Bettman: "Salary Cap will NOT go down next year"; and GMHockey investigates NHL attendance

"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

Well well well...

The "Amazing Bettmani" will pull a golden goose out of his hat, just wait and see.

I wonder, do franchise fees count as income to the league? Because that could seriously affect the cap. 55% of just $300M would raise the cap $5.5M for each team. And if they expand to 32 teams the franchise fees could very easily exceed that (if not double it).

I do recall saying a while back that Bettman and the NHL will do something to ensure it stays very close and moves marginally. Who knows what but they'll work the numbers...

rooneypoo wrote:

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

The cap has been going up even as teams lose money, so why should next year be any different?

davetherave wrote:

rooneypoo wrote:

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

The cap has been going up even as teams lose money, so why should next year be any different?

Because the economy sucks everywhere? We are not talking about 30 teams staying in the black, but for league revenues overall to continue going up. Some are raising ticket prices, but quite a few cannot sell tickets at all. The Sens did not sell out their home opener. As far as I know the Leafs didn't raise prices, and with no post-season in Toronto, Montreal or (likely) Edmonton this year, that's half of the $95-cent-loonie teams not getting any post-season gate receipts.

I'm not saying the cap will go down, but I'm not saying there isn't a reason to think that it would.

wprager wrote:

davetherave wrote:

rooneypoo wrote:

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

The cap has been going up even as teams lose money, so why should next year be any different?

Because the economy sucks everywhere? We are not talking about 30 teams staying in the black, but for league revenues overall to continue going up. Some are raising ticket prices, but quite a few cannot sell tickets at all. The Sens did not sell out their home opener. As far as I know the Leafs didn't raise prices, and with no post-season in Toronto, Montreal or (likely) Edmonton this year, that's half of the $95-cent-loonie teams not getting any post-season gate receipts.

I'm not saying the cap will go down, but I'm not saying there isn't a reason to think that it would.

So are you saying you don't know one way or the other, and neither do any of us on this forum?

I'll tell you who does know - and that's Bettman, and he says it's not going down -and if it does, not by much.

davetherave wrote:

wprager wrote:

davetherave wrote:

rooneypoo wrote:

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

The cap has been going up even as teams lose money, so why should next year be any different?

Because the economy sucks everywhere? We are not talking about 30 teams staying in the black, but for league revenues overall to continue going up. Some are raising ticket prices, but quite a few cannot sell tickets at all. The Sens did not sell out their home opener. As far as I know the Leafs didn't raise prices, and with no post-season in Toronto, Montreal or (likely) Edmonton this year, that's half of the $95-cent-loonie teams not getting any post-season gate receipts.

I'm not saying the cap will go down, but I'm not saying there isn't a reason to think that it would.

So are you saying you don't know one way or the other, and neither do any of us on this forum?

You asked: why should next year be any different? I see lots of reasons why this year could be different.

wprager wrote:

davetherave wrote:

wprager wrote:

davetherave wrote:

rooneypoo wrote:

SpezDispenser wrote:"Over the last few months, there's been a lot of speculation that the cap's going to go down 20 percent. That's absurd. That's just made-up. It isn't going to happen," Bettman said. "I think it will be somewhere near where it is ($56.8 million), up a little, down a little, somewhere near where it is."

http://www.nypost.com/p/sports/devils/devils_have_even_more_fun_in_florida_tiq2rTUfF4Hyk7kB25h18I

I'll believe it when I see it. The Coyotes alone ought to cost the league close to $1 mil / team on the cap, LOL.

The cap has been going up even as teams lose money, so why should next year be any different?

Because the economy sucks everywhere? We are not talking about 30 teams staying in the black, but for league revenues overall to continue going up. Some are raising ticket prices, but quite a few cannot sell tickets at all. The Sens did not sell out their home opener. As far as I know the Leafs didn't raise prices, and with no post-season in Toronto, Montreal or (likely) Edmonton this year, that's half of the $95-cent-loonie teams not getting any post-season gate receipts.

I'm not saying the cap will go down, but I'm not saying there isn't a reason to think that it would.

So are you saying you don't know one way or the other, and neither do any of us on this forum?

You asked: why should next year be any different? I see lots of reasons why this year could be different.

