FanDuel - WFBC

November 07, 2007

Small-market NHL teams crying poor again: Unless you're hockey obsessed and an insomniac, it's doubtful you've read Article 49 of the NHL's labour contract. It's a passage in the voluminous document that's beginning to attract a lot more attention these days.

posted by tommytrump to hockey at 10:46 AM - 21 comments

"We knew the clause was there but it wasn't something we looked closely at," said one small-market team owner. "We thought we'd deal with it when we had to." Ummmm, really? Really?!? That is impressive stupidity and short-sightedness for the owner of a multi-million dollar business.

posted by 86 at 11:24 AM on November 07

The idea that ice hockey is going to win over the USA markets from coast to coast is absolutely ridiculous. The small market teams should not exist today. The sooner the NHL realizes it's place in professional, franchise team sports (that being nothing more than an also ran akin to soccer in North America) the better the chance to survive will be.

posted by jaygolf at 11:29 AM on November 07

Amen 86.

posted by drose92264 at 11:31 AM on November 07

One of the problems with American pro sports is that bad owners can stick around forever. If there was relegation or more clauses like this one, the owners who couldn't field competitive, profitable teams would get drummed out. The old Winnipeg Arena was demolished a decade ago and the $133 million (Canadian) MTS Centre, which seats 15,003 for hockey, opened three years ago. Winnipeg has an $130 million arena without a pro franchise? Holy guacamole.

posted by rcade at 11:41 AM on November 07

Winnipeg has an $130 million arena without a pro franchise? Holy guacamole. They have a pro franchise, the Manitoba Moose, of the American Hockey League. It could be worse, they could be Kansas City, with the Sprint Center, with no tenant other than an Arena Football team.

posted by tommytrump at 11:58 AM on November 07

I truly believe that hockey's dilema is: money/greed vs. "doing what's good for the sport". the NHL's biggest problem is "fan base", they don't have a wide enough one. They're trying to arrange games overseas when they could be setting those in pro sports starved markets in the US and Canada. I say just mandate that every team negotiate a deal to play 2,3 or 4 home games in a different neutral city. I bet that they get more attendance revenue and merchandise sales at those than at other games and create more fans. You can also test out cities or prep them for a future franchise...see if it's viable. There are so many smart business solutions to the "NHL's dilema", they just never seem to take the smart path. They need a stronger commissioner and a bit more cooperation between the franchises. It can be done, if they get the right people in place.

posted by Hockey fan at 12:34 PM on November 07

Then there's another odd twist. The CBA also says the seven teams that play in North America's largest media markets aren't eligible to receive revenue sharing. Yet four of those clubs, including the Chicago Blackhawks and New York Islanders, would otherwise have been eligible to receive the stipend. Their owners may also be grumbling about how revenue-sharing is handled. Who the hell voted to ratify this? Not good for small markets, not good for cash-strapped teams in big markets . . . hooray for Toronto, Boston and New York.

posted by yerfatma at 12:36 PM on November 07

yerfatma, no one read those parts. And, sweet merciful crap, they're willing to admit it! Sorry, but that is still baffling me. It's unbelievable. They clearly saw that the new agreement guaranteed that what they pay the players would be determined by how much money they made and figured that was fool-proof enough. Silly fools.

posted by 86 at 01:19 PM on November 07

Hold on there yerfatma. It is the Toronto's and New York's (the powerful minority) that pay out revenue sharing dollars while not receiving any in return. Not that I'm defending the big teams, I'm just saying they finally agreed to revenue sharing in the first place with this latest CBA, so they are moving in the right direction. But as revenue sharing is based on revenue growth, it has been interesting to watch how teams have generated revenue since the owner lock-out. Some teams reduced ticket prices the first year, then increased them the next. Some held the line, then increased prices in subsequent years. Others increased prices from the drop of the puck. This league wide staggering of price increases seems to relate to this newly discovered CBA clause quite closely. Of course there have been league wide revenue initiatives in conjunction with the strengthening CDN$, that has helped propel league wide revenue higher every year. However, now that the cycle of quick revenue schemes has run its course (I believe most every team has made a play for bucks) growth will slow league wide, so the small market teams won't have to worry too much about huge growth numbers. They just have to worry about achieving above average growth. And if they can't, then the league will correct itself. There's been alot of noise about Canada being able to support more teams, so perhaps the failing clubs will be re-located. Just as soon as Bettman gets the axe. marginally related rant: The thing that makes me puke about pro sport ownership, especially the NHL, is the manner in which losses are claimed for one entity, all the while profits are reaped from 'unrelated' operations. Tax shelters, I think is the term. And here's a little article that made its way to my inbox that I thought spofi might enjoy.

posted by garfield at 01:47 PM on November 07

marginally related rant: The thing that makes me puke about pro sport ownership, especially the NHL, is the manner in which losses are claimed for one entity, all the while profits are reaped from 'unrelated' operations. Tax shelters, I think is the term. No doubt. The Carolina Hurricanes cry poor, but if you asked their parent company, Gale Force Holdings, to open it's books, they would pretty much deny owning such books. "Books? What books? In fact, we don't even know of this organization that you speak of. Gale Force what?" Per your article: isn't the NBA in the same kind of condition? Isn't it just all suits at an NBA game as well?

