Balsillie/Phoenix part V

[RR]

I'm going to take you to task over this sentence because it reminds me of the jargon that comes from business school professors drumming up consultancy work, or promoting their latest "management" books....

It also reminds of the slick use of buzz words to make a statement about something when someone can't back something with actual dollars, but is saying something that sounds "right".... hence the buzz words.

Market presence. What is this exactly, in your opinion?

Competing for the sports entertainment dollar, in North America? Oh really?

How much of this 'presence' do you need; and how much of that dollar do you think you can get?

Enough to build broad interest in the sport in North America to the point where expanding into markets currently well served adds virtually 100% new dollars, rather than taking portions of revenues from those teams serving those current markets.

It's not "business school professors" speak, it's a business growth strategy. Disagree if you like, but the NHL is obviously committed to the strategy and believes overall it is working. Since 1993 the league has grown from $400M in revenues to $2.6B; franchise values have grown from an average of $50M to $260M; and player salaries have grown from $400K to $1.8M per year.

Wonder why the other 29 owners might want to continue maintaining control of who joins their ranks and where those teams might play?

 

[MoreOrr]

At long last.... The 50,000 pound elephant speaks. Or would it be a 100,000 pound gorilla?

And there you go! May I say, I called it!

 

[David_99]

It's not "business school professors" speak, it's a business growth strategy. Disagree if you like, but the NHL is obviously committed to the strategy and believes overall it is working. Since 1993 the league has grown from $400M in revenues to $2.6B; franchise values have grown from an average of $50M to $260M; and player salaries have grown from $400K to $1.8M per year.

How much of that growth has come from Phoenix? Could it have been more if the Jets stayed in Winnipeg or moved straight to Hamilton? Who knows? It's still however a far stretch to believe every "sun belt" team contributed to the growth of the game. Most have, that is concrete. But to claim every expansion/relocation has grown the attendence/viewership of the league is short sightedness. If Winnipeg/Hamilton had generated more then Phoenix, the league would be stronger & claiming victory in Florida and Tennessee.

 

[RR]

I'm not saying it was mismangement.
I'm not saying it was the city/location.

I'm not saying it wasn't mismangement.
I'm not saying it wasn't the city/location.

It is a good question.
How long must *whatever* be there losing money before some realizes it shouldn't be there?

The *whatever* could be:
A McDonald's
A gas station
An NHL franchise
...etc...

Bad analogies. Thousands of McDonalds and gas station franchisees on the continent do not = 30 NHL franchises. Unless your willing to accept that 3.3% of all those franchises are to be sold and moved immediately, with no consideration, into a market already considered, at this point in time, to be well-served.

 

[MoreOrr]

The underlined portion is not accurate, IMO. In his interview with the Spec and Star (IIRC), he did not state this. His statement was that it became "apparent" to him. If he was expressly told that "straight out", he would have so stated it. He instead indicated what I noted above, which I interpret to be him drawing a conclusion from the NHL's actions. Whether or not it may be the right conclusion, they evidently did not tell him "straight out".

Okay, you got me on that one. And certainly I had no evidence to say that he was "told straight out". But what I meant was that it was made very clear to him, in one form or another, that MLSE were not about to ever allow him the opportunity to pay Territorial Rights Fees to get a team in the Hamilton.

 

[RR]

How much of that growth has come from Phoenix? Could it have been more if the Jets stayed in Winnipeg or moved straight to Hamilton? Who knows? It's still however a far stretch to believe every "sun belt" team contributed to the growth of the game. Most have, that is concrete. But to claim every expansion/relocation has grown the attendence/viewership of the league is short sightedness. If Winnipeg/Hamilton had generated more then Phoenix, the league would be stronger & claiming victory in Florida and Tennessee.

I don't remember saying anything about "every" team contributing. I referred to the financial impact of the overall strategy. I did not single anyone out. You did.

 

[The Pouzar]

Enough to build broad interest in the sport in North America to the point where expanding into markets currently well served adds virtually 100% new dollars, rather than taking portions of revenues from those teams serving those current markets.

It's not "business school professors" speak, it's a business growth strategy. Disagree if you like, but the NHL is obviously committed to the strategy and believes overall it is working. Since 1993 the league has grown from $400M in revenues to $2.6B; franchise values have grown from an average of $50M to $260M and player salaries have grown from $400K to $1.8M per year.[/B][/B]

Wonder why the other 29 owners might want to continue maintaining control of who joins their ranks and where those teams might play?

This doesn't added up if players salaries are capped at 57% of league revenue. If these are the actual numbers its no wonder teams are in trouble by committing just under 70% of the leagues revenues to players salaries alone.

 

[RR]

This doesn't added up if players salaries are capped at 57% of league revenue.

?????
It does added up. Just take 23 players on an NHL roster, multiply it by $1.8M and you get $41.4M. And 30 teams divided by $2.6B = $87M average revenue. 57% of of 87M = $49.6M. Add in benefits and two-way salaries paid to minor leaguers when they come up, and you get closer to 57% than you think.

