Spreading the Wealth

[B21]

@brelic

1. Good question... if their team is competitive (which it has been over the last number of years), then they should still be able to sell out the place. But what about the other options for your sports entertainment dollar in the San Jose area (note, I've never been there, so if these teams are not in the area or some are missing, my bad):

San Fran Giants - $23.28 (MLB average is $26.98)

San Fran 49ers - $23.79 (lowest in the NFL; highest was NY Giants at $332; average is $241.72).

Oakland Raiders - $108.89 (still below NFL average)

Golden State Warriors - $39 (NBA average is $48.48)

The average NHL ticket last year was $57.10, which still puts the Sharks below the average price. But, other than the Raiders, the Sharks have the most expensive tickets for a winter sport in a state that doesn't see snow. If the Sharks used the Flyers pricing model, they would have made a $18m in additional revenue, which in theory should put them on the plus side of the ledger.

But then if fans in San Jose won't pay that price, doesn't that signify that the market there won't support/sustain a team in the NHL? Which leads nicely into your 2nd question...

1st - assuming that 49ers price is a typ-o? 2nd - we asked the same question basically...if the Sharks charge Flyers prices would the still sell out thus closing that revenue gap? Maybe...but should they have to? To answer you last question...my answer is a strong "no". That does not at all signify that the market cannot sustain an NHL franchise considering that the Flyers are at the upper end of the ticket price spectrum and at the top of that list for U.S. based teams. It's not as if the Sharks prices are articifially low. If teams need to all charge that much to sustain profitability while spending to the cap then it's a clear indicator that the cap is too high. Just look at the cap room some teams have...even the hugely profitable teams like the Pens and Flyers.

2. Let's rephrase that another way... for argument's sake, should Comcast be financially penalized because San Jose's market can't support higher prices? If you think so, then I'm sure you'd have more than one owner thinking long and hard about their investment into an NHL team.

I do. I don't look at it as a penalty, either. A Comcast remains profitable even with revenue sharing...just not as profitable.

Not to bring this in the political and social realm, but if the Flyers shouldn't have an advantage over the Sharks because they're willing to pay more, why should a wealthy citizen have an advantage over a regular citizen for medical care because he's willing to pay more? Or why should Joe Thornton have a much much nicer car and much much bigger house than me because he's willing to pay more? Even the redistribution of tax dollars in social programs and safety nets won't give me anywhere near Thornton's purchasing power.

The only point I'm trying to make with those parallels is that why should hockey be some sort of share-the-wealth dream when the rest of American society is not structured that way?

Good argument but...I don't think a wealthy citizen should have an advantage over a poorer one when it comes to health care (and I'm a Republican BTW) but that's an arguement for another day.

To use your Joe Thornton point....because there is no competition between you and Joe Thornton. His career allows him access to more material things. Yours and mine do not. No one is winning or losing anything based on their ability to purchase a bigger house. I get what you are saying but comparing athletic competition to real life just doesn't fly for me.

When it comes to sport, in theory things should be on a level playing field among competitors. There are exceptions - sure. But finances shouldn't be one of them. I'm not looking for total equality among teams but when you have 30% - 35% differences that's a problem i/m/o.

[B21]

@B21

I think the players have a huge issue with what the Owners consider Hockey Related Revenue. As in what the owners are also pulling out of the pot so to speak and claiming that certain monies don't count towards the amount of revenue lowering the amount available to the percentage of the split.

Help me out on that one...haven't read up on it.

if you are a hockey team, isn't any revenue "hockey revenue" from the parking to the tickets to the concessions to the adertising.

[B21]

That's what I heard Flyerrod but I can't remember where i read it. Baseball (or is it football) and basketball count just about EVERY revenue stream into the 50-50 splits that they have. Parking, consessions, t-shirts, caps, pictures, jerseys, ect... The NHL doesn't so last time around the players scored their 57% number because the owners gather up all those residules. So the Owners current 43% is probably close to 50% if all that was considered. So if they go to a 50-50 split under current rules then the players share drops to a "real" 43% if using the other major sports as a baseline... I guess my point is, it seems fair right where it is. Or it's possible my math is off and I got confused because this really is confusing....

Confusingly confusing?

50/50 of ALL revenue seems fair.

