FanDuel - WFBC

February 04, 2004

Honest McCabe.: I know alot of people think NHL salaries are unsustainable and that a salary cap is the only wat to go, but this interview should atleast give those doubters pause. Big Time Kudos to Joe. T at tascastake.

posted by garfield to hockey at 03:46 PM - 30 comments

wat to go, garfield. spell checker extraordinaire.

posted by garfield at 03:52 PM on February 04

McCabe makes good points. Owners created this mess, and continue to make it worse by offering huge salaries to free agents (I'm looking at you, NYR!). The simple economics says the laws of supply and demand prevail. That means the if the Leafs' ownership can fill the ACC every night at $300+ per seat, then that's the price they'll charge. High salaries don't make for high ticket prices...high demand sets the price, and it won't go down until attendance does. So who should get that money? The owners? Personally, I pay to see players, and I'd rather see my money go to them than to Maple Leaf Sports and Entertainment, Inc.

posted by rocket88 at 04:07 PM on February 04

here's a direct link to the post, for posterity. here's how it started at onthewings (excuse the pop-ups, but I had to credit the source)

posted by garfield at 04:07 PM on February 04

McCabe Catches a Break at Practice: (Wed Feb 4, 2004 - 1:21pm ) Defenceman Bryan McCabe suffered a broken nose today at practice. McCabe was taken to the hospital to have the nose fixed up and is still expected to play in Thursday nights game against Ottawa. Perhaps the owners don't appreciate his honesty

posted by garfield at 04:19 PM on February 04

This whole mess makes my blood boil so here goes. Hockey players are overpaid... period. You can argue that they are low on the totem pole when compared to what other entertainers are paid, but it's safe to say pro hockey is WAY down the totem pole when it comes to public interest. Players have a right to complain & fight the proposed pay cut, but this is hardly the first time in history managers have over-compensated their employees and then had to ask for a wage roll back (See almost every major airline in the last couple years). The owners did get themselves in this mess, but now they have to fix it. Something that very few people mention is there is significant risk in owning a team. You could flush a lot of money down the drain if things don't work out. Players have no risk at all. I would be pissed too if my boss tried to force a 30% pay cut down my throat. If they weren't going to budge, and I thought they were full of BS I would quit. Hockey players have the same choice. A new pro league is in the works (the revived World Hockey Association), and they can always go play in Europe. Guess what... most (if not all players) would still have to swallow a big pay cut. So I hope the NHLPA fights the pay cut for the benifit of the players, but in the end they will need to accept some stance that will reduce the player salary load and give equal footing to all teams.

posted by camcanuck at 05:10 PM on February 04

camcanuck, so you believe what the owner's are selling? I agree with solving the money problem, but the owners are not being forthcoming with the $ figures, and are indignant in their stance that their solution(salary cap) is the only one that will work. Irregardibly of how much the player's make, no one in their right mind should agree to what is on the table. Salaries will go down, owners should be able to make money, given they properly manage their investment, but none of this will happen while the owners keep their cards up to their collective chest. If anything, the fans should mobilize against both sides, because choosing favorites just fuels the stalemate fire. Put 'em both on the hot seat, and they'll have an arrangement fully worked out on a cocktail napkin before happy hour ends.

posted by garfield at 05:31 PM on February 04

R88: If high demand sets high ticket prices, how does that explain the high prices for empty seats in the Fleet Center, Meadowlands, MSG? Cam: I'm with you. This says it all. Average NHL player makes ~1.5x more than average NFL player while NHL TV revnues are ~1.5x less than the NFL. Not sure what percentage of team revenue comes from TV, but it can't be a good indicator for the health of the sport.

posted by kokaku at 08:39 PM on February 04

82 games vs. 16 games. And then consider stadium revenue.

posted by garfield at 08:06 AM on February 05

garfield: I agree that the owners need to be more forth coming (opening up their books for independent audits would be a good start). Don't get me wrong I think it would be best the for NHL to fold several teams, and several NHL owners need to removed. However players salaries are still out of whack when balanced against incoming revenue. I haven't heard of any idea other than a salary cap that will help the NHL in this area. I would love to be enlightened if someone out there has an idea. The 2 key points are reigning in salaries, and creating a more level playing field for all teams. kokaku is correct in saying that TV revenues is where the money is (TV and I merchandise really). Basically the NFL isn't driven by gate revenues, the NHL most defiantly is. Many people have speculated that the reason several teams are in trouble these days is because all the expansion revenue from the 90's has dried up. Back when the NHL was expanding each new team had to pay to get in (50 Mill / team rings a bell). That revenue stream is gone now too. I'm no accountant, but here are some simple numbers.