Tovaritch Prager, you cite no concrete economic forecasts other than the 'economy sucks' phrase to buttress your position.

These are the questions that one needs to consider when discussing this very complex subject:

Have the revenues from NHL ticket sales and merchandise declined, flatlined or risen over last year?

Are there indicators that these revenues will decline, flatline or rise in the next 10-12 months (the decision on salary cap being, logically, be made as a result of financial analysis and forecasting by the league's accountants)?

Does the lowering of the salary cap benefit the players and the NHLPA? Would they fight a further lowering of the cap, given the impact on players who lost both jobs and revenue as a result in the past few months?

Do the owners, having 'cleaned house' as it were by the attrition of a significant number of mid-range salaries, now consider that further attrition is unnecessary?

Who are the influential voices on the Board of Governors, who ultimately decide--NOT Gary Bettman--whether the cap will stay the same, go down or even rise?

With 21 of the 30 teams currently over the $54MM level, why would any of this majority lobby for a lowering of the cap, which only makes it more difficult to retain their talent and/or acquire new talent in order to field the most competitive possible product?

And when influential owners like Ed Snider, Jeremy Jacobs, Ted Leonsis, Rocky Wirtz, Mario Lemieux, Francesco Aquilini, and Mike Illitch, to name a few, are all spending close to the cap in order to maintain their box office success, why would they support a lowering of the cap?

Your perception of the economy may have its own merits, as it relates to your life. But your perception and the financial perspective of the NHL may be entirely different.

Of course, if you know the answers to these questions, then by all means, let's hear them.

For my part, I make no such assumptions, but I welcome your thoughts in the spirit of our discussion.

In an earlier post I mentioned that the Sens did not sell out their home opener. I also said that three of the six Canadian (a.k.a. "revenue generating") teams are not likely to make the playoffs. The former is a concrete example of the economy sucking (at least I am pretty convinced that is the direct cause); the latter is just one more reason *outside* the economy for predicting lower revenues.

A few months ago I said that it's very possible that the NHL owners are still not properly disclosing *all* of the revenue. In that case they have a way of kind-of artificially boosting the league revenues.

There are many games to be played, but how has attendance been over the last two full seasons and at the start of this one? The Sens came out and said their season ticket sales were down from last season. I'm sure there are other teams in the same boat.

Last year's attendance was up 1.1% over the year before, a 4-year trend. But the Sens opened without a sellout. Chicago's averaged 16,355 in two home games (last year they led the league with an average of 22,247). Montreal (2nd last year) hasn't had a home game when these pages (see link below) were updated. Detroit (#3 on the list last year) is down from 19,865 to 17,679. Philly is up slightly, from 19,545 to 19,593. Toronto is slightly down. Vancouver is up but Minnesota is down.

Sorry, I'm visiting my parents and don't have access to Excel, otherwise I'd compare the sum of averages. They do have calc.exe though

The average attendance for the top 10 clubs of 2009 adds up to 196,232. Through a very small number of games this year, the top 10 teams are averaging 187,982. That's a drop of 4.2%.

Of course, like I've already said, it's extremely early in the season. But it's also possible that attendance in the the bottom teams is down even further.

Nothing conclusive, but hardly nothing.

Anyhow, I've got to get the kids ready to leave for the 2 hour ride back to Ottawa. I'll check back in later tonight or tomorrow morning.

Go Sens!

Oops, forgot that link I promised:

http://sports.espn.go.com/nhl/attendance?year=2010

wprager wrote:Oops, forgot that link I promised:

http://sports.espn.go.com/nhl/attendance?year=2010

Thanks for your thoughtful reply.

As you say, the numbers you cite are hardly conclusive.

FYI, the Blackhawks did sell out both their home opener and the current home game. ESPN's numbers might be skewed because of the 'home game' in Finland which had a much smaller capacity. Additionally, the renovations to the United Center have reduced seating capacity while increasing concession revenues.

Bear in mind, ticket sales, concession sales, merchandise and licensing agreements all factor into the equation...as well as revenue to the teams from other events in their buildings, as many of the teams are part of a larger entertainment and facilities corporation and/or holding company.

I look forward to your further thoughts on the aformentioned questions.

What questions?

It's been drilled into me that this is a gate-drive league. So far the average attendance is down. I'll keep monitoring as the season progresses.

wprager wrote:What questions?

