[News] Salary Cap 24/25: 87.675M, HRR ~$6.2B

[Kipper_3434]

Originally Posted by MegaErtz

When is the last time a top five free agent signed in Calgary?

James Neal was close to top 5 at the time.....barf. 1 top 5 every 6 years should be the average per team. Flames seem slightly above average by that metric.

[Enoch Root]

Originally Posted by Strange Brew

That is a tangent and not worth debating.

Expansion fees increase the wealth of owners, they pay tax on it, it increases the value of their franchise.

Players want a greater share of the wealth that is created by the game they play.

They already negotiated a share of naming rights for example. And that doesn't matter whether they are paid all at once or over time. People are too hung up over expansion fees not being recurring and predictable.

People aren't hung up on it. It is pretty straight-forward: you can't tie salaries to something that isn't recurring. They aren't revenues.

Of course the agents want to get their fingers into expansion fees. But they aren't going to. If you're an owner, the answer is simple: if you want in on expansion fees, put up some capital. No risk, no reward.

[dino7c]

Markstom was the top UFA goalie on the market
Kadri was top 5 for sure

[Roof-Daddy]

I was fully on board with signing Kadri, but I did NOT see Huberdeau turning from a 100 point forward to a 50 point forward in the blink of an eye.

[Icon]

Originally Posted by Roof-Daddy

I was fully on board with signing Kadri, but I did NOT see Huberdeau turning from a 100 point forward to a 50 point forward in the blink of an eye.

50 might be a longshot.

[GreenLantern2814]

Originally Posted by Roof-Daddy

I was fully on board with signing Kadri, but I did NOT see Huberdeau turning from a 100 point forward to a 50 point forward in the blink of an eye.

If Huberdeau continues to play the way he did last night, he’s going to be fine.

[Strange Brew]

Originally Posted by Enoch Root

People aren't hung up on it. It is pretty straight-forward: you can't tie salaries to something that isn't recurring. They aren't revenues.

Of course the agents want to get their fingers into expansion fees. But they aren't going to. If you're an owner, the answer is simple: if you want in on expansion fees, put up some capital. No risk, no reward.

Franchise fees are revenue, I have no idea what else you would call it. There are loads of examples if you want to research it. (start with the Rev Rec standard 606 and then some public company F/S for franchisors).

The fact that the amounts are not consistent, or occurring annually, does not preclude it from being revenue either. What standard are you using to come up with this?

Obviously tying salaries to a revenue stream that has peaks is complex but far from impossible. Escrow, amortizing fees over a number of years are possible mechanisms. The owners have already agreed to tie player salaries to revenue so that toothpaste is not going back into the tube. Of course the owners don't want to pay any more that they have to, but this is not the same as proceeds from the sale of a team.

I don't have your certainty about what happens with the next round of labor negotiations though.

[Enoch Root]

Originally Posted by Strange Brew

Franchise fees are revenue, I have no idea what else you would call it. There are loads of examples if you want to research it. (start with the Rev Rec standard 606 and then some public company F/S for franchisors).

The fact that the amounts are not consistent, or occurring annually, does not preclude it from being revenue either. What standard are you using to come up with this?

Obviously tying salaries to a revenue stream that has peaks is complex but far from impossible. Escrow, amortizing fees over a number of years are possible mechanisms. The owners have already agreed to tie player salaries to revenue so that toothpaste is not going back into the tube. Of course the owners don't want to pay any more that they have to, but this is not the same as proceeds from the sale of a team.

I don't have your certainty about what happens with the next round of labor negotiations though.

The definition of Hockey Related Revenues:

The simple definition of "Hockey Related Revenues":

The CBA creates a fixed relationship between the league's revenues and the amount that is available to be paid out to players. Basically, "hockey related revenues" is the money that is generated from revenue streams that are directly or indirectly related to the playing of NHL games, including ticket sales, concession sales, broadcasting agreements, etc. In addition, if player's names and likenesses are used (video games, etc), they will participate in those revenue streams as well.

(bold is my emphasis)

more on it: https://www.davemanuel.com/investor-...ated-revenues/

[Enoch Root]

Franchise fees are revenue, I have no idea what else you would call it

Purchasing a franchise is purchasing a license/asset, in order to generate and participate in the revenue streams of the business. It isn't part of the revenue streams.

Anyway, enough from me.

[Strange Brew]

Originally Posted by Enoch Root

Purchasing a franchise is purchasing a license/asset, in order to generate and participate in the revenue streams of the business. It isn't part of the revenue streams.

