A Problem with Linkage

[Cully9]

What ??

The players do not market the game .. They do not set up ticket prices .. They do not go out and sign big TV deals .. They do not spend Millions on marketing the game in advertising and promotions ..They do not even have a say in how the game should be improved to make it more entertaining .. They do not influence Parking or Concession or Merchandise revenue.The don't even have a say in what kind of team an individual owner puts on the ice. etc etc etc ..

So yes I would expect the owners to be accountable for the things they control ... NOT THE PLAYERS ..

That's why we have a Lockout .. The players have no control over any aspect on how the NHL is run .. yet the owners want to link them directly to it via their salaries, and bottom line need to find a different way then to get them to lock into a falling market place ..

So, the solution to this money-losing proposition is to keep players earning the same amount of money?

 

[Sammy*]

Wrong. You guys can't read obviously.

What he's saying is that they would sell the asset (which value would be based on a future revenue stream, as income-producing assets always are), and then re-invest that capital elsewhere, which return would not need to be shared with players.

Can this be explained any more simply?

Amazing that all those idiots in the NFL & NBA PA's did not figure out this loophole in their negotiations.
Never ceases to amaze how much more difficult these things are for the NHLPA & owners, such that its only in the NHL they cant resolve these oh so complicated issues.

 

[Cully9]

Wrong. You guys can't read obviously.

What he's saying is that they would sell the asset (which value would be based on a future revenue stream, as income-producing assets always are), and then re-invest that capital elsewhere, which return would not need to be shared with players.

Can this be explained any more simply?

What you're doing, though, is punishing the owner who has ownership over the parking lot. If the company that owns the parking lot is independent of team ownership, do the players get a slice of that pie? No.

 

[Jobu]

In every industry it is the employees that pay for the poor decisions of management. This is the situation in the NHL. It isn't a unique thing. No matter the cause of poor revenues or increasing costs it is the workforce that gets hit.

Yet in very few industries are there salary caps or explicit expense ties to revenue.

The difference in this industry and trying to tie things to revenue is that the loss of jobs can be prevented. 700 hockey players can still make handsome money even if revenues get cut in half (they won't and if they are they will rebound) as opposed to 300 getting laid off and making much smaller salary elsewhere.

Funny, I thought that one of the primary concerns of the Auto Workers was jobs. Again, no salary cap.

The "still make handsome money" argument is too ridiculous to comment on.

I personally like the failing industry argument the PA mouthpieces have now brought out the last week or so. Before it was how the industry was thriving and there are these great stacks of hidden money in every owners operation derived directly from hockey. The revenues are grossly underestimated, undereported etc. etc. etc. But now the industry is failing so why would the players ever do that? Interesting. Before the "problem" was that the owners are a bunch of lying liars (not relevant anyways because of the use of an independent auditor to account for revenues in a new CBA) and now it's because the industry is in trouble (i.e. the owners weren't lying after all).

The players have recognized the industry is in trouble by combining an unprecedented 25% rollback offer with other concessions and further guarantees of economic viability.

It doesn't mean that the owners have not concealed or underreported or otherwise manipulated revenues and expenses. They clearly have as evidenced by the Forbes report, past experience, and the reluctance of the NHL to open the books to the PA,

Well if the revenues are grossly underreported you'd have to imagine that any hit to the revenue side because of the lock out and loss of TV contract is going to be substantially offset by those huge stores of money hidden in the safes of these owners homes pilfered through hockey operations that any respectable auditor will find. An auditor jointly appointed by the NHLPA.

An auditor can't audit that with which he's not provided. Nor can an auditor define revenues and expenses.

The end result is that under a linkage system comes a healthy league and in healthy leagues comes revenue growth.

Says who?

The revenues may take a momentary dip (not as much as baseball IMO unless the season is cancelled. Award the cup and people will come back quickly as they did the last lockout when attendance actually increased) but they will recover and grow.

Says who? Bettman has proven to be a failure when it comes to adequately marketing the game. Have you seen the television contract with NBC?