It's been drilled into me that this is a gate-drive league. So far the average attendance is down. I'll keep monitoring as the season progresses.

As posted above:

These are the questions that one needs to consider when discussing this very complex subject:

Have the revenues from NHL ticket sales and merchandise declined, flatlined or risen over last year?

Are there indicators that these revenues will decline, flatline or rise in the next 10-12 months (the decision on salary cap being, logically, be made as a result of financial analysis and forecasting by the league's accountants)?

Does the lowering of the salary cap benefit the players and the NHLPA? Would they fight a further lowering of the cap, given the impact on players who lost both jobs and revenue as a result in the past few months?

Do the owners, having 'cleaned house' as it were by the attrition of a significant number of mid-range salaries, now consider that further attrition is unnecessary?

Who are the influential voices on the Board of Governors, who ultimately decide--NOT Gary Bettman--whether the cap will stay the same, go down or even rise?

With 21 of the 30 teams currently over the $54MM level, why would any of this majority lobby for a lowering of the cap, which only makes it more difficult to retain their talent and/or acquire new talent in order to field the most competitive possible product?

And when influential owners like Ed Snider, Jeremy Jacobs, Ted Leonsis, Rocky Wirtz, Mario Lemieux, Francesco Aquilini, and Mike Illitch, to name a few, are all spending close to the cap in order to maintain their box office success, why would they support a lowering of the cap?

---

By the way, your attendance figures may be incorrect.

Considering the economic trend the world is experiencing, it's natural to assume the cap will go down... but the calculation is likely highly complex and can probably be manipulated to ensure that they can control the swing to ensure the cap moves according to their "plan". Call me a skeptic... but that's how I see it.

Sorry, I was looking for questions in the later post.

davetherave wrote:

wprager wrote:What questions?

It's been drilled into me that this is a gate-drive league. So far the average attendance is down. I'll keep monitoring as the season progresses.

As posted above:

These are the questions that one needs to consider when discussing this very complex subject:

davetherave wrote:Have the revenues from NHL ticket sales and merchandise declined, flatlined or risen over last year?

Impossible to tell at this point. More people out of work or worried about their job security definitely will reduce the cash people spend on frivolous items like the latest third jersey or season tickets. Evidence exists of lower season-ticket sales for the Senators.

davetherave wrote:Are there indicators that these revenues will decline, flatline or rise in the next 10-12 months (the decision on salary cap being, logically, be made as a result of financial analysis and forecasting by the league's accountants)?

There is evidence that attendance has declined, but it is very early. There is evidence in at least one market experiencing a decline in season ticket sales. My gut tells me many others are facing the same music -- but I have not bothered googling for evidence. Maybe I will when I get a little more free time.

The glass-half-full guys can always argue that season tickets are sold at a discount over walk-up sales, so as long as attendance figures rebound, this could actually lead to higher gate revenues. To that I say "Bah!"

davetherave wrote:Does the lowering of the salary cap benefit the players and the NHLPA? Would they fight a further lowering of the cap, given the impact on players who lost both jobs and revenue as a result in the past few months?

It doesn't benefit the players. It does not benefit the owners (their income is 45%, so if the players' share of the pie goes down, so does the owners' -- I have not bothered looking into the slight variations in the relative size of the pie as the revenues slide down, but that's something else to consider).

davetherave wrote:Do the owners, having 'cleaned house' as it were by the attrition of a significant number of mid-range salaries, now consider that further attrition is unnecessary?

That's just a re-structuring of the salary tiers. It does not change the cap limits.

davetherave wrote:Who are the influential voices on the Board of Governors, who ultimately decide--NOT Gary Bettman--whether the cap will stay the same, go down or even rise?

Bettman has enough influence to reject an infusion of $241M (plus relocation expenses) versus an outlay of roughly $5M from each owner in the Phoenix fiasco. Whatever he must have offered them in return (such as profits from expansion fees) must have worked. It goes to show that he is a master manipulator. Why would he not have influence over matters such as the salary cap?

