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[POLL] CBA Opportunities - What's your stance?


Neufy161

  

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If my reasoning is incorrect, or my assumptions are wrong, I will re-evaluate my article.

As I haven't read the CBA's, I'm not 100% on some of the processes.

Mods: Although this is CBA related, I feel that rather then discussing current CBA issues, news and updates. I would start a thread where members can read up to understand some misconceptions of some proposals, discuss logistics and debate our own opinions on what the NHL - NHLPA should agree on from a business POV.

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In a traditional business, if Net Profits are less to stay closed then they are to open, then changes must be made. Is this the case for few NHL franchises? We don't really know for sure, but we can assume that some teams may be on the tipping point. Why on earth would Betman move teams down to places like Pheonix, Nashville and Columbus in the first place when they pose this risk?

What are some options people have been discussing?

With the current CBA deadline right around the corner, the prospect of a full 12-13 season is beginning to appear bleak at best. Especially with Gary Betmans latest interview stating "Negotiations have been stalled, and will restart on Friday Sept. 7th."

The Issue

When looking for places to expand the NHL to, there are a few places that make most people stand back and say "What were they thinking...Florida, Phoenix?" When the NHL or any viable business is looking to expand, you do your demographic analysis, average age, working class, average income, population, etc. Surely if a market like Vancouver (population of 600,000) can sell out every night, a team like Phoenix (population 1,500,000) can do well as well? After your due diligence, these high populated cities should be able to support these teams, but they're not... now what?

Option 1: Relocate the Dog Teams

People often say "Move teams like Phoenix to a Canadian market, like Quebec"; common sense dictates that of course the new franchise will be tremendously more profitable then its current Market. But lets analyse the decision from a business standpoint.

Fans=Dollars

Will the net fans increase?

When you look at Quebec, what percentage of their population is already supporting NHL teams like Toronto and Ottawa? You don't want to simply absorb these fans, thus taking away from Toronto's and Ottawa's profits; you want to acquire new fans that didn't support any NHL team in the first place. These new fans you gain must exceed the fans Phoenix will loose due to the move.

This is the issue with relocating to a saturated market like most of Canadian cities, we are Hockeys greatest nation, were already loyal fans of current teams... giving them a local team will simply reallocate profits, not increase the fan base enough to compensate for the relocation costs.

In addition, past relocations are almost always due to arena issues. So do these prospect citys (Seattle, Quebec etc.) Now have arenas to support an NHL team

Option 2: Roll back player's salary's to 43% (NHL's Offer)

Usually when a business cant be profitable, it gets shut down employees thus don't get paid. But this cant happen to NHL teams. So they need to figure out new methods of adjusting to their environment. As mentioned above, relocation can be pointless if your net fans don't increase drastically, relocating from one market to another without fixing the issue would be the worst case scenario.

So the owners have decided to target their expenses, by reducing their largest expense by 27% Thus increasing their bottom line, making it easier for teams to make it in these struggling industries until/if their fan base increases. This clearly will fix the issue long term, its not a band-aid but at the players expense.

You cannot expect the players... your key employees to suddenly take a pay cut of 27% on contracts you the owners agreed to pay. This is a classic case of bad management. The NHL is firm on this and doesn't appear to be budging, using the threat of a lockout to gain bargaining leverage.

Option 3 Meet Somewhere in the middle 50-50 Split

Fans are starting to get worried, as they should. As a result we're saying "Well if you cant agree on something just meet in the freaking middle and lets play some hockey!" But this doesn't really do anything.

It doesn't reduce owners expenses enough to the point where low revenue teams are able to be independantly stable - so the NHL isnt happy.

It reduces the contracts to players salaries. Contracts the owners already signed, agreeing to pay in full.

If a manager/owner need to compensate unprofitable business by revisiting contracts that are already being served then this is just a result of bad management. Any sort of roll back to current salaries is going to result in the NHLPA not being happy. As they should... its a binding agreement.

Option 4: Fix the salary cap; Revenue increases go to owners (NHLPA's offer)

Now here's a system that was really well structured. Over the next 3 years the players are agreeing to lock in their salary cap at 70.2 million a season, when the revenue increases in following years, the increase will go to the owners.

If the NHL's revenues continue to grow at the 8%/year they have been since 2005. The players will forfeit approx $500-$800 million. But what happens if the revenues drop? Players are still locked in at 70.2 million dollars. and suddenly their percentage has increased. This system is completely perfect except for the fact that it assumes the NHL's revenues will continue to grow as they have been, by turning variable costs to fixed costs and letting the owners keep the spread.

