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Guest4377
( )

Posted - 11/25/2012 :  12:09:50  Reply with Quote
Well, it was you who stated that 18 teams were breaking even each and every day the lockout continues. And now you want to "clarify" things to state that you meant breaking even compared to what they lost before. Huh?

And now you want to twist my words, which were quite clearly expressed. I never stated that a team's front office expenses were $10-15 million per year. I presented this number to be ALL costs which teams will be incurring, save and except for player payroll costs and related costs.

You believe this to be $4 million (assuming the lockout lasts a full season), and I still maintain it will be in the $10-15 million range. I can't find the facts to support this either, but I believe my estimate is more logical than your assessment.

Take the Oilers for example. I'm pretty sure their senior executives are still getting paid, which includes Patrick LaForge, Steve Tambellini, Kevin Lowe, Rick Olczyk, Stew MacDonald, Rick Carriere, Mike Sillinger, and most recently hired Craig MacTavish. There are some very large salaries in this grouping. Most head coaches are being paid (they're not part of the NHLPA) so add in Ralph Krueger's salary. I'm not sure if the Oilers are fully paying for assistant coach's salaries, which would include Steve Smith and Kelly Buchberger. Regardless, I would estimate the Oilers are spending in the $4 million range for senior executives and coaching staff this season, even with the lockout.

Then add in the Oilers scouting staff, who are all stll working. An average NHL team spends around $1.5 - 2 million a year on scouting costs. Most teams employ 5-7 full-time scouts, and a similar number of "amateur" scouts. Some full-time scouts are well paid (like Dave Semenko and Duane Sutter with the Oilers), and the travel costs are a significant expense line item for the scouting department.

Then add in all the various office and administrative staff, and while some teams have laid off some of their employees (or reduced hours), there are still lots of people being paid. (I was at the Oilers office for a meeting last week, and there were plenty of people working.) For the Oilers (and most teams), their office and administrative costs (non-executive, non-coaching) during the lockout will be less than usual, but still in the $1-2 million range.

And then add in rent on their office space. The Oilers have a stand-alone building near the Edmonton City Airport, but they also have space in an expensive office tower in downtown Edmonton (Bell Tower) which is occupied by team owner Darryl Katz for his drug store business, but also for hockey operations, specifically their efforts to get a deal struck for the downtown arena project.

I speculate the Oilers (similar to most teams) will incur rent and office costs in the neighbourhood of $1 million for a lockout season. One example (there are many) of a cost incurred is printing. Every team printed media guides, schedules, season tickets (the Oilers were going to go with a credit card style "ticket" for season ticket holders by the way), etc. which they needed to do, season or no season.

And what about commitments to arena costs. Some teams rent their facilities while some teams own their facilities. For teams which rent, I assume they are out of pocket for some of their commitment. (Space was/is being held for all scheduled games after all.). And for teams which own their facilities, there are upkeep and depreciation costs to consider. I understand that the Oilers have a $1 million minimum commitment (play or no play) to arena rent. I speculate this number could be much larger with other NHL teams.

And how about the costs of this dispute. I'm sure the league is incurring substantial legal (and related) costs each and every day of the lockout. Regardless, the league office is very expensive to run, and with revenues (merchandise, etc.) being significantly reduced, I suspect NHL teams will need to contribute.

I'm probably missing a few things, but when you add up what I've presented, it's WAY more than $4 million, and much closer to the figure I presented. Some of what I've presented is factual, while some is logical calculation or speculation. But I think a reasonable person will see that an average team will lose a lot more than $4 million if there is no hockey this season.

But what's the purpose of disputing my $10-15 million figure? I'm not suggesting this figure is a significant factor in the negotiations. Whether teams lose $4 million (which is not accurate) or $10-15 million this season (which plain and simple, is more accurate), it doesn't matter.

The NHL is determined to get the deal they want, and they can afford to lose a season more than the players. By going to a 50/50 split (which the owners will get), the owners will recoup whatever they lose this season in 1-2 seasons. Going from 57% to 50% works out to around $224 million (7% of $3.2 billion), and divided by 30 teams, it works out to around $7.5 million per team.

And if you still believe an average NHL team will only lose $4 million in a full lockout season, you can then believe that NHL teams will recoup this amount in about half a season.
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slozo
Moderator



Canada
4580 Posts

Posted - 11/26/2012 :  03:42:15  Show Profile  Reply with Quote
That was an impressive post, Guest. Nicely said.

And I follow your logic and agree on your end point . . . the big difference is between player and league on how they can recoup their losses if they hold out and get exactly what they want.

For the players, the best they can hope for is to actually simply keep status quo. This, while their careers all take a one year (or more?) hit. They'll never recoup that money, although they can make it a bit less by playing overseas.

For the owners . . . even if the numbers are off a bit, MOST of the owners will recoup all losses within a couple of years.

There is a big BUT there, however . . . and as impeccably as the guest's logic is, he didn't extrapolate the actual effect of the lockout for the owners to make back their money.

First off, if another full year of lockout passes, I fully expect there to be a sizeable negative effect for merchandise sales and season tickets. Especially in the states. The whole feeling is different at this point from I can guage among the fanbase . . . although, we can only really know once we get there. Still, with a few american franchises already on life support, even a great deal for the BOG might still result in a couple of franchises moving, maybe even contraction eventually if economically things get really bad in the US (it's headed there).

So, the BOG takes a hit there.