posted by NoMich at 02:16 PM on November 07

Same overpriced tickets, but they aren't up against it because of TV revenue. The NHL is unique in the major NA sports landscape because of its dependence on the gate. way outside the margins : Going to an NBA game crystallized the realization what freaks NBA players are. 7' and can dribble through zone D in a phone booth. Freaks I say!

posted by garfield at 02:34 PM on November 07

Hold on there yerfatma. It is the Toronto's and New York's (the powerful minority) that pay out revenue sharing dollars while not receiving any in return. Oh, no doubt. I've just phrased my question poorly. What I mean is: revenue sharing typically exists where a small minority of teams make a great deal more money than the rest. Otherwise, there's no point. That being the case, how can a small minority of teams get anything voted into a CBA? Shouldn't all the other teams be voting against those kinds of proposals? I will disagree with what I perceive to be the brunt of your ticket price suggestion. Ticket prices are set to maximize revenues and nothing else. You can't set them to account for a change in the price of inputs. It wouldn't make sense.

posted by yerfatma at 03:03 PM on November 07

how can a small minority of teams get anything voted into a CBA? Fantastic question! I'd like to know myself, because as it appears now their votes carry more weight. Ticket prices are set to maximize revenues and nothing else. You can't set them to account for a change in the price of inputs I understand and agree with the first sentence. Can you explain the second further? change in price of inputs?

posted by garfield at 03:13 PM on November 07

The idea that ice hockey is going to win over the USA markets from coast to coast is absolutely ridiculous. The small market teams should not exist today. The sooner the NHL realizes it's place in professional, franchise team sports (that being nothing more than an also ran akin to soccer in North America) the better the chance to survive will be. Don't agree. You could have said the same thing about the NBA in the early 80s before Bird and Magic showed up. Things change. Hockey has to become cool again. It can (though not with Team Bettman at the helm). There should be more Canadian Teams. There needs to be a re-shuffling - but I don't agree with the notion that hockey can't work. It's wonderfully structured for the modern fan - quick high tempo action, physical and games don't take 3 hours.

posted by WeedyMcSmokey at 03:31 PM on November 07

Can you explain the second further? change in price of inputs? I was basing that on this comment: This league wide staggering of price increases seems to relate to this newly discovered CBA clause quite closely Which seemed to suggest ticket prices were being set based on ownership's perception of how the CBA would affect their revenues. Ticket prices are set to maximize dollars coming in, so they always have to be at the place where (tickets sold x price) = max dollars, regardless of any other variables (namely "inputs" like rent, salaries, etc).

posted by yerfatma at 04:12 PM on November 07

Thanks, and understood. While I agree in theory, I don't think that is what happened. I think teams evaluated their individual markets, and either lowered prices, kept status quo, or upped prices when the league resumed play based upon revenue needs and or what they thought the ticket buying market would bear. This was an unusual situation, because teams were afraid of the ill-will the lock out created and wanted to make sure people would come back. I think I'm going to do a little googling and see if I can map out ticket price changes for the 30 teams, maybe get a better idea how these changes relate to revenue sharing.

posted by garfield at 04:20 PM on November 07

Chicago doesn't deserve revenue sharing. They were too stupid to put home games on TV until this year. Luckily Bill Wirtz finally died and his son has some common sense.

posted by Jackjeckyl at 12:40 AM on November 08

how can a small minority of teams get anything voted into a CBA? IIRC, Bettman insisted on a supermajority approval of any new labor deal (like 75% or something like that) to insure that the reasonable owners couldn't break ranks during the lockout.

posted by stevis at 08:51 AM on November 08

Mirtle has two good posts on what is driving revenue growth and what 'small market' actually means = 'big market, indifferent to hockey.'

posted by garfield at 09:04 AM on November 08

I think teams evaluated their individual markets, and either lowered prices, kept status quo, or upped prices when the league resumed play based upon revenue needs and or what they thought the ticket buying market would bear. But that's the same thing as "Ticket prices are set to maximize dollars coming in, so they always have to be at the place where (tickets sold x price) = max dollars, regardless of any other variables (namely "inputs" like rent, salaries, etc)." Guessing what the buying market would bear is how you maximize your ticket revenue. You lower the ticket prices to increase the number of tickets sold because that's the maximum amount of money you can make selling tickets. "Lowering prices for the fans" is strictly a marketing phrase the team's PR squad will feed to the media. If they thought they could less tickets at a higher price for more revenue, they sure as hell would.

posted by grum@work at 06:44 PM on November 11

Agreed. I was thinking about that over the weekend. My bad. Sorry yerfatma. Though I still think certain teams had more incentitive to drive revenue than others, despite how crazy that sounds, due mostly to need. The more stable the franchise, the longer it played nice with prices. I still need to map ticket prices to half validate my hair brained theory.

posted by garfield at 10:27 AM on November 12

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