 

[HockeyScholar]

Enough to build broad interest in the sport in North America to the point where expanding into markets currently well served adds virtually 100% new dollars, rather than taking portions of revenues from those teams serving those current markets.

It's not "business school professors" speak, it's a business growth strategy. Disagree if you like, but the NHL is obviously committed to the strategy and believes overall it is working. Since 1993 the league has grown from $400M in revenues to $2.6B; franchise values have grown from an average of $50M to $260M; and player salaries have grown from $400K to $1.8M per year.

The majority of the growth has come from Canadian based teams. Adding another Canadian based team will only help increase revenue, especially in the Southern Ontario market.

"If you take out the Canadian teams, which have done so well since the lockout largely because of the Canadian dollar, the league's revenues are actually only growing at a 2 per cent clip per year," says an executive with a U.S.-based NHL team, who requested anonymity.

http://www.thestar.com/article/433906

The article is from almost exactly a year ago.

As I said before, when the Canadian teams are at an almost level playing field in terms of currency with the American teams, they make up over 30% of the league ticket revenue. If the CDN$ and USD$ stay at an even level for a significant period of time, it would be fair to say that the 6 Canadian based NHL teams could account for over 40% of ticket revenue.

Adding another Canadian team in a strong market such as the GTA will add significant ticket revenue and television money. Keep in mind that more people bought NHL seasons tickets for a team that didn't even exist (Hamilton Predators) than Phoenix averaged in television audience.

 

[The Pouzar]

?????
It does added up. Just take 23 players on an NHL roster, multiply it by $1.8M and you get $41.4M. And 30 teams divided by $2.6B = $87M average revenue. 57% of of 87M = $49.6M. Add in benefits and two-way salaries paid to minor leaguers when they come up, and you get closer to 57% than you think.

I read the original as 1.8B as a whole , 1.8M average per player.

 

[Jake16]

Please help me understand that comment. While most would acknowledge MLSE is the most influential owner in the league, they have no standing in this bankruptcy. Threatening legal action against Balsillie, the NHL, the individual owners etc. seems like noise. Couldn't anyone with the wherewithal, such as Balsillie, file similar actions?

I think you are right. Any dispute the Leafs have with the league over whether a team can come into their 50 mile territory would be separate of the Coyotes bankrupcty issue. Judge Baum would have no part of resolving that in the AZ Bankrupcy Court. If the Sportsnet article is correct, the Leafs would bring an action against the league likely in either Ontario or New York courts. I do not think that the Leafs would be wise to assert a right to a absolute veto since that appears to be a significant factor in the Canadian Competition Bureau's 2007 decision finding no antitrust violation from the leagues' relocation policies. There is a signicant difference, however, between claiming:
1. the Leafs have a veto right and that they will prevent a second team in Ontario at any cost or under any condistions, and;
2. simply demanding a large fee or other concessions as compensation.
I don't like the Leafs chances on (1), but do like it on (2).

Also, Carpenter made a good observation above - nowhere in the Sportnet article does it actually quote anyone from the Leafs actually saying anything.

The point I was trying to make before was that if this kind of dispute is likely to occur, its quite unlikely that it will be resolved on Balsilie's timeline (by late June 2009). As Judge Baum pointed out, antitrust cases like Wirtz, SBC, and the Raiders cases took many years to wind themselves through the court system. And unlike the Bankruptcy court here, the Circuit Courts of Appeal rarely expedite civil cases.

 

[Rob]

Buffalo I can understand but MLSE? The sellout every game with a horrible product.
They don't need Hamliton.

Just another reason to hate the Maple Laughs.

 

[Fugu]

If memory serves right, I think I saw a figure of $500,000 per year for suites. Are there 50 companies willing to put up a half million dollars plus say another 12 companies willing to take on a major sponsorship role?

Then what about broadcast rights fees?

Do you mean that's what they'd charge at Copps for a suite? I think that's on the high side. What I recall from other cities (excluding the Leafs) is something in the $200K+ range.

Enough to build broad interest in the sport in North America to the point where expanding into markets currently well served adds virtually 100% new dollars, rather than taking portions of revenues from those teams serving those current markets.

Not sure what you mean by that last part. I might point out that we're also redistributing revenues from market to market, albeit as a means to contain player costs (the tradeoff for the bigger teams).

It's not "business school professors" speak, it's a business growth strategy. Disagree if you like, but the NHL is obviously committed to the strategy and believes overall it is working. Since 1993 the league has grown from $400M in revenues to $2.6B; franchise values have grown from an average of $50M to $260M; and player salaries have grown from $400K to $1.8M per year.

I always like these answers where posters are told to disagree, but the NHL believes in ______________. I mean, isn't that the point of discussing these things, to dissect and often times disagree? Just because they're committed to something (and yes, it is their money) doesn't mean some us can't say it's a pie in the sky pursuit.