And secondly, and not of less importance, the few teams who really will lose out on a lot more money than the rest of the league - Toronto, Montreal, Vancouver, the Rangers, etc - also happen to have a major influence on the whole BOG, especially Toronto. There will come a tipping point, and it's not too far away. They read the tea leaves and the feeling among the fans same as us, they are no dummies.

So that should also have a major impact on their stance.

"Take off, eh?" - Bob and Doug
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/26/2012 :  06:17:09  Show Profile  Reply with Quote
Guest, I appreciate the work you put into the posts but really, you can't say with any more certainty that your numbers are accurate as I can say my numbers are accurate. I can tell you that at least 2 of your numbers are dead wrong. The first being the $1 million building rent for Rexall Place. It is common knowledge that the EIG(the conglomerate who bought the Oilers from Pocklington) signed a $1 per year lease. That is not a typo, it's $1. However, the Oilers also forfeit all revenue from rink operation (concessions, parking, etc) and they pay a surcharge on each ticket sold.. Also, I know both of the Oilers office facilities well. If they are paying $1 million for renting those spaces they are paying more than triple the rent value based on the market.


Regardless, I don't believe your numbers and and you don't believe mine. Although I agree with Slozo that your post was very well written, it doesn't prove your numbers or make them correct. As neither of us can prove our numbers, we will have to agree to disagree.

Finally, to my "break even" comment. As I have already explained, that is a concept based on expectation. For example, I work for a department of a company that is not a revenue generating group. We are a support group and essentially a cost centre. Or target. Or break even point, is around $3 million a year. That is a $3 million loss. Anything more than that is a negative and anything less than that is a positive. However, for the purpose of my budgets and the company's expectation, 'breaking even' is a $3 million loss.


Finally, this " losing $4 million" comment is being misunderstood. Based on the total operating income of the NHL and dividing it by 30 teams, each one makes about $4 million in profit. They are losing that money for sure. Some are losing more, some are losing less, but that is the profit number. I doesn't mean they can't or won't lose more than that. But the teams are losing minimally their profits.

So, to the original point,

NHL revenues are $20 million per day
NHL profits are approx 4% of revenue
NHL is losing 'minimally' $800k a day in pure profit.
Teams are also likely incurring other operational costs above and beyond the $800k in profits.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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Guest4377
( )

Posted - 11/26/2012 :  09:50:42  Reply with Quote
The Oilers "rent deal" costs them well over $1 million per season.  (Play or no play.)

Under the terms of their current agreement, which Rexall Sports Corporation took over from the EIGL (Edmonton Oilers Investors Group) in 2008, they pay $1 per annum PLUS a contribution towards building costs of $878,166 per annum for the period July 1, 2004 to June 30, 2014, this sum is adjusted annually based on the Consumer Price Index. The License Agreement includes an additional annual contribution of $270,272 for the use of the scoreboard until September 30, 2021 to pay off the loan for the scoreboard.  Recognizing the Consumer Price Index increases experienced since 2004, the Oilers (Rexall) are paying well over $1 million in "arena costs" this season. (A very small percentage of the costs are assigned to their junior team, the Oil Kings.)

By the way, the Oilers have one of the most favourable deals in the NHL.  Most teams are paying substantially more in arena costs, even with no games being played.

As it relates to office rent, I never stated that the Oilers are paying $1 million a year on rent alone.  Here's an excerpt of what I stated:  "I speculate the Oilers (similar to most teams) will incur rent AND OFFICE COSTS in the neighbourhood of $1 million for a lockout season. One example (there are many) of a cost incurred is printing. Every team printed media guides, schedules, season tickets (the Oilers were going to go with a credit card style "ticket" for season ticket holders by the way), etc. which they needed to do, season or no season."

When you add it all up, the Oilers will lose around $10 million this hockey season if no games are played.  The Oilers have one of the lowest operating costs (and most favourable arena deals) in the NHL, so most teams will lose MORE (some substantially more) than this amount, and nowhere near the $4 million which has been suggested.
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/26/2012 :  11:39:30  Show Profile  Reply with Quote
Wow guest. You need to sign up. That was backend cost knowledge not often put into a post by a guest. I would think most of the revenue which the Oilers lose, but of course the Oilers will make money from outside sources regardless of whether hockey is played this year. TV revenue which is a split of the $200 million NBC deal, plus the merchandise they still will sell. I will bet over the holidays a few people will receive Oilers merchandise regarless of the lockout. I think they will take a hit but they will still sell a lot. There are probably a few other outside revenue sources that I havent considered. There are probably a few other cost which the Oilers will incur that we havent considered as well. At the end of the day I dont know if the will break even, make money or lose a bundle.

Edited by - JOSHUACANADA on 11/26/2012 13:43:34
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/26/2012 :  11:51:08  Show Profile  Reply with Quote
I really want to move on from this, so it is take me saying you are right and I am wrong then so be it. I can't agree with all of your numbers but I have no desire to do the research required to prove it. I wasn't aware of the rest of the story behind the Oilers arena deal so I do stand corrected on that. That said, I am not sure how favorable that is compared to the teams that own their arenas as they are still getting revenue from concerts, trade shows, etc.

My original point was that the NHL is NOT losing anywhere near the $20 million in revenues as reported by some media groups. As a group, they are losing 4% on the revenue plus a significantly reduced operating cost. I think we can all agree that is not $20 million a day or around $670,000 per team per day.

Using your $10 million assumption, the media is over-inflating the NHL loss by tenfold.

Can we agree to that??

