2012 CBA Negotiations Thread

[Kin]

I guess it would seem to me that the gate would be more of a revenue that is specifically generated by that team's succesful marketing.  I guess I'd have an issue if the dopes running a lousy team are chasing my gate receipts.

Well, I'd have an issue with all of this but this isn't Nik Designs His Ideal Sports League. If I own the Leafs the Coyotes can get stuffed.

At its core though any ticket in the NHL is a ticket to watch two teams. It's revenue that can't be generated without two teams. So there's no leap in suggesting that both teams are entitled to it.

 

[Rebel_1812]

Anyway, CW is saying that the percentage of revenues is significant because it is a significant percentage of the profits (and he claims that is a reasonable way to assess the significance of revenue sharing). 

Yeah, I got that. But, you know, feel free to keep chipping in on whether or not we're sufficiently entertaining you. I do a tumbling act in the second half.

I have always feel free to jump in and criticize you on your entertainment value.  I suggest you try something that really stretches yourself as a poster and try something new in your next post.  For example "I think on the whole your correct, lets not quibble over details", or try something with bad spelling or grammar.  You know just to let your hair down ;-)

 

[cw]

Factually, that isn't what they did. The top revenue teams contribute to the bottom revenue teams. The Leafs contribute the most to revenue sharing. So there is a variable scale. As well, there is a cap floor which allows smaller market teams to spend less. Therefore, the percentages vary with each team.

You and I both know that the revenue sharing in the NHL is so minimal as to barely register as meaningful.

In 2006, revenue sharing was 44% of overall league profits.

Do you have a source for that figure?  Since it is the crux of the ensuing paragraph I would like to check that figure.

For 2006, Forbes guesses that the NHL made $125 mil profit on $2.267 billion revenue.
http://www.forbes.com/lists/2006/31/biz_06nhl_NHL-Team-Valuations_Revenue.html

In 2003, vs Levitt's audit, Forbes numbers were 5% high. Several teams including the Leafs have disputed Forbes numbers as being high in recent years. Forbes does not have access to all the financial statements, etc. The Leafs for example are privately held and the only folks that see their numbers are MLSE, MLSE's accountants, the NHL, the NHLPA and 3rd party auditors for the hockey related business.  Forbes simply has no choice but to make educated guesses. We can't completely rely upon them but they're the best numbers for the league that we have in the public domain that I'm aware of.

Forbes also reports in 2006 that the league provided $90 mil in revenue sharing to the small market teams (90/125 = 72% of profits):
http://www.forbes.com/2006/11/09/nhl-teams-owners-biz_06nhl_cz_mo_kb_1109nhlintro.html
Without question, the biggest beneficiaries of the new CBA are small-market teams. Last season, 11 low-revenue NHL teams received more than $90 million in revenue-sharing payments (the proceeds came from the ten teams with the highest revenue and from a portion of playoff gate receipts), with the New York Rangers and Toronto Maple Leafs chipping in $10 million each. The only reason why the Buffalo Sabres, Pittsburgh Penguins, San Jose Sharks and Washington Capitals posted profits last season was because of the money they received from revenue-sharing.

However, I saw several media reports that disagreed with Forbes when the revenue sharing was first reported. They reported for 2006 that the top 10 teams contributed 10 mil to 1 mil, declining by 1 mil for each rank from the top revenue team to the 10th revenue team to tally $55 mil total revenue sharing which is 44% of profits (a more reasonable number if you're not close to communist persuasion and a rational decline in contribution to offset lower revenues).

For ten teams to contribute the $90 mil Forbes reports, they would have to average $9 mil per team - there would be little difference in contribution between the $10 mil Leafs and 10th-place-in-revenue Tampa Bay (for 2006) while the Leafs got roughly $40 mil more in hockey revenues. And the 11th-15th place teams wouldn't have to contribute a nickel getting nearly $9 mil bottom line advantage over the teams slightly above them in revenue. Logically, I can't imagine the owners agreeing to a drop off that large and abrupt. On that basis, Forbes revenue sharing number was very suspect. As I did not believe Forbes $90 mil revenue sharing number, I used the lowest revenue sharing number I read, $55 mil, to present the worst revenue sharing case for discussion purposes.