In my opinion, the reason for not lowering the cap has as much to do with showing to the outside world (including NBC and advertisers) that the NHL is a strong league, and not likely to suffer through another work stoppage, as it has to do with actual economic forecasts. Some number manipulation may be taking place behind the scenes in order to make this happen. Or not.

davetherave wrote:With 21 of the 30 teams currently over the $54MM level, why would any of this majority lobby for a lowering of the cap, which only makes it more difficult to retain their talent and/or acquire new talent in order to field the most competitive possible product?

Why do you think this has anything to do with lobbying? The cap is calculated strictly as a percentage of league-wide revenues. If revenues go down, then so does the cap. Unless, of course, the suspected "hidden" revenues come into play. In that case, yes, some input from the owners will be required. Do they claim reduced revenues and risk a work stoppage, or do they open their books just a little bit wider (and once opened, there's no way in hell to close them).

[quote="davetherave"]And when influential owners like Ed Snider, Jeremy Jacobs, Ted Leonsis, Rocky Wirtz, Mario Lemieux, Francesco Aquilini, and Mike Illitch, to name a few, are all spending close to the cap in order to maintain their box office success, why would they support a lowering of the cap?

Again, it may not have anything to do with choice or influence. Then again, it may.

---

davetherave wrote:By the way, your attendance figures may be incorrect.

Huh? Does that mean they *may be* correct?

@Prager> excellent and very thoughtful answers, sir...that I will consider carefully...and return with an appropriate response.

Ottawa's only sold out once, yet Bettman says the cap will not decline.

Hmmm.... :??:

Meh, not selling out in Ottawa isnt a big deal, we hold over 20 000 people. It's relative. Edmonton sells out every game but they only hold 16 000 so...

Thank you Canadian dollar! That's why Quebec will be getting a team VERY soon. Pretty sure it will be The Thrashers anyways.

SpezDispenser wrote:Ottawa's only sold out once, yet Bettman says the cap will not decline.

Hmmm....

What was with that home opener not selling out? Very strange. We were close though... vs Isles: 18,075 (97.7% full); vs Thrashers: 19,360 (104.6% full) and then vs Pens: 17,014 (92.0% full). Saturday games are easier to sell I guess.

N4L wrote:Meh, not selling out in Ottawa isnt a big deal, we hold over 20 000 people. It's relative. Edmonton sells out every game but they only hold 16 000 so...

Thank you Canadian dollar! That's why Quebec will be getting a team VERY soon. Pretty sure it will be The Thrashers anyways.

They already have those blue jerseys. Rip off that orange/black logo and replace with the old Nordiques one, then add a couple of fleurs de lys and you're good.

That Pittsburgh game was on Thanksgiving Monday. Days like that is when walk-up sales will really suffer. We need more season ticket holders, but that's been a problem.

wprager wrote:That Pittsburgh game was on Thanksgiving Monday. Days like that is when walk-up sales will really suffer. We need more season ticket holders, but that's been a problem.

Comrade Prager, with your focus on single game attendance, and attempts to draw conclusions from the first few weeks of the season, it will indeed be interesting to see how you develop your arguments supporting your contention that the salary cap WILL drop.

From the NHL, for your information, dated April 12 of this year:

The National Hockey League has set an overall attendance record for the fourth consecutive season. Total attendance of 21,475,223 and the per-game average of 17,460 were 1.1% higher than the corresponding record figures of 21,236,255 and 17,265 from 2007-08...including the full Winter Classic attendance of 40,818, the aggregate NHL attendance increases to 21,495,541, and the per-game increases to 17,476.

Further detail here:
http://www.nhl.com/ice/news.htm?id=417969

The salary cap rising from $39 to almost $57MM--a 47% increase--since the lockout mirrors that upward trend; so assuming that a downturn is 'inevitable' is presumptuous.

Corporate financial planning is, per standard practice, done with a 12 to 24 month projection. Multi-billion dollar conglomerates like the NHL normally operate on three to five year plans, if not longer.

The idea that the salary cap would fall. because of what you see as declines in individual team attendance after just two weeks, has little relationship to business realities.

Furthermore, you ignore the fact that attendance alone does not determine revenue. Total aggregate income, including that from concessions, merchandising, sponsorships, and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

You may wish to read Forbes' excellent analysis of the NHL as a business entity, "The Business of Hockey" that provides insights into how these companies work.