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/26/2012 :  13:50:43  Show Profile  Reply with Quote
I don't think its about who is right or wrong when we dont have the overall picture the owners do. Unless your Katz the picture in Edmonton is not clear. However your assumption that the league teams as a whole makes 4% of revenue in probably correct. Its a little harder to equate that when certain teams keep 50% of there revenue and others lose - 50% more than there revenue. Some teams are going to feel this lockout harder than others. If I was the rogers group I would be screaming to get hockey back on the ice, while Pheonix, Columbus and a few other teams have no incentive to close a deal. I think if Bettman hadn't put a fine in place should an owner speak out of turn, you would see an outcry of owners saying get this deal done. Not all, but the traditional hockey market owners should want hockey back on the ice.

Edited by - JOSHUACANADA on 11/26/2012 15:14:11
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/26/2012 :  16:31:09  Show Profile  Reply with Quote
quote:
Originally posted by JOSHUACANADA

I don't think its about who is right or wrong when we dont have the overall picture the owners do. Unless your Katz the picture in Edmonton is not clear. However your assumption that the league teams as a whole makes 4% of revenue in probably correct. Its a little harder to equate that when certain teams keep 50% of there revenue and others lose - 50% more than there revenue. Some teams are going to feel this lockout harder than others. If I was the rogers group I would be screaming to get hockey back on the ice, while Pheonix, Columbus and a few other teams have no incentive to close a deal. I think if Bettman hadn't put a fine in place should an owner speak out of turn, you would see an outcry of owners saying get this deal done. Not all, but the traditional hockey market owners should want hockey back on the ice.



Although I don't complete disagree, I think the richer teams have more to gain in the long run. The key being the revenue sharing between teams. If you are Toronto you want hockey back. But at the same time, would you not likely be willing to give up a year if it means you get to keep more of your profit in the future? If teams like St. Louis and Pittsburgh go from ones losers to money makers it means TO has to spend less propping up the weaker teams.

I don't think you would hear many if any owners talking negatively about the lockout. I think without the gag order you would hear more from the owners against the players. Based on how much the players are talking crap and how little it adds anything positive to the situation I think the owners are incredibly smart for installing the gag order.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/26/2012 :  17:05:34  Show Profile  Reply with Quote
See I think a team like Toronto which has more to lose, who will only save maybe $5-6 million per season on salary has lost significantly more than that already. They are one of the few teams who can say hockey makes money. Pittsburg - St Louis might be more Bettman sided based on being so close to profit yet not profitable. I bet you though with the same reduced salary expectations, both of those 2 teams stand to lose more than the reduction in salary, if NHL hockey is not played this year. The owners may save $20 million in player salary per team over a 5 year deal, but there is no guarantee the damage to the fan based wont be as significant. I'd say 2 out of 3 would have positive support comments behind the lockout had the gag order not been imposed.

The NHL has stated that future offer's will only get worse from there end, but last CBA the players said no way, no hell to a salary cap and reduction in wages. If a deal isn't reached soon, all bets are off on who comes out of this on the winning side. If it takes a season away and the players feel like they won in any way shape or form, look out come the next negotiations.

quote:
Originally posted by Beans15

quote:
Originally posted by JOSHUACANADA

I don't think its about who is right or wrong when we dont have the overall picture the owners do. Unless your Katz the picture in Edmonton is not clear. However your assumption that the league teams as a whole makes 4% of revenue in probably correct. Its a little harder to equate that when certain teams keep 50% of there revenue and others lose - 50% more than there revenue. Some teams are going to feel this lockout harder than others. If I was the rogers group I would be screaming to get hockey back on the ice, while Pheonix, Columbus and a few other teams have no incentive to close a deal. I think if Bettman hadn't put a fine in place should an owner speak out of turn, you would see an outcry of owners saying get this deal done. Not all, but the traditional hockey market owners should want hockey back on the ice.



Although I don't complete disagree, I think the richer teams have more to gain in the long run. The key being the revenue sharing between teams. If you are Toronto you want hockey back. But at the same time, would you not likely be willing to give up a year if it means you get to keep more of your profit in the future? If teams like St. Louis and Pittsburgh go from ones losers to money makers it means TO has to spend less propping up the weaker teams.

I don't think you would hear many if any owners talking negatively about the lockout. I think without the gag order you would hear more from the owners against the players. Based on how much the players are talking crap and how little it adds anything positive to the situation I think the owners are incredibly smart for installing the gag order.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!

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Guest4377
( )

Posted - 11/26/2012 :  19:47:41  Reply with Quote
With respect to the NBC TV deal, any amount paid this season will be considered "unearned revenue."  Most teams will classify it as such on their P&L statements.

It's not real revenue earned this year, because NBC's 10-year $2 billion deal with the NHL is for ten seasons, so the NHL will have to add another season at the end of the deal.

I actually believe the deal with NBC was constructed knowing that a lockout might occur (the deal was signed in April 2011), so that the NHL would be able to provide teams with some cash-flow dollars during a lockout.  (And for certain psychological advantages in negotiating a new CBA)  For NBC to agree to this deal suggests that a somewhat more lucrative deal could have been reached, but the NHL for some reason (my speculations are outlined) wanted to be "paid" in the event there was no hockey being played.  Interesting that NBC agreed to this provision, but once again, there must have been some material benefit for NBC to include to agree to this part of the deal.

For anyone to think that a company the size of NBC is "paying" $200 million ($6.67 million per team) for nothing is ludicrous.  For the record, I don't think anyone is making this assertion on this site.