(42 * (16 591 * 44.22)) + 5 700 000 - 44 000 000 = -7 486 531.16 Now I realise that there are other sources of income (parking, merchandise, etc.), but there are also other costs (building maintenance, insurance, etc.). Either way that figure looks bad, and has to change. On a side note it's amazing to me that NFL TV revenue per team is more than every NHL's team payroll (check the links above).

posted by camcanuck at 11:07 AM on February 05

Oops... on closer inspection I guess the Red Wings payroll is a couple hundred thousand dollars more than NFL TV revenue, but they are the one whose payroll is that high.

posted by camcanuck at 11:11 AM on February 05

camcanuck, awesome post. I agree that salarires must be reduced, but it just sickens me when the players are dubbed greedy, when all they are doing is countering a ridiculous and inflexible offer. But isn't the second goal to ensure the survival of the current teams, rather than making the league more competitively even? The two aren't far apart, but given how payroll has not translated into on-ice success, evening up the team coffers won't translate to parity, which is why I think the salary cap idea is flawed and concealing an unknown agenda, which aims I'd guess are far more beneficial to the owners than to the players. btw, kokaku, I couldn't read your link. Though I'd like to.

posted by garfield at 11:33 AM on February 05

garfield: Couple comments on your points. Your point on players being dubbed greedy goes back to the original post. I can't feel sorry for a player that would go from earning 3 mil a season to 1.5 mil a season with a salary cap. Even though the NHL always says it wants all keep all 30 teams I think the reality is they would like to see contraction in some of the less popular hockey markets. Does the NHL really need 2 teams in Florida? While increase pay-roll doesn't garuntee you a good team it cetainly helps. The Rangers are the poster children for what not to do, but look at the Wings, Flyers, Leafs, and Avs. They spent the money, and are now at or near the top. What a salary cap really does is bring parity over many years. Teams that are at the bottom have a better chance of moving up over the years, while teams at the top have a harder time maintaining that position. How does a team like the Penquins ever generate enough revenue to compete with the rest of the league? They get stuck in a cycle of no one going to their games, not enough money to sign players, team loses any good players it has, team continues to suck. Revenue sharing amongst the teams would help, but there isn't enough there when you have to help out 10+ teams. A salary cap in my mind is the only way to go. I think the owners initial offer of 35 mil / team / year is to low. I figure 40 - 45 mil / year / team would be more realistic. That's my $0.02 CDN. BTW... that link you couldn't visit says the NHL TV contract is worth $171 Mil (compared to 2.48 BILLION for the NFL, $766.7 Mil for the NBA, and $550 Mill for MLB), which works out to 5.7 mil / team (compared to $77 mil per team in the NFL, 26.4 mil for the NBA, 18.3 mil for MLB). It also shows average player salaries, but those can be a little deceiving. There are more people on the payroll of an NFL team than there is a NHL team. Lastly it has change in viewership for the championship series / games. The Stanley cup was down 24%, Super Bowl was up 2%, NBA Finals down 38%, and World Series was down 21 %.

posted by camcanuck at 12:51 PM on February 05

cam, that's a commonly held sentiment, but apply it to the owners as well, and considering how much entertainment these greedy athletes provide you and me, cut them some slack. They aren't a dime a dozen at this level. And its the owners that just sit in the luxury box and collect the loot. Why so much slack for them? The contraction thing I'm reserving judgement on, because with the way the game is played right now. Less skill is needed to win. IF rules change, and the game is opened up, then the talent pool's depth becomes more relevant. The 'parity' scenario you describe is the epitome of mis-management, because getting stuck in a cycle is a result of mismanagement, or, market forces. If the former, its the team's fault, if the later, sh!t happens. I admit equal money provides more chances to improve, but the formula for success is rebuilding through the draft. The formula is not signing free-agents, who are over-priced as it is. But in the new NHL, this could be done by the less wealthy clubs because it would take less money to sign the U/FAs. I don't know. Maybe a salary cap is needed to sustain the NHL, but I think it would ruin hockey, and I like the fact that $20m of payroll can beat $80m of payroll on any given night.

posted by garfield at 01:21 PM on February 05

cam: great point and analysis about stadium revenue v. TV revenue. i'm not arguing whether the players/owners are or are not greedy or do or do not deserve X dollars. the way i see it, given the available information, the NHL does not appear to be able to support the current salary trends. the only question is whether the players and owners will be able to see that and figure out what to do about it before a strike/lockout. unlike baseball, hockey is not incredibly popular and would not recover as well from a break (even baseball took 5-10 years). there's just too many ways to find entertainment these days (especially in sports - cycling or rodeo on OLN? euro football on fox sports world? even more obscure stuff on ESPN26?) how about that old favorite - relegation? split the NHL into NHL-A and NHL-B. that might drive some ticket purchasing for the lesser teams on the verge. of course, teams at the very bottom of NHL-B prolly wouldn't be able to give away tix.

