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Franchise Economic Issues Need To Be Addressed

from John Shannon of Sportsnet,

It was late in Thursday's Press Conference. Gary Bettman had probably been on the podium for 10 minutes too long. You knew he was now fully on adrenaline. The media were inching towards the door to begin filing on one of the most bizarre, theatrical days of anyone's adult life, and a simple question came from the back...

"Gary, are you concerned that franchises will be in peril if there is no hockey this season?"

The answer was just a simple, yet had much more meaning: "My bigger concern is if we make the wrong deal we'll have more franchises in jeopardy."

And that, in a nut shell, is why there was no agreement in New York City this week. It is a message that the NHL really has not trumpeted enough during this lock out. As wealthy as some teams are there are other in this league riddled with debt. And before you jump up and yell, that the teams are in the wrong locales, stop it! This isn't a public trust, it's a private club. A business where the owners decide where the teams play. If you don't like that, tough! It's a private business, with economic issues that need to be addressed. And the players and the owners both bear the responsibility of addressing those issues.

continued

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

Comments

redxblack's avatar

Bullshit. There wasn’t a player responsible for placing teams in Miami, Atlanta, columbus, phoenix or scouting las Vegas as a hockey town.

Posted by redxblack from Akron Ohio on 12/08/12 at 11:58 AM ET

Red Winger's avatar

Hi everyone, this is the elephant, he’s been in the room all the time

Posted by Red Winger from Sault Ste Marie on 12/08/12 at 12:37 PM ET

Red Winger's avatar

Bullshit. There wasn’t a player responsible for placing teams in Miami, Atlanta, columbus, phoenix or scouting las Vegas as a hockey town.

Right, the NHLPA is against expansion, because it means more jobs for players, thus more union dues, so ...

...wait…what??

Posted by Red Winger from Sault Ste Marie on 12/08/12 at 12:40 PM ET

redxblack's avatar

The issue is and has always been the WHERE not the WHAT.

Hamilton, QC, KC, and even Cleveland made more sense than where the league put teams.

Posted by redxblack from Akron Ohio on 12/08/12 at 01:02 PM ET

J.J. from Kansas's avatar

The NHLPA’s opinions on expansion are as valid as their history of forcing the NHL to expand, which for the slowest among you is “not at all.”

If the NHLPA had told the NHL not to move to Arizona, it wouldn’t have accomplished anything anyway.

Posted by J.J. from Kansas on 12/08/12 at 01:02 PM ET

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Hamilton, QC, KC, and even Cleveland

Yeah that is a cast of winning cities. Nice tv contract to go along with.  How about adding Saskatoon, Whitehorse and Rochester and you can have a nice little league.

Posted by timbits on 12/08/12 at 01:50 PM ET

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The NHLPA’s opinions on expansion are as valid as their history of forcing the NHL to expand, which for the slowest among you is “not at all.”

If the NHLPA had told the NHL not to move to Arizona, it wouldn’t have accomplished anything anyway.

It should be noted you support the NHL’s position on expansion here, shouldn’t it?

Last year the NHL tried to re-organize the divisions to reduce travel.  Partly to reduce travel costs.  The NHLPA rejected the NHL’s plan.  Just saying.

The issue is and has always been the WHERE not the WHAT.

Totally agree.  The NHL has to fight over every dime because the NHL has 5+ teams in bad markets that can’t survive economically and be competitive on the ice at the same time.

MLB doesn’t care about most teams being competitive on the field or not.  That’s why they have 6 teams paying less than 65 mil in salaries and 6 teams paying more than 120 mil in salaries.

The NBA already had this exact fight.  They won. 

The NFL makes so much money it hardly even matters.

 

Posted by HockeyinHD on 12/08/12 at 04:57 PM ET

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Yeah that is a cast of winning cities. Nice tv contract to go along with.  How about adding Saskatoon, Whitehorse and Rochester and you can have a nice little league.

The way things are going we’re well on our way to a nice little league.  Oh but I forget, you don’t seem to mind a team dropping 30-40 million per season for the last dozen years.

Posted by dash_pinched on 12/08/12 at 05:28 PM ET

Down River Dan's avatar

John Shannon worked/works ?? For the league, so little surprise his opinions are what they are.

His point that the successful teams should care for the not so successful works in the NFL because the 32? Teams evenly split a $ 1,000,000,000 + television deal. That’s before they sell 1 ticket, $10 beer,$6 hotdog, $25 parking…etc. You have to be a moron to loose money as an nfl owner. Nearly as good as a casino!!

