What are the hidden costs of running a NHL team?

[Googlie]

You have greatly understated TV revenue.  See this old news item:

 

"The Canadian TV deal is worth a whopping 5.2 billion dollars for 12 years beginning in 2014. That breaks down to approximately 500,000 annually. Divide nearly 700,000,000 dollars by 30 and that comes to over 20,000,000 per team. The salary cap per team in the NHL is 75 million."

[189lb enforcers?]

Lip reading services 

[IBatch]

5 hours ago, Doesntmakesense said:

I am a marketing student going for my MBA and we were given an assignment to break down the balance sheet of the Vancouver Canucks (as an estimate).

So far I have the following research and numbers confirmed:

 

Home Games : 41 (average ticket price $125) (average attendance 17,125) 

Home Game Revenue Expected: 41 x 17,125 x $125= $87,765,625

TV/Radio Revenue (Canucks Share): $11,000,000

Canucks Merchandise Sales: $9,000,000

Arena Food/Drinks team share: $14,000,000

Team Promotions/Extra Revenue: $7,000,000

Total Revenue: $128, 765, 625 

 

Now for the expenses:

 

Team Payroll: $81, 500,000

Arena Maintenance: 

Arena Workers Salaries:

Flights:

Hotels:

Food:

Medical/Insurance:

Team Office Salaries:

Canucks Marketing Materials/Ads:

Cost of Food/Cost of Goods:

 

I am very confused how owners find extra income to pay millions to their coaches, like Bab in Toronto. It was much better for the owners to pay $1 mill or less for coaches, there is no reason why coaches salaries are going up. The coaches salary is a direct hit on the owners wallet, it is dumb to accept $6 million throwing away for a coach when you are getting nothing back for it.

 

And this is just the start of the expense of a hockey team, what about the first class air travel, premium hotels etc? Can this be reduced to regular air travel, reduction on hotels, food vouchers etc?

 

I plan to be a hockey team owner my self one day, at 35 though I am struggling to understand how to afford all of the expenses above without significantly cutting costs along the way as a potential future owner.

 

Thoughts are welcomed. 

 

Your not even close to finishing the revenue portion of the the income statement.   They have a dozen major sponsors, and the media share doesn’t line up with the SN deal of a few years ago.   

 

There is more information available just by googling it,  their net income usually is in the 40-60 million range after all expensess.   League revenues and the cap are fixed to players salaries, but not all the income actually is shared with the players.    Their net income before operating costs would appear to be 90% of the cap approx BUT they make more then the players do before operating costs as not all revenue is shared...

 

Simply put if the CAP is 80 million you can bet the owners are also making their half of the pie.  Start at 80 and then take expenses out and you will find the owners are still making 40 million or more depending on what city they are from.  In US funds to no less.   

 

That is why they can ask 650 million for a franchise (split by the teams not a penny shared with the players to no less) , it’s gauranteed money under the cap and revenue sharing.  TO and NYR surely support a lot of the other teams but still come out smelling like roses, same with MTL and even Vancouver to a certain extent. 

 

Aquaman paid 207 million and since its grown to a value around 3/4 of a billion...and he’s made money each and every year on this investment...valued #9th overall 

 

edit; players cover their own medical insurance, no need to have that on the list...other insurance costs for sure though

Edited July 3, 2019 by IBatch

[RU SERIOUS]

4 hours ago, the grinder said:

get your self a blue berry farm.. break labour laws ,  hire cheap labour to build you a empire of crappy over priced condos and then own a team  badda bing

and...........file net income from your sports investment group of about $51,000/yr each for you and your brothers including for your mother’s estate of $176,000 and hope you're not reassessed by Revenue Canada far actual taxable income of about $11.5 million for you and each of your brothers  and $4.3 million for your mother’s estate  and told to pay-up or go to jail.

[the grinder]

57 minutes ago, RU SERIOUS said:

and...........file net income from your sports investment group of about $51,000/yr each for you and your brothers including for your mother’s estate of $176,000 and hope you're not reassessed by Revenue Canada far actual taxable income of about $11.5 million for you and each of your brothers  and $4.3 million for your mother’s estate  and told to pay-up or go to jail.

they should of brought  in the hockey bags of money to the casino   

[Nuck1991]

6 hours ago, Nucksfollower1983 said:

that would be included in the team payroll portion of the expenses break down. no one likes Eriksson's contract but seriously man grow the f up.

im pretty sure that post was sarcastic 

just use the some of that thing in ur head if u can

[IBatch]

6 hours ago, RU SERIOUS said:

and...........file net income from your sports investment group of about $51,000/yr each for you and your brothers including for your mother’s estate of $176,000 and hope you're not reassessed by Revenue Canada far actual taxable income of about $11.5 million for you and each of your brothers  and $4.3 million for your mother’s estate  and told to pay-up or go to jail.

Maybe that’s all they paid themselves and retained the rest in the business which is then taxed at a lesser corporate rate.  Not like they need the money from their hockey team.  The rest would be retained earnings on their balance sheet.   Sure CCRA might be after something else like dividend payments not assessed but regardless something smells off about it.  Crazy.  Rich . People.

[timberz21]

15 hours ago, Doesntmakesense said:

I am a marketing student going for my MBA and we were given an assignment to break down the balance sheet of the Vancouver Canucks (as an estimate).