As it relates to how (some) media groups are reporting league losses, I'm not responsible for what the media is reporting, and I definitely know the difference between losses in revenues and losses after all costs are considered.

For it to be stated that "the NHL is NOT losing anywhere near $20 million in revenues" (per day) is a misstatement.  This statement is actually true.  The NHL IS losing revenues of $20 million per day.  But revenues are before costs.  See how easy it is to get confused.  But I know what was meant (that the league's losses are substantially less than this figure) and I also know what the media means.

Most people know that when it is reported that the league is losing $20 million per day in revenues, that there are huge costs to be considered.  The media likes to report the big numbers, so it is up to people to figure things out.  

And for those who can't figure things out, they are left to make their own conclusions on what they understand.   The numbers are so big that whether a team loses $4 million, $10 million, or $20 million because of a lost season is all the same to some people.  

And when you really think about it, what's the difference to a billionaire owner of a hockey team, who wants to get a new CBA structured which is more in their favour?

One more comment about team costs, and I agree it's time to move on. I would be very interested to see anyone's presentation of costs being incurred by NHL teams during a lockout season. One poster thinks it's around $4 million. I maintain it's in the $10-15 million range. (For an average team.) What do others think?

I own a number of businesses, and from my experience, most people overestimate revenues (what a business brings in), and underestimate costs. It's easy to do - revenues appear (from the outside looking in) higher than reality. And what a business spends to deliver its product (or service, etc.) is so often misunderstood or miscalculated.
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nuxfan
PickupHockey All-Star



3582 Posts

Posted - 11/26/2012 :  20:26:45  Show Profile  Reply with Quote
quote:
Originally posted by Guest4377
When you add it all up, the Oilers will lose around $10 million this hockey season if no games are played.



Guest, nice posts. FWIW, I think that your 10-15M number is closer to the truth than Bean's 4M number. Likely, we're somewhere in the middle, and it varies from team to team.

But that 10M number really puts things into perspective. Lets say the Oilers lose 10M this season by not playing hockey. The Katz Group (Darryl Katz's holding company, that includes the Oilers), generated revenues last year of 7 billion dollars, according to http://v250.albertaventure.com/the-v250/?company_id=2358&myyear=2011&sort=rank&industry. The Maple Leafs, who will certainly lose the most money this year if no hockey is played, are owned by a conglomerate of companies that had revenues of well over 20B last year, and profits of at least 11B. That is a lot of money, and likely these groups are easily capable of absorbing that loss. In the big scheme of things, does Katz care if the Oilers lose 10M this year? Perhaps in principle, but in reality this loss does not have a meaningful impact on his bottom line. Is Katz even seriously affected if the Oilers are suddenly worth 50% less than they are today? Not really.

The NHL has 29 other Katz-like owners - some richer, some poorer, but all of them with other business interests. They can conceivably hold out for as long as it takes. They know that there is a bigger picture at stake - as much as teams want to ensure they hang on to today's stars, they know there are a bumper crop of future stars waiting to take their place - there is no shortage of talent now or in the future, and the league will march on.

The current players have so much more to lose from this lockout. I'm not sure if they truly realize that or not, one has to assume that deep down they do. But rarely do people win a money fight against a determined group of billionaires.

Edited by - nuxfan on 11/26/2012 20:31:59
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slozo
Moderator



Canada
4580 Posts

Posted - 11/27/2012 :  05:40:05  Show Profile  Reply with Quote
NEWSFLASH:

quote:
The NHL and NHLPA have agreed to allow federal mediators to join the labour negotiations. U.S. federal mediator George Cohen has already had discussions with both sides.


Is this a sign that the beginning of the end of the lockout starts with a third party being a part of the negotiations? Would love to hear everyone's thoughts on whether this is better for the players or owners . . .

"Take off, eh?" - Bob and Doug
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nuxfan
PickupHockey All-Star



3582 Posts

Posted - 11/27/2012 :  08:36:10  Show Profile  Reply with Quote
quote:
Originally posted by slozo

NEWSFLASH:

quote:
The NHL and NHLPA have agreed to allow federal mediators to join the labour negotiations. U.S. federal mediator George Cohen has already had discussions with both sides.


Is this a sign that the beginning of the end of the lockout starts with a third party being a part of the negotiations? Would love to hear everyone's thoughts on whether this is better for the players or owners . . .


"Take off, eh?" - Bob and Doug



its non-binding, so take it for what it is - both parties have asked for some outside opinions on what they should do. Its a reasonable step, given that both sides have given their "best" offer and they are still miles apart.

I have no idea who will be favoured here. Logic tells me the owners will benefit, but it really depends on the mediator.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/27/2012 :  10:57:17  Show Profile  Reply with Quote
In the NFL and NBA, mediation did nothing but slow down the process of decertification. I would suggest the owners are pushing for mediation for that point alone. Things get very messy with a decert and I would assume the owners do not want that.

I think this is more of a risk to the players than the owners based on the offers on the table. Compared to the other sports CBA's, the NHL offer is comparable to say the least. I don't think either side is going to listen to the mediator but I think public opinion can be swayed heavily based on the mediator's opinion.



Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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MrBoogedy
Rookie



Canada
195 Posts

Posted - 11/28/2012 :  01:51:44  Show Profile  Reply with Quote
During the last lockout, the season was cancelled 3 days after mediation stepped in, at least that's what I just heard on CBC news.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/28/2012 :  10:43:45  Show Profile  Reply with Quote
Forbes has just released the NHl team valuations from 2012. Using the updated information, they peg revenues at $3.4 billion and operating income at $250 million which is a 7% return on investment.