The NHL will never come close to that sort of tv deal. The NHL was/is/always will be a butts in the seat driven league.  That’s why it’s critical to choose your market carefully, and your potential owners even more so. You know like the former owners in buffalo, Long Island, Nashville, Tampa, Phoenix….etc.

The league losing money is not the fault of the players. Can they help the problem by accepting concessions…sure. The league and its poor choice of markets,owners, tv broadcast deals and owners signing ridiculous contracts are the reason we are where we are.

Is the league gonna trot out ever high profile personality affiliated with the league to plead their case. I fear that Shanahan might be waiting in the wings( no pun intended) to tell his sad story next.

Posted by Down River Dan on 12/08/12 at 06:08 PM ET

J.J. from Kansas's avatar

Am I on trial here? What does my opinion on the failure of the Phoenix Coyotes have to do with the fact that the players had no say in their placement?

Posted by J.J. from Kansas on 12/08/12 at 06:18 PM ET

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Am I on trial here? What does my opinion on the failure of the Phoenix Coyotes have to do with the fact that the players had no say in their placement?

1) You are attempting to portray the NHLPA as victims of a policy you agree with.

2) It is disingenuous of you to try and limit your position re: expansion to the Phoenix Coyotes.

Posted by HockeyinHD on 12/08/12 at 06:52 PM ET

J.J. from Kansas's avatar

On the first point, I’m not painting a victim. I am pointing out a reality. The players had no say in financial matters they’re being expected to solve.

On the second point I’ll simply laugh at the implication that in order to be in favor of southern hockey, that I also must support the Coyotes remaining, as though I am to be somehow forced into such a ridiculous set of beliefs as defined by you regardless of what I’ve said in the past.

Posted by J.J. from Kansas on 12/08/12 at 07:01 PM ET

Avatar

On the first point, I’m not painting a victim. I am pointing out a reality. The players had no say in financial matters they’re being expected to solve.

But financial matters that you agree need to exist for what you perceive to be the betterment of the NHL.

So on the one hand it’s not the players fault for these economic issues.  On the other, they need to exist in order for the league to grow (in your opinion).  So since it’s not the players fault, but it needs to happen in order for the league to grow, shouldn’t you be applauding the owners for taking steps to secure what you believe to be in the best long-term interests of the NHL?

I wonder that you can have such contradictory positions and not even be able to comprehend the nature of the loggerhead.

On the second point I’ll simply laugh at the implication that in order to be in favor of southern hockey, that I also must support the Coyotes remaining, as though I am to be somehow forced into such a ridiculous set of beliefs as defined by you

No, as defined by you.  When you say that teams need to stay in non-traditional markets indefinitely.

 

Posted by HockeyinHD on 12/08/12 at 08:19 PM ET

J.J. from Kansas's avatar

What you say what I supposedly say when I don’t actually say something < what I actually say.  You’re not this dense . Stop pretending to be.

I think reaching nontraditional markets is good, but I think Phoenix is beyond saving.  I think that nontraditional markets need support, but more from enhanced revenue sharing than blanket cuts to player costs which benefit the least-needy teams the most.

That is what I have said all along. To categorize it differently is either foolish or dishonest.

Posted by J.J. from Kansas on 12/08/12 at 09:36 PM ET

tuxedoTshirt's avatar

The league losing money

Is it though?  3.3 Billion aside, look at Miami.  Sunrise Entertainment has rights to hold 100 non-hockey events per year without paying for the building.  They have a tonne of auxillary income generators (like parking) as well as lucrative real estate deals….but only because they operate the Panthers.  So that division of a hugely profitable company can post a loss.  That is why arguing over HRR is not some kind of nonsense.
These businesses need to take care of themselves or take it to the league to change the model.  Or they should be open about trying to leverage dollars away, and not put on this BS poor act.  The number one thing hurting franchise values is Phoenix and their hugely public money hemorrhage.  But real offers have been made by viable businesses, so I don’t think that should count.

Posted by tuxedoTshirt from the Home of the 1937 World Champions on 12/08/12 at 09:54 PM ET

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What you say what I supposedly say

Fortunately, this is an incredibly easy thing to prove.  Which current NHL franchises do you think should be moved?

I think that nontraditional markets need support, but more from enhanced revenue sharing than blanket cuts to player costs which benefit the least-needy teams the most.

Excellent.  So, at what rate do you think profitable teams should be taxed, and what ‘profit’ do you think qualifies as taxable?