So far I have the following research and numbers confirmed:

 

Home Games : 41 (average ticket price $125) (average attendance 17,125) 

Home Game Revenue Expected: 41 x 17,125 x $125= $87,765,625

TV/Radio Revenue (Canucks Share): $11,000,000

Canucks Merchandise Sales: $9,000,000

Arena Food/Drinks team share: $14,000,000

Team Promotions/Extra Revenue: $7,000,000

Total Revenue: $128, 765, 625 

 

Now for the expenses:

 

Team Payroll: $81, 500,000

Arena Maintenance: 

Arena Workers Salaries:

Flights:

Hotels:

Food:

Medical/Insurance:

Team Office Salaries:

Canucks Marketing Materials/Ads:

Cost of Food/Cost of Goods:

 

I am very confused how owners find extra income to pay millions to their coaches, like Bab in Toronto. It was much better for the owners to pay $1 mill or less for coaches, there is no reason why coaches salaries are going up. The coaches salary is a direct hit on the owners wallet, it is dumb to accept $6 million throwing away for a coach when you are getting nothing back for it.

 

And this is just the start of the expense of a hockey team, what about the first class air travel, premium hotels etc? Can this be reduced to regular air travel, reduction on hotels, food vouchers etc?

 

I plan to be a hockey team owner my self one day, at 35 though I am struggling to understand how to afford all of the expenses above without significantly cutting costs along the way as a potential future owner.

 

Thoughts are welcomed. 

 

Quick question, once you realize your dream of being a hockey team owner...are you going to come to CDC for advice on signings and trades too?

 

Plus I'm not sure if your looking at the right financial statement.  A balance sheet doesn't contain any revenues or expenses.  All it does is show you your asset, liabilities and your surplus or deficit.  If you looking at revenues and expenses your either looking at the income statement or trial balance.

[Shirotashi]

On 7/2/2019 at 4:38 PM, Arrow 1983 said:

LOL total revenue $128 mill more like $250mill plus

Profits between $10-15 mill this is probably low 10%-15% non playoffs playoffs $20-$50mill plus, full cup run probably closer to $100mill.

And then there is all the other events.

Canucks memberships

Licenses

Trademarks

The list would go on and on for revenues either direct or indirect.

 

If the Canucks become conteders again all the profit numbers boost way way up whilst the costs remain the same give or take. The prices for tickets would be higher by probably 50%. Not forgetting that merchandising would see huge increases as well.

[5Fivehole0]

Pretty sure everyone in this thread just got trolled by the OP. 

What self respecting 35 year old person finishing his MBA or whatever would come to CDC for advice on his "homework" that looks questionable at best anyways,,,?

[rychicken]

Vancouver has an additional miscellaneous expense of $5,000 for Coach Green's Advil...not easy dealing with the media in this city....

[Chris12345]

On 7/3/2019 at 3:48 AM, IBatch said:

Maybe that’s all they paid themselves and retained the rest in the business which is then taxed at a lesser corporate rate.  Not like they need the money from their hockey team.  The rest would be retained earnings on their balance sheet.   Sure CCRA might be after something else like dividend payments not assessed but regardless something smells off about it.  Crazy.  Rich . People.

I think they tried to use losses from another company and were denied.

[IBatch]

36 minutes ago, Chris12345 said:

I think they tried to use losses from another company and were denied.

Sure they used as very creative accounting when it comes to filing their personal income tax....in the end it should only be what they paid themselves from whatever company they have, losses from a company can only be used against previous or future profits within that company - each is a separate entity.   If CCRA is after them they should be firing their accountant firm. 

[IBatch]

7 hours ago, 5Fivehole0 said:

Pretty sure everyone in this thread just got trolled by the OP. 

What self respecting 35 year old person finishing his MBA or whatever would come to CDC for advice on his "homework" that looks questionable at best anyways,,,?

Absolutely...Who knows maybe he’s 23 and just wrapping up his MBA - but as a former BCOM graduate I can say this is first year stuff (BCOM - Not MBA), not sure how he got through that, think maybe that’s about where he’s at now (first maybe second year)...with plans to get his MBA.  Would get an F as a project the way it is, 5 minutes of googling you can come up with a decent overall from Forbes, dig a bit deeper and their are arcticles that get more specific.

 

And as I mentioned earlier, the cap is set so players and owners basically split the revenue (not all revenue goes into the pot either, it’s kept by the owners like Expansion fees are split equally and go right into the owners pockets) .  So start with 80 million, then take expenses off that.  Retained earnings are well over 100 million for the franchise (profits not paid out), they bought it for 207,  it’s ranked 9th overall and close to 750. 

 

There is a reason rich people are lining up to buy one of these, with revenue sharing as long as the franchise is relatively healthy and isn’t like ARI or CAR was (they really did a great job last year getting bums back in seats) and the market interest is high enough, these things are money makers.  That’s why they can ask for 650 and get it, artificially raising the bottom of the franchises  up. 

 

Its set up for an easy 8-10% ROI including the fees they pay themselves to run it.   That’s a dividend.  If they own the arena they also make money every single time it’s used for something else.  Concerts.  Events.  Etc. 

 

Each franchise is partnered with an elite group of billionaires.  Some better then others.   If  FA sells the Canucks now he will have lined his pockets with well over a billion dollars.  It wouldn’t surprise me at all if the next core pushes the value up he might do just that.

 

Under the cap the days of owners whining and crying foul (and rightly so) that they are bleeding money are all bit over.  Revenue sharing keeps all the franchise’s healthy.  ARI is the lone outlier, with a new billionaire owner with plans to put the arena where there are actually people...who knows it might actually work...

[Chris12345]

2 hours ago, IBatch said:

Sure they used as very creative accounting when it comes to filing their personal income tax....in the end it should only be what they paid themselves from whatever company they have, losses from a company can only be used against previous or future profits within that company - each is a separate entity.   If CCRA is after them they should be firing their accountant firm. 

I'd use an ABIL. Who's the CCRA?

Edited July 4, 2019 by Chris12345