My proposal

What if a system was put into play that duplicated the NHLPA's proposal, where the salary cap is a hard cap and any revenue increases moving forward are absorbed by the Owners, combined with a roll-back clause that states that if the NHL's revenues are less in a following year then the previous, then players salaries and cap would be rolled back the percentage the revenues dropped. In subsequent years following the drop the salary's and cap they can increase to their original amounts but never exceed the $70.2 million salary cap and original contract amounts.

This will allow teams to mitigate the unknown, and give them more flexibility in the future so the struggling teams are able to become profitable.

This proposal doesn't addresses the NHL's short term need to address their "Core economic issues" but when negotiating both parties have to give in a little.

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This might get locked, despite being well thought out.

I think for the CBA to go through the NHL has to concede on the way contracts currently are. I mean forcing the players into serfdom of the teams that drafted them for 10 years is ridiculous. The length of the contract actually helps both sides, for the GMs to keep cap hits down and for the players to ensure a longer playing career.

As per the "core" economic issues, I believe the players have already offered concessions in that manner. The NHL's proposed reduction of 11% is absolutely massive. The NHL/Owners are the ones who have to come back to the middle to ensure the season starts on time.

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This might get locked, despite being well thought out.

I think for the CBA to go through the NHL has to concede on the way contracts currently are. I mean forcing the players into serfdom of the teams that drafted them for 10 years is ridiculous. The length of the contract actually helps both sides, for the GMs to keep cap hits down and for the players to ensure a longer playing career.

As per the "core" economic issues, I believe the players have already offered concessions in that manner. The NHL's proposed reduction of 11% is absolutely massive. The NHL/Owners are the ones who have to come back to the middle to ensure the season starts on time.

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From a fans point of view, I'd say moving the dog teams. Dogs are in their quadrant for a reason. They're not growing and they're not making money. Ask any businessman and they'd say abandon dog enterprises ASAP. It seems stupid to keep dog franchises, when there are potential Stars out there like Quebec, maybe Seattle, and perhaps even another in Ontario.

growthshare.gif

Edit: Further on my point on relocating dog teams.

One issue as the OP mentioned was getting new fans. Now in the case of Quebec taking away fans from Montreal or Toronto, I don't think that either Montreal or Toronto have any shortage of fans or money, so that wouldn't be an issue.

More of an issue would be actually getting some loyal fans to abandon their old favourite teams for the new Quebec team. I was too young to even remember Quebec being moved to Colorado, but I assume this was at the crux of their financial issues, assuming they had financial issues. Many more fans were probably loyal to Montreal than Quebec, thus Quebec City couldn't keep up in the battle of Quebec.

Now one thing is that Quebec did last for more than 15 years in the NHL, so that makes me reconsider my earlier statement about them having issues trying to garner a large fan base. If they did it once, who's to say they can't do it again? Some of those Quebec vs. Montreal rivalries were the best in hockey back in the 80's.

As for other teams like Seattle, the issue would not be changing fans' loyalty, unless they target British Colombians, rather it would be gaining a fresh new fan base out of a relatively untested market.

The Seattle Thunderbirds have been there for over 30 years now (first as the Seattle Breakers), but that is a WHL team with an arena capacity of 6,500, not a thriving NHL team with an arena capacity of 20,000. And despite that 6,500 capacity, they haven't broken an average of 5,000 since 2000-01. On a positive note, last year's average of 4,206 was the highest they've had since 2004-05.

Some may argue that an NHL team would attract way more fans, and they may be right in this argument. It was certainly the case for the Manitoba Moose. They attracted an average of 8,400 fans in 2010-11, high for an AHL team, but still much below the max capacity of over 15,000. Enter the new Winnipeg Jets. They sell out every game.

There are issues with moving 'dog' team, yes, but past evidence seems to point to it being a possible profitable business venture.

I feel like I just finished a report for one of my business classes.

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From a fans point of view, I'd say moving the dog teams. Dogs are in their quadrant for a reason. They're not growing and they're not making money. Ask any businessman and they'd say abandon dog enterprises ASAP. It seems stupid to keep dog franchises, when there are potential Stars out there like Quebec, maybe Seattle, and perhaps even another in Ontario.

growthshare.gif

Edit: Further on my point on relocating dog teams.

One issue as the OP mentioned was getting new fans. Now in the case of Quebec taking away fans from Montreal or Toronto, I don't think that either Montreal or Toronto have any shortage of fans or money, so that wouldn't be an issue.

More of an issue would be actually getting some loyal fans to abandon their old favourite teams for the new Quebec team. I was too young to even remember Quebec being moved to Colorado, but I assume this was at the crux of their financial issues, assuming they had financial issues. Many more fans were probably loyal to Montreal than Quebec, thus Quebec City couldn't keep up in the battle of Quebec.

Now one thing is that Quebec did last for more than 15 years in the NHL, so that makes me reconsider my earlier statement about them having issues trying to garner a large fan base. If they did it once, who's to say they can't do it again? Some of those Quebec vs. Montreal rivalries were the best in hockey back in the 80's.