[Polaris922]

@OH1FlyersFan

The Forbes article...

http://www.forbes.com/sites/mikeozanian/2011/11/30/the-business-of-hockey/

The Sutcliffe article...

http://sports.nationalpost.com/2011/12/05/nhl-rich-keep-getting-richer/

[Polaris922]

Something else to think about when it comes to expanding the NHL... when you expand the league, you also expand interest in hockey to the youth of the country. As the NHL has spread through the US, there have begun more and more youth hockey programs. The more youth hockey programs we have the better the youth product we are seeing come out of the USA Hockey circles. More kids trying it out means more interest, means more revenue in the sport, means more talent coming up through the ranks, means more talented players hitting the ranks of the NHL. Adding teams may thin out the talent pool slightly upon initialization, but in the end some kid playing in Phoenix because Bettman gave the Coyotes a shot just might be the next Mario Lemieux.

[idahophilly]

Something else to think about when it comes to expanding the NHL... when you expand the league, you also expand interest in hockey to the youth of the country. As the NHL has spread through the US, there have begun more and more youth hockey programs. The more youth hockey programs we have the better the youth product we are seeing come out of the USA Hockey circles. More kids trying it out means more interest, means more revenue in the sport, means more talent coming up through the ranks, means more talented players hitting the ranks of the NHL. Adding teams may thin out the talent pool slightly upon initialization, but in the end some kid playing in Phoenix because Bettman gave the Coyotes a shot just might be the next Mario Lemieux.

Oddly enough, I favor expansion so long as it's well thought out. Hartford, Quebec City, Seattle, Cleveland (yes Cleveland and i spelled if different cause i can't remember if it needs that 'e') ,Saskatoon, Kansas City, Hamilton , Portland, Salt Lake City, Moscow (?) and Long Island NY (joke) all could support teams....

[Polaris922]

Oddly enough, I favor expansion so long as it's well thought out. Hartford, Quebec City, Seattle, Cleveland (yes Cleveland and i spelled if different cause i can't remember if it needs that 'e') ,Saskatoon, Kansas City, Hamilton , Portland, Salt Lake City, Moscow (?) and Long Island NY (joke) all could support teams....

Cleveland? Sure why not... we love crushing them in football. Why not hockey too? They can remain the second longest dry run of major sports championships with or without a hockey club!

[flyerrod]

Help me out on that one...haven't read up on it.

if you are a hockey team, isn't any revenue "hockey revenue" from the parking to the tickets to the concessions to the adertising.

The Owners decide what is considered Revenue and they also remove other monies for things they deem hockey related costs. That is one of the things causing the biggest gap between Owners and the NHLPA. The Owners basically "define" for a lack of a better word the term Hockey Related Revenue and that is where the disparity between the 2 exists.The Players would probably agree to the split if they had any say in the definition of HRR. The article is in the CBA related forum that cites the info. Link is below......

http://www.hockeyfor...-revenue-split/

[sarsippius]

If you really want to think about it here is my off the cuff analogy:

I own a big company that runs 3 big factories producing widgits and making lots of money. Then the employees want me to open a 4th plant to provide jobs for more employment jobs in Zimbawee that makes no money. So my other three factories have to subsidize the 4th and then ALL the employees ask for a pay raise or else... Well, how , as the owner, would you feel about that?

I'd couch that scenario a bit differently to fit the state of affairs in the NHL....You open plant #4, not really because your employees want more jobs created, but because you see the opportunity to cash in on increased economies of scale, grow overall revenues and operating profit among your companies, and raise the visibility of your business. You are wildly successful at doing all of those things, OVERALL revenue goes up by more than a third over a seven year period, OVERALL operating margins are the best they've ever been, even though the new plant on its own is struggling.

But since that plant is contributing many other less quantifiable benefits that help your company as a whole, you infuse some capital into it....instead of telling the employees at the other 3 plants that they have to subsidize the fourth plant

[idahophilly]

I'd couch that scenario a bit differently to fit the state of affairs in the NHL....You open plant #4, not really because your employees want more jobs created, but because you see the opportunity to cash in on increased economies of scale, grow overall revenues and operating profit among your companies, and raise the visibility of your business. You are wildly successful at doing all of those things, OVERALL revenue goes up by more than a third over a seven year period, OVERALL

operating margins are the best they've ever been, even though the new plant on its own is struggling.

But since that plant is contributing many other less quantifiable benefits that help your company as a whole, you infuse some capital into it....instead of telling the employees at the other 3 plants that they have to subsidize the fourth plant

I suppose that works also...

