When will next season start? Return to Play Negotiations

[Scroopy Noopers]

Originally Posted by iggy_oi

South Park quotes aside, has anyone actually seen it reported anywhere? I’ve seen numerous people comment on how the league can’t afford to take the hit they would take without the changes their seeking so I’m assuming those folks have read that information.

The big item I keep looking at is their typical gate revenue is $1.8billion. So, slashing that by operating without fans seems insane to me. The bubbles in Edmonton and Toronto cost them about $100mil as pointed out in an article a while back. I imagine you scale that up with having multiple cities, but the biggest take away from me is the loss of that gate revenue. So if it’s $300mil or $100mil to run it, neither make sense to me.

[Sidney Crosby's Hat]

I feel like if the players don't defer additional money, the breakdown is going to be close to 100-0 in favour of the players for this season.

I do think that if that is the case, the owners are going to claw that back in a big way. When you consider how much the league has grown in revenue since 2013 (this CBA is seven years long), the cap in 2013 was $64 million so it grew almost $20 million or 30% since then. Seven years from now, the cap is still going to be $80-82 million if the players don't defer any money when it should probably be $100 million. Owners will be collectively up $640 million PLUS 6% escrow on top of that which is another $150 million.

So if NHL revenue in 2018-19 was 5 billion, assumption of 25% growth (which is conservative) means 6.25 billion. Players would get 2.75 billion of that and owners might get 3.75 which is an average of $35 million a team.

I also think that the players, once this is explained to them, will actually agree to defer some money. The consequence of it, really, is that players in the current 22-26 age bracket will never see a big payday in their entire career.

[ah123]

Originally Posted by Sidney Crosby's Hat

I feel like if the players don't defer additional money, the breakdown is going to be close to 100-0 in favour of the players for this season.

I do think that if that is the case, the owners are going to claw that back in a big way. When you consider how much the league has grown in revenue since 2013 (this CBA is seven years long), the cap in 2013 was $64 million so it grew almost $20 million or 30% since then. Seven years from now, the cap is still going to be $80-82 million if the players don't defer any money when it should probably be $100 million. Owners will be collectively up $640 million PLUS 6% escrow on top of that which is another $150 million.

So if NHL revenue in 2018-19 was 5 billion, assumption of 25% growth (which is conservative) means 6.25 billion. Players would get 2.75 billion of that and owners might get 3.75 which is an average of $35 million a team.

I also think that the players, once this is explained to them, will actually agree to defer some money. The consequence of it, really, is that players in the current 22-26 age bracket will never see a big payday in their entire career.

How many players are going to worry about the work environment 7 years from now? A lot of them might be out of the league by then

[bizaro86]

Originally Posted by ah123

How many players are going to worry about the work environment 7 years from now? A lot of them might be out of the league by then

The biggest losers are stars on their ELC. They get a bigger chunk of their $1MM this year, but may end up losing huge percentages of a much bigger number in a few years.

[getbak]

Originally Posted by bizaro86

The biggest losers are stars on their ELC. They get a bigger chunk of their $1MM this year, but may end up losing huge percentages of a much bigger number in a few years.

Yup, and the biggest winners are the players who are on their final contracts and will be retiring in the next 3 or 4 years. They get a bigger share now and won't be around when it's time to pay it back.

The question is, who will have the louder voice in the PA?


Also, any player whose contract is up in the next 3 or 4 years needs to understand what the various options will mean for them on their next deals.

[powderjunkie]

Originally Posted by getbak

Yup, and the biggest winners are the players who are on their final contracts and will be retiring in the next 3 or 4 years. They get a bigger share now and won't be around when it's time to pay it back.

The question is, who will have the louder voice in the PA?


Also, any player whose contract is up in the next 3 or 4 years needs to understand what the various options will mean for them on their next deals.

I don't know if it's been fully explained (or even decided), but I wonder if retiring players will get their deferred salary in future years? I would think not, but I could see it working either way...

[iggy_oi]

Originally Posted by Bingo

Haven't seen that specifically no.

But you don't need that to take income from games (tickets, concession, etc) and make them zero. Then look at income from tv and naming rights etc and pro rate them down by the expected games played.

Then compare that to player salaries at 72%.

Originally Posted by Scroopy Noopers

The big item I keep looking at is their typical gate revenue is $1.8billion. So, slashing that by operating without fans seems insane to me. The bubbles in Edmonton and Toronto cost them about $100mil as pointed out in an article a while back. I imagine you scale that up with having multiple cities, but the biggest take away from me is the loss of that gate revenue. So if it’s $300mil or $100mil to run it, neither make sense to me.

