Frank E said:
This NHL is a business, and business must be profitable to be sustainable.
But I think this sentence highlights the problem with the stance you're taking. If the NHL is
a business then the business
is profitable. Right? By Forbes' estimates they're more than a hundred million in the black. But, of course, the NHL isn't
a business. It's a league of 30 largely separate businesses that collectively bargain as an industry.
And it's because these are 30 largely separate businesses that there's little to no justification for the owner's stance. Remember, the idea that one of those 30 individual businesses can't cut their own expenses in players costs as they see fit is an entirely artificial mechanism of cost control that was insisted upon by the league. There are lots of positions the NHL could take to address the fundamental imbalance that tying individual team expenses to leaguewide revenues creates that wouldn't have caused a labour dispute. They could be in there negotiating a deal that has a large gap between the cap floor and cap ceiling. They could be negotiating a deal where each team has their own separate cap tied to their individual revenues. If we're going to pretend that the owner's stance is largely centred around addressing the problems of that bottom third then we can't pretend that the only recourse they have is a leaguewide cut in player costs. That would be like having a doctor telling you that your finger is broken and recommending that he put your whole arm in a cast just in case.
That's the "Greed" of it. The Maple Leafs don't need cuts in player costs. The Rangers didn't need a lockout to become a sustainable business. The teams losing money at a drastic rate are pretty neatly counterbalanced by the teams that are making money at a pretty drastic rate. That the league is so hellbent on having a CBA that doesn't address the differences in revenue between the Rangers and the Blue Jackets doesn't mean that the PA should go into their negotiations pretending that they're only negotiating with the Blue Jackets.
The issue here isn't whether or not a business needs to be profitable to be sustainable, it's whether or not an industry should have a CBA with their employees on the basis that none of the businesses can ever be unsustainable. There has to be some measure of Darwinism here.
Corn Flake said:
The problem I have with the player's stance is that virtually all the financial risk in this business is on the owners side. These guys shell out huge money to buy in, take all the risk of being another Phoenix or Florida, often take $20+ mil losses each year... and you have a deal where 57% of your income is gone before you've paid a dime of any other expense.
Well, first and foremost, that's not strictly true. Players get 57% of HRR but HRR doesn't encompass the entirety of the league's revenue. So the things that fall outside of HRR is money that the team takes as income that does go to their other expenses. That includes a pretty significant chunk of things like concessions and merchandise sales.
But secondly, while I think there's a good argument to be made that the league would be better served by having more of a partnership between the owners and the players that change couldn't just be about the players assuming a share of the risk. Partnership would mean risk, yes, but it would also have to mean some measure of control or say in the way the business runs. I mean, I'm assuming you wouldn't buy 20% of a company and not want a vote, right?
So I think that's kind of a non-starter for the owners way more than it is for the players. I mean, like you say, the owners run the risk of being another Phoenix or Miami(and, significantly for the point I'm making, that's probably better described as Glendale, Arizona and Sunrise, Florida) but the owners are also the ones who get to decide whether there is a Phoenix or a Florida. I'd
love for the players to have a voice in things like Franchise moves or whether or not they should have taken less TV money from ESPN. I'd love for there to be a Commissioner of the sport who had to answer to players and owners about the state of the game.
But, and this is just my read of things, I'm guessing that if you asked NHL owners if they'd rather have shared risk or total control it'd be pretty near universal in favour of total control.
bustaheims said:
I don't think the owners are expecting to achieve a deal where no teams lose money, just one where maybe only a handful of teams do, and, for the most part, they're not significantly in the red. Right now, based on reports, 18 of 30 teams are operating at a loss. That's just absurd and unsustainable. Clearly, there's a league-wide need to cut expenses and player salaries are every team's largest expense.
Well, let's be fair. It's anything but clear to you or I what the actual, nuts and bolts financial situation is of individual clubs. I'm going to guess that the majority of the "reports" you refer to are people making reference to the Forbes list and, while I think that it's as good a piece of information as we have to work with and can be the basis for an argument, I think we should probably resist using it as the basis for any definitive statements about what the league does or doesn't need.
Remember that there are two inherent problems with the Forbes list. The first is obvious in that it's an estimate and could be off significantly in either direction. Corn Flake refers to teams "often" taking 20 million dollars in losses because that's chatter but according to Forbes, as best as I can tell, the only team to have taken on losses that even approach that number is Phoenix.
But the second problem, less significant from a details perspective but probably more so from a philosophical perspective, is that the Forbes list is also just a snapshot. It's what happened in a given year, not a statement about the carved in stone financial future of the league. According to the Forbes list the Penguins were in the red by 200,000 bucks last year. Now, I think you'd agree, that's a small enough sum that for the Penguins to be profitable does not require a change to the CBA. If they had better playoff goaltending or a healthy Sid Crosby for most of the year they're almost certainly profitable.
If you're right and the owners aren't after a situation where no teams lose money than the issue shouldn't be what teams are or aren't profitable but rather what teams can and can not be profitable. Again, this is the problem with taking the snapshot and just saying that it is the league's financial situation. The 2012 Forbes list had the Devils losing 6.1 million. Their 2010 list had the Devils making 6.9 million. Things swing, it's the nature of sports.
The Forbes list, as you say, contends that 18 of 30 teams are losing money but as we dug into a while back that's outweighed by quite a bit by the 12 that are making money. That's because most of them, again according to Forbes, aren't losing that much money. If we use your figure of 5 million as an acceptable loss than we have 20 out of 30 teams profitable or losing less than 6 million dollars. Only 2 of the 30 teams are in the double digits in losses, compared to 6 teams being at double digit profits.
So how much would the league have to trim things to get every team other than Phoenix and Columbus to a state where the most they could lose is five million or so, provided the increased owners share was evenly distributed? Well, again using Forbes' numbers they'd probably have to reduce player share from 57% to around 54.5%. Something tells me that if that's all they were after this deal would be done.
Again, it's kind of like I said to Frank, if there's one slow gazelle in the herd, it gets eaten, the herd doesn't try and negotiate with the lions to run slower. The sort of equilibrium you're talking about where teams are either profitable or are running a fairly insignificant loss is essentially where the league is or at least would be with pretty minor tweaks in terms of player compensation and revenue sharing.
Except, of course, Phoenix. But I think you'd agree that it'd be pretty myopic if the only team we looked at, and whose needs the CBA was specifically designed to address, were the Phoenix Coyotes.