This link takes you to last October's edition:
http://www.forbes.com/2008/10/29/nhl-team-values-biz-sports-nhl08_cz_mo_kb_1029nhl_land.html

From this article:

The 2007-08 season was the National Hockey League's most successful since Forbes began tracking team values 10 years ago. Fueled by higher ticket prices and a stronger Canadian dollar, revenue increased 13%, to an average of $92 million per team, while operating income (earnings before interest, taxes, depreciation and amortization) rose 48%, to $4.7 million per team.

The recap of the current state of affairs in the NHL by Forbes should be available sometime this month.

The uptrend in income for the NHL appears to contradict the doomsayers who say the economy is 'tanking'. One can make the argument that even in difficult economic conditions, while consumers may reduce their overall spending, they will continue to spend 'discretionary dollars' to make themselves feel better.

@Comrade Prager> as reported by Lyle Richardson at FoxSports.com, season ticket renewals this year are about the same as last, and that NHL player agent Alan Walsh states that the NHL's revenue projections being flat or slightly increasing for the coming year, no significant decline in the salary cap is expected.

Article here:
http://community.foxsports.com/spector/blog/2009/10/13/no_significant_decline_in_nhl_salary_cap

davetherave wrote:
The salary cap rising from $39 to almost $57MM--a 47% increase--since
the lockout mirrors that upward trend; so assuming that a downturn is
'inevitable' is presumptuous.

Tell me, did you buy any Nortel stock when it hit $120 and was still climbing?

Assuming a downturn is inevitable is simple mathematics. In the case of the NHL there are strict physical limits (number of seats) and, although that can be overcome a bit by raising ticket prices, the simple truth is that people's (and companies') discretionary spending cash is not going up every year.

I'm going to have to tackle this in parts, sorry (just fluffing):

davetherave wrote:[
Comrade Prager, with your focus on single game attendance, and attempts to draw conclusions from the first few weeks of the season, it will indeed be interesting to see how you develop your arguments supporting your contention that the salary cap WILL drop.

From the NHL, for your information, dated April 12 of this year:

The National Hockey League has set an overall attendance record for the fourth consecutive season. Total attendance of 21,475,223 and the per-game average of 17,460 were 1.1% higher than the corresponding record figures of 21,236,255 and 17,265 from 2007-08...including the full Winter Classic attendance of 40,818, the aggregate NHL attendance increases to 21,495,541, and the per-game increases to 17,476.

I believe I referred to those results in my post. It's been a 4-year steady climb. However the economy went into the dumper last year. Because of season ticket sales, and contracts with the likes of Versus and NBC, much of the NHL's income was "guaranteed". The full effects of the economic downturn won't be felt until this year.

At this point, this is just an opinion (an informed one, I think). I will monitor the attendance averages and report my findings.

davetherave wrote:
Corporate financial planning is, per standard practice, done with a 12 to 24 month projection. Multi-billion dollar conglomerates like the NHL normally operate on three to five year plans, if not longer.

The idea that the salary cap would fall. because of what you see as declines in individual team attendance after just two weeks, has little relationship to business realities.

Season tickets are renewed on a year-by-year basis. That is *also* a business reality. Alcatel (where I *used to work*) used to have a 400-level double suite, at least one more suite in the 200s, plus some season tickets. At least one of those suites is gone (maybe both of them, since I left). Do you think Nortel still has theirs? How many other, smaller companies that had suites or season tickets are no longer swimming in cash?

Quick poll, did anyone who had season tickets last year *not* renew this year because of economic concerns? I remember Neely saying he won't renew, or at least threatening to do so, but in his case it may have been simply dissatisfaction with the team direction. In any case, since he mentioned buying tickets to the Saturday game, I am assuming he followed through and did not renew. Overall, season ticket sales were down fairly significantly.

davetherave wrote:
Furthermore, you ignore the fact that attendance alone does not determine revenue. Total aggregate income, including that from concessions, merchandising, sponsorships, and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

No, I do not ignore that at all. Simply, this is a gate driven league. Until we get $500-miliion contracts with NBC, ESPN, CBS and so on to televise games throughout the season, or that little phenomenon called the Internet drives *significant* revenues via Game Center and other initiatives, until the sport of hockey (or, at least, watching it on TV) takes off in India and China -- the league will continue to derive most of its revenues from ticket sales.

