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Hockey’s Wealth Redistribution Problem


Guest radoran
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http://business.time...he-nhl-lockout/

The NHL would like you to believe that owners give too much money to players. That was management’s position almost a decade ago—the last time the league locked out its talent—when players were getting three-quarters of total revenues. After an entire season was voided, the NHL Players Association caved, agreeing to lower its members’ share of revenue to 57%. Peace and harmony have ensued since, but now the owners want an even bigger piece of the pie, claiming financial hardship.

Don’t believe them, not for a minute. First, as I’ve written about before, sports team accounting is misleading at best, given that club owners can claim to be losing money when a) the losses are on paper only; b) there are tax benefits from whatever losses happen to be real; and c) the value of their teams continue to rise.

A business analysis of the "business" of professional sports - NHL division.

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First, as I’ve written about before, sports team accounting is misleading at best, given that club owners can claim to be losing money when a) the losses are on paper only; b) there are tax benefits from whatever losses happen to be real; and c) the value of their teams continue to rise.

This is what I have been saying all along.

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The value of a business doesn't pay the bills.

Indirectly it does. It helps them secure loans to build new stadiums and other peripheral items that help them generate revenue, while being able to claim a loss due to the debt of those loans- while getting an increase in valuation due to increase assets.

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Indirectly it does. It helps them secure loans to build new stadiums and other peripheral items that help them generate revenue, while being able to claim a loss due to the debt of those loans- while getting an increase in valuation due to increase assets.

Right. Thus an owner gets richer in the event he sells the team or any of the acquired assets. But that same owner may still struggle to make the monthly payroll as his loans and expenditures are greater than his revenues.

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Right. Thus an owner gets richer in the event he sells the team or any of the acquired assets. But that same owner may still struggle to make the monthly payroll as his loans and expenditures are greater than his revenues.

Yeah, but the disney on ice, phil collins reunion concerts etc. events that generate enormous revenue that said owner leveraged his teams valuation to get a loan never get reported under the umbrella of the teams costs. I am not saying that it is all teams, but there are allot teams that have used this type of model. Thus why valuation is an important part of the equation even if not realized / materialized.

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Yeah, but the disney on ice, phil collins reunion concerts etc. events that generate enormous revenue that said owner leveraged his teams valuation to get a loan never get reported under the umbrella of the teams costs. I am not saying that it is all teams, but there are allot teams that have used this type of model. Thus why valuation is an important part of the equation even if not realized / materialized.

sure, there is all kinds of obfuscation going on from the owners' side. there is very little from the players side. because we all know they average $2.4mil/yr on guaranteed contracts with generous pension and insurance benefits while performing in semi-major league firmly positioned outside anything resembling nation-wide relevance. we all know their average salary has increased around 400% over the last twenty years. they are hurting so bad, evander kane can't even afford a real phone

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see how he has to carry the base while he uses the handset? it's a corded phone made from gigantic stacks of hundred dollar bills, for cliff's sake. poor guy. hopefully the owners will stop being jerks and let his salary continue to inflate at a 100%-every-5-years pace. granted, the guy's career high is all of 57 points, but how can he be proud of his job when his bosses try to put a policy in place that might make his $5m/yr salary seem a wee bit high? he has my sympathies, definitely.

Edited by aziz
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