Revenue disparities are still a major problem

[hockeytown9321]

As I've been saying for a while, this league will not have 30 healthy franchises until the vast revenue disparities between big and small markets is addressed. Don Waddell mentioned that in an interview last week, now it seems more a catching on:

http://www.globesports.com/servlet/story/RTGAM.20070711.wsptmilner11/GSStory/GlobeSportsHockey/home

Click to read more...

 

[Hunter Gathers]

I LOVE the hypocrisy of mentioning big market teams driving prices of UFAs up but fail to mention Lowe throwing a Pejorative Slured amount of money at Vanek.

 

[Sotnos]

I LOVE the hypocrisy of mentioning big market teams driving prices of UFAs up but fail to mention Lowe throwing a Pejorative Slured amount of money at Vanek.

Yeah, that's a HUGE omission right there, kinda blows the whole article for me. Well, that and mentioning the Blues sale but not the bidding for other teams since.

 

[Fugu]

Yeah, that's a HUGE omission right there, kinda blows the whole article for me. Well, that and mentioning the Blues sale but not the bidding for other teams since.

The Blues sale was the only one that closed. The bidding for the Pens and Preds was driven upwards by Balsillie and Del Biaggio.... and that whole moving thing. Kind of puts it into a different category.

Back to the article though-- I thought you agreed that the revenue gap was still too wide?

 

[Trizent]

I LOVE the hypocrisy of mentioning big market teams driving prices of UFAs up but fail to mention Lowe throwing a Pejorative Slured amount of money at Vanek.

You do realize that the Oilers were 7th in league revenue in 06-07, right? A team that pays into the revenue sharing pool ...

I would say that 7M is the going rate for a 43 goal scorer ... but I do know what you mean.

 

[GSC2k2*]

You do realize that the Oilers were 7th in league revenue in 06-07, right? A team that pays into the revenue sharing pool ...

I would say that 7M is the going rate for a 43 goal scorer ... but I do know what you mean.

Source?

 

[Sotnos]

The Blues sale was the only one that closed. The bidding for the Pens and Preds was driven upwards by Balsillie and Del Biaggio.... and that whole moving thing. Kind of puts it into a different category.

Still, it'd be relevant to the topic he was discussing IMO. Leaving that out, but especially leaving out the Vanek thing, just looks like he's picking and choosing his facts.

Back to the article though-- I thought you agreed that the revenue gap was still too wide?

Sure I do. Just because I think the article is missing something doesn't mean I don't agree with the point the guy was attempting (and kinda failed) to make. I'm a skeptic and a born critic, what can I tell you?

The point remains - what can be done about it? If they do go back to the drawing board, what sort of solutions are out there outside of the rich teams passing out more of their money, which I doubt they want to do.

 

[SJeasy]

The point remains - what can be done about it? If they do go back to the drawing board, what sort of solutions are out there outside of the rich teams passing out more of their money, which I doubt they want to do.

Not my recommendation but a potential avenue - bigger chunk of playoff revs to sharing.

 

[kdb209]

Not my recommendation but a potential avenue - bigger chunk of playoff revs to sharing.

The league does fund a portion of revenue sharing from Playoff Revenues:

49.5 Sources of Funding for Player Compensation Cost Redistribution. The funds
required to be collected for Player Compensation Cost Redistribution in a League Year
shall be collected as follows: First, from excess centrally generated League revenues, if
any; next, up to one-third (⅓) of the remaining balance from the Escrow Account, if there
is an Overage in a League Year, provided, however, that any funds taken from the
Escrow Account shall be limited to funds attributable to the Players on the ten-highest
revenue Clubs that had an Actual Club Salary for such League Year in excess of the
Midpoint of the Payroll Range for that League Year; and finally, any remaining amount
of necessary funding to be split fifty (50) percent from the Playoff revenues of all Clubs
that participate in the Playoffs Qualification Round (if any) and the Stanley Cup Playoffs,
and the other fifty (50) percent from certain revenues of the ten-highest revenue Clubs,
based on such Clubs' non-playoff revenues.

Although the amount contributed by playoff teams is not linked to actual playoff revenues. Instead, all playoff teams contribute between 30% - 50% of the total revenues generated by one sold out regular season game.

 

[hockeytown9321]

\\

The point remains - what can be done about it? If they do go back to the drawing board, what sort of solutions are out there outside of the rich teams passing out more of their money, which I doubt they want to do.

Luxury tax. Soft cap.

 

[Trizent]

Source?

Not handy, but all 6 Canadian teams were in the top 12 in league revenues. It has been discussed in other threads on this board.

Oilers paid $2.7M into league revenue for the 06-07 season. They paid several million more during the previous season due to their Stanley Cup Final run.

The only reason the Oil were a "small" market before was the Canadian dollar. At 0.64 cents, instead of a sellout of 16,500 generating a big gate, it generated a comparable gate of a crowd of 10560 (64% of 16500). Now that the CDN$ is up to over 0.90 they are a "have" not a have not just like the other Canadian teams.

