Why the NHL wanted to lose this season.

Discussion in 'Fugu's Business of Hockey Forum' started by Peter, Apr 5, 2005.

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  1. Peter

    Peter Registered User

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    Just speculating...nothing more, nothing less. One has to think that if the NHL wanted to get control back with the escalating salaries then one simply just waits until some of the larger salaried players are too old to play...or have their contracts expire.

    And in effect, that has happened due to this loss of the 04/05 season. Lots of contracts expired and many of the big money earners will probably retire now or have become UFA. Add to that the 24% rollback the players offered (if it is still on the table remains to be seen) and what you get is a clear, clear win for the NHL; from THEIR standpoint.

    Plus they got the players to offer a salary cap. How can this not be seen as a victory for the NHL???
     
  2. You theory makes little sense. If the owners just wanted to reset the marketplace like you suggest they would have been all over the 24% rollback and be done with it. They wouldn't have washed away $2.1 billion in revenue and still be staruing down the barrel of a gun. The 24% rollback achieves exactly what you suggest, so if that was the motivation of the owners that would have done just that. As it turns out that is not the goal. That much is very obvious.
     
  3. Jarqui

    Jarqui Registered User

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    If the NHL had got an agreement with the NHLPA where they would have made money playing this season and into the future, they would have played this season. The NHL reduced their losses this season but didn't eliminate them by not playing.

    With so many contracts completed, with changes in the rules coming that may well change the type of talent mix needed, with either a conscious or subconscious desire to change out a lot of the players to get the bitterness out of the current NHLPA, with older players that will have a tough time coming back after missing a season, etc, I think a significant or unusal portion of the NHLers who finished the 2003-4 season have played their last NHL game.

    But if the owners had a deal upfront where they could make money this season, many more of the 2003-4 NHLers would have survived to play another NHL game.
     
  4. ryz

    ryz Registered User

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    Exactly what the previous posters have said. Regardless of what any PA supporter might argue, there is NO WAY the owners intentionally crippled their 2.1 billion dollar industry just to "show-up" the players. Anyone who thinks that is nothing but a sour whiner sucking on some sour grapes.
     
  5. Mess

    Mess Global Moderator

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    Lets put this into a little better perspective

    The owners claim that player costs are at 75 % ....

    So 2.1 Bil X 75 % = 1.5 Bil .. So of the 2.1 total Revenue generated by playing the Owners would have given 1.5 Billion of that to the players to cover Salaries ..

    That leaves the NHL owners with 600 Mil ... Now the Levitt report says that the Owners lost between 275 and 300 mil the last season ...

    So $600 mil Revenue - 300 Mil in losses = 300 Mil Revenue

    Conveniently 300 mil / 30 owners = $10 mil per Owner that they gave up by not playing ..

    Now lets see if they gain anything by that 10 mil .. Well ..

    1 year off of bad contracts .. One year less to Pay Yashin, Holik, Jagr, Guerin, LeClair, Tkachuk, Cujo, etc etc .. Saves a lot of money on Buyouts ..

    Of course the famous Revenue is going down so now the Players have to except a shrinking Market when they agree to a new CBA HARD CAP .. Sure couldn't have used that, had they played the season .. and its not just a 1 year gain .. They gain that advantage for all years of a CBA .. Alone since the season was cancelled they lowered the 42.5 Mil to 37.5 mil Saving $ 5 mil a year.

    Right .. So that we they have corrected the market setting the Hard Cap to just 54% of League Revenues of course they still include the 24% rollback of all remaining and existing contracts .. .Lets see .. Originally that made sense.. 75 % players - 24 % rollback = 56% player cost .. Only problem now is that owners can't control themselves so he need a Cap .. But a cap is already at 54 % so why the need for more reduction in Salaries ??

    Oh yes lets not forget that the NHL conveniently sets the Hard Cap off to the MAX 54% or 37.5 mil. However everyone knows full well that not all teams will reach the limit in fact maybe only 1/2 will , which really boils down to much less then the 55% the NHL is offering in the partnership , because its the Hard Cap Floor that ensures the players get their fair share not the Hard Cap Ceiling ..

    Magically somehow by cancelling the season these Billionaire owners are winning the PR war, as much as 80% of fans support the owners in this dispute .. So they have somehow brainwashed the public to convince them that they need to take the money from the greedy players and put it in their pockets, of course disguising the fact that it was Fans money just being redirected to themselves now and the Hard Cap can only weaken teams and on the on ice product .. But cancelling a season fans will not notice that deterioration since its been so long between games we are none the wiser ..

    They have also convinced the majority of the public that its all about making money on a day to day bases , when the real money is really in Franchise values and the buying and selling of them .. The NFL cap tripled Franchise values so the few millions of year to year losses is returned 100 fold when your 100 mil Franchise suddenly becomes 300 mil net worth .. and of course cancelling a season and working towards IMPASSE allow the owners to put their own CBA in place and ensure these huge Franchise profits on resale.. and without being able to use the lost season as amunition how are they ever going to get the NLRB to rule in their favour ??