13 of the 30 teams lost money and the story speaks a lot towards franchise values. Two teams that were actually sold this season were St. Louis for $130 million and Toronto for nearly $1 billion. That is a massive spready between the top on the bottom.

The story also states that even at 50/50, the bottom 4-5 teams would need to go 2 rounds into the playoffs to be profitable. It also speaks about the top 5 teams making 83% of the total profit in the NHL.

These numbers look better but there is still a long way to go to get most of the NHL teams making a reasonable return.


http://www.forbes.com/sites/mikeozanian/2012/11/28/nhl-team-values-2012-maple-leafs-first-hockey-team-worth-1-billion/

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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Guest4178
( )

Posted - 11/28/2012 :  10:50:37  Reply with Quote
I read an interesting letter on the opinion page of my local newspaper, which offered an interesting perspective on the lockout. Here it is...

"Watching the NHL season slowly disappear reminds me of the parable of two rich men sitting across from each other at a table.

A hole has opened in the roof above them and money is falling through it onto the table. This happy circumstance is soon enough interrupted by human nature, provoking an argument over how to divide the bounty.

Each man makes claims to be more deserving in some way — perhaps more of the money is landing on one man’s side or one feels he opened the hole or owns the house or table.

There seems to be no solution and the only thing they can agree on is to close the hole before more money falls in. They do this and then sit bickering, looking like fools to us, except we’re in no position to judge because we have been the ones shovelling in the money.

What is the lesson of this parable? Maybe that it’s not a good strategy when something is broken to break it even more. You wouldn’t think the two sides in the NHL dispute need a parable to figure that out."
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Guest4350
( )

Posted - 11/28/2012 :  11:24:43  Reply with Quote
quote:
Originally posted by Beans15

Forbes has just released the NHl team valuations from 2012. Using the updated information, they peg revenues at $3.4 billion and operating income at $250 million which is a 7% return on investment.

13 of the 30 teams lost money and the story speaks a lot towards franchise values. Two teams that were actually sold this season were St. Louis for $130 million and Toronto for nearly $1 billion. That is a massive spready between the top on the bottom.

The story also states that even at 50/50, the bottom 4-5 teams would need to go 2 rounds into the playoffs to be profitable. It also speaks about the top 5 teams making 83% of the total profit in the NHL.

These numbers look better but there is still a long way to go to get most of the NHL teams making a reasonable return.

Is that it then? The goal is to make the split in such a way that all teams to be profitable? This is the fair split for you?

Why is it always the players that make the concession rather than the NHL and the BOG to clean its own house and keep it in order? I think expansion and relocation to the sunbelt is the BOG and NHL's decision and problem. Don't blame or take money away from the players for the owners and BOGs poor decisions.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/28/2012 :  12:05:25  Show Profile  Reply with Quote
It's not it for me. When 5 teams make 83% of the profits for the league and there is an $850 million difference between the top and the bottom valued teams that is a not a sound and sustainable model. Also, look at the 4-5 years prior to this one year and you will not see anywhere near those profits. If I told you that you could make money $1000 for one year but lose $300 in each year for 5 years would you jump on that deal??

Secondly, do you really think the players are interested in losing 20% of their membership by cutting the expansion sunbelt teams?? The players are just as interested, if not more interested, in keeping those teams as the owners.

Finally, you don't think the owners give anything up??? How about their money they put at risk every single year?? Do the owners get a guaranteed amount of money every year like the players do?? Nope. They actually have to perform. A player can sign a contract tomorrow and get every single dollar regardless of his performance. The owner only gets paid when he is in the right market, with the right TV deal, the right arena, the right GM and management group, the right coach, and the right players.

The owner has to perform to get paid. The player gets paid regardless. I think that in itself is enough for the owner to give up.


Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/28/2012 :  13:14:23  Show Profile  Reply with Quote
Before I read thru the article and respond to that, the difference between the worth of St Louis and Toronto is greater due to so many factors which have little to do with the on ice product. Toronto is the model all NHL teams need to shoot for, except for the on ice product. 1 Billion did not buy the roster only. It did not buy the merchandise sales or the Beer sales alone. Anybody who knows anything about the business of The Maple Leafs knows they are a serious business which includes a hockey team. The St Louis Blues are just that a hockey team with little potential outside of a hockey club in a major city center.

quote:
Originally posted by Beans15

Forbes has just released the NHl team valuations from 2012. Using the updated information, they peg revenues at $3.4 billion and operating income at $250 million which is a 7% return on investment.

13 of the 30 teams lost money and the story speaks a lot towards franchise values. Two teams that were actually sold this season were St. Louis for $130 million and Toronto for nearly $1 billion. That is a massive spready between the top on the bottom.

The story also states that even at 50/50, the bottom 4-5 teams would need to go 2 rounds into the playoffs to be profitable. It also speaks about the top 5 teams making 83% of the total profit in the NHL.

These numbers look better but there is still a long way to go to get most of the NHL teams making a reasonable return.


http://www.forbes.com/sites/mikeozanian/2012/11/28/nhl-team-values-2012-maple-leafs-first-hockey-team-worth-1-billion/

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!