Nearly all reports I can recall, including Forbes, reported that the top revenue team would contribute $10 mil. In a subsequent audio interview after 2006, Peddie let it slip that their contribution had risen to $13 mil or so. Therefore, we've had considerable confirmation of that $10 mil revenue sharing number for 2006 for the top team and some confirmation that it went up as revenues rose in subsequent years.

I did consider that since the NHL is a non profit entity itself, they could kick in something at the league level from broadcasting, advertising and merchandising. But I still have my doubts they would get anywhere close to 72% of league profits going towards revenue sharing - even if some of that was going on. Aside from the top revenue owners absolutely howling, in part because the normal course in prior years was for the bulk of that money after league operating expenses were paid to be passed on to all the teams anyway.

To give that a rough check, back when, I did do some accounting ratio tests on the Forbes numbers leading up to the lockout and since to roughly check the revenues - to see if they were in the ball park for the two extremes in revenue sharing. Although I can't be absolutely certain, the feeling I was left with was that Forbes overstated the revenue sharing with their $90 mil figure after that checking.

Without looking at official information from the league, that's as close as I could get to verification. With the info available to us that I've seen, there's no way to be absolutely certain.

 

[cw]

From that Forbes 2006 league analysis, Forbes did report
http://www.forbes.com/2006/11/09/nhl-teams-owners-biz_06nhl_cz_mo_kb_1109nhlintro.html
If you bet that the National Hockey League would emerge from its 2004-2005 lockout with a reasonable cap on player salaries and significant revenue sharing payments from rich to poor teams and that fans would quickly forgive the league and return to the turnstiles, you won big.

Even if Forbes realized they overstated revenue sharing, they would scoff at the notion of $55 mil in revenue sharing being "so minimal as to barely register as meaningful" because quite obviously, $90 mil was significant and whatever the revenue sharing was, relative to where the league had been, Forbes were generally quite pleased with the turn in the financial results brought about by the new CBA and credited revenue sharing for some of that turnaround.

In subsequent years I looked at (2007-2011), I saw no attempt by Forbes to quantify revenue sharing - which reinforces that it's likely something else they had to guess. They did credit the existing revenue sharing arrangement with helping some smaller market teams to become profitable - which also defies the characterization of league revenue sharing as "so minimal as to barely register as meaningful"

http://www.forbes.com/2007/11/08/nhl-team-values-biz-07nhl_cx_mo_kb_1108nhlintro.html
In addition, greater revenue sharing from the new collective bargaining agreement (CBA) helped teams like the Pittsburgh Penguins and Edmonton Oilers turn a profit.

As there was no revenue sharing prior to the last CBA, the use of the word "greater" in the 2007 Forbes report implies that it increased. My guess from the Peddie interview is that it rose like the cap with league revenues.

 

[Rebel_1812]

If indeed 44% of combined team profit went to revenue sharing, well, that's a pretty significant number no matter which teams contributed more or less.  What percentage would you suggest is more fair?

I don't think teams should share any revenue but that's entirely beside the point. Revenue sharing isn't a question of profits. It's a simple matter of how much of a team's revenue is shared. That's what I'm referring to. When the Leafs sell me their ticket with it's average cost of 120 bucks how much of that money goes to the Leafs and how much is pooled and shared with the league? When they sell their TV rights, how much do they keep and how much is pooled and shared?

Again, it's revenue sharing. Not profit sharing.

I don't need to tell you that profit is derived of revenue minus the expense.

You'd really get a better idea of the magnitude of dollar amount currenlty shared if you discussed it as a percentage of profit rather than just revenue dollars. 

Profitability, league profitability, is really what this whole thing is about.  Limiting the conversation to just revenue really just ignores the cost per revenue dollar of operating a team.

The accounting numbers are no longer debatable this time around because of third party audits..