posted by kokaku at 01:49 PM on February 05

its a crappy situation all around, fosho. However, there is one flaw in that awesome analysis above. If you factor in stadium foods/beverage purchases, which for me rivals the actual avg.ticket price of approx $40. If this adjusted number is slid into the equation, there is actually a $17m surplus. Even at $20 spent beyond each ticket purchased (64), with current prices that translates to a large soda and nachos, the formula spits out a +$6m. Of course, my factors are pure speculation, based on my own horrible eating and spending habits.

posted by garfield at 02:04 PM on February 05

garfield: The reason I cut the owners some slack is because I buy into the fact that they are losing money. The players do provide the actual product, but not one (okay Mario could be the one exception) of them are seeing money disappear from their bank accounts every year. Unfortunately the ability to better yourself via the draft is almost impossible in the NHL today. With no real rookie salary cap you have teams that can't afford to sign players that have never played a NHL game. At least with a salary cap you would have fighting chance to hang on to your good players after a couple of years rather than seeing them go to the highest bidder. Edmonton is widely considered to have drafted better than anyone else in the league in the last 5 years. Where are they today? Stadium foods/beverage purchases are a big unknown. Until teams open up the books you really don't know what they are making. If you actually own the stadium (some teams don't and therefore don't get that revenue) how much of the food purchase is profit after you pay for building maitaince, staff, debt financing, lighting, heating, etc. Another source of income if you own the building are other events (concerts, etc.). It gets very complicated in a hurry. I still believe that in order to be successful ticket sales & TV revenue should cover your player payroll. If it was my money I sure wouldn't buy a team unless that was the case. Sigh... in the end I really hope everyone can compromise and keep hockey going. As mentioned above hockey can ill afford a lock-out. Both sides need to soften their positions and get the bargaining table ASAP.

posted by camcanuck at 02:29 PM on February 05

The reason I cut the owners some slack is because I buy into the fact that they are losing money. Teams open up the books you really don't know what they are making. These statements are incongruous to me. And I think your Edmonton example proves my point, given the salary/player contract structure is amended so that it's possible to hang onto at least half of your draft gems. But fundamentally, it still takes two.

posted by garfield at 02:47 PM on February 05

garfield: >The reason I cut the owners some slack is because I buy into the fact that they are losing money. >Teams open up the books you really don't know what they are making. These statements are incongruous to me. I guess I believe the owners, but I can't show any hard facts to back up their claim. I can say that the players ar not losing money... in fact their are making more every year. How would you amend the contract so a team like Edmonton could keep it's players? Players hold out and walk-away from teams until they get traded so they can play for more money. How can you stop that?

posted by camcanuck at 04:42 PM on February 05

that's fair. I have no argument for that. The players are definitely getting paid...and soon they'll be getting paid less. But I come from the thought that hockey players are the coolest pro athletes hands down, on several fronts, and i think they earn every penny. I think contract structure should be a major issue in the CBA negotiations. First, the term of the contract has alot to do with affordability: make the contracts for a bit longer. When you got your first job, you didn't negotiate very well on salary, I'm guessing. I didn't. Anyways, by the next year you were much better prepared. Well, if teams were more generous off the bat, but demanded longer term contracts, the team would be able to benefit from the development, and the player could simply focus on hockey(unless you are Mike PUNK Comrie, who feels he is special). Agents would eventually agree to the terms, because otherwise they don't get paid, right? Second, the rookie contract with performance incentives has been criticized for contributing to this quagmire. They're rookies, you drafted them, either they sign with you or they don't play. The player has to earn their leverage in the NHL, not in feeder systems. And make these longer than 3 years. If they are franchise players, lock em up for 6 years. To be honest, I really don't have a firm idea as to what to do. I'm merely brainstorming, but I have faith that lawyers for both sides will figure out how to bill their clients alot, so they better figure it out. Any Policy Studies majors out there? We could use a little help.

posted by garfield at 05:11 PM on February 05

I'm basically against salary caps, in any sport, because the cap only protects a foolish owner against him or herself. The owners don't have to pay McNabb a $20M signing bonus except that another owner would, and that's a problem the owners should figure out for themselves. Look at the Oakland A's and, to a lesser extent, the Minn. Twins, neither team spends near the luxury tax line (or the league average) and both have done quite well lately. So, if hockey has a bunch of doofii for owners, the players should not have to cave on a key negotiating point to help them out. Further, the comments so far have focused on a speculative annual loss by the owners due to higher salaries. But you've completely ignored the other side of the equation, that the market value of the teams are still positive and, generally, going higher meaning that an owner can sell and make back the money (at least in most of the cases).

