top has skyrocketed. Ask yourself how come poverty is so big, how come there are so many problems in the US... the uneven development is actually somewhat sickening, we can see for example cities declaring bankruptcy. So, I think that it is not fair to paint a rosy picture of things in the US. There are huge problems there. We see teams not being able to make it in the south.. .atlanta moved for example... phoenix is in trouble... and of course these are just two teams, but it points to the fact that things are not superb or ideal in the US. The system there is different however... things function so differently, comparing it the KHL is like comparing apples and oranges...

 

[Jussi]

edit/add: For some fun...

Health of the economy and health of the people have nothing to do with one another. In the US wages have been pretty stagnant since the 1970s. You know, real median wage as remained relatively constant while the wage at the top has skyrocketed. Ask yourself how come poverty is so big, how come there are so many problems in the US... the uneven development is actually somewhat sickening, we can see for example cities declaring bankruptcy. So, I think that it is not fair to paint a rosy picture of things in the US. There are huge problems there. We see teams not being able to make it in the south.. .atlanta moved for example... phoenix is in trouble... and of course these are just two teams, but it points to the fact that things are not superb or ideal in the US. The system there is different however... things function so differently, comparing it the KHL is like comparing apples and oranges...

No one's saying that. Just that in the grand scheme of things, US aren't in as deep **** as some people think.

Also, to my knowledge Detroit is the only major city to go bankrupt and that things been coming for years. Even the posters here from Detroit weren't surprised by it.

 

[malkinfan]

No one's saying that. Just that in the grand scheme of things, US aren't in as deep **** as some people think.

Also, to my knowledge Detroit is the only major city to go bankrupt and that things been coming for for years. Even the posters here from Detroit weren't surprised by it.

This is true, I live 5 minutes from Detroit. It is bankrupt because corruption and no one except trouble makers live in the actual city itself, everyone who earns the money to gen. tax rev. lives in the suburbs. Only sports teams, some corporations are present in the city itself. Otherwise you shouldn't be even hanging around there its horribly dangerous... US will be fine financially.

Lagalte fan I would like to comment on your comment. Oligarch system can persist for a long time, and there will be spin off effects from this. If a team markets properly, wins, builds a nice big enough rink, eventually the franchise will build roots and a fan base. Eventually local economic situations will increase and fans will buy merchandise, TV packages and show up to games to such an extent that the team may be close to being financially self sufficient. Everything is already in motion, wait until the next generation, I think the KHL will benefit greatly from the work they are doing today....
Just think, people 30-50 years old are people of communist era, many still holding attitudes and suffering financially from the transition to free market to some effect. That generations children, will be better off. That generation will also grow up watching KHL on HDTV, following news on internet, seeing cool ads, stars like Kovy etc (which didn't exist for current generation).. They will have a different attitude on hockey and KHL when they are 30-50 year old than the people who are that age today. IMO the KHL is a massive investment in the future generation and its being done very well. We see growth in attendance and interest in foreign countries grow by the year. Fast forward 10 years and if everything continues I think you will have most teams making better financial returns and just better quality franchises in every aspect of the organization from facilities to training to fan treatment in general.
To sum up, using oligarch money is good for not only short term but also will leave long term effects if money is channelled properly, natural progression should help push the league's teams into better self funding position.

 

[loppa*]

Just that in the grand scheme of things, US aren't in as deep **** as some people think.

It is actually much much worse than people think.

Also, to my knowledge Detroit is the only major city to go bankrupt and that things been coming for for years. Even the posters here from Detroit weren't surprised by it.

Many small towns and counties have gone bankrupt. It's a common occurrence nowadays. Case in point, http://www.news10.net/news/article/245294/2/10-California-cities-that-could-file-for-bankruptcy

This is true, I live 5 minutes from Detroit. It is bankrupt because corruption and no one except trouble makers live in the actual city itself,

No. It is a structural syndrome of US cities, where there have been decades of disinvestment. In turn there have been areas which have been invested in - suburbs... it's always "junk the old and make something new", until that something new gets junked too...

...such a culture is very destructive/shot sighted. I think that it can be transplanted to sports to some degree.

Oligarch system can persist for a long time, and there will be spin off effects from this.

It can not, and it is an awful system. Russia's people would be richer and have more money to spend on hockey had their country not been robbed by these criminal oligarchs in the 1990s. Too bad that Putin's the best buddy of most of them.

That generations children, will be better off.

*snort* In whose fairy tales or dreams? Poverty reduction in the last 20 or 30 years did occur in the world. However that was almost entirely in China and India, the world in general experienced booming poverty. Tell your false dreams of trickle down myths to some other audience.
Enjoy, http://www.gatt.org/trastat_e.html

 

[stv11]

Please keep the thread on topic. Some economic informations are relevant to the topic, but the overall economic situation in Russia or the United State should be discussed on the political forum only.

 

[tobu]

A financial daily newspaper in Slovakia interviewed Slovan's GM Maros Krajci. Bottom line is, Slovan was profitable 300,000 Euros in its first season of KHL, confirming my assumptions and calculations. The revenues were covered by sold out games and sponsor deals. The club forecasts higher revenues and profit in the upcoming season.