I’m just trying to determine what the actual cost to the league would be as it seems unlikely that that losses would be so high that it would put many teams in jeopardy as has been speculated. Given that burning the last year of the tv deal will result in a pretty big influx of cash next season, with the salary cap frozen for several season it seems unlikely that the league is going to be hurting for very long even if they were to lose some money this season.

I think people forget that when revenues were previously split 50/50 about 20% of that revenue ended up being profit for the owners. That puts the previous costs to run the league after player salaries at around $1.5B. How much of that is being saved by not having to staff arenas for games, less travel etc? The players are already giving up an additional $0.7B in salary so a rough estimate of what the league would be paying if they were still paying event staff would be around $3.3B, roughly the revenue previously generated outside of the league’s broadcast rights. Again I’m just trying to figure out what people are basing their argument that teams would have to fold under the current structure on.

[Bingo]

Originally Posted by iggy_oi

I’m just trying to determine what the actual cost to the league would be as it seems unlikely that that losses would be so high that it would put many teams in jeopardy as has been speculated. Given that burning the last year of the tv deal will result in a pretty big influx of cash next season, with the salary cap frozen for several season it seems unlikely that the league is going to be hurting for very long even if they were to lose some money this season.

I think people forget that when revenues were previously split 50/50 about 20% of that revenue ended up being profit for the owners. That puts the previous costs to run the league after player salaries at around $1.5B. How much of that is being saved by not having to staff arenas for games, less travel etc? The players are already giving up an additional $0.7B in salary so a rough estimate of what the league would be paying if they were still paying event staff would be around $3.3B, roughly the revenue previously generated outside of the league’s broadcast rights. Again I’m just trying to figure out what people are basing their argument that teams would have to fold under the current structure on.

Really?

You said before that the league made 770M in profits according to Forbes. I found that link. 3 teams make up almost 43% of that 770M total, and 7 teams lost money.

That's with fans!

Most estimates have the average hockey game bringing in $1.7M / game for tickets and concessions.

So the average team in a season would bring home just under $80M in that revenue category. That goes to zero this year.

So no ... not hard to believe that fan-less hockey would put some teams in a pretty bad spot.

[SuperMatt18]

I think the big thing comes down to should the owners be willing to eat a bit more of the short term losses for a long term benefit.

In the end the owners valuation on a lot of these teams has skyrocketed, and they are in line to get a new TV deal in the U.S. that should be a lot bigger after next season.

I don't question that lots of teams will probably take a loss this season if they don't get salaries reduced from the current MOU, the NHL is historically more reliant on the gate than other leagues, but I think the question is should some of these owners be willing to eat that loss this year to help drive the better long term outcomes that they will get from not losing a full season and being able to get to the new TV deal faster.

In many of these cases not playing with fans probably puts the "Franchise" in the red potentially, but for the owners taking the loss in-year might still be the right call long term from an overall long term view of it.

And honestly it's the same thing for the players. Big picture they agreed to 50/50...sure the MOU had some estimates as part of it but in the end based on the revenue forecast that would put them above a 50/50 revenue split. In the end for the players they would still be better off getting 60% of their salary to play a 50 game season than they would with no season. Plus getting to the new TV deal helps them too because it increases the size of that 50/50 revenue pool sooner if they play this year.

Both sides are better off long term if they can figure our something that is fair and works for both parties long term.

[Locke]

Originally Posted by Bingo

Really?

You said before that the league made 770M in profits according to Forbes. I found that link. 3 teams make up almost 43% of that 770M total, and 7 teams lost money.

That's with fans!

Most estimates have the average hockey game bringing in $1.7M / game for tickets and concessions.

So the average team in a season would bring home just under $80M in that revenue category. That goes to zero this year.

So no ... not hard to believe that fan-less hockey would put some teams in a pretty bad spot.

This isnt an argument you can win. You cant reason people out of positions that are inherently unreasonable.

[iggy_oi]

Originally Posted by Bingo

Really?

You said before that the league made 770M in profits according to Forbes. I found that link. 3 teams make up almost 43% of that 770M total, and 7 teams lost money.

I should have worded my last post better. The $775M in profits is after taxes, the $1B figure was a rough estimate of how much revenue the owners pay tax on. If I recall that link had those teams posting an operating loss prior to revenue/profit sharing among the teams being taken into account.

That's with fans!

Most estimates have the average hockey game bringing in $1.7M / game for tickets and concessions.

So the average team in a season would bring home just under $80M in that revenue category. That goes to zero this year.

So no ... not hard to believe that fan-less hockey would put some teams in a pretty bad spot.