    So those POOR POOR OWNERS really had nothing to gain at all by cancelling a season ..
     

  6. Wow. Nice conspiracy theory. And the owners also wanted to do unconscionable damage to an entire industry in which they have a stake of multi-billions of dollars across a continent? What color is the sky in your world?

    :shakehead
     
  7. ceber

    ceber Registered User

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    I don't follow this. Isn't it: revenue - cost = profit/loss?
    So 600 million revenue (already having subtracted player costs) - additional costs = -300 million loss. So additional costs (interest pmts, insurance, bubble gum, etc.) for the 30 teams totaled 900 million. Unless I missed your point you make it look like the teams gave up 300 million bucks by not playing... I don't think that's how the numbers work. Maybe I'm missing it though.. head's all stuffed up today and my thinker might be affected... ;)
     
  8. Sixty Six

    Sixty Six Registered User

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    and the owners would put money in an escrow so the players were guaranteed their 54 %
     
  9. futurcorerock

    futurcorerock Registered User

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    A more realistic theory on why the owners would want to lose a season is because of the loss of all those 04-05 contracts. if you cut 05-06, who's still signed besides Yashin and Jagr?
     
  10. Jarqui

    Jarqui Registered User

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    That's as wacky a financial rationale as you could ever hope to find on this planet. In fact, it's origins may be so out of this world, it may serve as irrefutable proof that there is some form of life in outer space - who just are not very good at accounting and realizing that there are other expenses besides players salaries to running a hockey team (and many that don't go away when the team isn't playing). The good news is: at least these beings like hockey. :)
     
  11. PecaFan

    PecaFan Registered User

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    Anyone up for "spot the logic error?" Here's a hint, you don't subtract losses from revenue.

    Geezus.
     
  12. Timmy

    Timmy Registered User

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    OMG

    Try 600m rev, less 900m expenses, creating a 300m loss.

    EDIT: This ranks right up there with the "wash" post.

    You weren't the CFO of Enron back in the day, were you?
     
  13. mooseOAK*

    mooseOAK* Guest

    I thought that it was the small market teams in non-traditional areas that shouldn't have franchises and the penny pinchers who were the driving forces behind the lockout.

    Now it is the big market teams with the huge player contracts that they would have needed to pay?

    I'm confused.
     
  14. Timmy

    Timmy Registered User

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    Judging from some of the logic being tossed around by some folks, I'd say that's the first step down the slippery slope towards switching your support to the PA. :eek:
     
  15. Cawz

    Cawz Registered User

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    Wow. Now if you take the amount of lines in your post, and compare it to the amount of logical statements, I’d have to say that’s one of the worst length to logic posts I’ve seen on here.

    Now theres a plethora of illogical posts gracing these pages, don’t get me wrong, but you spent how long typing out that tripe? You could have made you same “point†(I have a feeling you were being a bit facetious) without the essay.
     
  16. reckoning

    reckoning Registered User

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    The fact remains that all the talk we`ve been hearing from Bettman and the owners lately about how "the league is committed to having a season this year" was noticably absent last year. Boston`s roster for last year proves they weren`t planning on putting together a team that season. I know that`s only one team, but Jeremy Jacobs has more influence with Bettman than the other 29 owners combined. He must have pictures or something.
     
  17. mooseOAK*

    mooseOAK* Guest

    Jeremy Jacobs has but one vote either way.

    There are a heckuva lot of unsigned free agents out there so there are a lot of incomplete rosters around. Anyway, the PA telling the league to take a flying leap every time the NHL tried to talk to them about cost containment wasn't giving anyone confidence that there would be a season.
     
  18. kerrly

    kerrly Registered User

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    Actually the Bruins roster can be viewed the other way. They left many holes to see what the new NHL landscape would be like and adjust to it. I think it shows that they were trying to get ready for life under a cap far more than if they had left their roster as is and signed players too large sums of money only having to scramble to get under a cap before the next season starts.
     
  19. FlyersFan10*

    FlyersFan10* Guest

    Why is it when someone has a difference of opinion with you, you resort to personal attacks? I think there's a little truth behind everything that has gone on with the NHL lockout. I believe that owners were willing to lose a season to get back some fiscal sanity. As well, I'm willing to bet that most owners realize that the game is strongest in Canada and in the Northern US, so it shouldn't come as a surprise that that will be the areas that will be most forgiving to hockey and the fans will be back. They'll get back to that 2.1 billion in revenue again, but they'll only do so once they cut the dead weight away.

