2024 Salary Cap and Beyond

[majormajor]

Don’t know. I saw something about the Reds making $60 million and they were projected to lose 20-50% of that. Reds have twice as many games. So if we are in a similar situation as the Reds with half the games, we could lose $6-15 million. Canadian teams wouldn’t be impacted. Some American teams (Rangers) own their own cable network so they aren’t directly impacted.

I would guess on the lower side of that, probably about a quarter as much as the Reds will lose (and of course we don't how much they will lose yet). I don't think our local tv money was ever that big. Hockey in general is much more gate driven, close to half of total revenue, while baseball is about a quarter.

I just looked up the Reds tv ratings and they are very high, even for baseball. 4.74% of the market. That's going to be more than double the Jackets ratings, which I remember being around a 2? So then double the number of games and if you make a simplifying assumption of even dollars for eyeballs, then the Jackets would have about 21% of the local tv revenue. The Jackets losing $2.6m-$6.3m in revenue sounds like a lot but it's small compared to the revenue they are gaining in other areas as NHL revenues boom.

 

[koteka]

I would guess on the lower side of that, probably about a quarter as much as the Reds will lose (and of course we don't how much they will lose yet). I don't think our local tv money was ever that big. Hockey in general is much more gate driven, close to half of total revenue, while baseball is about a quarter.

I just looked up the Reds tv ratings and they are very high, even for baseball. 4.74% of the market. That's going to be more than double the Jackets ratings, which I remember being around a 2? So then double the number of games and if you make a simplifying assumption of even dollars for eyeballs, then the Jackets would have about 21% of the local tv revenue. The Jackets losing $2.6m-$6.3m in revenue sounds like a lot but it's small compared to the revenue they are gaining in other areas as NHL revenues boom.

I wonder if we could ballpark the budget of this team as a group. It would be interesting. We have transparency into the main cost (payroll). The arena is owned by Franklin County Convention Facilities Authority so they should have some documentation. TV contracts are usually somewhat out there.

 

[Forepar]

I wonder if we could ballpark the budget of this team as a group. It would be interesting. We have transparency into the main cost (payroll). The arena is owned by Franklin County Convention Facilities Authority so they should have some documentation. TV contracts are usually somewhat out there.

It's surprisingly hush-hush on the regional tv contract front. The most recent info was on the SJS contract and it looked to be in the $20M range annually, but that info was 3-4 years ago. My take would be that the CBJ rights are less than SJS rights given the size of the markets (not the rating percentage). I also am aware per the bankruptcy filing that a 20% reduction in rights fees was part of the deal for FSO/Bally's/Fanduel to continue to broadcast CBJ games through the season. I would imagine that the numbers might be available amidst the various bankruptcy filings (those would be "executory contracts" that the debtor must either reject or assume as part of the ongoing bankruptcy reorganization - and the debtor negotiated an assumption of the contract but at a reduced price). I'm not going to do a deep dive, but my guess is that the CBJ rights fee for regional broadcast after all is said and done is in the $10-15M range. Not insignificant but even if the revenue from the FanDuel assumption of the Bally's contract goes away, then some other party will still broadcast the games, probably at 50-70% of the prior rights fee. So CBJ loses some revenue, maybe $5-7M?

Here's the thing - if CBJ make the PO's, every home game is worth roughly $2M in ticket revenue (18,500 seats x $108 average seat price (over the entire arena), so there is $4M guaranteed per series (minimum 2 home games), without factoring concessions, gear and parking. Players do not get paid more $ for making a playoff run (except for a few with bonus incentives).

If you have a winning team out of the gate and average attendance increases at 1,000 per game (last I looked attendance was just north of 16,000 per game factoring out the 'Shoe game, so 17,000+ per game), and using a lower average game ticket price for regular season games of $80, that would create another $3,280,000 (41 games x $80 x 1,000) of incremental revenue with little incremental cost. Again, without factoring in concessions, gear and parking. And if you have a winning team, viewership goes up, and the next set of rights fees goes up (whether TV, streaming or otherwise).