How are you defining pretty bad spot? $1M in losses? $10M?

You seem pretty certain the league will lose a lot of money no matter what, but without an idea of how much it will cost to run the season I’m trying to get an understanding of how you’ve come to that conclusion. While the league certainly won’t be making profits like last season, if the cost of runing the season drops from $4B to under $3B it’s plausible for the league to break even if their previous non gate revenue was over $3B.

[iggy_oi]

Originally Posted by Locke

This isnt an argument you can win. You cant reason people out of positions that are inherently unreasonable.

Cry me a river Locke.

Just because you don’t agree with my positions doesn’t make them inherently unreasonable. Why not pick apart my position with some actual arguments instead of resorting to petty drive-bys? You seem to have no problem at least trying to do that in other threads.

[Bingo]

Originally Posted by iggy_oi

I should have worded my last post better. The $775M in profits is after taxes, the $1B figure was a rough estimate of how much revenue the owners pay tax on. If I recall that link had those teams posting an operating loss prior to revenue/profit sharing among the teams being taken into account.



How are you defining pretty bad spot? $1M in losses? $10M?

You seem pretty certain the league will lose a lot of money no matter what, but without an idea of how much it will cost to run the season I’m trying to get an understanding of how you’ve come to that conclusion. While the league certainly won’t be making profits like last season, if the cost of runing the season drops from $4B to under $3B it’s plausible for the league to break even if their previous non gate revenue was over $3B.

The methodology says net of revenue sharing

Methodology: Revenue and operating income are for the 2018-19 season, include postseason and applicable non-NHL arena revenue, and are net of revenue sharing and arena debt service. All figures are in U.S. dollars based on average exchange rate during 2017-18 season.

This is going to need a spreadsheet at some point.

But if you have say 50% of your revenue from game receipt etc, .... which goes to zero, and 45% of your revenue from tv revenue that gets heaving prorated down (by 30% at least) ... you have $2.5B x 0 + $2.0B x 70% you have $1.4B + whatever they hang onto that doesn't get prorated ... somewhere around $1.8B.

The cap is $81.5M, but teams don't all spend to it ... so lets say $79M x 31 teams ... that's $1.8B.

So to break even the league would have to have no other costs at all ... which isn't right.

Seems like a pretty tough go to me.

[iggy_oi]

Originally Posted by Bingo

The methodology says net of revenue sharing



This is going to need a spreadsheet at some point.

But if you have say 50% of your revenue from game receipt etc, .... which goes to zero, and 45% of your revenue from tv revenue that gets heaving prorated down (by 30% at least) ... you have $2.5B x 0 + $2.0B x 70% you have $1.4B + whatever they hang onto that doesn't get prorated ... somewhere around $1.8B.

The cap is $81.5M, but teams don't all spend to it ... so lets say $79M x 31 teams ... that's $1.8B.

So to break even the league would have to have no other costs at all ... which isn't right.

Seems like a pretty tough go to me.

The league only generates 36% of revenue from gate revenues.

Has it been confirmed that the league will take a hit on their tv contract as a result of fewer games?

[chummer]

https://twitter.com/user/status/1336144189000650754

[getbak]

I'm not sure what that means. Are they not going to discuss the financial changes because they've come to an agreement on them, or are they trying to get a schedule hammered out and then will revisit the financials?

[memphusk]

I would love to play for 100k a year, plus being catered. Travelling probably sucks, but careers dont last forever. Get after it boys.

[iggy_oi]

Originally Posted by getbak

I'm not sure what that means. Are they not going to discuss the financial changes because they've come to an agreement on them, or are they trying to get a schedule hammered out and then will revisit the financials?

I think it means the season will be going ahead and the league and PA will continue to try and negotiate the escrow/deferral as they go.

[albertGQ]

Sounds like the financials won’t be changed from what they agreed on six months ago.

I guess the owners are okay with it?

[getbak]

More detail from Friedman: https://www.sportsnet.ca/nhl/article...ework-new-cba/

The NHL and NHLPA will continue to negotiate protocols for the 2020-21 season, but agreed that the economic framework of the newly negotiated CBA won’t be changed.

Targets include a Jan. 13 start to the season, with non-playoff teams reporting Dec. 28 and others on Jan. 1. No exhibition games appear likely. I believe there is a short-term “hub plan” being worked on just in case, but it is not the preference. The biggest headache might be training camp plans in places like Montreal, San Jose (Arizona?) and Winnipeg, which have strict current restrictions due to COVID-19.

It sounds like there’s a desire to get something done by the end of the week, to be voted on but the Board of Governors and the players. We’ll see where this goes, but the financial discussions are over.