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Afternoon Line

"Donald Fehr, I know he's a tough negotiator and for years he was used to getting his way by virtue of the fact that MLB is still the only league that doesn't have a salary cap.  But I think the wrangling that will go on over the course of the next month or two is simply seeing what (off-ice) concessions he can get ... just like the NFL got fewer workouts, this that and the other.

"Then looking into the future, if the owners cannot largely make a profit with a 50-50 split, then you shouldn't own an NHL franchise. Part of the reason teams get into trouble is because they feel like they have to keep up with the Joneses."

-Dr. Patrick Rishe, sports economic professor at Webster University.  More on this topic from Jeremy Rutherford of the St. Louis Post-Dispatch.

Filed in: NHL Talk, NHLPA, | KK Hockey | Permalink
 

Comments

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Here’s the problem with the NHL compared to other leagues.  The revenue difference between small and big market teams is positively immense, and the manner in which the cap floor is calculated requires low-revenue teams to spend to -10 or -20 million just to be ‘street legal’.

The reason MLB ‘works’, depending on ones definition of the term, is that a team can just decide to not pay any money in salaries.  There are 6 MLB teams that spent 120+ mil in payroll this year.  There are 6 MLB teams that spend 65 mil or less in payroll last year.

I mean, when you’re talking about something like 40 or 50 million going to each team each year at an absolute minimum from their national TV deals, then you add in local deals, then you add in tickets sold and stadium revenue… it’s impossible to not make money with a 60ish mil payroll.

The reason the NHL doesn;t do that is in many cases the lower-revenue clubs are also in the non-traditional markets the NHL covets (stupidly).  If the NHL allowed non-traditional markets to spend within their means those clubs would be eternally crap, which does nothing to advance the cause of the NHL in those markets.

Unless and until the NHL gets it together and figures out which business battles it can win, stupid stuff like this is always going to happen.

Forever.

Posted by HockeyinHD on 10/08/12 at 04:09 PM ET

Vladimir16's avatar

The reason the NHL doesn;t do that is in many cases the lower-revenue clubs are also in the non-traditional markets the NHL covets (stupidly).

Stupidly indeed.

Posted by Vladimir16 from Grand River Valley on 10/08/12 at 04:41 PM ET

Kate from Pa.-made in Detroit's avatar

“Then looking into the future, if the owners cannot largely make a profit with a 50-50 split, then you shouldn’t own an NHL franchise.

It’s all about location. You cannot make a profit if you do not have fans. Relocate a few teams to Canada. Hockey is such a huge part of their culture.

Lets Go Red Wings!!!!! In’13?

Posted by Kate from Pa.-made in Detroit on 10/08/12 at 06:58 PM ET

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Pos

ted by Kate from Pa.-made in Detroit on 10/08/12 at 06:58 PM ET

I thought you promised you were done with the NHL?

Posted by timbits on 10/08/12 at 10:01 PM ET

HockeytownOverhaul's avatar

How’s the view from the high-road Tim?

Posted by HockeytownOverhaul on 10/08/12 at 11:40 PM ET

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How’s the view from the high-road Tim?

It’s not the high road, it’s common sense.  If people were actually truthful about being done with the NHL they wouldn’t be, you know, posting on blogs about the NHL

They’d be ‘done’ with it, right?

Except they aren’t.  So when they say they are, and keep repeating how done they are on blogs about the NHL, it rings spectacularly hollow.

 

Posted by HockeyinHD on 10/09/12 at 06:06 AM ET

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How’s the view from the high-road Tim?

I had to ask with Kate having made previous statements about dropping the NHL for good.

Posted by timbits on 10/09/12 at 09:07 AM ET

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My position from the outset has been the NHL has to figure out a way to either help the small market teams or let them sink on their own. The current owner mandated salary cap is the biggest obstacle for small market teams. It forces them to pay revenue to players that they simply cannot afford.  At some point a team will have to spend, but they cannot spend if they have wasted money for years just to reach an artificial floor without ever becoming more competitive. Now team build through the draft, but take on short term bloated salaries just to reach the floor with no improvement in the standings.

The idea that the players, by giving up a larger share of revenue, can fix this is a fallacy. All it will do is make the rich teams richer. From the very beginning I said keep HRR defined as is so that everyone is working from a common set of numbers. Reduce the split from 57% down to 50% over the next five years and put aside that 7% in saving towards the revenue sharing pot.  In year six revenue sharing goes back to 54%. The large market teams, don’t need more help, they have a fixed cap on the high end to ensure profits. Players would see their share diminish due to lowering of the split, but from a greater pool of money so no givebacks in current contracts.  The problem the players would have with this is that at the next CBA negotiation, the owners would start at 50% and nregotiate their way down from there.  So going up to 54% in the final year would make sure the players are negotiating from a more equitable number again.