If the players want to be a direct part of that as the owners have offered not only in a percentage cap but in sharing profits they will indeed have to take this momentary hit (or negotiate the amount of hit they do take). And with linkage comes power for the union to make sure things are running properly on the league side as the NFLPA has made sure of in the past for the NFL.

The NFLPA is a joke. Why do people think the NHLPA wants any part of that shafting? NFL players are severely underpaid and disadvantaged by a lack of guaranteed contracts, share of revenues, pension benefits, etc.

Was the last NHL offer a good one? Not really but there were obviously things in there to negotiate and that the NHL would drop immediately if the NHLPA accepted the framework and cap percentages near the level they were at that would have made it a nice deal. It was certainly a good jumping off point to get things done quickly. But I do think if the season is cancelled it will look pretty damn good to the one that will be offered in September.

Why doesn't the NHL offer a cap without linkage? Linkage is the absolute non-starter, as it should be.

Truly I think NHLPA logic can make one quite dizzy.

Sort of like your post, eh?

 

[Jobu]

What you're doing, though, is punishing the owner who has ownership over the parking lot. If the company that owns the parking lot is independent of team ownership, do the players get a slice of that pie? No.

So you're saying that players should get no cut of parking revenues, then? And by extension, and outsourced concession and merchandising revenues?

You're not "punishing" the owner; they're the ones who want to link salaries with revenues, remember?

 

[Jobu]

Amazing that all those idiots in the NFL & NBA PA's did not figure out this loophole in their negotiations.
Never ceases to amaze how much more difficult these things are for the NHLPA & owners, such that its only in the NHL they cant resolve these oh so complicated issues.

Please explain, then, how these issues are so easily resolvable, especially in a league with zero TV revenue which is dependent on these sources more than, e.g., teh NBA or NFL.

As for the NFLPA at least, they are idiots.

 

[PecaFan]

This is at the heart of the NFLPA's problem with their current CBA. When the current agreement was reached revenue sources like naming rights were relatively new, if not unheard of. Few teams had new stadiums with hundreds of luxury suites, premium clubs, etc.

And yet if you read the agreement, luxury suites, PSL's etc are all through the document.

"(1) Regular season, pre-season, and post-season gate receipts (net of admission taxes, and surcharges paid to stadium or municipal authorities which are deducted for purposes of calculating gate receipts subject to revenue sharing), including ticket revenue from “luxury boxes,†suites and premium seating subject to gate receipt sharing among NFL Teams;"
http://www.hfboards.com/showpost.php?p=2459969&postcount=69

Nope, his argument doesn't fly. Even if they develop a new stream, the players are going to make sure they get their share.

 

[Cully9]

So you're saying that players should get no cut of parking revenues, then? And by extension, and outsourced concession and merchandising revenues?

You're not "punishing" the owner; they're the ones who want to link salaries with revenues, remember?

But if the owner of the hockey team doesn't own a parking lot, how is the hockey team generating that revenue? Just like there are other ancillary businesses that see an increase in revenues when hockey is being played (surrounding restaurants, public transit etc.) the players don't have a right to that revenue.

Players can have a cut of the parking revenue if the parking deal is part of the ownership of the team.

If the team had the rights and then outsourced them, that is a different story than an owner that doesn't have the rights in the first place.

 

[PecaFan]

What he's saying is that they would sell the asset (which value would be based on a future revenue stream, as income-producing assets always are), and then re-invest that capital elsewhere, which return would not need to be shared with players.

Can this be explained any more simply?

No, it can't be explained more simply, because it simply doesn't make sense.

Nobody in their right mind will sell assets that generate guaranteed revenue, in the *hope* that some other revenue stream *might* come along that isn't covered, and that you *might* be able to hoard for a year before the players negotiate a share of it.

 

[AM]

why try rationalizing with these guys?

I realize that I'm only an idiot, and that I should be banging my head on the wall instead of questioning your superior intellect, I'm only a lowly engineer after all. Hardly educated at all...