Think of it this way. Last year I bought that Emery practice jersey for $50. Prior to that, I'd bought a Sens 3rd jersey for $50 (I knew a guy). I've bought a couple of shirts with a logo for the girls ($19.95 each) and one for my other kid ($24.95). My wife and oldest son each bought a tee-shirt, totaling something like $35. My kid bought two hats for a total of another $30. Plus various miscellaneous trinkets that didn't add up to very much. So let's say I spent $300 over the course of 6 years on merchandise. Then my wife got me tickets for my birthday and it cost $150 for the pair, plus parking and concessions.

One game and I spent half of my "other merchandise" spending for six years. I know there are other revenue sources, but let's face it, they are not getting much from NBC (if anything at all)

You may wish to read Forbes' excellent analysis of the NHL as a business entity, "The Business of Hockey" that provides insights into how these companies work.

davetherave wrote:...and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

Sorry, I missed this particular part in the last read through. Are you certain this particular revenue stream counts in determining the salary cap? I would be flabbergasted if it was. While it is income for the owner, it is not hockey-related, so there is no way it should be counting toward the players share.

I am not saying, here, that the owners are losing money. What I am saying is that the hockey side of their operations is not generating as much income as before (in many cases -- not all). And that should have a direct effect on the salary cap.

It should, but it doesn't mean it will.

wprager wrote:

davetherave wrote:...and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

Sorry, I missed this particular part in the last read through. Are you certain this particular revenue stream counts in determining the salary cap? I would be flabbergasted if it was. While it is income for the owner, it is not hockey-related, so there is no way it should be counting toward the players share.

I am not saying, here, that the owners are losing money. What I am saying is that the hockey side of their operations is not generating as much income as before (in many cases -- not all). And that should have a direct effect on the salary cap.

It should, but it doesn't mean it will.

@Prager> the mention of non-hockey revenue streams speaks to your presumption that teams are 'losing money'. Do you know for a fact that these teams are operating at a loss, and which ones specifically?

The salary cap is calculated, according the definition sourced from Wikipedia, thusly:

The actual amount of the cap varies on a year-to-year basis, and is calculated as a percentage of the League's revenue from the previous season; for instance, in 2007-08, the NHL's salary cap was approximately US$50.3 million per team, and for the 2008-09 season it was $56.7 million.

http://en.wikipedia.org/wiki/NHL_Salary_Cap

According to this information, the salary cap has to do with revenues, not profits. And this on an aggregate of league revenues, not a team by team basis.

So what's the basis for your presumption that the salary cap is going down?

wprager wrote:

davetherave wrote:
The salary cap rising from $39 to almost $57MM--a 47% increase--since
the lockout mirrors that upward trend; so assuming that a downturn is
'inevitable' is presumptuous.

Tell me, did you buy any Nortel stock when it hit $120 and was still climbing?

Assuming a downturn is inevitable is simple mathematics. In the case of the NHL there are strict physical limits (number of seats) and, although that can be overcome a bit by raising ticket prices, the simple truth is that people's (and companies') discretionary spending cash is not going up every year.

I don't play the stock market.

In any case, you make the assumption that consumers are not going to spend as much as they did specifically on NHL hockey games, and you cite no concrete evidence.

wprager wrote:I'm going to have to tackle this in parts, sorry (just fluffing):

davetherave wrote:[
Comrade Prager, with your focus on single game attendance, and attempts to draw conclusions from the first few weeks of the season, it will indeed be interesting to see how you develop your arguments supporting your contention that the salary cap WILL drop.

From the NHL, for your information, dated April 12 of this year:

The National Hockey League has set an overall attendance record for the fourth consecutive season. Total attendance of 21,475,223 and the per-game average of 17,460 were 1.1% higher than the corresponding record figures of 21,236,255 and 17,265 from 2007-08...including the full Winter Classic attendance of 40,818, the aggregate NHL attendance increases to 21,495,541, and the per-game increases to 17,476.

I believe I referred to those results in my post. It's been a 4-year steady climb. However the economy went into the dumper last year. Because of season ticket sales, and contracts with the likes of Versus and NBC, much of the NHL's income was "guaranteed". The full effects of the economic downturn won't be felt until this year.

At this point, this is just an opinion (an informed one, I think). I will monitor the attendance averages and report my findings.

