hf101 Posted February 11, 2012 Share Posted February 11, 2012 Are we headed to another lockout?http://www.forbes.co...ness-of-hockey/More business is boosting National Hockey League team values but climbing player costs are eroding the sport’s profitability.The average hockey team is now worth $240 million, 5% more than last year due to a 5% increase in revenue during the 2010-11 season, to an average of $103 million per team. The sport’s popularity ontelevision (NBC’s broadcast of theBridgestone NHL Winter Classic was the most-viewed NHL regular season game in 36 years, with an average of 4.5 million watching during prime time) and online (average monthly unique visitors to NHL.com plus all 30 NHL team Web sites has increased to a record 22 million) is up, as is the revenue from those platforms.Sponsorship and merchandise sales have also been increasing thanks to new deals, like the one with Tim Hortons that gives the quick-service donut chain title sponsorship of the 2012 NHL All-Star Game in January, and the extremely well done reality series 24/7 Penguins/Capitals: Road to the NHLon HBO that was a big hit. And the NHL recently extended its European reach with separate regional broadcast deals for U.K./Ireland, Czech Republic, Germany and Austria, among other new territories.Complete Coverage: The Business of Hockey Video: NHL CBA PeaceBut margins are getting squeezed. During the 2010-11 season the league posted operating income (earnings before interest, taxes, depreciation and amortization) of $126 million, 21% lower than the previous year. Main reason: Player costs increased 11%, to $59 million. Last season 18 of the league’s 30 teams lost money even before they had to pay bank loans or write down assets, compared with 16 the prior year.The league’s salary cap, set at 57% of revenue, is too high for some teams to be profitable . As a result, expect the National Hockey League to undergo a cantankerous labor negotiations when the owners and players union begin to hammer our a new collective bargaining agreement to replace the current six-year deal that expires in September . The NHL must move much closer to the 48% model the NFL agreed to before this season or the 50-50 revenue split National Basketball Association’s owners and players recently agreed to.Three years ago NHL commissioner Gary Bettman told me not a single NHL team was worth less than $200 million. But money-losing teams are being sold for much less. In February Forbes 400 member Terrence Pegula bought the Buffalo Sabres, who lost $5.6 million last season, for $165 million. The St. Louis Blues and Carolina Hurricanes, two other teams losing money, are being shopped at prices well below $200 million. And the New Jersey Devils, who sank 17% in value to $181 million, are in such bad shape financially that there is speculation the team could be headed for bankruptcy and a court supervised sale like the Dallas Stars.Yet a handful of teams, most of which play in big markets, are making piles of money. The league’s most valuable team, the Toronto Maple Leafs, is now worth $521 million and generated $81.8 million in operating income last season. The New York Rangers, who are enjoying the benefits of playing in arefurbished Madison Square Garden, earned $41.4 million last year and are the NHL’s second-most valuable team, worth $507 million. And the Montreal Canadiens, placing third with a $445 million valuation, earned $47.7 million. Thus the top three teams posted an aggregate operating profit greater than the rest of the league combined.Having all that cash gives teams an advantage when it comes to keeping talent, despite the salary cap, because teams can reduce their payroll for salary cap purposes by sending players to the minors or Europe, play games with the league’s long-term injury reserve system and front-load contracts to manipulate the yearly cap hit (team payrolls are based on the average annual values of the contracts).This helps explain the big gap in team payrolls within the league. The New York Rangers, Vancouver Canucks and Chicago Blackhawks each had more than $70 million in player expenses, versus less than $50 million for the Carolina Hurricanes, New York Islanders and St. Louis Blues.Complete Coverage: The Business of HockeyThe value of the Winnipeg Jets increased 21%, the most among the 30 teams. After buying the Atlanta Thrashers in May for $110 million, plus a $60 million relocation fee, True North Sports and Entertainment moved the team to Manitoba where the previous incarnation of the Jets played as part of the NHL from 1979 to 1995 before moving to Phoenix. In Atlanta the team sold only 73% of their tickets last season but sold out all of their games for the 2011-12 campaign in less than 30 minutes.The average NHL team is worth 47% more than it was before the lockout thatcancelled the 2004-05 season. Let’s hope a the NHL can get a more economically sound CBA without having another work stoppage. Business has improved too much the past seven years. Quote Link to comment Share on other sites More sharing options...
hf101 Posted February 11, 2012 Share Posted February 11, 2012 http://video.forbes.com/fvn/sportsmoney/tom-laidlaw-nhl-players-union Quote Link to comment Share on other sites More sharing options...
DaGreatGazoo Posted February 12, 2012 Share Posted February 12, 2012 In a word...yes. Quote Link to comment Share on other sites More sharing options...
Vanflyer Posted February 14, 2012 Share Posted February 14, 2012 @hf101- That was a fuzzy article. Though the explained away the "erosion" of profits due to increased player cost (annual cap increase of 57% of revenue, split by the teams), they never explained many other factors. At the end of the day, the AVERAGE team increased FOURTY SEVEN PERCENT since the last lock out and CBA. I found the article lazy in that it never spoke of the "small market teams" that are located in geographic regions that can not support them either by general fan base or corporate fan base. They did say how Winnipegs value spiked 21% even AFTER paying a relocation fee of 60m to the league. The other part is the building, parking and merchandising. Of course the owners are in business to make money. I don't have any problem with that. Yet, when I see that the valuation has gone up 47% in 7 years- especially in this economy, I have no "softness" for the owners for a lockout. Their investments are doing well (for the most part). The ones that are located in places that culturally are not set to sustain them- short term or long term should fold or be moved. Where is the mention of how the league has been bailing out Phoenix? I am sure that I totally miss things and I know that teams like Montreal, NYR, Toronto, Philly allow the average revenue to be overstated as well as the valuation, but still. I guess I struggle to see why the league would lock out the players AGAIN, while the league agreed to the CBA (ie they made their bed). Add in the increased popularity, new mainstream tv deal (though something needs to be done with that versus garbage) and from a business perspective, they would be fools to lock their doors. Quote Link to comment Share on other sites More sharing options...
hf101 Posted May 22, 2012 Share Posted May 22, 2012 The Business of Sports: Comparing the NHL to NFL, NBA, MLB & moreI thought this thread might be a great place to stash this image. Quote Link to comment Share on other sites More sharing options...
Vanflyer Posted May 22, 2012 Share Posted May 22, 2012 @hf101NFL runs at a 11% profit to revenue marginMLB 6.86%NHL 5.33%NBA 4.46%I was a little bit shocked by the NBA. I thought it would be higher than the NHL. I also thought that MLB would be significantly higher than 6.86%. Quote Link to comment Share on other sites More sharing options...
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