 

[kovy1335]

Luxury tax. Soft cap.

We've seen how well the luxury tax is working for baseball.

I think a hard cap is definitely the way to go if properly run. The NFL (hard cap) is pretty much the model of parity.

Possibly a soft cap with a hard-cap limit would work, but I've never seen it done before. At least i don't know about it. I doubt that the NHLPA would stand for it after giving in on the hard cap already though.

 

[hockeytown9321]

We've seen how well the luxury tax is working for baseball.

I think a hard cap is definitely the way to go if properly run. The NFL (hard cap) is pretty much the model of parity.

Possibly a soft cap with a hard-cap limit would work, but I've never seen it done before. At least i don't know about it. I doubt that the NHLPA would stand for it after giving in on the hard cap already though.

Baseball's system is working quite well. The big markets are redistributing around $300M a year. It so happens that many small market team owners simply pocket their share and don't reinvest. The CBA was renewed last year without a peep from anyone.

The NFL works because they have so much revenue sharing. That is where their parity and financial health began, not with the hard cap.

 

[BobbyClarkeFan16]

We've seen how well the luxury tax is working for baseball.

I think a hard cap is definitely the way to go if properly run. The NFL (hard cap) is pretty much the model of parity.

Possibly a soft cap with a hard-cap limit would work, but I've never seen it done before. At least i don't know about it. I doubt that the NHLPA would stand for it after giving in on the hard cap already though.

But the league does have a hard cap. That's the thing. You can't spend any less than a said amount, you can't spend any more.

This past collective bargaining agreement gave owners everything they wanted in terms of cost certainty. How much more can you give these guys before you have to start looking at the owners themselves and asking why they can't make things work with the current CBA. I'd say that the NHL CBA is probably the most owner friendly CBA in place right now.

 

[orthosrgn2]

The first problem is there is no mission statement by which the owners stricly adhere. The size of the league and the solvency of the league is left to the indivdual franchise. Therefore, those in rich markets make their profit and those in smaller markets struggle. Unfortunately, getting the owners (some greedy and some too frugal) to agree and comply with said statement is tantamount to herding cats.

 

[kovy1335]

Baseball's system is working quite well. The big markets are redistributing around $300M a year. It so happens that many small market team owners simply pocket their share and don't reinvest. The CBA was renewed last year without a peep from anyone.

The NFL works because they have so much revenue sharing. That is where their parity and financial health began, not with the hard cap.

Haha. OK. It may work for or help SOME teams, but it doesn't stop Steinbrenner from spending 300 million. AND it doesn't make Kevin McClatchy spend any more than 30 million. The Yankees are a joke. The Pirates are a joke. To me, that alone is a pretty fair indictment of the system, but these arent the only baseball teams that are an embarassment to professional sports.

How can a league allow a difference of $100 million in salaries between teams? Is that fair to fans?

 

[kovy1335]

But the league does have a hard cap. That's the thing. You can't spend any less than a said amount, you can't spend any more.

This past collective bargaining agreement gave owners everything they wanted in terms of cost certainty. How much more can you give these guys before you have to start looking at the owners themselves and asking why they can't make things work with the current CBA. I'd say that the NHL CBA is probably the most owner friendly CBA in place right now.

Yea, I don't know why people are looking for further solutions. The salary cap isn't an immediate fix. It'll take a few years for everyone to catch up and settle in to the system.

I don't know if I agree that it's the most owner friendly system, but i think it's perfectly adequate for the league (and any individual teams) to be successful.

 

[saskganesh]

How is this for a solution?

Don't do anything.

I think many of the so-called "have not" teams can do a better job marketing their product to local fans and business community, which would make up revenue disparity.

In some cases, they just need to put together a better team on ice to make the sell easier. The usual model is not to sign every UFA out there, but build through draft and develop through a functional minor system. Hiring some more good scouts is a good investment and cheaper than blowing 6 million in a bidding war on a dodgy FA. A better product would make up revenue disparity.

In other cases, its because the team is in a "nontraditional" market and so there's more comps, cheap tickets etc. Teams will run losses short term, but over time it should get better. There are expansion successes out there after all. These losses are part of the price of establishing an NHL fanbase and should be part of the business plan.

Too much revenue sharing would paper over bad management, bad ownership, bad marketing and poor planning.

 

[GSC2k2*]

Not handy, but all 6 Canadian teams were in the top 12 in league revenues. It has been discussed in other threads on this board.Oilers paid $2.7M into league revenue for the 06-07 season. They paid several million more during the previous season due to their Stanley Cup Final run.

The only reason the Oil were a "small" market before was the Canadian dollar. At 0.64 cents, instead of a sellout of 16,500 generating a big gate, it generated a comparable gate of a crowd of 10560 (64% of 16500). Now that the CDN$ is up to over 0.90 they are a "have" not a have not just like the other Canadian teams.

For chrissakes!

GATE REVENUE! GATE REVENUE!

ONCE AND FOR ALL, GATE REVENUE!