That is a hugely contenious point.  Every company keeps two sets of books and every big company is involved in accounting manipulation to make themselves look good to certain audiences and cry poor to others.

 

[cw]

If indeed 44% of combined team profit went to revenue sharing, well, that's a pretty significant number no matter which teams contributed more or less.  What percentage would you suggest is more fair?

I don't think teams should share any revenue but that's entirely beside the point. Revenue sharing isn't a question of profits. It's a simple matter of how much of a team's revenue is shared. That's what I'm referring to. When the Leafs sell me their ticket with it's average cost of 120 bucks how much of that money goes to the Leafs and how much is pooled and shared with the league? When they sell their TV rights, how much do they keep and how much is pooled and shared?

Again, it's revenue sharing. Not profit sharing.

I don't need to tell you that profit is derived of revenue minus the expense.

You'd really get a better idea of the magnitude of dollar amount currenlty shared if you discussed it as a percentage of profit rather than just revenue dollars. 

Profitability, league profitability, is really what this whole thing is about.  Limiting the conversation to just revenue really just ignores the cost per revenue dollar of operating a team.

The accounting numbers are no longer debatable this time around because of third party audits..

That is a hugely contenious point.  Every company keeps two sets of books and every big company is involved in accounting manipulation to make themselves look good to certain audiences and cry poor to others.

And to a significant extent, that got addressed by this CBA:

1. The teams have to provide audited financials from their outside accountants - so they have to get an outside accountant willing to risk his career to cheat for a few million bucks - while a big hunk of that would go to the cheating owner.

2. The NHLPA gets to scrutinize those numbers.

3. The NHL gets to scrutinize those numbers.

4. The numbers must be submitted monthly which makes it tougher to cook the books.

5. They now have league audited history for all teams going back to 2003 which again makes it tougher to cook the books.

6. The numbers for all teams are submitted on the same forms with extensive breakdown of revenues and expenses using common definitions which makes it tougher to cook the books.

7. The NHL & NHLPA have a third party auditor they mutually agree upon to check the numbers

8. If a team gets caught with their hand in the cookie jar, they get a multi million dollar fine ($5 mil?), loss of a bunch of first round draft picks and are virtually exposed to whatever else Bettman wants to do to them for additional punishment depending on how egregious the infraction was. They have very serious penalties in place both in terms of dollars and team competitiveness.

To the best of my knowledge, there hasn't been a single claim or infraction during the life of the current CBA with respect to the above. It isn't hard to imagine why that might be. I'm sure the system isn't infallible for small amounts of cheating but it's pretty darn tough for a team to get away with cheating on big amounts and very likely, you'd need a conspiracy of more than one party to pull it off. 

 

[Britishbulldog]

Has there been any indication when the player's counter offer will be presented?  I saw it referenced in a few places but couldn't actually find the time frame.

 

[hockeyfan1]

Interesting (potential) situation...


From: http://www.thehockeynews.com/articles/48152-Would-the-NHL-contrat-the-Coyotes.html


One thing that has set this bargaining session apart from all the others, say some insiders, is that the players have been more vocal in the meetings than they have ever been before...young players, such as Jonathan Toews and Jeff Skinner to...have been speaking up and making their association?s feelings known...One of the things that has plagued the NHLPA almost since its inception, has been player apathy. The fact the young stars of the NHL seem so willing to stand up to their employers bodes well for the NHLPA?s present and future.

...commissioner Gary Bettman is holding a negotiating card that he has yet to play (and may never have to play) that would be a direct and significant blow to the NHLPA.


The threat of contraction...is very real and could become very much in play as these negotiations continue. Bettman may not be able to justify the need for a bigger share of revenues, term limits on contracts and increasing the age for unrestricted free agency with the fiscal insanity we?ve seen this summer, but he might be able to do so if he can convince the NHLPA that the Phoenix Coyotes will shut their doors if the league doesn?t get what it wants and the season doesn?t start on time.