Looking forward to that!


PS don't forget that FoxSports report that underlined season ticket sales this year are equal to last year's.

You may also want to factor in the revenues that may increase on a per consumer basis, as prices for merchandise may rise; and increases in merchandise sales (which you do not mention at all as a potential positive factor) can add significantly to the bottom line, as fans who don't attend the games may still spend considerable amounts.

davetherave wrote:

wprager wrote:

davetherave wrote:...and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

Sorry, I missed this particular part in the last read through. Are you certain this particular revenue stream counts in determining the salary cap? I would be flabbergasted if it was. While it is income for the owner, it is not hockey-related, so there is no way it should be counting toward the players share.

I am not saying, here, that the owners are losing money. What I am saying is that the hockey side of their operations is not generating as much income as before (in many cases -- not all). And that should have a direct effect on the salary cap.

It should, but it doesn't mean it will.

@Prager> the mention of non-hockey revenue streams speaks to your presumption that teams are 'losing money'. Do you know for a fact that these teams are operating at a loss, and which ones specifically?

The salary cap is calculated, according the definition sourced from Wikipedia, thusly:

The actual amount of the cap varies on a year-to-year basis, and is calculated as a percentage of the League's revenue from the previous season; for instance, in 2007-08, the NHL's salary cap was approximately US$50.3 million per team, and for the 2008-09 season it was $56.7 million.

http://en.wikipedia.org/wiki/NHL_Salary_Cap

According to this information, the salary cap has to do with revenues, not profits. And this on an aggregate of league revenues, not a team by team basis.

So what's the basis for your presumption that the salary cap is going down?

I agree. The cap is all about revenue, not profit. A team that's not making enough income (or profit) may resort to not spending to the cap ceiling, but it's not going to affect that ceiling. If I somehow, somewhere made a point that "teams losing money" will affect the salary cap, let's just amend that slightly to "teams losing money because of reduced attendance."

As for the basis of my presumption (not a word I would have chosen) that the salary cap is going down, here are a few numbered points (you can connect the dots, although it's not really necessary):

1. This is a gate driven league. The single biggest source of revenue is ticket sales.
2. The economy is doing very badly. People are losing jobs or at least job security; holdings in stocks have taken a huge hit, leading further to eroding confidence. Many companies are struggling due to lowered sales.
3. When conditions described in #2 happen, both individuals and corporations tend to tighten the belt and reduce discretionary spending.
4. Hockey tickets and merchandise fall into that "discretionary spending" area. Unlike booze and cigarettes (sales of which probably actually go up as the economic conditions go down) hockey tickets are a luxury item; I can see people turning to watching Hockey on TV to cheer up, but not spending $100 on a pair of tickets, $12 for parking and $30 for a couple slice of barely warm pizza and drinks.

Actually, Dave, please re-read my post that you quote in your reply (below). Especially the bolded part. While your reply makes sense and all, it implies I said or meant something I never said (or meant).

I talk about hockey-related income (not profit). I maintain that it is only the hockey-side revenues which are used to calculate the salary cap.

And somehow, from that, you make the leap about my "presumption that teams are 'losing money'".

davetherave wrote:

wprager wrote:

davetherave wrote:...and--most importantly--other sports, entertainment and/or convention events at the facilities, all augment the bottom line of the companies that own NHL hockey teams.

Sorry, I missed this particular part in the last read through. Are you certain this particular revenue stream counts in determining the salary cap? I would be flabbergasted if it was. While it is income for the owner, it is not hockey-related, so there is no way it should be counting toward the players share.

I am not saying, here, that the owners are losing money. What I am saying is that the hockey side of their operations is not generating as much income as before (in many cases -- not all). And that should have a direct effect on the salary cap.

It should, but it doesn't mean it will.

@Prager> the mention of non-hockey revenue streams speaks to your presumption that teams are 'losing money'. Do you know for a fact that these teams are operating at a loss, and which ones specifically?

The salary cap is calculated, according the definition sourced from Wikipedia, thusly:

The actual amount of the cap varies on a year-to-year basis, and is calculated as a percentage of the League's revenue from the previous season; for instance, in 2007-08, the NHL's salary cap was approximately US$50.3 million per team, and for the 2008-09 season it was $56.7 million.

http://en.wikipedia.org/wiki/NHL_Salary_Cap

According to this information, the salary cap has to do with revenues, not profits. And this on an aggregate of league revenues, not a team by team basis.

