There are many reasons for ownership to create companies as part of their overall activities other than 'hiding revenue'. Some people like the clarity of forcing a focus on a particular function. ie putting the arena under a seperate entity as it's revenue is not solely derived from the hockey operation.
Absolutely. There are multiple valid legal reasons to create companies for specific purposes. However, it does create an opportunity for the companies to divide revenue and costs so as to maximum them for each of the individual companies when both companies are owned by the same parent company. Normally that wouldn't be a big deal if it was simply to maximize tax benefits or whatever (as if they need more tax breaks...) However, if they are using their multiple companies to shift profits or costs in order to short the people with whom they have contracts, it becomes a different matter entirely.
Because they are owned by the same company, both are able to work in the interest of themselves and one another in a way two unrelated companies would never do since their ultimate interest is that of the parent company. As such, it is certainly possible that the companies have specifically designed their relationship (via a leasing agreement) to maximize profits for both companies based on their individual contracts with outside entities. For example, the lease could give the team more of the profits from anything that wouldn't be related to HRR than would normally be offered to an arena lessee in order to lower the profit for the arena management company in hopes that they would avoid reaching the threshold that requires them to share profits with the city that built the arena. Or the lease could give more than normal level of profits from certain things that should be included in HRR (such as parking, concessions, or in-arena advertising) to the arena management company to allow the team to declare the deductions for costs while declaring little if any revenue for those things.
I'm not saying either of those situations are true. I have absolutely no way of knowing. I'm only saying it's worth being investigated because, as the article's author noted in his edit message, "a 90% drop in total AOC profitability in a lockout year remains highly interesting when the number of hockey events should only represent roughly one-third of their total revenue."
The idea that significant HRR revenue is being hidden keeps coming up. I would hardly take Larry Brooks as any expert on anything, refer to Torts. Since the players derive their income as a % of revenue it is absolutely necessary that they be comfortable in that number. It would be an issue which would have to be non-negotiable IMO. To date I haven't seen anything where Fehr has questioned their verification process. It is a great way of 'greying' the process as most players and fans would throw their hands up and question how they would ever understand how it works. When Don Fehr says publically that he doesn't believe the HRR numbers he is receiving then I would be more concerned.
Fehr hasn't said anything about HRR because the players have not said they want to go after the cap system. They want to get a deal done, and trying to redefine HRR is not something that will make that happen quickly. For proof, just look at the NHL's first offer which included changes to HRR that would have reduced the players' share by about 2% annually. (Reference article.
) As stubborn as the NHL has been in so many other things, even they backed off that particular can of worms possibly because they knew that if they wanted to increase the amount of deductions teams can take the players were likely going to demand a full accounting of all deductions made to investigate reports that some teams have been under-reporting revenues and using other creative methods to avoid fully reporting HRR. (For example, it's been reported that teams were deducting portions of luxury boxes for concessions and parking even though they were, under the last CBA, to be included in their entirety as revenue.) Even still, there are some "clarifications" that are supposed to be taking place (though we don't know any specific details).
But my comments about teams' true profits were not about HRR at all. In fact, my entire point was that HRR is, by design, a partial picture. It's certain revenue minus certain deductions. It does not indicate how much money a team actually made, or how much their actual costs were for that matter, and therein lies the problem with using a team's HRR number to try to determine their financial health. Like you said, it's always hard to follow the money. I'm just saying that using HRR as the only guidepost won't ever guide us to the whole truth and I don't trust them enough to just take their word for it.