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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/28/2012 :  13:20:29  Show Profile  Reply with Quote
Actually, I would love to know who here on the website could acurately demonstrate the Maple Leafs business model and acurately convey why they can make such stunning profits as an NHL team primarily. I dont think I am the best person to do that.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/28/2012 :  18:17:55  Show Profile  Reply with Quote
Joshua, I don't think anyone would argue the environment has a significant amount of why the Leafs are as valuable as they are. However, when you read the article you will understand the point. The STL deal and TO deal are pretty similar with the exception that the Leafs own the stadium where STL does not.

Regardless, the point is that comparatively speaking, the gap between high and low in the other major sports is not even close. The multiple is way off. When I say multiple I mean how many of the lowest value teams can you buy for the highest value team.

NFL - Dallas Cowboys = $2.1 billion vs Jacksonville Jaguars = $770 million
Approx 3x multiple ( you can buy 3 Jaguars franchises for one Cowboys franchise)

NBA - LA Lakers = $900 million vs Milwaukee Bucks $268 million
Approx 3 times multiple

MLB - NY Yankees = $1.85 billion vs Oakland A's = $321 million
Approx 6 times multiple

NHL - Leafs = $1 billion vs St. Louis = $130 million
Approx 8 times multiple



Not only does the fact that 5 teams make more than 80% of the income but when the top franchise is worth nearly 8 times the value of the bottom frachise, the system is clearly not sustainable.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/28/2012 :  18:51:47  Show Profile  Reply with Quote
I was hoping some other factors would be pointed out by someone with more Leafs business knowledge and could help with the extreme difference in value. I understand the Leafs own the building, I think that they also own the Raptors and that the Leafs network is one of, if not the most successful team owned team networks. I believe there are many other income generating factors which go into the true value of the Leafs franchise, which teams like the Blues have not been able to establish or make as successful. If you go strictly by HRR there is less of a gap. Certainly not 8 times the difference. So if the Leafs is a model example of how to make money with a hockey team, it is not strictly by the on ice product.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/28/2012 :  20:16:03  Show Profile  Reply with Quote
Joshua, it's not rocket science as to why the Leafs are the most profitable team. It's the same reason why the top 6 teams are also the original 6.

1. Significant hockey fan population
2. Long established traditions
3. Metropolitan areas with money
4. Established facilities with majority ownership
5. Substantial local tv deal
6. Engrained marketing on a national level

Their business model is not that much different than any other team. It's like comparing the NFL to the NHL. Both have very similar business models yet one makes $9 billion in revenues where the other makes around $3.5 billion in revenues.

Who do you think will make more money and therefore be worth more?

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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slozo
Moderator



Canada
4580 Posts

Posted - 11/29/2012 :  04:50:38  Show Profile  Reply with Quote
Let's stick on topic, folks.

If you want to start a thread on why the Maple Leafs franchise as a money-making entity is successful, go ahead. If you want to start a thread on franchise value disparity, go ahead.


And if you want to lock the owner and player reps in a room and force them to sign an agreement to get hockey back on the ice so that we can stop talking about finances . . . by all means, be my special guest and GO AHEAD AND DO THAT!

"Take off, eh?" - Bob and Doug
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JOSHUACANADA
PickupHockey Veteran



Canada
1877 Posts

Posted - 11/29/2012 :  08:58:48  Show Profile  Reply with Quote
Sorry Slozo, but my questions were to relate to the current CBA negotiations. I was fishing for someone to help illustrate a point.

So what your saying is these CBA negotiations have little to do with the current financial situation of the top 5 teams in the league with established fan base, tradition, strong hockey market, ownership of the facilities, access to tv deals and are already engrained marketing on a national level. These negotiations are being stalled by the bottom 10 teams who cannot seem to follow this business model or our in poor hockey markets. And this is the players problem why? I still see this as an ownership problem, location problem, marketing and fan based problem, not a player salary problem.

I still believe if you took the top 10 teams in a room and got there true feelings you would find 10 owners who would play now under the last terms of the CBA and are extremly pissed hockey is not being played right now over a few million $. If you locked the bottom 10 in a room you would see the opposite because frankly not playing hockey right now costs them less money. The middle 10 are in traditional hockey markets which will benefit from any of the offer's presented by the League or the PA. Someone has got to take control, maybe even away from the duo of Bettman/Daly and force a deal to get done now or very soon. Whether it be a group of owners from the successful 10 with a proposal to the bottom 10 with increased revenue sharing to ease the burden and some form of movement towards the players last proposal, or a revised owner proposal with increases to the make whole, or a staggered reduction in HRR ending at 50/50.

I dont see that potential to force Fehr and his other brother Fehr to move towards the owners offer, as he has taken control of his membership by having to many moving parts in the PA.

quote:
Originally posted by Beans15

Joshua, it's not rocket science as to why the Leafs are the most profitable team. It's the same reason why the top 6 teams are also the original 6.

1. Significant hockey fan population
2. Long established traditions
3. Metropolitan areas with money
4. Established facilities with majority ownership
5. Substantial local tv deal
6. Engrained marketing on a national level

Their business model is not that much different than any other team. It's like comparing the NFL to the NHL. Both have very similar business models yet one makes $9 billion in revenues where the other makes around $3.5 billion in revenues.

Who do you think will make more money and therefore be worth more?

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!

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Guest4178
( )

Posted - 11/29/2012 :  09:55:30  Reply with Quote
I don't disagree with Joshua that some owners want a new CBA more than other owners. And that the top 10 teams (in profitability) have a different mindset than the bottom 10 teams.

But I would add the same thing with the players.

While it may seem that the highest paid players have the most to lose, the reality is that the top 100 (or even 200) players can "afford" to hold out for a better CBA.