Industry insiders have suggested that prospective owner Greg Jamison hasn?t been able to take over the franchise yet because his investors are getting skittish, even with the City of Glendale paying up to $324 million over the next 20 years as part of the lease agreement.

Should the league use contraction as leverage for a CBA deal, it would potentially affect the employment of 23 members of the NHLPA?s constituency. The roster players on the Coyotes would likely be distributed throughout the league and that would mean one player on more than two-thirds of the existing NHL teams would be losing his job.

And there?s little that gets the attention of any union more than job losses. That?s what puts the NHLPA in such a bind here. Sure, the union could argue that there shouldn?t be teams in places where hockey doesn?t work, but those teams still represent association jobs and members. And when you think of it, that?s what?s really at the heart of this debate between large markets and small markets. If the large market teams disregard the needs of the have-nots, they?ll find they have fewer and fewer teams to oppose. That?s where the NHLPA has a point when it comes to a more equitable revenue sharing format.

 

[Frank E]

The next option would be moving the team, not contraction.

Come on, Bettman isn't stupid enough to float that.

 

[Kin]

That would be an embarrassingly empty threat. Bettman and the Owners would be walking away from the upwards of 300 million dollars they could make by selling the team they own to someone.

And I love the idea that a Union would be so terrified at the idea that 4% of their membership(the absolute bottom 4%) would lose their jobs that they'd take a significantly worse deal for the remaining 96%. The only thing that the threat of contraction would do is open up the idea that the Union should have a say in the placement of franchises.

 

[Frank E]

That would be an embarrassingly empty threat. Bettman and the Owners would be walking away from the upwards of 300 million dollars they could make by selling the team they own to someone.

And I love the idea that a Union would be so terrified at the idea that 4% of their membership(the absolute bottom 4%) would lose their jobs that they'd take a significantly worse deal for the remaining 96%. The only thing that the threat of contraction would do is open up the idea that the Union should have a say in the placement of franchises.

I suppose one could argue that selling the team at a discount could be damaging to franchise values overall, and therefore contraction could be a better option...but I doubt it.

 

[Kin]

I suppose one could argue that selling the team at a discount could be damaging to franchise values overall, and therefore contraction could be a better option...but I doubt it.

But at this point what does selling the Coyotes at a discount even mean? They've been trying to sell that lemon for years. What's the real value of a team in Phoenix and under the conditions that they have to play under?

If the Jamison deal falls apart, and at this point that's a question that seems entirely separate from the CBA, then they'll almost certainly sell the team to someone looking to move the team which means they could get as much as they want for it.

Regardless, as you say, you'd have a tough time convincing me that selling the Coyotes for a plug nickel would impact any other team's value.

 

[Zee]

What's the general consensus on the chances of a lockout this season?  I wouldn't mind a break from watching the Leafs flounder.  Leafs need a reboot from the last lockout.

 

[Kin]

What's the general consensus on the chances of a lockout this season?  I wouldn't mind a break from watching the Leafs flounder.  Leafs need a reboot from the last lockout.

Any lockout? I'd be fairly surprised if there isn't one.

 

[Zee]

What's the general consensus on the chances of a lockout this season?  I wouldn't mind a break from watching the Leafs flounder.  Leafs need a reboot from the last lockout.

Any lockout? I'd be fairly surprised if there isn't one.

I was hoping for a rather lengthy lockout, say at least half the season.

 

[Frank E]

I suppose one could argue that selling the team at a discount could be damaging to franchise values overall, and therefore contraction could be a better option...but I doubt it.

But at this point what does selling the Coyotes at a discount even mean? They've been trying to sell that lemon for years. What's the real value of a team in Phoenix and under the conditions that they have to play under?

If the Jamison deal falls apart, and at this point that's a question that seems entirely separate from the CBA, then they'll almost certainly sell the team to someone looking to move the team which means they could get as much as they want for it.

Regardless, as you say, you'd have a tough time convincing me that selling the Coyotes for a plug nickel would impact any other team's value.

I agree with you. 