So what's the basis for your presumption that the salary cap is going down?

davetherave wrote:

wprager wrote:

davetherave wrote:
The salary cap rising from $39 to almost $57MM--a 47% increase--since
the lockout mirrors that upward trend; so assuming that a downturn is
'inevitable' is presumptuous.

Tell me, did you buy any Nortel stock when it hit $120 and was still climbing?

Assuming a downturn is inevitable is simple mathematics. In the case of the NHL there are strict physical limits (number of seats) and, although that can be overcome a bit by raising ticket prices, the simple truth is that people's (and companies') discretionary spending cash is not going up every year.

I don't play the stock market.

In any case, you make the assumption that consumers are not going to spend as much as they did specifically on NHL hockey games, and you cite no concrete evidence.

Not just hockey, specifically. Sure, there are some people who prioritize hockey above other discretionary items, but the vast majority of people out there consider hockey tickets a luxury item. Especially when hockey is available in fairly large quantities on TV.

davetherave wrote:
Looking forward to that!


PS don't forget that FoxSports report that underlined season ticket sales this year are equal to last year's.

You may also want to factor in the revenues that may increase on a per consumer basis, as prices for merchandise may rise; and increases in merchandise sales (which you do not mention at all as a potential positive factor) can add significantly to the bottom line, as fans who don't attend the games may still spend considerable amounts.

OK, the first data point still has no attendance figure for Montreal -- have they played a home game yet? Anyhow, the average attendance is slightly higher -- by 34, to be precise. I'm not sure if average attendance goes up or down from the start of the season toward the end. My gut says it goes up because more than half of the teams are either locked into a playoff spot or fighting for one (16 of 30 teams make it in, and I'd argue that in each Conference you could have another 4 that are fighting for that last spot -- that;s easily 22 of 30 markets where interest increases (plus Toronto always sells out even if they are out of the playoffs).

Anyhow, we'll see how this goes. I've put a calendar reminder to check attendance every week. I'll keep posting in here.

wprager wrote:

davetherave wrote:
In any case, you make the assumption that consumers are not going to spend as much as they did specifically on NHL hockey games, and you cite no concrete evidence.

Not just hockey, specifically. Sure, there are some people who prioritize hockey above other discretionary items, but the vast majority of people out there consider hockey tickets a luxury item. Especially when hockey is available in fairly large quantities on TV.

Yes, but revenues also come from those who watch TV, such as subscribers to the NHL Center Ice package, and internet subscribers to NHL Gamecenter.

Your assumption "there are some people who prioritize hockey above other discretionary items, but the vast majority of people out there consider hockey tickets a luxury item" is just that. You have no marketing data that supports that statement.

I am not making a case that cap won't go down. I am saying there is insufficient data to suggest that it will, and that the data available, as cited previously from sources like the NHL, Allan Walsh and Fox Sports, suggest it will not.

Market data? Are you serious? The Sens had around 12,000 season ticket holders last year. Ottawa/Gatineau has nearly 1 million people. Assuming 2.5 people per household that's 400,000 households. Many season ticket holders buy tickets in pairs, but the 12,000 is "equivalents" so includes guys who purchase quarter-season tickets. Even if all 12,000 bought quarter season tickets that would be 48,000 households with quarter-season tickets. We know that's no-where the true number (like I said, many buy two seats). But even in that worst, unimaginable case, you'd have 352,000 households not making season tickets a priority. That's 88% -- pretty close to a "vast majority". Montreal is a city three times as big, and I'd say their season ticket sales are less than double that of Ottawa. And I don't believe they have all seats sold as season tickets, so that means there are season tickets available but no buyers. Yes, I am ignoring the fact that there are some people who want season tickets but not in the upper bowl, so they are, perhaps, on a waiting list. Toronto certainly falls into that category in a big way, but even there, in a city of 5 million, I don't believe the waiting list includes anywhere near 1 million households (roughly half -- very roughly, as I don't even know the population of the GTA).

Moving south I would expect those percentages to go way, way higher in some markets.

So when I say the vast majority, I think I am very much correct.