[jammer2]

@sarsippius Speaking of increased visibility, I would LOVE to see a NHL commercial featuring wicked goals and hits to the tune of Metallica's "trapped under ice" just think it would be very cool way to sell the sport, and it would target the age specific audience they are looking at, the males 16-50. Sounds ood, but I am always cooking up commericials for different products in my mind, think I missed my calling! lol.

[sarsippius]

@jammer2

Trapped Under Ice, excellent! One of my favorite Metallica tunes with accompanied by a visual of bone jarring hits! Metal is to music what hockey is to sports......

[jammer2]

@sarsippius It would be so *great* to have an advertising campaign centered around that tune! That would make my month!

[OH1FlyersFan]

But (and I don't think it will happen) do you really want to see less teams? Half of the teams lost money last year if you believe the owners. If there is no change to the system and the truly unprofitable/unsustainable teams "go away" then the NHL will be down to what...20 teams?

That would relegate the league to a niche sport somewhere between Arena League Football and Bowling.

I think maybe I would like to see that. I could argue based on many things and compared to the other professional sports (except for maybe major league soccer and lacrosse) that hockey is a niche sport already, at the very least there is that perception - as much as I hate to say it. So what is there to lose? If the league drops down to 20 teams and they are all financially healthy then wouldn't it be in a better, more competitive position than it is today? You would have teams located in markets that are strong and that are known to support hockey, that actually DO support hockey. That's a better experience for the fan and for the team. It also would improve the game by strengthening the talent pool....which may be somewhat diluted with 30 teams. With fewer teams perhaps there is greater parity.

This is actually a pretty good article I came across on NHL expansion. I know I'm actually talking about retraction, but this article points out that expansion may not be what it's cracked up to be and that it may not always work out as planned.

http://sports.yahoo.com/nhl/blog/puck_daddy/post/should-nhl-expand-to-houston-what-about-honolulu?urn=nhl,wp10912

"Yes, according to these metrics, Atlanta is the 11th-best market from a local income perspective to support an NHL team. The same Atlanta that just saw their NHL leave after a decade to become Winnipeg Jets 2.0. So yes, having a stout income base should be paramount for NHL expansion or relocation; Atlanta is a reminder that it won't matter if your shiny new team (a) is mismanaged and (b) fails to connect with more than a niche audience of fans and © blows."

[OH1FlyersFan]

@OH1FlyersFan

The Forbes article...

http://www.forbes.co...ness-of-hockey/

The Sutcliffe article...

http://sports.nation...getting-richer/

Thanks Polaris. Much appreciated. I'll give them a read.

[Polaris922]

I think maybe I would like to see that. I could argue based on many things and compared to the other professional sports (except for maybe major league soccer and lacrosse) that hockey is a niche sport already, at the very least there is that perception - as much as I hate to say it. So what is there to lose? If the league drops down to 20 teams and they are all financially healthy then wouldn't it be in a better, more competitive position than it is today? You would have teams located in markets that are strong and that are known to support hockey, that actually DO support hockey. That's a better experience for the fan and for the team. It also would improve the game by strengthening the talent pool....which may be somewhat diluted with 30 teams. With fewer teams perhaps there is greater parity.

This is actually a pretty good article I came across on NHL expansion. I know I'm actually talking about retraction, but this article points out that expansion may not be what it's cracked up to be and that it may not always work out as planned.

http://sports.yahoo.com/nhl/blog/puck_daddy/post/should-nhl-expand-to-houston-what-about-honolulu?urn=nhl,wp10912

"Yes, according to these metrics, Atlanta is the 11th-best market from a local income perspective to support an NHL team. The same Atlanta that just saw their NHL leave after a decade to become Winnipeg Jets 2.0. So yes, having a stout income base should be paramount for NHL expansion or relocation; Atlanta is a reminder that it won't matter if your shiny new team (a) is mismanaged and (b) fails to connect with more than a niche audience of fans and © blows."

@sarsippius posted a great point though... The league as a whole is doing much better than before. Some argue it's because they've stretched into the markets that are struggling to support teams. I suppose that's something that can't be measured. It all depends on who the author is.