I can also appreciate why there is no Coyotes deal to be had until they hammer out a new CBA because of the effect of the CBA on future income statements.  I don't doubt that Bettman may suggest that he's unable to finalize a Coyotes deal until they get some fundamental economic structures in place, but I'd be shocked if he even tried to pull out the contraction card.

 

[Kin]

I can also appreciate why there is no Coyotes deal to be had until they hammer out a new CBA because of the effect of the CBA on future income statements.  I don't doubt that Bettman may suggest that he's unable to finalize a Coyotes deal until they get some fundamental economic structures in place, but I'd be shocked if he even tried to pull out the contraction card.

I don't think any of that plays. The league has been desperate to sell the Coyotes and would have if not for Goldwater and the issues with the city. To all of a sudden claim that the CBA is the deal breaker? If that were the case why would they announce that the Jamison deal was done?

I

 

[Frank E]

I can also appreciate why there is no Coyotes deal to be had until they hammer out a new CBA because of the effect of the CBA on future income statements.  I don't doubt that Bettman may suggest that he's unable to finalize a Coyotes deal until they get some fundamental economic structures in place, but I'd be shocked if he even tried to pull out the contraction card.

I don't think any of that plays. The league has been desperate to sell the Coyotes and would have if not for Goldwater and the issues with the city. To all of a sudden claim that the CBA is the deal breaker? If that were the case why would they announce that the Jamison deal was done?

I think they may be looking to show some stability and gain some public approval in the meantime...last I read Jamison was short.  Maybe Jamison is short until they get a new CBA?  If it's favourable, he finds the cash? 

Would you move ahead with the purchase if you had an impending lockout with practically zero revenue for un undermined period of time?  I'd sure delay.

EDIT:  Getting back to my point, I wouldn't bet against Bettman suggesting that the CBA is the tipping point on hockey in Arizona/Jamison deal...but certainly contraction would not be the next step.

 

[Kin]

I think they may be looking to show some stability and gain some public approval in the meantime...last I read Jamison was short.  Maybe Jamison is short until they get a new CBA?  If it's favourable, he finds the cash?

I'm not entirely sure what your point is. I thought you were saying that Bettman may try and claim that he isn't able to get a deal done absent a CBA. I'm only responding from the position that such a claim, in light of the fact that he announced a done deal with Jamison only a little while ago with the CBA dispute clearly on the Horizon would be seen through by anyone with even the slightest knowledge of the situation. It certainly wouldn't fly with Donald Fehr. 

Would you move ahead with the purchase if you had an impending lockout with practically zero revenue for un undermined period of time?  I'd sure delay.

If I'm Jamison? It wouldn't matter much to me because even in the event of a CBA getting done the Coyotes are probably going to be run at a bit of a loss for the forseeable future anyway. Not operating the team is probably more profitable than operating it. Either way, I couldn't realistically claim that I was willing to make the deal in May and then not in July because of the impending uncertainty concerning the CBA.

 

[Frank E]

I think they may be looking to show some stability and gain some public approval in the meantime...last I read Jamison was short.  Maybe Jamison is short until they get a new CBA?  If it's favourable, he finds the cash?

I'm not entirely sure what your point is. I thought you were saying that Bettman may try and claim that he isn't able to get a deal done absent a CBA. I'm only responding from the position that such a claim, in light of the fact that he announced a done deal with Jamison only a little while ago with the CBA dispute clearly on the Horizon would be seen through by anyone with even the slightest knowledge of the situation. It certainly wouldn't fly with Donald Fehr. 

Would you move ahead with the purchase if you had an impending lockout with practically zero revenue for un undermined period of time?  I'd sure delay.

If I'm Jamison? It wouldn't matter much to me because even in the event of a CBA getting done the Coyotes are probably going to be run at a bit of a loss for the forseeable future anyway. Not operating the team is probably more profitable than operating it. Either way, I couldn't realistically claim that I was willing to make the deal in May and then not in July because of the impending uncertainty concerning the CBA.

My point got lost there, you're right.  I doesn't make much sense to announce a deal being in place if it weren't so.