But, doesn't the fact that the owners can sell this parking business and the players will get nothing from the new owner imply that the players have no right to the parking money in the first place?

The owners will continue to try to make any money they can, but if the NHLPA is going to try to force them to give over money from businesses that are only related to the hockey team because they have the same owner, could you blame the owner for divesting himself of that business? And why are the owners obligated to find outside income streams to pay players more money?

The only thing the owners should have to try to increase to pay players are income streams that are directly related to hockey, namely tickets, advertising, broadcast (TV and radio), conccesions sold during the games, and merchandise. Outside of that, if someone else can own the same business (as in parking) and not have to give the players any portion of it, the players are obviously not entitled to it.

I'll crawl back under my rock now and return to my ignorant existance now...

As far as the NHLPA guys are concerned they should be getting 60% of the GNP of each country they are playing in.

 

[Jobu]

No, it can't be explained more simply, because it simply doesn't make sense.

Nobody in their right mind will sell assets that generate guaranteed revenue, in the *hope* that some other revenue stream *might* come along that isn't covered, and that you *might* be able to hoard for a year before the players negotiate a share of it.

Of course they would. People sell apartment buildings all the time. YOu have no understanding of business if you think nothing with a guaranteed revenue stream is ever sold. Your ignorance is hilarious.

 

[Jobu]

But if the owner of the hockey team doesn't own a parking lot, how is the hockey team generating that revenue? Just like there are other ancillary businesses that see an increase in revenues when hockey is being played (surrounding restaurants, public transit etc.) the players don't have a right to that revenue.

Players can have a cut of the parking revenue if the parking deal is part of the ownership of the team.

If the team had the rights and then outsourced them, that is a different story than an owner that doesn't have the rights in the first place.

That's the point. An owner can sell his parking lot and claim that he doesn't have to share revenues. That is the entire logic behind the OP's post! He will convert that sale into further investments, none of which need to be shared!

Your last sentence makes no sense either.

 

[AM]

whats the market

Absolutely. Why not let the market dictate who gets what?

dictate NHL players are worth right now?

 

[SENSible1*]

It's really quite simple. You define the hockey revenue and then you negotiate any adjustments necessary during the next CBA.

It can be done in the NFL and the NBA, so it most certainly can be done in the NHL. If the PA is worried about hidden revenues, fight for a high % of easily calculated ones.

 

[djhn579]

As far as the NHLPA guys are concerned they should be getting 60% of the GNP of each country they are playing in.

Only the countries they are playing in? I thought they wanted that from every country...


EDIT: One thing I do find somewhat funny is that the owners are expected to find and develop outside revenue streams to continue paying exhorbitant salaries, while the players can just ask for more, more, more even as the quality of the game goes down. If the NHL was healthy, players revenue would be covered by fans paying to see the games, and buying merchandise. That's how you build the sport (and revenue), by getting people to want to come see your games, to watch the games on TV, to buy league merchandise. You don't grow the game by charging parking fees, or adding restaurants and hotels. But, obviously, I'm not an economist and have no clue what I'm talking about...

 

[PecaFan]

Of course they would. People sell apartment buildings all the time. YOu have no understanding of business if you think nothing with a guaranteed revenue stream is ever sold. Your ignorance is hilarious.

And your arrogance is mind numbing. But we'll press on and ignore it, and address the "arguments" in this post of yours.

First of all, no one said "nothing with a guaranteed revenue stream is ever sold".

Secondly, the apartment building in your example has *zero* relevance to our discussion, which is ancillary revenue streams of another business, which are shared with others.

Company A has revenue streams X,Y,Z that are required to run the company. The argument being presented here is that they'll shut them down, and develop revenue streams T,U,V instead.

What business owner is going to take T,U, and V alone, instead of T,U,V,X,Y and Z?

*That's* the point. It's nonsensical for anyone to throw away X,Y, and Z, even if you only get a portion of them. It's still more than you'd get otherwise.