Posted by HockeyinHD on 12/09/12 at 08:59 AM ET

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Sunrise Entertainment has rights to hold 100 non-hockey events per year without paying for the building.  They have a tonne of auxillary income generators (like parking) as well as lucrative real estate deals….but only because they operate the Panthers. 

This is true.  That is a large part of the disconnect here, philosophically.  The anti-owner position is that since these business groups can run dozens of events outside of hockey which actually make money, they should be perfectly content with playing hockey at a significant loss.  The pro-owners position is that any league where hockey ops is a big loss is a league that is going to die, mostly because not every arena is in Miami so not all of those outside revenue streams are going to be enough to float vast losses in hockey ops.

Essentially, if a structure can’t exist where hockey ops is at least a break-even endeavor, there’s disaster looming.

The number one thing hurting franchise values is Phoenix and their hugely public money hemorrhage.  But real offers have been made by viable businesses, so I don’t think that should count.

I think most of the offers made for Phoenix, in Phoenix, have been of the ‘buying the asset for a $1 and assuming the debt’ type a la Newsweek.

The problem with the NHL is that there are 10 teams, mostly in non-traditional markets, with revenue between 66-91 mil and there are 10 teams, mostly in traditional markets, with revenue 120-200 mil.  That’s a big spread and a fairly densely populated spread on both extremes.

And since the league wants non-traditional markets to have competitive on-ice teams, because they want these non-traditional markets to help the league get a better TV contract, they have to have a fairly narrow cap/floor salary band.

Which means those small revenue teams have to drop 77-100+% of their hockey ops revenue into salaries to reach the cap, or 50+ to 70+ just to reach the floor.

Which is financial disaster for those clubs unless they are able to cobble together external revenue streams upwards of 20 million dollars a year.

Which is why it’s so hard to find qualified buyers for those teams.  There isn’t exactly a long list of people who want to buy a club and then start every fiscal year eight figures in the hole.

Posted by HockeyinHD on 12/09/12 at 09:19 AM ET

J.J. from Kansas's avatar

Which current NHL franchises do you think should be moved?

Phoenix, Long Island

Excellent.  So, at what rate do you think profitable teams should be taxed, and what ‘profit’ do you think qualifies as taxable?

I reject the definition of revenue sharing as a tax.

The anti-owner position is that since these business groups can run dozens of events outside of hockey which actually make money, they should be perfectly content with playing hockey at a significant loss.

Add back in the part where the specific finances there are built to create a loss as part of a business plan tailored to the ownership and we’re golden.

Posted by J.J. from Kansas on 12/09/12 at 10:37 AM ET

Avatar

Phoenix, Long Island

Exactly.  So you’re fine with Dallas, Anaheim, Columbus, Nashville, Tampa, Florida, Carolina… all teams that are never going to be financially competitive consistently.

I reject the definition of revenue sharing as a tax.

Eyeroll.

Whether you call it a tax, a tithe, a collection, outreach for the needy, a tip, an investment, or what the tooth fairy leaves under small-market teams’ pillow… what rate would you be comfortable seeing teams that make money give to teams that lose money?

Keep in mind that a) whatever rate you suggest has to actually ‘make whole’ those financial losers and b) we’re talking about 4-6 consistently profitable teams.

Add back in the part where the specific finances there are built to create a loss as part of a business plan tailored to the ownership and we’re golden.

Ah yes, the ‘shadow profits’.

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

J.J. from Kansas's avatar

So you’re fine with Dallas, Anaheim, Columbus, Nashville, Tampa, Florida, Carolina… all teams that are never going to be financially competitive consistently.

I have much less faith in your ability to see into the future than you appear to.

Whether you call it a tax, a tithe, a collection, outreach for the needy, a tip, an investment, or what the tooth fairy leaves under small-market teams’ pillow

Eyeroll

Ah yes, the ‘shadow profits’.

Eyeroll

what rate would you be comfortable seeing teams that make money give to teams that lose money?

Probably the exact opposite rate you’d be comfortable having players give money to teams that lose money AND make money.

Posted by J.J. from Kansas on 12/09/12 at 04:30 PM ET

redxblack's avatar

Yeah timbits, tell me more about how large TV markets equates successful NHL franchises. How did that work in Atlanta, Phoenix, Columbus? There’s no correlation. Detroit and Phoenix are nearly the same size market. Atlanta is bigger than both. Hartford is bigger than Pittsburgh.
http://www.stationindex.com/tv/tv-markets

Posted by redxblack from Akron Ohio on 12/09/12 at 06:35 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.

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