[OH1FlyersFan]

@brelic

1. Good question... if their team is competitive (which it has been over the last number of years), then they should still be able to sell out the place. But what about the other options for your sports entertainment dollar in the San Jose area (note, I've never been there, so if these teams are not in the area or some are missing, my bad):

San Fran Giants - $23.28 (MLB average is $26.98)

San Fran 49ers - $23.79 (lowest in the NFL; highest was NY Giants at $332; average is $241.72).

Oakland Raiders - $108.89 (still below NFL average)

Golden State Warriors - $39 (NBA average is $48.48)

The average NHL ticket last year was $57.10, which still puts the Sharks below the average price. But, other than the Raiders, the Sharks have the most expensive tickets for a winter sport in a state that doesn't see snow. If the Sharks used the Flyers pricing model, they would have made a $18m in additional revenue, which in theory should put them on the plus side of the ledger.

But then if fans in San Jose won't pay that price, doesn't that signify that the market there won't support/sustain a team in the NHL? Which leads nicely into your 2nd question...

1st - assuming that 49ers price is a typ-o? 2nd - we asked the same question basically...if the Sharks charge Flyers prices would the still sell out thus closing that revenue gap? Maybe...but should they have to? To answer you last question...my answer is a strong "no". That does not at all signify that the market cannot sustain an NHL franchise considering that the Flyers are at the upper end of the ticket price spectrum and at the top of that list for U.S. based teams. It's not as if the Sharks prices are articifially low. If teams need to all charge that much to sustain profitability while spending to the cap then it's a clear indicator that the cap is too high. Just look at the cap room some teams have...even the hugely profitable teams like the Pens and Flyers.

2. Let's rephrase that another way... for argument's sake, should Comcast be financially penalized because San Jose's market can't support higher prices? If you think so, then I'm sure you'd have more than one owner thinking long and hard about their investment into an NHL team.

I do. I don't look at it as a penalty, either. A Comcast remains profitable even with revenue sharing...just not as profitable.

Not to bring this in the political and social realm, but if the Flyers shouldn't have an advantage over the Sharks because they're willing to pay more, why should a wealthy citizen have an advantage over a regular citizen for medical care because he's willing to pay more? Or why should Joe Thornton have a much much nicer car and much much bigger house than me because he's willing to pay more? Even the redistribution of tax dollars in social programs and safety nets won't give me anywhere near Thornton's purchasing power.

The only point I'm trying to make with those parallels is that why should hockey be some sort of share-the-wealth dream when the rest of American society is not structured that way?

Good argument but...I don't think a wealthy citizen should have an advantage over a poorer one when it comes to health care (and I'm a Republican BTW) but that's an arguement for another day.

To use your Joe Thornton point....because there is no competition between you and Joe Thornton. His career allows him access to more material things. Yours and mine do not. No one is winning or losing anything based on their ability to purchase a bigger house. I get what you are saying but comparing athletic competition to real life just doesn't fly for me.

When it comes to sport, in theory things should be on a level playing field among competitors. There are exceptions - sure. But finances shouldn't be one of them. I'm not looking for total equality among teams but when you have 30% - 35% differences that's a problem i/m/o.

Great discussion between you and Brelic. Appreciate the perspectives, though I just can't bring myself to support your position on point #2 -- that comcast should be penalized because its market supports a higher price than San Jose's. I also believe that a wealthy citizen should have an advantage over a poor citizen. But you have to look at why, so I think I want to reserve the right to qualify my blanket statement at a later date because my thinking could change. For now, it's based on questions like -- Is it because they worked harder? Put themselves through college, got a degree, started a business, worked 18 hours a day, 6 days a week? I think that there should be a reward when a person puts in that much hard work, effort, time, committment. I can choose to do nothing with my life, but why should I be entitled to the same rewards and benefits as someone who chooses to do something. Now, I'm crossing the line into a socio-political discussion which I really want to avoid because politics can be even more inflammatory than hockey talk, so that's all I have to say about that. Ha!

[OH1FlyersFan]

Oddly enough, I favor expansion so long as it's well thought out. Hartford, Quebec City, Seattle, Cleveland (yes Cleveland and i spelled if different cause i can't remember if it needs that 'e') ,Saskatoon, Kansas City, Hamilton , Portland, Salt Lake City, Moscow (?) and Long Island NY (joke) all could support teams....

I'd be very leery of that. See the link I just posted in a previous response about the dangers, that may be too strong a word, of expansion. Cleveland is a ghost town by the way. An absolute mess. Even worse than Columbus which can't even support its own NHL team.

