Kukla's Korner Hockey
by Paul on 10/13/12 at 10:19 AM ET
from Ian Hudson (professor of economics at the Univ. of Manitoba) at the Winnipeg Free Press,
The owners' statement of the problem and its solution is misleading and simplistic. In fact, the league as a whole was profitable in 2010-11. While the poorest 27 teams (out of a league total of 30) were a combined $44 million in the red, $24 million of this was lost by Phoenix as a result of a disastrous league decision to hang onto that franchise. The three highest-earning teams (Leafs, Rangers and Canadiens) combined for an operating income of $171 million.
In other words, the NHL's real problem is its income is very unevenly distributed. The NHL (along with the NBA) has the weakest revenue-sharing provisions in North American sports. In contrast, the NFL not only shares broadcast revenue equally between all the teams in the league but also money from ticket sales. Forty per cent of gate revenue goes into a league pool that is shared evenly.
If the NHL were really worried about the survival of small markets, this type of redistribution would solve the problem. In the NFL, the small-market Green Bay Packers can compete financially with the big-market New York Jets.
Owners are asking players to sacrifice for the stability of small market teams, but redistributing money between the owners would achieve the same goal. The owners prefer the salary-cutting option, of course, because it would transfer money to all of the owners, including those who are already making great piles of cash, while revenue sharing would reduce the profits of the high earners in the league.
When it comes to dividing up the $3.3 billion of revenue between owners and players, perhaps the owners should get their own house in order before asking for sacrifices from the players.
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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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