Incidentally, they were also a small market before becasue they probably generated little ancillary revenue and they did not sell out. Already, the myth is firmly taking hold that Canadian teams have always sold out.

 

[GSC2k2*]

But the league does have a hard cap. That's the thing. You can't spend any less than a said amount, you can't spend any more.

This past collective bargaining agreement gave owners everything they wanted in terms of cost certainty. How much more can you give these guys before you have to start looking at the owners themselves and asking why they can't make things work with the current CBA. I'd say that the NHL CBA is probably the most owner friendly CBA in place right now.

Who says that?

 

[SJeasy]

The league does fund a portion of revenue sharing from Playoff Revenues:


Although the amount contributed by playoff teams is not linked to actual playoff revenues. Instead, all playoff teams contribute between 30% - 50% of the total revenues generated by one sold out regular season game.

I was aware that some was already written in. I was just thinking of ways that the league could generate sharing without going at the bottom line of individual clubs.

The playoff revs was off the top of my head. I know there are central revs for VS, and NBC but they are hardly enough to cover league overhead like ref pay and league office salaries. I was fairly surprised by the total number on ref expenses (pay plus travel, etc.).

The only other item I could figure would be for the league to have a league tax on merchandise sales but that would be edging close to the bottom line of individual teams.

Are there central revenue items other than broadcasts?

 

[coolguy21415]

For chrissakes!

GATE REVENUE! GATE REVENUE!

ONCE AND FOR ALL, GATE REVENUE!

Incidentally, they were also a small market before becasue they probably generated little ancillary revenue and they did not sell out. Already, the myth is firmly taking hold that Canadian teams have always sold out.

This is just me nosing into a conversation where I don't belong, but in a gate-driven league like the NHL I'd like to see some figures that demonstrate those teams don't have total revenues proportional to their gate revenue.

I'm not attacking anyone, but I personally haven't seen such figures.

I don't think he was talking about before the lockout specifically. The Canadian dollar was lower than 70 cents as recently as 2003, and lower than 80 cents in 2005. The CAD appreciation certainly helps the smaller market Canadian teams, regardless of whether they sell out or not. Even if they had 10000 gate receipts prior to the lockout, it would have been akin to 7000 in a major US market (so as ticket prices are more comparable), as opposed to 9500 now.

I do find it funny that the lockout was the best thing that ever happened to Canadian hockey franchises, in terms of gate revenues.

 

[Sotnos]

Baseball's system is working quite well. The big markets are redistributing around $300M a year. It so happens that many small market team owners simply pocket their share and don't reinvest.

That is not something I'd want to see in hockey, ever.

The NFL works because they have so much revenue sharing. That is where their parity and financial health began, not with the hard cap.

Well, they have that because they have a massive tv contract which covers teams' payrolls. The NHL doesn't have that kind of revenue.

As for the CBA being "owner friendly", that only goes for the owners of the top revenue producing teams. I think some of you are really over simplifying this.

 

[GSC2k2*]

This is just me nosing into a conversation where I don't belong, but in a gate-driven league like the NHL I'd like to see some figures that demonstrate those teams don't have total revenues proportional to their gate revenue.

Exactly how "gate-driven" do you think the league is? Would it surprise you to learn that the NHL gets less than half of its revenues from ticket revenues?

I'm not attacking anyone, but I personally haven't seen such figures.

Not explicitly, but a bit of rational thought will lead you to that conclusion. THe other revenues have very very little to do with gate revenue and much, mcuh more to do with corporate presence and corporate money.

NYI, for example, have a $17 million/year TV deal. Chicago undoubtedly has huge corporate box and concessions revenues in spite of their low attendance. Same thing for the LA Kings and every other team that shares its space with an NBA team.

don't think he was talking about before the lockout specifically. The Canadian dollar was lower than 70 cents as recently as 2003, and lower than 80 cents in 2005. The CAD appreciation certainly helps the smaller market Canadian teams, regardless of whether they sell out or not. Even if they had 10000 gate receipts prior to the lockout, it would have been akin to 7000 in a major US market (so as ticket prices are more comparable), as opposed to 9500 now.

Converting attendance numbers by using the currency difference is asinine, by the way. It assumes level ticket prices, which there are not. Secondly, you overstate the impact. The only relevant usage of curency exchange rates is on an annual basis; one does nto do a comparison of the exchange rate of today and compare it to its one-day low 4 or 5 years ago and get a meaningful number. Accordingly, "lower than 80 cents in 2005" is misleading and irrelevant. For the last two years, the exchange rate has been .8602 and .8831.

 

[coolguy21415]

Exactly how "gate-driven" do you think the league is? Would it surprise you to learn that the NHL gets less than half of its revenues from ticket revenues?

No, that wouldn't surprise me, but I think it would be a fairly representative proportional figure for most teams' total revenues.

Besides, having reasonably high ticket revenue (even if it's less than half.. which would be incredibly high) still makes the NHL a gate-driven league in my mind.