Anyway, enough from me.

Purchasing a franchise is not revenue. Selling franchise rights is. How are you suggesting an entity accounts for the sale of franchise if not revenue? (hint: it is in the revenue standard).

As for your earlier comment, I have read the definition of HRR and it excludes franchise fees. I am suggesting players will negotiate to broaden the definition.

All revenue in the NHL is the result of playing hockey. If arena sponsorship revenue can be included in HRR, why can't franchise fees?

[Paulie Walnuts]

Originally Posted by Strange Brew

Purchasing a franchise is not revenue. Selling franchise rights is. How are you suggesting an entity accounts for the sale of franchise if not revenue? (hint: it is in the revenue standard).

As for your earlier comment, I have read the definition of HRR and it excludes franchise fees. I am suggesting players will negotiate to broaden the definition.

All revenue in the NHL is the result of playing hockey. If arena sponsorship revenue can be included in HRR, why can't franchise fees?

These are one time fees, the expansion fee is not spread out over 10 years like a sponsorship deal or tv rights deal.

Its a one time that's it.

Any one off like this is always excluded from bonuses and things like that. Working for a big corporation and you see your bonus doesn't match with revenues is because they exclude one offs like this.

They can try to negotiate to broaden HRR to include a one time expansion fee but it will be shot down quickly.

[Strange Brew]

Originally Posted by Paulie Walnuts

These are one time fees, the expansion fee is not spread out over 10 years like a sponsorship deal or tv rights deal.

Its a one time that's it.

Any one off like this is always excluded from bonuses and things like that. Working for a big corporation and you see your bonus doesn't match with revenues is because they exclude one offs like this.

They can try to negotiate to broaden HRR to include a one time expansion fee but it will be shot down quickly.

If expansion fees were a one time fee, the exec director of the NHLPA wouldn't be bringing it up. How much in expansion fees do you think the league will collect in next 10 years? 20? 30?

It's not a one time thing.

As for how they are paid or collected, how do you know this? Why wouldn't a $1 Billon expansion fee be collected over a number of years? That's certainly what I would expect. But even if it isn't, that doesn't mean it's not revenue or should be argued to be part of the pot to be split.

In collectively bargaining a new agreement, the notion of "shot down quickly" doesn't often apply. You don't ask a judge for a ruling.

[Jay Random]

Originally Posted by Strange Brew

If expansion fees were a one time fee, the exec director of the NHLPA wouldn't be bringing it up.

But they are a one-time fee. They are paid one time by each new franchise, as the price of membership in the league.

As for how they are paid or collected, how do you know this? Why wouldn't a $1 Billon expansion fee be collected over a number of years? That's certainly what I would expect.

In the past, they were paid in a lump sum. If you don't have access to the cash to buy a franchise, you don't belong in the major-league pro sports business.

But even if it isn't, that doesn't mean it's not revenue or should be argued to be part of the pot to be split.

It's a capital investment by the new owners. For the existing owners, it is the sale of a capital asset, represented by the loss of players and the dilution of their ownership stake in the league. It is not revenue from operations.

[Finger Cookin]

The Flames should invest this windfall in NFTs, right?

[bizaro86]

Originally Posted by Strange Brew

Purchasing a franchise is not revenue. Selling franchise rights is. How are you suggesting an entity accounts for the sale of franchise if not revenue? (hint: it is in the revenue standard).

As for your earlier comment, I have read the definition of HRR and it excludes franchise fees. I am suggesting players will negotiate to broaden the definition.

All revenue in the NHL is the result of playing hockey. If arena sponsorship revenue can be included in HRR, why can't franchise fees?

I will cheerfully admit to not being an accountant, but it makes sense that IFRS would account for the sale of franchises as revenue. When McDonalds sells a franchise that comes with the right to run a business using their systems in a defined territory. That payment is clearly revenue to the McDonalds corporation.

However, when McDonald's sells a new franchise it DOESN'T include any ownership in McDonald's corporation. So franchisees don't share in any existing revenue streams or in the franchise fees paid by subsequent purchasers.

That's different than the NHL. Vegas/Seattle paid their fee, and are now part owners of the league. They get an equal share of league wide revenue, even though their contribution to the national TV deals is probably small. They also get an equal share of future expansion fees.

That portion of the expansion fee should reasonably be considered a capital item. They bought a share in the league along with their franchise.