posted by billsaysthis at 05:32 PM on February 05

garfield: I like the idea of longer contracts. However short contacts also protect the owners because if the players sucks they're not stuck paying him for the next 5 years. Right now owners can't 'fire' a player. If they argee to a $20 million 4 year deal with a player, no matter how bad he plays they have to continue to pay him unless they trade him and then the other team has to take over the salary. If your fired it means you can go to any other team you want, but you have to re-negotiate a salary. This would help correct stupid mistakes made by owners who give mediocre players huge contracts. It would also balance out the power the players have to hold-out for more money. I think if you mandated longer contracts for rookies, but allowed owners to 'fire' players that would be a good start. billsaysthis is correct. The salary cap really only protects the owners from themselves. The NHL is different than most leagues because the income gap between the top and bottom is huge. Unfortunately the NHL has also been plagued with some really dumb owners. In the end though it's the owners that make the league. Without their money there is no NHL. Unless you have a good buisness environment (so the owners can make lots of money on their investments) the owners will take their money somewhere else. Most of the owners arn't in this because they love hockey. They want to get the best return on their money... period.

posted by camcanuck at 11:21 AM on February 06

The guaranteed contract thing is a touchy subject. I completely agree that it puts the owner in a bind when the player doesn't pan out...if the player isn't performing, or is sucking, the pay should be reduced in some way. And I'm not talking point production, I'm talking team mate evaluation; when the players lose faith, the player should lose part of their pay check(% to be determined in some unformulated way, as of yet). However, firing a player outright is completely unacceptable, because where is the player job security. That's why the union is there in the first place. Maybe annual contracts are the way to go? Or maybe some type of insurance scheme that would reimburse the teams could help dull the pain from personnel nightmares. Now, if I had a gagillion dollars and owned a NHL team, I wouldn't want a salary cap. I'd want the freedom to wager the fortune on a team, if I felt the situation called for it. But, that desire to win it all has to be countered by fiscal responsibility. Maybe the owners have gambling problems, and they are gambling with the life of their teams. I think a memo needs to go out to the owners to let them know this isn't a hobby. It is a passion that should devour their time. Get involved, stay out of the loop, do what it takes to win, and take personal responsibility for failure. And refrain from token firings. that shit is stupid anyways.

posted by garfield at 11:42 AM on February 06

bill, 50 pts for 'doofii'....that killed me. Do you have any links to the 'market value' increases you mention. I agree, but haven't read much about that. I'm not even sure how you measure such a thing. btw, the NHL and the PA have contacted me privately and requested that participants of this thread to join the negotiations as consultants. They also sent me a Vermont Teddy Bear a la Janet Jackson and a ChiaHead.

posted by garfield at 11:49 AM on February 06

Ode to Hockey ::: Memo to Hockey

posted by garfield at 02:15 PM on February 06

It's amazing how much I hear / talk about hockey as a buisness these days rather than just enjoying the game. I can't afford to go to many games, but when I do I really enjoy it. I'd be happy if the 2 sides would just started talking to one another (apparently they can't even agree on when they did actually talk!). If they do need a consultant... I'd being willing to pull the 2 sides kicking and screaming to the bargainning table right now. Here's hoping that we'll be talking aobut something else come the Fall '04.

posted by camcanuck at 02:31 PM on February 06

[raises glass] Ain't that the truth?! Cheers! [swigs down the frothy goodness]

posted by garfield at 02:39 PM on February 06

Follow Up: I just found this today regarding TV revenue, and how it is not an appropriate measuring stick of the today's NHL finances. Rather, Butts in Seats is the real unit of measure. Which, of course, is dwindling.

posted by garfield at 12:39 PM on February 09

At it's heart, hockey (NHL or otherwise) is not a good TV sport. Until someone can change that, tickets are where you are going to get your income. Give FOX some credit for at least trying to make it better. I actually didn't mind the glowing puck (the red streak however is another story), and I know it made it easier for some people to watch the game. 5.7 million in TV revenue (see earlier posts) basically pays for one higher end player (not an elite player thats for sure). That's it. It shouldn't be forgotten this is the last year of the TV contract. With viewship at all time lows that 5.7 million is going no where but down. After mulling this over for a while I think the problem can be summed up like this. The market just isn't there to pay NHL players what they make today. NHL players have comparable salaries to the other pro sports, but the NHL doesn't have anywhere near the same popularity (aka demand). The salaries must be reduced. Either by changes to the CBA, or the free market will catch up and do it for them.

posted by camcanuck at 02:07 PM on February 09

camcanuck, what was your favorite moment of the All-Star weekend?

posted by garfield at 02:16 PM on February 09

I was having at talk with 86 about this last night, and he came up with a stellar idea: If the owners want to cap salary, then the players should have profits capped. Once a certain $ figure has been attained, anything beyond that should be fed back to the players, either via the NHLPA or some over avenue. If the owners were upfront and honest about their revenues, this could be a partnership that has both sides winning.

posted by garfield at 08:20 AM on February 10

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