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What are they Spending the Money on?


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http://sports.yahoo.com/blogs/nhl-puck-daddy/yeah-nhl-totally-losing-hundreds-millions-dollars-every-140130733--nhl.html

Yeah, the NHL is totally losing hundreds of millions of dollars every year

RDS reporter Renaud Lavoie reported in two separate tweets (here and here) that a league source told him the NHL is losing money by the barrel, shedding some $240 million over the last two seasons. For reasons that should be pretty plainly obvious to all non-ownership shills, the Players' Association basically feels the NHL is full of it.

....

Player costs have risen about 30 percent at most since the last lockout, accounting for as much as $1.9 billion. And because we know revenues are $3.3 billion, the costs beyond what players are paid probably climb to $1.52 billion, given that the league is claiming to have lost about $120 million last year. That's simple math.

So what on earth, then, are teams spending $1.52 billion dollars on that are not covered by hockey-related revenues?The Levitt Report, which was based on data from the 2002-03 season, defined "other costs" as: those related to additional player costs outside salary, bonuses, and benefits; operating costs including everything from what they pay other people associated with the team (front office staff, coaches, trainers, travel, etc.); minor league players, coaches, scouts, etc.; arena and building costs; and additional staff like legal, finance, marketing, and so forth. Man, those seem like they'd add up in a hurry. Wow. Must be expensive, right?

Well, not really. The Levitt Report found that all those things combined, league-wide, cost about $770 million in 2002-03. And so now we're supposed to sit here and believe that "other costs" have skyrocketed to just about double the money required nine years ago? Well, that's funny in and of itself.

One might also easily attribute a large portion of the "loss" (should it exist) from having a moribund franchise in Phoenix with no owner, forcing the league to dump millions into running a franchise that couldn't work with Wayne Gretzky much less Shane Doan.

For most - and certainly the big spending, large market teams - the companies that own them generate a tremendous amount of money from owning teams. For example, I think that it is quite possible that "on the books" the Flyers "lost money" because of things like paying thirty coaches at a timehyperbole and having large, long-term, immovable contracts on IR.

But making the second round of the playoffs says "probably not."

When one considers, however, that much of the "marketing" the Flyers are "paying" for (as well as, I'll wager, "finance" and "legal") not to mention actually owning the building and getting all the "arena and building costs" is going internally to Comcast and Comcast subdivisions one can see where the NHLPA is coming from in some of the more extreme examples. That money is then likely not "hockey related revenue."

It's just revenue that wouldn't exist without hockey - or at the very least might not be as lucrative in a competitive bidding environment than it is in a closed shop.

I don't know what is and isn't "hockey related revenue" and I'm not at all saying that some of these "costs" and "losses" teams have experienced aren't real (air travel and fuel alone is much more expensive these days). Then you have questions like "how much did it cost Minnesota to start the season in Finland and why would you have (aside from Mikko Koivu) Minnesota, who's owner has been among those decrying big spending, spend the money to do that? How much more are the Flyers paying - facilities, travel, etc. - now that their itinerant AHL team isn't right across the parking lot?

This really doesn't boil down to "did the league lose money the last two years?" as much as the owners playing fast and loose with the numbers whenever it suits them.

That may be "business" in the modern era, but it may also be why we don't have the faith and trust in the basic institutions we once held dear. The NHL and hockey included.

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Then you have questions like "how much did it cost Minnesota to start the season in Finland and why would you have (aside from Mikko Koivu) Minnesota, who's owner has been among those decrying big spending, spend the money to do that? How much more are the Flyers paying - facilities, travel, etc. - now that their itinerant AHL team isn't right across the parking lot?

I'm sure that is all a part of the expense. The Aeros are in Houston. The Wild are trying to have their AHL team in North Dakota. Ideal really. But the problem is there isn't the population to support an AHL team.

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The minute any faction in all of this has hidden income and expenses, they're instantly guilty of defrauding the hockey world. There is only one valid reason to hide numbers from anybody in this business, and that's to prevent people from demanding a share of it.

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I'm sure that is all a part of the expense. The Aeros are in Houston. The Wild are trying to have their AHL team in North Dakota. Ideal really. But the problem is there isn't the population to support an AHL team.

It definitely is "part of the expense" - but I'm not sure a direct Houston-Twin Cities flight is going to be any more expensive than from Bismarck-Twin Cities.

My point is that teams make decisions - like having a "losing money" franchise start the season overseas (losing a home game and incurring additional expenses) - that can lead to them "losing money."

The minute any faction in all of this has hidden income and expenses, they're instantly guilty of defrauding the hockey world. There is only one valid reason to hide numbers from anybody in this business, and that's to prevent people from demanding a share of it.

It's not as much "hidden income" as it is running a business.

Say, for example (speculation), the Flyers budget for Cap + $xM for administrative/marketing.

You have budgeted for sellouts at every game and getting at least to the second round of the playoffs to break even.

During the season, when you lose Chris Pronger and need to bring in new players you go above the cap number you expected. You get three second round home games so you would have made your budget, but for "losing money" on replacement players.

Now, add in extra expenses for travel between Glen Falls and Philadelphia as opposed to being across the street. And additional costs for facilities instead of using Skate Zone.

It's not hard to see how the Flyers could be "losing money" while generating tens of millions of dollars of real income for its parent company.

And these losses associated with the AHL franchise moving are investments in the future, taken by a responsible company making a business decision.

And Gary Bettman still gets to get up and talk about franchises "losing money."

It doesn't have to be the Flyers - the Predators are going to "lose money" next season (and a lot of it) if you book Weber's bonuses on the cap as a one-time business expense (which most businesses wouldn't, but the NHL might to "make a point" about franchises "losing money").

In the end, if the owners can't make a successful, money-making league with $3.3B in revenues, it's not the players fault.

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Really? That's nuts. I know they can support an excellent college team and do, but can't see both that and pro franchise.

Supposively they prefer an AHL team along the Red River with Fargo being the most likely choice I presume. The rumors started when the Aeros were without a lease for the Toyota center in Houston. But I believe they now do have a contract, but I cant confirm that at the moment nor find out how long the contract is. It isn't going to happen this year.

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This really doesn't boil down to "did the league lose money the last two years?" as much as the owners playing fast and loose with the numbers whenever it suits them.

That may be "business" in the modern era, but it may also be why we don't have the faith and trust in the basic institutions we once held dear. The NHL and hockey included.

To me, this speaks volumes.

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