Revenue Sharing Defined?

Discussion in 'Fugu's Business of Hockey Forum' started by shnagle, Jan 31, 2005.

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  1. shnagle

    shnagle Registered User

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    Revenue sharing certainly seems to be the key to any of the latest proposals or rumors. Several posters have stated that the league has guaranteed revenue sharing so that all teams may reach the salary floor. However, when the league makes this guarantee it uses a phrase "assuming an appropriate level of business performance within their respective markets".

    The NHLPA proposal from December 9th sheds some light on the leagues thought of revenue sharing. Here is the link:
    http://www.nhlpa.com/Proposal/NHLPAcomProposal.pdf

    The proposal states that teams must meet league established benchmarks in order to be eligible for revenue sharing:"One of the benchmarks you proposed is that a club sell 80% of the seats in their arena" Three small revenue teams were below that level last year Florida, Nashville and Carolina. Do you think that is a fair benchmark? What other benchmarks do you think might exist?

    Also, the NHLPA proposal states that the NHL offered 65 million in revenue sharing: "While our initial proposals contemplated revenue sharing of 215 million, we have recognized your desire for much more modest levels of revenue redistribution. We are now proposing a plan that is in line with the levels you have previously requested by approximately sharing approximately 65 million." This seems like an awfully low number and the NHLPA actually offers two additional proposals with more revenue sharing. Would you say that this is meaningful?

    Thoughts?
     
    Last edited: Jan 31, 2005
  2. thinkwild

    thinkwild Veni Vidi Toga

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    If all teams are capable of meeting minimum requirements, how much revenue sharing do you need? Is revenue sharing meant to help them buy bigger payrolls, or subsidize if they are losing money? Or help them bid on UFA's?

    Bettman claimed he would revenue share enough to bring all teams up to a floor. Although it sounds like they are proposing throwing some of the underperforming franchises under the bus, if they dont sell enough tickets. I would of thought, those franchises were the ones needing the help.

    Its hard to say what is a meaningful amount without saying what it is used for, who qualifies, and how much they need?

    If its just to prop up teams who are selling the minimum amount of tickets, but had to lower ticket prices to do it, and this the top-up to bring them to a floor, then probably $65mil or so is all thats needed for the few teams its designed for.
     
  3. Wetcoaster

    Wetcoaster Guest

    There are two types of revenue sharing envisaged in the NHLPA's December proposal.

    One is a re-distribution of money collected via a luxury tax. The union has proposed a tax threshold starting at $45 million in payroll with a tax at 20 cents on the dollar. The tax increases to 50 cents at $50 million and 60 cents at $60 million.

    The proposal also increases the tax for repeat offenders. For a team that violates the thresholds in a second consecutive year the tax rates increase to 25, 55 and 65 cents. A third consecutive year pushes the rates to 30, 60 and 70 cents.

    The second is actual revenue sharing. The NHLPA's proposal included a plan for revenue sharing. This is not a redistribution through a luxury tax, but a system of moving revenues from high revenue teams to low revenue teams. The plan doesn't go into a lot of details about the formula, but does say it follows the league's guidelines that teams must meet certain minimum revenue requirements in order to receive redistributed revenue.

    Overall, the plan redistributes $65 million from high revenue teams to low revenue teams. The union says the plan shrinks the difference between the highest and lowest revenue teams from $76 million to $58 million.

    The calculations are based on revenues from the 2003-04 season. The proposal did not reveal the revenues of the 30 teams, but it did indicate the amount each team would receive or lose under the plan. Here's how it breaks down.

    Team Revenue Sharing
    Anaheim Mighty Ducks Receive $4.2 million
    Atlanta Thrashers Receive $8.8 million
    Boston Bruins Send $3.9 million
    Buffalo Sabres Receive $8.4 million
    Calgary Flames Receive $4.7 million
    Carolina Hurricanes Receive $4.1 million
    Chicago Blackhawks Neither Send Nor Receive
    Colorado Avalanche Send $8.9 million
    Columbus Blue Jackets Neither Send Nor Receive
    Dallas Stars Send $9.9 million
    Detroit Red Wings Send $7.9 million
    Edmonton Oilers Neither Send Nor Receive
    Florida Panthers Receive $4.4 million
    Los Angeles Kings Send $990,000
    Minnesota Wild Send $3.0 million
    Montreal Canadiens Send $5.0 million
    Nashville Predators Receive $10.3 million
    New Jersey Devils Neither Send Nor Receive
    NY Islanders Receive $740,000
    NY Rangers Send $6.0 million
    Ottawa Senators Receive $1.5 million
    Philadelphia Flyers Send $6.9 million
    Phoenix Coyotes Receive $8.9 million
    Pittsburgh Penguins Receive $1.7 million
    San Jose Sharks Receive $61,000
    St. Louis Blues Neither Send Nor Receive
    Tampa Bay Lightning Receive $1.0 million
    Toronto Maple Leafs Send $10.9 million
    Vancouver Canucks Send $2.0 million
    Washington Capitals Receive $6.7 million

    The union also says it has revenue sharing plans that would further shrink the gap between high and low revenue teams. Sharing $124 million would narrow the gap to $43 million. With $189 in shared revenue the gap will drop to $27 million.
     
  4. OilerMania83

    OilerMania83 Registered User

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    Shouldn't the Oilers be getting a share of the money? Oilers would gain and lose nothing under this system...aren't the Oilers a team that need some sort of sharing of this money to "survive"?
     
  5. vanlady

    vanlady Registered User

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    Look at the Moog report in one of the other threads. If that report was right Edmonton made money.
     
  6. grego

    grego Registered User

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    Edmonton had the one time deal of the Heritage Classic. About 50 000 people at 2 outdoor games. And all the revenue that was made from that, which attributes much or all of their profit. So on any other year they would get money from the NHL. It is just they chose to use last year, since it was the most recent year.
     
  7. vanlady

    vanlady Registered User

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    Like the players salaries, the revenue sharing numbers being thrown around are from last year. This doesn't represent the true picture on either side once play begins.
     
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