For giving up on the revenue split, the players shouldn’t have to give up any of their contract rights such as NTC or when they are eligible for free agency.  I personally hate when a team gives a NTC, but that is a non-cost benefit a team can give a player to entice him to stay. If they want to reduce the lengths of contracts to 10 years max, I’m okay with that too, but that isn’t a player benefit, that is an owner circumventing the cap benefit. The same with hiding contracts in the AHL, that could remain as a concession to the players since it makes it easier for the large markets to bury their mistakes.  I hate that the large markets can do this, but it is again a way to give some flexibility to the entire league.

PS
I am done giving the NHL any of my money for the year, that doesn’t mean I can’t follow the NHL or comment on the issues that affect the league. A boycott doesn’t mean you have lost interest ,it means they have lost what interested them about you - your money.

Posted by hockey1919 from mid-atlantic on 10/09/12 at 10:26 AM ET

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The idea that the players, by giving up a larger share of revenue, can fix this is a fallacy. All it will do is make the rich teams richer.

That’s just wrong, though.  If the richest team in the NHL makes 50 million dollars a year and the poorest team in the NHL loses 20 million dollars a year, if the NHL shifts the HRR burden by enough the richest team in the NHL will make 70 mil a year and the poorest team will break even.

That’s math.

A boycott doesn’t mean you have lost interest ,it means they have lost what interested them about you - your money.

If you are watching the team, that’s fine by them.  It means the commercials advertisers buy are getting beamed into your skull, which is still money into the NHLs pockets.

Someone else will buy your ticket.

Posted by HockeyinHD on 10/09/12 at 11:01 AM ET

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If you are watching the team, that’s fine by them.  It means the commercials advertisers buy are getting beamed into your skull, which is still money into the NHLs pockets.

I’m not a Nielsen house so if my TV is on or not it doesn’t really matter. Besides following it on KK doesn’t affect TV. Let them buy my ticket(s) and my Center ICe package as well, I’m okay with that.

If the richest team in the NHL makes 50 million dollars a year and the poorest team in the NHL loses 20 million dollars a year, if the NHL shifts the HRR burden by enough the richest team in the NHL will make 70 mil a year and the poorest team will break even.

If the cap is always relative to HRR then the math means the lower end teams will always just have to pay more from the bottom of the pot. The more the rich teams make, the more poor teams will have to contribute in salary.  When the rich teams earn 70 the poor teams will have to pay out 40.

 

Posted by hockey1919 from mid-atlantic on 10/09/12 at 11:50 AM ET

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I know in the end the owners don’t need my specific money because there are enough other people that will pay.  Good for them but, I can only control what I do with my money.

Posted by hockey1919 from mid-atlantic on 10/09/12 at 11:53 AM ET

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I’m not a Nielsen house so if my TV is on or not it doesn’t really matter.

Sure it does.  All Nielsen does is provide estimates of viewership.  If you’re still interested in the sport and willing to watch it on TV… that’s the foundation on which the Wings sell their air-time to advertisers.

The only people in this issue who even move the dial are the ones who actually will stop watching the sport, reading about it, or following it in any way… the ones who completely drop off the radar.

If the cap is always relative to HRR then the math means the lower end teams will always just have to pay more from the bottom of the pot.

That’s not the way it works, though.  A lower HRR share to players means a lower cap in the short term.  Which, assuming the NHL continues to run their floor and ceiling like idiots, means a direct decrease in the amount a team has to spend.

Each % of HRR the owners get back is 33 million bucks, so each % back roughly means the floor will drop by a million dollars.  So not only does the floor drop, but the teams are also getting more of the pie.  It’s a double plus.

It’s like having your rent drop and getting a raise at the same time.  When you are broke, it’s a pretty big improvement and you love it.  When you’re flush, hey, more money is always nice.

Posted by HockeyinHD on 10/09/12 at 01:16 PM ET

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A lower HRR share to players means a lower cap in the short term.

Not if the total revenue shares increase on the top, while income on the bottom decreases because of loss of income. If revenue were somehow shared equitably then maybe, but after the lockout Phoenix will probably be bringing in even less revenue and teams like New York will have a boom in revenue due to pent up demand.  In other words, if my rent decreases and I get laid off and my neighbor gets my salary on top of his and his rent decreases as much as mine, it still leaves me worse off.

All Nielsen does is provide estimates of viewership

And that estimate has no correlation as to whether my TV is turned on or not, thus proving my point. They do not calculate my actual viewership, so if I watch and two Nielsen families don’t , they don’t estmate 1/3 viewership, they estimate 0 out of 2 and extrapolate from there and assume I wasn’t watching either.

Posted by hockey1919 from mid-atlantic on 10/09/12 at 02:24 PM ET

Kate from Pa.-made in Detroit's avatar

I thought you promised you were done with the NHL?

Posted by timbits on 10/08/12 at 10:01 PM ET

Whatever. It’s something I say every season, and, I am free to change my mind any time I please.

I never said I was done with KK.

Lets Go Red Wings!!!!! In ‘13?

Posted by Kate from Pa.-made in Detroit on 10/09/12 at 07:37 PM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

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