What we can say is that Slovan has a healthy financial model.

source: http://hnonline.sk/sport/c1-60494050-slovan-ma-rekordne-trzby-vdaka-khl

 

[tobu]

Slovan announced ticket revenues in this season at 2.9 million euros. Slovan posted 7th highest average attendance in Europe this year (10 013/game) and the 1st in terms of sell-out/capacity% (99,58%). Curious to see how much profit the team made this year compared to last year's 300K.

 

[Atas2000]

I am curious about what teams in KHL can we consider profitable, as in financially not bleeding today?

SKA, Slovan, Dinamo Riga, Dynamo Moscow, Donbass, Severstal, Ak Bars, Avangard ?

Who is bleeding? Vityaz, Avtomobilist?

Do teams release this information?

Dinamo Riga, Slovan, that's it.

How can teams like SKA, AkBars and Avangard be profitable with such a payroll?

To have it simplified: those top teams have a payroll roughly half that big as an NHL slaray cap. Average NHL ticket price is around 50 bucks. Average KHL ticket price around 15 bucks. The arenas are far smaller than in the NHL. Even if we leave aside merchandise income(which is nowhere nearly well developed still in the KHL) and considering that only around half the NHL teams are profitable, I think you get the picture.

 

[An Argument For]

Dinamo Riga, Slovan, that's it.

How can teams like SKA, AkBars and Avangard be profitable with such a payroll?

To have it simplified: those top teams have a payroll roughly half that big as an NHL slaray cap. Average NHL ticket price is around 50 bucks. Average KHL ticket price around 15 bucks. The arenas are far smaller than in the NHL. Even if we leave aside merchandise income(which is nowhere nearly well developed still in the KHL) and considering that only around half the NHL teams are profitable, I think you get the picture.

About a 2/3 of NHL teams are profitable and those that aren't generally have relatively miniscule losses. Seriously, almost every NHL team that lost money last year could get out of the red by cutting one single NHL contract. Also with new television deals coming on stream in the next year most of these loses will be negated.

I would just like to comment on this thread in general though. First, Norway is the only European country, the last time I checked, that had a per capita income higher than Canada or the U.S. The US economic situation isn't great but it's not nearly as bad as many of you make it out to be. Russia and many of the other KHL countries won't be "catching up" in our lifetimes. It would take either a miracle or catastrophe on one end or the other to make that happen. Also when you talk about moving west to Europe's larger more westernized countries; UK, France, Italy, Spain.. these countries aren't exactly in great economic situations themselves.

The three largest revenue generating sports leagues in the world are American Football, American Basketball, American Baseball and American hockey comes in at 7th. North America has both a massive sports population and the funds to spend. This isn't something that Europe can replicate at this moment.

Secondly, the Hockey teams that have been forced to move recently, or should be forced to move are being done so because the NHL did exactly what some of you are prescribing the KHL do. You can't force yourself into a market just because they have a substantial population and economy. Atlanta is a big city with a big sports base. But they didn't/don't have any hockey base so it's tough to get them on board. The same goes for Pheonix, Tampa Bay, Columbus. Some of you are suggesting that you move into Western Europe because there are numbers there. That tends not to work more often than not.

 

[Jonimaus]

First, Norway is the only European country, the last time I checked, that had a per capita income higher than Canada or the U.S. The US economic situation isn't great but it's not nearly as bad as many of you make it out to be.

Don't think you should read into that too much. Compared to the nordic countries especially, USA is in terrible shape. It just has the numbers to support leagues. A country with 300million people, where many of the sport team cities has as many people alone (sometimes several times) as many european countries. New york has close to 20million people, that alone is more than twice Swedens total population. Even if the economy if USA is terrible, a country with cities that size will never have issues supporting sports teams.

 

[QnebO]

Also when you talk about moving west to Europe's larger more westernized countries; UK, France, Italy, Spain.. these countries aren't exactly in great economic situations themselves.

The three largest revenue generating sports leagues in the world are American Football, American Basketball, American Baseball and American hockey comes in at 7th. North America has both a massive sports population and the funds to spend. This isn't something that Europe can replicate at this moment.

Secondly, the Hockey teams that have been forced to move recently, or should be forced to move are being done so because the NHL did exactly what some of you are prescribing the KHL do. You can't force yourself into a market just because they have a substantial population and economy. Atlanta is a big city with a big sports base. But they didn't/don't have any hockey base so it's tough to get them on board. The same goes for Pheonix, Tampa Bay, Columbus. Some of you are suggesting that you move into Western Europe because there are numbers there. That tends not to work more often than not.

If Europe does something big, Germany is in it. They are the economical motor. And they also do have very solid hockey attendance in their league, as well as in other sports. Germany is where any league that wants to call it self a big league should go.

If level of German hockey player production would raise to level of Sweden.. heck.. Finland, that league would be diamond.. They have the masses, they have the money, they have the sports culture.