Post by NHLWinnipeg on Sept 18, 2012 21:12:33 GMT -6
NHL lockout: Running the numbers on the league’s money losers
Guy Spurrier | Sep 18, 2012 10:25 AM ET | Last Updated: Sep 18, 2012 10:24 AM ET
Pity the poor NHL owners.
No, seriously, you should pity the poor NHL owners. Imagine operating a business with an economic climate as perverted as this one.
— Over the last three years, half of the teams have a net shortfall between operating revenue and expenses.
— The revenue pile allocated for player costs, 54% to 57% of hockey-related revenue in the last agreement, reaches for some magical average where poor teams have to spend beyond their means and rich teams spend below theirs.
— Even if you don’t have yearly losses, about two-thirds of the teams operate in a mushy middle where revenues are dependent on factors beyond hockey or are tied to whether the team makes the playoffs.
— You have a chief executive, the commissioner, who is deeply committed to selling hockey in places where not enough people want to buy it.
— For three years you and your fellow owners have been covering the US$20-million-a-year losses of the weakest of the weak sisters — a team that appears to be unsellable because of the economic and political quagmire in which is operates.
— Nobody likes you because the players are their sporting heroes and the current lockout is denying the public their sporting heroes.
Most NHL teams are privately held, so hard numbers are difficult to come by. But Forbes magazine has been attempting to do so with North America’s major professional sports teams for several years now. As our best option, we will consult the numbers the magazine has generated.
Below is a table comprised of the operating revenue and operating income of every team over the last three years using Forbes’ published data. In addition, we have added the three-year average of the percentage of salary-cap money spent.
The NHL Economy :
2011 2010 2009
.
FV OpRev OpInc OpRev OpInc OpRev OpInc 3-year OpInc 3-year cap spent
.
Toronto Maple Leafs 521 193 81.8 187 82.5 168 78.9 243.2 96.20%
.
Montreal Canadiens 445 165 47.7 163 53.1 130 31.3 132.1 98.69%
.
New York Rangers 507 169 41.4 154 41.4 139 27.7 110.5 98.16%
.
Vancouver Canucks 300 146 23.5 119 17.6 109 20.3 61.4 100.00%
.
Detroit Red Wings 336 127 16.3 119 15.3 130 27.4 59.0 97.62%
.
Chicago Blackhawks 306 118 8.7 120 17.6 108 20.9 47.2 97.37%
.
Edmonton Oilers 212 96 17.3 87 8.2 83 9.4 34.9 90.03%
.
Philadelphia Flyers 290 111 3.2 121 13.3 101 3.1 19.6 99.96%
.
Dallas Stars 230 90 -1.1 95 6.4 97 12.4 17.7 83.18%
.
Boston Bruins 325 125 2.7 110 2.6 108 11.6 16.9 98.71%
.
Colorado Avalanche 198 83 6.1 82 2.3 84 3.4 11.8 78.25%
.
Los Angeles Kings 232 101 -2.0 98 0.7 92 10.6 9.3 93.80%
.
Calgary Flames 220 105 1.1 98 4.6 95 -0.8 4.9 99.64%
.
New Jersey Devils 181 100 -6.1 104 6.9 97 1.4 2.2 97.69%
.
Pittsburgh Penguins 264 110 -0.2 91 -1.6 93 3.3 1.5 99.80%
.
Ottawa Senators 201 100 2.8 96 -3.8 90 -3.8 -4.8 91.50%
.
Minnesota Wild 213 97 -5.9 92 -2.3 95 1.3 -6.9 94.60%
.
Anaheim Ducks 184 84 -8.4 85 -5.2 94 4.8 -8.8 93.35%
.
St. Louis Blues 157 78 -2.7 79 -6.2 80 -2.7 -11.6 81.04%
.
Winnipeg/Atlanta 164 71 -5.2 71 -8.0 68 -1.8 -15.0 77.42%
.