[jammer2]

@OH1FlyersFan Agreed, no way, no how could Cleveland support and NHL team...just can't see it.

[OH1FlyersFan]

accompanied by a visual of bone jarring hits!

I'm totally with you, but does this fit into Bettman's vision of a kinder, gentler league without any, or very little, physical contact? His commercials would come out looking something like a ballet. No offense to those who like the ballet.....

[jammer2]

@OH1FlyersFan F**k that little beaty eyed dwarf!!!

[brelic]

It's funny how this conversation can really only happen in sports. Apple would never revenue share with HP and Dell to prop-up their respective PC markets. Ford, which managed to avoid bankruptcy and bail-out money didn't need to help GM. The founders of Burger King and McDonalds were good friends, but certainly didn't do each other any favors.

That's exactly the point I was trying to make, HF... but you made it so much more eloquently than I did

[B21]

The Owners decide what is considered Revenue and they also remove other monies for things they deem hockey related costs. That is one of the things causing the biggest gap between Owners and the NHLPA. The Owners basically "define" for a lack of a better word the term Hockey Related Revenue and that is where the disparity between the 2 exists.The Players would probably agree to the split if they had any say in the definition of HRR. The article is in the CBA related forum that cites the info. Link is below......

http://www.hockeyfor...-revenue-split/

Makes sense now. Many thanks.

[B21]

I think maybe I would like to see that. I could argue based on many things and compared to the other professional sports (except for maybe major league soccer and lacrosse) that hockey is a niche sport already, at the very least there is that perception - as much as I hate to say it. So what is there to lose? If the league drops down to 20 teams and they are all financially healthy then wouldn't it be in a better, more competitive position than it is today? You would have teams located in markets that are strong and that are known to support hockey, that actually DO support hockey. That's a better experience for the fan and for the team. It also would improve the game by strengthening the talent pool....which may be somewhat diluted with 30 teams. With fewer teams perhaps there is greater parity.

This is actually a pretty good article I came across on NHL expansion. I know I'm actually talking about retraction, but this article points out that expansion may not be what it's cracked up to be and that it may not always work out as planned.

http://sports.yahoo....urn=nhl,wp10912

"Yes, according to these metrics, Atlanta is the 11th-best market from a local income perspective to support an NHL team. The same Atlanta that just saw their NHL leave after a decade to become Winnipeg Jets 2.0. So yes, having a stout income base should be paramount for NHL expansion or relocation; Atlanta is a reminder that it won't matter if your shiny new team (a) is mismanaged and (b) fails to connect with more than a niche audience of fans and © blows."

Good points. I guess I wouldn't have a problem with 20-ish teams for the reasons you stated. I just think a 28-32 team league where the wealth is pooled is better than 20 teams each doing what is best for them. Somewhere Adam Smith is cringing.

[B21]

Great discussion between you and Brelic. Appreciate the perspectives, though I just can't bring myself to support your position on point #2 -- that comcast should be penalized because its market supports a higher price than San Jose's. I also believe that a wealthy citizen should have an advantage over a poor citizen. But you have to look at why, so I think I want to reserve the right to qualify my blanket statement at a later date because my thinking could change. For now, it's based on questions like -- Is it because they worked harder? Put themselves through college, got a degree, started a business, worked 18 hours a day, 6 days a week? I think that there should be a reward when a person puts in that much hard work, effort, time, committment. I can choose to do nothing with my life, but why should I be entitled to the same rewards and benefits as someone who chooses to do something. Now, I'm crossing the line into a socio-political discussion which I really want to avoid because politics can be even more inflammatory than hockey talk, so that's all I have to say about that. Ha!

Yeah - I'll skip the political discussion for now other than to say in just about all other aspects of life I am all for survival of the fittest. Just not healtcare.

But - to point #2. To me it's an apples to oranges comparison. Few markets - not just San Jose - can support a team financially the way Phildelphia can. By support I mean dollars spent and not necessarily butts in the seats. I could see that point if San Jose was charging some obscenely low ticket prices but they are right there in the middle where as the Flyers are way up at the top. When a team right smack dab in the middle of the spectrum still loses that much because they spend to the cap it tells me the cap is too high. You can keep that cap that high...but you have to spread the wealth a little or else you end up with 2/3 losing money and 1/3 making money. That won't last very long.