I think if you put the bottom 100 players in a room (and/or players in the last few years of their hockey careers), they would say let's get a deal done, making the necessary compromises to do so.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/29/2012 :  10:01:17  Show Profile  Reply with Quote
Joshua, as noted in my original point, although the deparity between the top and bottom NHL team is larger than the other sports, the other NA sports also have this issue. Some markets are better than others. The profitability of each all the teams in every major sport is market dependent. In the NFL, Jacksonville will never have the revenue opportunity that NY or CHI have. They have fewer people to draw revenue from, less corporate dollars, less local TV opportunity etc.

The largest different between the NHL and the other leagues are revenues and player costs. Teams in the other major sports are not only spending less of their revenue on their players but are also getting substantially more revenue opportunities from TV and other non-ticket related revenue streams.

Consider the revenues by team in all of the major sports(in millions)

1 - NFL - Hi - $500 Ave $275 Low - $226
2 - MLB - Hi - $439 Ave $211 Low - $148
3 - NBA - Hi - $244 Ave $132 Low - $89
4 - NHL - Hi - $200 Ave $112 Low - $66

Now, consider this the % of revenues in each of the four major sports.

MLB - 30% players/70% owners
NFL - 47% players/53% owners
NBA - 49% players/51% owners
NHL - 57% players/43% owners


This is the part that I can't understand from the pro-players side. The owners in the NHL today not only get less revenue than the other owners of pro sports in NA but they also give significantly more of that revenue to their players.









Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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Guest4350
( )

Posted - 11/29/2012 :  12:51:55  Reply with Quote
quote:
Originally posted by Beans15

Now, consider this the % of revenues in each of the four major sports.

MLB - 30% players/70% owners
NFL - 47% players/53% owners
NBA - 49% players/51% owners
NHL - 57% players/43% owners

Well it looks like you make a good argument for the owners to scrap the cap and go with the baseball system. Not sure why the owners of the NFL, NBA and NHL won't go for a MLB model if it is so good for the owners.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/29/2012 :  14:53:50  Show Profile  Reply with Quote
The MLB program doesn't work for thee reasons:

The NHL does not produce the $7 billion a season in revenues that MLB produces

There is too large of a gap between the rich and the poor in the NHL and teams would certainly fold

Not to open up a can of worms from another thread, but the MLB process is the worst system of the 4 to produce parity. The rich ALMOST always win and th poor ALMOST alway lose.


No one wants to see the NHL turn into the CFL do they??

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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Guest4178
( )

Posted - 11/29/2012 :  16:30:20  Reply with Quote
The following statement was made by NHL Deputy Commissioner Bill Daly, following two days of mediation:

"Today, we concluded two days of mediation with FMCS mediators and representatives of the NHL Players' Association. After spending several hours with both sides over two days, the presiding mediators concluded that the parties remained far apart, and that no progress toward a resolution could be made through further mediation at this point in time. We are disappointed that the mediation process was not successful."

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Guest4377
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Posted - 11/29/2012 :  17:59:47  Reply with Quote
The mediators (and mediation process) never had a chance. Their involvement was mostly about optics.
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Guest0649
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Posted - 11/29/2012 :  18:21:01  Reply with Quote
quote:
Originally posted by Beans15

The MLB program doesn't work for thee reasons:

The NHL does not produce the $7 billion a season in revenues that MLB produces

There is too large of a gap between the rich and the poor in the NHL and teams would certainly fold

Not to open up a can of worms from another thread, but the MLB process is the worst system of the 4 to produce parity. The rich ALMOST always win and th poor ALMOST alway lose.

Sorry but it seems that your 3 points are already in the NHL now and the revenue is favour of the players. So how will that change if it goes the other way and favour the owners or an even split?

Clearly you have indicated a league doesn't work even when it swings in the owners favour either in your MLB example.

How does the 3 points above compare in the NBA or NFL where the split is fairly even? My hunch is not too good either. Note the NFL 16 game season is not a big enough sample size.
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nuxfan
PickupHockey All-Star



3582 Posts

Posted - 11/29/2012 :  22:14:01  Show Profile  Reply with Quote
quote:
Originally posted by JOSHUACANADA
These negotiations are being stalled by the bottom 10 teams who cannot seem to follow this business model or our in poor hockey markets. And this is the players problem why? I still see this as an ownership problem, location problem, marketing and fan based problem, not a player salary problem.




Well, it seems that the solution is simple. Chop the bottom 10-15 teams from the NHL. I'm sure Fehr will have no problems explaining that hockey is back on, but only for 60% of his membership. Do you still think this is not a player problem?

When you work for a company that is losing money, it automatically becomes a problem for you - even if you didn't personally cause the company to lose money.
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Guest4350
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Posted - 11/30/2012 :  09:35:30  Reply with Quote
quote:
Originally posted by nuxfan
Well, it seems that the solution is simple. Chop the bottom 10-15 teams from the NHL. I'm sure Fehr will have no problems explaining that hockey is back on, but only for 60% of his membership. Do you still think this is not a player problem?

When you work for a company that is losing money, it automatically becomes a problem for you - even if you didn't personally cause the company to lose money.

Well considering it is an idle threat, the league will never contract (though it should) Fehr's got nothing to worry about.