Carolina Hurricanes 169 81 -4.4 75 -7.3 82 -4.6 -16.3 86.06%
.
New York Islanders 149 63 -8.1 63 -4.5 62 -5.6 -18.2 70.41%
.
Tampa Bay Lightning 174 87 -8.5 76 -7.9 80 -2.2 -18.6 86.80%
.
Buffalo Sabres 173 87 -5.6 81 -7.9 79 -5.2 -18.7 97.04%
.
Nashville Predators 163 82 -7.5 74 -5.5 71 -5.7 -18.7 81.53%
.
San Jose Sharks 211 96 -7.8 88 -6.2 84 -5.0 -19.0 98.78%
.
Washington Capitals 225 94 -7.5 82 -9.1 83 -4.9 -21.5 98.18%
.
Florida Panthers 162 81 -7.0 76 -9.6 74 -13.6 -30.2 86.25%
.
Columbus Blue Jackets 152 80 -13.7 76 -7.3 77 -9.9 -30.9 88.62%
.
Phoenix Coyotes 134 70 -24.4 67 -20.1 66 -18.5 -63.0 82.06%
Once again, let’s state this clearly: According to these figures, exactly half of the teams in the NHL had a net shortfall between operating revenue and expenses. At their cores, half of these businesses were unable to make money over a three-year period. A golden few made money by the bushel. Twelve teams had an operating-income shortfall in all three years.
Over the last half of the recently expired CBA, it had become clear there were three glaring structural problems with the collective bargaining agreement:
1. The loophole that allows teams to bury bad contracts in the American Hockey League is a decided benefit for the rich teams. Sheldon Souray, Wade Redden, Cristobal Huet, Jeff Finger, Sean Avery are the primary examples, all from teams in the black. It’s probably a credit to some teams that they refused to use the ploy more often.
2. Calculating the salary cap based on league-wide revenue was bound to leave some weak teams struggling to remain above water. Although the Maple Leafs operate inside a perpetual money monsoon, it can be difficult for teams in a hockey desert (literally and metaphorically) to find enough water to sustain life.
3. The salary-cap floor is too high. When it was bargained in 2004, the cap floor was set at US$8-million below the calculated midpoint of the salary range (with the cap being set US$8-million above the midpoint). So in the first season after the last lockout, the salary cap was set at US$39-million. The poorest team was only obligated to spend 59% of what the richest ones did. When the 2012-13 cap was announced at US$70.3-million, the poorest teams would have been obligated to spend 77% of the maximum. That swiftly rising tide almost certainly contributed to some of the foundering of the lower-income teams. Had the spread been negotiated as, say, 60% of the cap, lower-income teams in 2012-13 would been obligated to spend about US$42.2-million rather US$54.3-million. Of course, you would also get a team about 60% as talented or experienced as the elite teams.
It is instructive in hindsight that the language in the 2004 CBA described the salary range based against the midpoint, rather than the top end as we now discuss it. It would seem, given the language used, it was assumed that most teams would cluster around the middle with the rich teams using the extra US$8-million above the midpoint and the poor teams using their US$8-million provision below the midpoint. That the cap has become the focal point is another lesson in how quickly the spirit of the law can diverge from the letter of the law.
All these structural inefficiencies have left the NHL where it is now: Locking out the players for the third time in 18 years.
Given that the owners are willing to operate in a system where the revenue pool for player costs is an average of all teams’ revenues, it is the perfect tactic for the players association to tell the owners they should share their revenues more generously with each other instead of asking the players to decrease their slice of the pie. It’s your revenue system, the players would assert, so you fix the inequities yourself. And as the Post‘s Sean Fitz-Gerald writes in his profile of NHLPA executive director Donald Fehr, Fehr dislikes planned economies like this.