    I have to agree with what I saw on CTV Sportsnet the other night when a radio show on the Fan590 in Toronto said that this strike is all about the six worst owners in the league and is also about Bill Wurtz and Jeremy Jacobs. It's funny how you see the old school owners on the negotiating team, but anyone with an iota of ability to make money isn't on the negotiating team. This is about an owner's group who knows nothing of progression, but knows plenty about digression. Don't kid yourself if you think owners aren't willing to sacrifice it all to get what they want. If the league goes bankrupt and folds, then the owners can essentially buy back the leage and implement whatever they want. And you know what, fans in Toronto, Montreal, Ottawa, Edmonton, Calgary, Vancouver, Philadelphia, New York, Boston, Detroit, etc....will swallow it hook line and sinker.
     
  20. Mess

    Mess Global Moderator

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    Well you are right to a point .. But the cost of doing business is unknown in the equation .. The league lost 300 mil but the figure can't be tied to just player costs, ..Buliding leases, Overhead (light, heat, power,) Office Staff , GM, President, Coach, Assistant coaches wages etc., Travel costs, Building mantenance, Parking, Concession Staff wages, Benefits (Medical, Dental ) ..etc etc etc ..

    The only thing we know for sure is that the players have guaranteed contracts that they got paid every cent .. So the 1.5 Billion (75 %) is a fact .. Now what contributed from here on in to the 300 league wide losses is not itemized .. So what part of that loss is contributed of all of the possible costs is unknown .. You would have to get in to see the owners books to determine that ..

    However we do know that 2.1 bil is gross Revenue .. meaning that every 3 dollar hot dog or 10 bucks parking or replica jersey is included in that figure .. The cost of the Hot dog, mustard, relish, sales staff etc is not .. but those are all cost that contributed to the losses last season ..

    So you are correct I can't pin point where the losses came or the exact amount as to take off the 600 mil Owners share .. but that number is Gross revenue and cost do need to come off and the Losses have to come from somewhere .. Follow me .. ??

    In Fact by your formula which is correct ..

    Plugging the numbers we know ..

    Total Revenue (2.1 bil) - Costs (player salaries 1.5 bil) + Other Cost (??.described above) = (Loss) League wide of < NEGATIVE $ 300 mil> (as per Levitt report) ..

    To make the equation true ..

    $ 2.1 Bil (Revenue) - $ 1.5 Bil (player cost) - $ 900 mil (Other costs) = Negative $ 300 Loss ..

    Total Revenue $ 2.1 Bil - Total Costs $ 2.4 Bil = Net Loss $ 300 mil

    I deducted 300 mil loss, when in fact I should have deducted $900 mil extra costs .. NO??

    My original equation was in error as it resulted in a $ 300 Profit league wide..

    So that even more makes the case for the Owners wanting the season cancelled ..
     
    Last edited: Apr 5, 2005
  21. Asking the guy what color the sky was in his world is a personal attack? Wow, you need to develop some thinker skin my man. Or is that a personal attack as well? Sorry, but the common sense filter caught all that post and diverted it to the garbage bin. What the guy wrote was 100% conspiracy theory logic and not plausible. We're talking about BUSINESS men who have made themselves and built up huge interests that allowed them to invest in the game they love. And they are going to throw that all away, money that it will take them a decade to recoup, to make a point and stick it to the players? They're going to potentially kill an industry and flush billions of dollars down the toilet so they can "buy it back and implement waht they want". If that were the case they would have sold the league for a tidy profit to Bain and be done with it. But no, you and The Messenger have it right and its more likely that the owners really had no plan to have a season at all and that the whole time they have been planning on folding the league, bankrupting the whole mess, and then buying it back at a cut rate. You might want to check the laws on what you are suggesting and understand how ownership and bankruptcy works before continuing on with this fine little story of yours. You'll find that what you are suggesting is possible only in Hollywood movies.

    Now back to "Conspiracy" on The History Channel!
     
  22. Hoss

    Hoss Registered User

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    Actually evidence supports you, the owners were absolutely furious that the players refused to back down. Melnyk seemed absolutely stunned, Gretzky looked like he was going to puke.
     
  23. Mess

    Mess Global Moderator

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    You are correct .. I have changed that..

    but you bring up a good point now as well .. That 900 mil is never questioned in this whole CBA to date ... perhaps there are items that make up the 900 mil that can be improved upon to increase the bottom line and lower the debt ??.

    Also just for fun as the league wants Player costs at 54% and not 75% ..

    So based on last seasons figures ..

    $ 2.1 Bil (Total Revenue) - $ 1.134 Bil (Player Cost @ 54 %) - $ 900 Mil (other Costs) ( Combined total Costs $ 2.034 Bil) = $ 66 mil PROFIT league wide ..

    So that would mean that NHLPA offer of a 24 % rollback would have put the league in PROFIT situation ... The key is how do you keep costs there??.
     
  24. mr gib

    mr gib Registered User

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    isn't this fun
     
  25. reckoning

    reckoning Registered User

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    Ever since the season was officially cancelled, Melnyk has come across like a completely arrogant a----le. Even though I hate the Sens, i love hockey and usually go to about 6-8 Senator games a year; but when this is over I doubt I`ll go to anymore because I can`t stomach the thought of my money going to someone like him.
     
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