If the NHL is serious about being profitable for each team, then it should contract and use it as a part of the negotiations.
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Beans15
Moderator



Canada
8174 Posts

Posted - 11/30/2012 :  11:17:54  Show Profile  Reply with Quote
Here are a few quotes from TSN posters. I think they are awesome:

Let me put it in the simplest numbers:
683 players have lost $463mil while fighting for $182mil and the contracting rights of the 42 players with contracts that are 7yrs or more (Ik it is 5yrs the NHL wants but I bet they would go 6yrs).
So to recap 683 players losing $463mil because they want $182mil and are not willing to tell the 42players with 7+yr contracts to shut it. This is a special level of stupid at this point.


The Players' net loss is $200mil/mo (AHL, Europe, PA-pogey). The share switch from 57% to 50% is $200mil a season. So the PA 'victory' had an expiry date of 5 months on a 5-year proposal. But Wait! The last PA proposal averged out at 53%, just under half. In 2 weeks, the players will be in 'forever-lost' territory. But Wait! League revenue will take a year or two to recover (hint: that's why the PA wants floor-protection), and every $120mil down adds another 'forever-lost' year to the damage. It's easy to 'get it' with the PA strategy. It's a lot harder to figure out how the Players bought into it.




Finally, without question, the quote that says it all:

They don't don't need a mediator, they need a basic economics teacher for the players.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!
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Guest0649
( )

Posted - 12/01/2012 :  07:46:07  Reply with Quote
quote:
Originally posted by Beans15
The Players' net loss is $200mil/mo (AHL, Europe, PA-pogey). The share switch from 57% to 50% is $200mil a season. So the PA 'victory' had an expiry date of 5 months on a 5-year proposal. But Wait! The last PA proposal averged out at 53%, just under half. In 2 weeks, the players will be in 'forever-lost' territory. But Wait! League revenue will take a year or two to recover (hint: that's why the PA wants floor-protection), and every $120mil down adds another 'forever-lost' year to the damage. It's easy to 'get it' with the PA strategy. It's a lot harder to figure out how the Players bought into it.

I think you forgot to mention that the owners are making money hand over fist right now. C'mon now, the owners are losing money too and just about the same $200M so far that the players have lost. Both sides are stupid not just the players. Let's not be too biased.
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slozo
Moderator



Canada
4580 Posts

Posted - 12/03/2012 :  03:36:41  Show Profile  Reply with Quote
quote:
Originally posted by Beans15

Here are a few quotes from TSN posters. I think they are awesome:

Let me put it in the simplest numbers:
683 players have lost $463mil while fighting for $182mil and the contracting rights of the 42 players with contracts that are 7yrs or more (Ik it is 5yrs the NHL wants but I bet they would go 6yrs).
So to recap 683 players losing $463mil because they want $182mil and are not willing to tell the 42players with 7+yr contracts to shut it. This is a special level of stupid at this point.


The Players' net loss is $200mil/mo (AHL, Europe, PA-pogey). The share switch from 57% to 50% is $200mil a season. So the PA 'victory' had an expiry date of 5 months on a 5-year proposal. But Wait! The last PA proposal averged out at 53%, just under half. In 2 weeks, the players will be in 'forever-lost' territory. But Wait! League revenue will take a year or two to recover (hint: that's why the PA wants floor-protection), and every $120mil down adds another 'forever-lost' year to the damage. It's easy to 'get it' with the PA strategy. It's a lot harder to figure out how the Players bought into it.




Finally, without question, the quote that says it all:

They don't don't need a mediator, they need a basic economics teacher for the players.

Daniel Alfredsson is the MVP of the universe. All hail the Ottawa Senators!!!!!



Exactly what I have been saying in the other lock-out thread . . . the players don't understand basic economics, and they have been totally hoodwinked. And each passing week they lose more and more. I can only shake my head in dismay at their utter ignorance!

"Take off, eh?" - Bob and Doug
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Guest0649
( )

Posted - 12/03/2012 :  19:44:25  Reply with Quote
quote:
Originally posted by Beans15

Here are a few quotes from TSN posters. I think they are awesome:

Let me put it in the simplest numbers:
683 players have lost $463mil while fighting for $182mil and the contracting rights of the 42 players with contracts that are 7yrs or more (Ik it is 5yrs the NHL wants but I bet they would go 6yrs).
So to recap 683 players losing $463mil because they want $182mil and are not willing to tell the 42players with 7+yr contracts to shut it. This is a special level of stupid at this point.


The Players' net loss is $200mil/mo (AHL, Europe, PA-pogey). The share switch from 57% to 50% is $200mil a season. So the PA 'victory' had an expiry date of 5 months on a 5-year proposal. But Wait! The last PA proposal averged out at 53%, just under half. In 2 weeks, the players will be in 'forever-lost' territory. But Wait! League revenue will take a year or two to recover (hint: that's why the PA wants floor-protection), and every $120mil down adds another 'forever-lost' year to the damage. It's easy to 'get it' with the PA strategy. It's a lot harder to figure out how the Players bought into it.

Finally, without question, the quote that says it all:

They don't don't need a mediator, they need a basic economics teacher for the players.


Net loss = income (or total revenue) - expenses

where expenses are higher than income.

Is this what is described as net loss? If yes, then how do you know that the players' expenses have not gone down to match income?

Looks like by the numbers posted you mean revenue loss is $200M. The owners are even in a worse position than the players if you compare their revenue loss as well as their net loss to the players. So why don't the owners just give up on the $200M difference since they are losing even more than the players?

Perhaps it is not only the players that need an economics teacher.
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sahis34
PickupHockey Pro



Canada
573 Posts

Posted - 12/04/2012 :  18:27:56  Show Profile  Reply with Quote
How are you people not sick of this s*** yet?
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