But based on the numbers, the gaps between revenue and player expenses remain very large and the owners in the have-not group and the ones in the mushy middle are not wrong to ask for changes.
sports.nationalpost.com/2012/09/18/the-nhl-economy-financial-disparity-from-the-bottom-up/
Guy Spurrier | Sep 18, 2012 10:25 AM ET | Last Updated: Sep 18, 2012 10:24 AM ET
Pity the poor NHL owners.
No, seriously, you should pity the poor NHL owners. Imagine operating a business with an economic climate as perverted as this one.
— Over the last three years, half of the teams have a net shortfall between operating revenue and expenses.
— The revenue pile allocated for player costs, 54% to 57% of hockey-related revenue in the last agreement, reaches for some magical average where poor teams have to spend beyond their means and rich teams spend below theirs.
— Even if you don’t have yearly losses, about two-thirds of the teams operate in a mushy middle where revenues are dependent on factors beyond hockey or are tied to whether the team makes the playoffs.
— You have a chief executive, the commissioner, who is deeply committed to selling hockey in places where not enough people want to buy it.
— For three years you and your fellow owners have been covering the US$20-million-a-year losses of the weakest of the weak sisters — a team that appears to be unsellable because of the economic and political quagmire in which is operates.
— Nobody likes you because the players are their sporting heroes and the current lockout is denying the public their sporting heroes.
Most NHL teams are privately held, so hard numbers are difficult to come by. But Forbes magazine has been attempting to do so with North America’s major professional sports teams for several years now. As our best option, we will consult the numbers the magazine has generated.
Below is a table comprised of the operating revenue and operating income of every team over the last three years using Forbes’ published data. In addition, we have added the three-year average of the percentage of salary-cap money spent.
The NHL Economy :
2011 2010 2009
.
FV OpRev OpInc OpRev OpInc OpRev OpInc 3-year OpInc 3-year cap spent
.
Toronto Maple Leafs 521 193 81.8 187 82.5 168 78.9 243.2 96.20%
.
Montreal Canadiens 445 165 47.7 163 53.1 130 31.3 132.1 98.69%
.
New York Rangers 507 169 41.4 154 41.4 139 27.7 110.5 98.16%
.
Vancouver Canucks 300 146 23.5 119 17.6 109 20.3 61.4 100.00%
.
Detroit Red Wings 336 127 16.3 119 15.3 130 27.4 59.0 97.62%
.
Chicago Blackhawks 306 118 8.7 120 17.6 108 20.9 47.2 97.37%
.
Edmonton Oilers 212 96 17.3 87 8.2 83 9.4 34.9 90.03%
.
Philadelphia Flyers 290 111 3.2 121 13.3 101 3.1 19.6 99.96%
.
Dallas Stars 230 90 -1.1 95 6.4 97 12.4 17.7 83.18%
.
Boston Bruins 325 125 2.7 110 2.6 108 11.6 16.9 98.71%
.
Colorado Avalanche 198 83 6.1 82 2.3 84 3.4 11.8 78.25%
.
Los Angeles Kings 232 101 -2.0 98 0.7 92 10.6 9.3 93.80%
.
Calgary Flames 220 105 1.1 98 4.6 95 -0.8 4.9 99.64%
.
New Jersey Devils 181 100 -6.1 104 6.9 97 1.4 2.2 97.69%
.
Pittsburgh Penguins 264 110 -0.2 91 -1.6 93 3.3 1.5 99.80%
.
Ottawa Senators 201 100 2.8 96 -3.8 90 -3.8 -4.8 91.50%
.
Minnesota Wild 213 97 -5.9 92 -2.3 95 1.3 -6.9 94.60%
.
Anaheim Ducks 184 84 -8.4 85 -5.2 94 4.8 -8.8 93.35%
.
St. Louis Blues 157 78 -2.7 79 -6.2 80 -2.7 -11.6 81.04%
.
Winnipeg/Atlanta 164 71 -5.2 71 -8.0 68 -1.8 -15.0 77.42%
.
Carolina Hurricanes 169 81 -4.4 75 -7.3 82 -4.6 -16.3 86.06%
.