 

[dawgbone]

The lack of economic explanation/analysis of the owner's proposals is something that's been a real problem during the course of the lockout. The vast majority of the posters here don't seem to understand that the effect of such a proposal bein implemented will be to limit the incentive of the owners to develop the revenue streams associated with a hockey team, and instead focus their energies/investments on revenue streams that aren't part of what is defined as hockey related revenue. Obviously, this is unfair to the players, and understanding this is essential to understanding the problems with the ownership position.

Mudcrutch, you make it sound as if the owners would be the sole decider of what constitutes revenues, and how it will be calculated. For someone as behind the players as you, you don't give them, or Goodenow much credit.

One of the first thing they'd do is an extensive audit (as a condition of accepting linkage), of all 30 teams. Not all 30 teams get a cut of parking. Not all 30 teams get a cut of concessions. Either way, you will see now, what all the teams receive. If they get a cut of parking now, they are going to continue to get a cut of parking (unless they change their lease agreement... which is entirely possible).

One of the things we've discussed is parking. Let's say that the owners proposal is implemented. We'll further say that parking is worth $100 per game.

              	Team Owner	Unrelated Party
Revenue                          100	100
$ guaranteed to players	53	0
Remaining $	             47	100

As you can see, this revenue stream is now worth more to an unrelated party than it is to the team owner. If I'm the team owner, I'll sell any parking lots that I may own around the arena, and put the money elsewhere. Since that would be a capital sale, and not revenue from the actual parking, I don't see how it would apply. There would be examples of this in every aspect of the business.

In that case, the money from selling the lots should be counted as revenue (at least in terms of the % of parking that is hockey related... i.e. if hockey games constitutes 40% of all parking revenues, then 40% of the sale is lumped into parking). If it's a one year leasing deal, it's based on the money for one year... if it's a 10 year deal with 100% upfront money, then you divide the amount by 10 and that's your value for each year.

You give very little credit to the ability of the NHLPA to work these things out... don't forget, this is the same group who gave the owners all kinds of power in the last CBA, and then played the owners against each other.

The implementation of systems like the NHL is proposing can't help but lead owners of teams to cease their investment in properties that are defined as hockey revenue. Why is it wrong for the players to resist this?

Then the PA should negotiate measures to prevent this. As many ways you can think of to hide revenues, the PA can think of ways to still have that revenue count by negotiating controls in the CBA.

 

[mackdogs*]

I'm sorry mudcrutch, this is just silly. Your theory is that owners would rather make less money (a one time sale vs a permanent revenue stream), and your assuming the sale wouldn't be covered by the agreements (if the players are concerned about it, they can negotiate that part).

Basically, you're saying the owners will try and make less money just to screw the players. That's just a little too paranoid to take seriously.

I agree totally, this whole thread was based on poor assumptions and extremely questionable business tactics.

Does each and every team own the rights to it's parking? I can't say for sure, but this was an assumption. The next is that the Unrelated party would get 100% of the full revenues that the owner (whoever gets parking $$) would have per game. So the owner gives the parking away for free?? No way in hell. The other assumption is that 47% of a year's parking revenue would be less than selling the lots service to a third party making it wise to go with the third party. Again I have to question your foundation. I'm no businessman myself but a guaranteed revenue source is always better than a one-time deal.

The players just seem to want everything without giving anything up for it. The owners are the ones paying the rent, paying for the maintenance of the aforementioned lot (if they indeed own it), snow removal as has been mentioned, etc, etc. and all the players want is more $$. The players are sounding more and more like a tax to me. Like the government, they just want their % of the pie just because they exist.

Like Iconoclast said the question seems to be where do you draw the line. Should players demand more $$ from a jersey sold with their name on the back? Or should this $$ be divided evenly among the players? Where does it end?

 

[joepeps]

meah

Linkage can't happen...

whos to say how much they made or lost?

we all know we can't trust the NHL's numbers... it's easy to write off ****.. or make money disappear.. thats what lawyers do for an extra 4 mill ....

Linkage is a bunch of bs and is a way for the NHL and to limit Owners spending so they can make 500% profits...