As for other teams like Seattle, the issue would not be changing fans' loyalty, unless they target British Colombians, rather it would be gaining a fresh new fan base out of a relatively untested market.

The Seattle Thunderbirds have been there for over 30 years now (first as the Seattle Breakers), but that is a WHL team with an arena capacity of 6,500, not a thriving NHL team with an arena capacity of 20,000. And despite that 6,500 capacity, they haven't broken an average of 5,000 since 2000-01. On a positive note, last year's average of 4,206 was the highest they've had since 2004-05.

Some may argue that an NHL team would attract way more fans, and they may be right in this argument. It was certainly the case for the Manitoba Moose. They attracted an average of 8,400 fans in 2010-11, high for an AHL team, but still much below the max capacity of over 15,000. Enter the new Winnipeg Jets. They sell out every game.

There are issues with moving 'dog' team, yes, but past evidence seems to point to it being a possible profitable business venture.

I feel like I just finished a report for one of my business classes.

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Haha Good! I'm a BCIT Business Management grad

To address the bold.

Think of the NHL as a corporation, with each team being a regional branch.

Lets assume (to make the scenario easy) we have thirty million fans(customers) total for our entire corporation.

We say, okay the minimum each team must have is approx. 1 million fans, to stay profitable enough so it isn't classified as a dog.

Our research states that montreal has 1.5 million fans, and Toronto has 1.5 million fans and Phoenix has .5 million fans... doesnt make the cut.

So we relocate Phoenix to Quebec, due to the lack of loyalty all .5 million phoenix fans stop contributing to our NHL revenues (we just lost .5 million customers.)

But, relocating to Quebec, now Quebec has 1 million fans, they are no longer a Dog team. So we have 1 less dog team.

The bad thing is, is that the relocation cost us 50 million dollars, and the one million fans Quebec attained were already fans of the corporation in the first place, they were just loyal to Toronto and Montreal before.

So now Quebec has 1 million

Montreal has 1 million

and Toronto has 1 million

Our total client base is still 30 million clients and we spent 50 million dollars to re-locate. All we did was shuffle where our clients shop.

Since Canada is sooooo Saturated i.e. Majority of population of fans are already fans, it would be difficult to justify and increase our fan base by a move to Canada.

This is why Betman is so U.S. focused, because the number of fans per capita are way lower then in Canada. U.S. Stanley cup champions, U.S. Winter Classic events, attract attention to this league in such an untapped market that its slowly building the fan base higher and higher, and as a result its making the league more and more profitable.

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Haha, B.Comm powers AWAAAAYYY!!!

What you stated would be true however you neglected to account for the fact that ticket sales shoot through the roof doing that shuffle. Montreal/Toronto/Ottawa fans can only fill the arena so much. Most games are sell outs, season tickets are hard to get and the dough rolls in. PHX is meanwhile trying to lower prices just to get people in the seats. So you not only sell fewer tickets but sell them at far lower prices than you would in the Canadian market.

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Scrap the salary cap and institute a luxury tax system.

Allow Toronto and Vancouver and Philadelphia, et al, spend to their heart's content. But for every $1 they spend over the "cap limit", they pay $1.50 to the league for revenue sharing. Allow Phoenix and Nashville, et al, spend within their means, and the only way they can collect on revenue sharing is if they spend the "cap basement".

No limitations on contract length, (Owners and players alike are playing with fire on deals over 5 years long, anyway. But if they want that, let them do it.) However, no more funny business on the math of the deals. Whatever the length and total money the contract calls for, you go with a consistent annual pay. For example, if you sign a 4-year deal worth $20 million, your "cap figure" and money you're paid annually is $5 million.

Also, no more circumventing the cap by exiling players to the minors just to avoid paying that cap hit. A team signs a player to a deal, that contract counts against the team's "cap figure" as long as that player is controlled by that team.

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Scrap the salary cap and institute a luxury tax system.

Allow Toronto and Vancouver and Philadelphia, et al, spend to their heart's content. But for every $1 they spend over the "cap limit", they pay $1.50 to the league for revenue sharing. Allow Phoenix and Nashville, et al, spend within their means, and the only way they can collect on revenue sharing is if they spend the "cap basement".

No limitations on contract length, (Owners and players alike are playing with fire on deals over 5 years long, anyway. But if they want that, let them do it.) However, no more funny business on the math of the deals. Whatever the length and total money the contract calls for, you go with a consistent annual pay. For example, if you sign a 4-year deal worth $20 million, your "cap figure" and money you're paid annually is $5 million.

Also, no more circumventing the cap by exiling players to the minors just to avoid paying that cap hit. A team signs a player to a deal, that contract counts against the team's "cap figure" as long as that player is controlled by that team.

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