New York Islanders 149 63 -8.1 63 -4.5 62 -5.6 -18.2 70.41%
.
Tampa Bay Lightning 174 87 -8.5 76 -7.9 80 -2.2 -18.6 86.80%
.
Buffalo Sabres 173 87 -5.6 81 -7.9 79 -5.2 -18.7 97.04%
.
Nashville Predators 163 82 -7.5 74 -5.5 71 -5.7 -18.7 81.53%
.
San Jose Sharks 211 96 -7.8 88 -6.2 84 -5.0 -19.0 98.78%
.
Washington Capitals 225 94 -7.5 82 -9.1 83 -4.9 -21.5 98.18%
.
Florida Panthers 162 81 -7.0 76 -9.6 74 -13.6 -30.2 86.25%
.
Columbus Blue Jackets 152 80 -13.7 76 -7.3 77 -9.9 -30.9 88.62%
.
Phoenix Coyotes 134 70 -24.4 67 -20.1 66 -18.5 -63.0 82.06%
Once again, let’s state this clearly: According to these figures, exactly half of the teams in the NHL had a net shortfall between operating revenue and expenses. At their cores, half of these businesses were unable to make money over a three-year period. A golden few made money by the bushel. Twelve teams had an operating-income shortfall in all three years.
Over the last half of the recently expired CBA, it had become clear there were three glaring structural problems with the collective bargaining agreement:
1. The loophole that allows teams to bury bad contracts in the American Hockey League is a decided benefit for the rich teams. Sheldon Souray, Wade Redden, Cristobal Huet, Jeff Finger, Sean Avery are the primary examples, all from teams in the black. It’s probably a credit to some teams that they refused to use the ploy more often.
2. Calculating the salary cap based on league-wide revenue was bound to leave some weak teams struggling to remain above water. Although the Maple Leafs operate inside a perpetual money monsoon, it can be difficult for teams in a hockey desert (literally and metaphorically) to find enough water to sustain life.
3. The salary-cap floor is too high. When it was bargained in 2004, the cap floor was set at US$8-million below the calculated midpoint of the salary range (with the cap being set US$8-million above the midpoint). So in the first season after the last lockout, the salary cap was set at US$39-million. The poorest team was only obligated to spend 59% of what the richest ones did. When the 2012-13 cap was announced at US$70.3-million, the poorest teams would have been obligated to spend 77% of the maximum. That swiftly rising tide almost certainly contributed to some of the foundering of the lower-income teams. Had the spread been negotiated as, say, 60% of the cap, lower-income teams in 2012-13 would been obligated to spend about US$42.2-million rather US$54.3-million. Of course, you would also get a team about 60% as talented or experienced as the elite teams.
It is instructive in hindsight that the language in the 2004 CBA described the salary range based against the midpoint, rather than the top end as we now discuss it. It would seem, given the language used, it was assumed that most teams would cluster around the middle with the rich teams using the extra US$8-million above the midpoint and the poor teams using their US$8-million provision below the midpoint. That the cap has become the focal point is another lesson in how quickly the spirit of the law can diverge from the letter of the law.
All these structural inefficiencies have left the NHL where it is now: Locking out the players for the third time in 18 years.
Given that the owners are willing to operate in a system where the revenue pool for player costs is an average of all teams’ revenues, it is the perfect tactic for the players association to tell the owners they should share their revenues more generously with each other instead of asking the players to decrease their slice of the pie. It’s your revenue system, the players would assert, so you fix the inequities yourself. And as the Post‘s Sean Fitz-Gerald writes in his profile of NHLPA executive director Donald Fehr, Fehr dislikes planned economies like this.
But based on the numbers, the gaps between revenue and player expenses remain very large and the owners in the have-not group and the ones in the mushy middle are not wrong to ask for changes.
sports.nationalpost.com/2012/09/18/the-nhl-economy-financial-disparity-from-the-bottom-up/