 

[Sammy*]

Please explain, then, how these issues are so easily resolvable, especially in a league with zero TV revenue which is dependent on these sources more than, e.g., teh NBA or NFL.

As for the NFLPA at least, they are idiots.

Yeah, I am sure they dont have genius's like you on retainer to figure it out for them.
Only in the NHL is it so difficult to figure out what revenues are to be attributed & to be able to audit them.
Too funny.

 

[Sammy*]

. Your ignorance is hilarious.

Your ignorance is hilarious that these sorts of things cannot be dealt with in a CBA.
Geez, I wonder why that is.
Any guesses out there?

 

[Cully9]

That's the point. An owner can sell his parking lot and claim that he doesn't have to share revenues. That is the entire logic behind the OP's post! He will convert that sale into further investments, none of which need to be shared!

Your last sentence makes no sense either.

Actually, my last sentence does make sense if you're able to follow along. I'm trying to make the point that not every parking option is owned, or was at one time owned, by the owner of the hockey team. Thus, players do not have access to that revenue. Are you with me?

If Green P Parking -- a company that owns countless parking lots in Toronto, owns a lot across the street from the Air Canada Centre, none of that revenue goes to the Maple Leafs organization. How would you propose is it fair for the Leafs players to get their mitts on that revenue?

 

[Mountain Dude]

Linkage can't happen...

whos to say how much they made or lost?

we all know we can't trust the NHL's numbers... it's easy to write off ****.. or make money disappear.. thats what lawyers do for an extra 4 mill ....

Linkage is a bunch of bs and is a way for the NHL and to limit Owners spending so they can make 500% profits...

Yeah, because NHL profits have been the big problem in this lockout.

 

[Jobu]

And your arrogance is mind numbing. But we'll press on and ignore it, and address the "arguments" in this post of yours.

First of all, no one said "nothing with a guaranteed revenue stream is ever sold".

Secondly, the apartment building in your example has *zero* relevance to our discussion, which is ancillary revenue streams of another business, which are shared with others.

Company A has revenue streams X,Y,Z that are required to run the company. The argument being presented here is that they'll shut them down, and develop revenue streams T,U,V instead.

What business owner is going to take T,U, and V alone, instead of T,U,V,X,Y and Z?

*That's* the point. It's nonsensical for anyone to throw away X,Y, and Z, even if you only get a portion of them. It's still more than you'd get otherwise.

Wrong. They aren't shutting down anything; rather, they are selling one asset for proceeds that they can re-invest into other assets, ones whose resultant revenue streams they don't need to share. That is the scenario presented by the OP, and wholly predictable. You're suggesting that there are not mutual exclusive investments; however, resources are actually limited in the real world.

It's unbelieveable you don't understand this, but then again, you've pretty much established your intellectual abilities on this board. Or lack thereof.

 

[Jobu]

I agree totally, this whole thread was based on poor assumptions and extremely questionable business tactics.

Does each and every team own the rights to it's parking? I can't say for sure, but this was an assumption. The next is that the Unrelated party would get 100% of the full revenues that the owner (whoever gets parking $$) would have per game. So the owner gives the parking away for free?? No way in hell. The other assumption is that 47% of a year's parking revenue would be less than selling the lots service to a third party making it wise to go with the third party. Again I have to question your foundation. I'm no businessman myself but a guaranteed revenue source is always better than a one-time deal.

The players just seem to want everything without giving anything up for it. The owners are the ones paying the rent, paying for the maintenance of the aforementioned lot (if they indeed own it), snow removal as has been mentioned, etc, etc. and all the players want is more $$. The players are sounding more and more like a tax to me. Like the government, they just want their % of the pie just because they exist.

Like Iconoclast said the question seems to be where do you draw the line. Should players demand more $$ from a jersey sold with their name on the back? Or should this $$ be divided evenly among the players? Where does it end?

Players don't want a % of anything; they just want a market to dicate what they ought to be paid, whether that's $1m or $2m. The point is, money should NOT be divided evenly or based on any percentage.