If CBJ was projected to be in rebuild mode in the short- and mid-term, the regional tv rights fees might be a problem for ownership, as there would be no PO ticket or ancillary revenue and presumably no uptick in attendance to offset a loss in rights fees. But then CBJ would not be looking to spend to the cap or anywhere close to it in the beginning of said rebuild. Small market teams that are in the hunt can afford to spend closer to the cap because of the additional revenue a good team produces. When the smaller market team sucks, they usually don't spend up to the cap. Only big market teams with endless cash flow (higher ticket prices, higher attendance even in down years, higher rights fees, higher franchise values, richer owners) tend to spend up to the cap each and every year....

In short, it will work out. There may be a down year as early as next year (hope not and not expecting that). CBJ will spend even with TML when the timing is right, less than TML when its not right. Thus CBJ lows will tend to be lower than TML. But there is a cap (and a floor) in place. Otherwise small market teams would get spent out of contention - which is what you see in MLB. Money doesn't guarantee success (look at this year's CBJ and NYR), but I admit it doesn't hurt.

 

[Fred Glover]

It's surprisingly hush-hush on the regional tv contract front. The most recent info was on the SJS contract and it looked to be in the $20M range annually, but that info was 3-4 years ago. My take would be that the CBJ rights are less than SJS rights given the size of the markets (not the rating percentage). I also am aware per the bankruptcy filing that a 20% reduction in rights fees was part of the deal for FSO/Bally's/Fanduel to continue to broadcast CBJ games through the season. I would imagine that the numbers might be available amidst the various bankruptcy filings (those would be "executory contracts" that the debtor must either reject or assume as part of the ongoing bankruptcy reorganization - and the debtor negotiated an assumption of the contract but at a reduced price). I'm not going to do a deep dive, but my guess is that the CBJ rights fee for regional broadcast after all is said and done is in the $10-15M range. Not insignificant but even if the revenue from the FanDuel assumption of the Bally's contract goes away, then some other party will still broadcast the games, probably at 50-70% of the prior rights fee. So CBJ loses some revenue, maybe $5-7M?

Here's the thing - if CBJ make the PO's, every home game is worth roughly $2M in ticket revenue (18,500 seats x $108 average seat price (over the entire arena), so there is $4M guaranteed per series (minimum 2 home games), without factoring concessions, gear and parking. Players do not get paid more $ for making a playoff run (except for a few with bonus incentives).

If you have a winning team out of the gate and average attendance increases at 1,000 per game (last I looked attendance was just north of 16,000 per game factoring out the 'Shoe game, so 17,000+ per game), and using a lower average game ticket price for regular season games of $80, that would create another $3,280,000 (41 games x $80 x 1,000) of incremental revenue with little incremental cost. Again, without factoring in concessions, gear and parking. And if you have a winning team, viewership goes up, and the next set of rights fees goes up (whether TV, streaming or otherwise).

If CBJ was projected to be in rebuild mode in the short- and mid-term, the regional tv rights fees might be a problem for ownership, as there would be no PO ticket or ancillary revenue and presumably no uptick in attendance to offset a loss in rights fees. But then CBJ would not be looking to spend to the cap or anywhere close to it in the beginning of said rebuild. Small market teams that are in the hunt can afford to spend closer to the cap because of the additional revenue a good team produces. When the smaller market team sucks, they usually don't spend up to the cap. Only big market teams with endless cash flow (higher ticket prices, higher attendance even in down years, higher rights fees, higher franchise values, richer owners) tend to spend up to the cap each and every year....

In short, it will work out. There may be a down year as early as next year (hope not and not expecting that). CBJ will spend even with TML when the timing is right, less than TML when its not right. Thus CBJ lows will tend to be lower than TML. But there is a cap (and a floor) in place. Otherwise small market teams would get spent out of contention - which is what you see in MLB. Money doesn't guarantee success (look at this year's CBJ and NYR), but I admit it doesn't hurt.

I recall Jay Feaster when he was the GM of Tampa saying on Sirius that teams needed to make the playoffs in order to finish in the black
Granted that was 15 or so years ago but I remember thinking that was probably pretty accurate