You'll need to revise your average franchise value. It's all well and good to lump in the outliers in the $300-450+ million range (I think there are 4-5 of them in a 30 team league; however the mean and median values can look quite different. Furthermore, those are estimates. The last franchises that have sold since the lockout all were sold in $150-204 million range. Correction. Minnesota was higher, around $260 million if reports were true. Franchise values nevertheless have increased for some teams. Ducks were sold for a paltry $75 million, and the Yotes situation may not be great, especially if mobility is denied. (StL, Tampa, Nashville sales)

These global figures are always a bit misleading. Team by team, the situation can look a bit different. The league can pat itself on the back if it likes, but as others mentioned, a lot of this growth is coming in places that don't support the footprint strategy.

Having said all that, the reasoning behind the footprint strategy has been the pursuit of the national TV contract. During the time period that you cite of increasing revenues and franchise values, US national TV revenue has in fact declined.

I think you are right. Any dispute the Leafs have with the league over whether a team can come into their 50 mile territory would be separate of the Coyotes bankrupcty issue. Judge Baum would have no part of resolving that in the AZ Bankrupcy Court. If the Sportsnet article is correct, the Leafs would bring an action against the league likely in either Ontario or New York courts. I do not think that the Leafs would be wise to assert a right to a absolute veto since that appears to be a significant factor in the Canadian Competition Bureau's 2007 decision finding no antitrust violation from the leagues' relocation policies. There is a signicant difference, however, between claiming:
1. the Leafs have a veto right and that they will prevent a second team in Ontario at any cost or under any condistions, and;
2. simply demanding a large fee or other concessions as compensation.
I don't like the Leafs chances on (1), but do like it on (2).

Also, Carpenter made a good observation above - nowhere in the Sportnet article does it actually quote anyone from the Leafs actually saying anything.

It's an accepted news source that claims their sources have divulged this tidbit. Thus it is accurate to say that MLSE hasn't stated this as a public record. I too was surprised that they'd bother given the legal positions as we understand them. However, I don't think the Sportsnet writer is making this up just because it's a slow news day.

 

[KevFu]

Balsillie, however, didn’t mention that Hamilton’s unemployment rate climbed to 8.8% in March, as the city struggles with the contracting steel and manufacturing industries.

All those people would become vendors and zamboni drivers in Copps.

 

[KevFu]

We don't know what is going to happen with this court case, but the one thing we do know is that there will be more lawsuits filed no matter what the outcome.

JB is going to appeal if he fails and probably go anti-trust on the NHL.
The NHL is going to appeal if he succeeds. MLSE is going to seek an injunction if JB wins, and potentially sue the NHL.

The end result in all of this, is that the NHL constitution will be shredded. Either JB or MLSE is attacking it in the next round.

The funniest thing to me, is we've still seen no mention of the NHL Constitution section on membership termination.

I'd love to see JB win the case, the NHL say Phoenix can move to Hamilton, MLSE sue the NHL for that, and then have Bettman drop a bomb on everyone:
"Moyes committed an act that resulted in automatic termination of membership in the NHL. We said we had no problem with you moving your club team to Hamilton, because its not in our league anymore. Sorry JB, you're not an owner of an NHL team.

And Toronto's franchise membership has been terminated for suing the league, We're granting an expansion franchise in Hamilton. They're going to pay $220 for the franchise, and $80 to Buffalo.

MLSE, we'd like to extend an offer to re-enter the NHL now as team #30... with a small entry fee.

Glendale, He's Toronto's entry fee to settle the lawsuit you just filed over losing the Coyotes."

Hey, a guy can dream.

 

[MAROONSRoad]

The Coyotes have averaged less than 15,000 in home attendance for a number of years now. That's pretty awful.

It's actually much worse than that:

1) Last season, actual turnstile attendance was only 10,943;

2) The team had one of the lowest, if not the lowest, average ticket price in the entire league.

See here:

http://i85.photobucket.com/albums/k42/Jhendrix70_/Jets/tickets.jpg

and here:

http://www3.thestar.com/static/PDF/080530_nhl_tickets_revenue.pdf

for example; and

3) Local TV ratings also were only 7,000 TV HH last year on average on FSN in the entire State of Arizona. Got a fan base, much, in a state with 6.5 million plus residence?

So far, according to certain reports, the team has not been able to negotiate a new local TV deal with FSN Arizona for next season.

GHOST

 

[RR]

The majority of the growth has come from Canadian based teams. Adding another Canadian based team will only help increase revenue, especially in the Southern Ontario market.



http://www.thestar.com/article/433906

The article is from almost exactly a year ago.

As I said before, when the Canadian teams are at an almost level playing field in terms of currency with the American teams, they make up over 30% of the league ticket revenue. If the CDN$ and USD$ stay at an even level for a significant period of time, it would be fair to say that the 6 Canadian based NHL teams could account for over 40% of ticket revenue.

Adding another Canadian team in a strong market such as the GTA will add significant ticket revenue and television money. Keep in mind that more people bought NHL seasons tickets for a team that didn't even exist (Hamilton Predators) than Phoenix averaged in television audience.

Ah, so when economic conditions benefit Canada, that is an emphatic guarantee that all Canadian markets, at all times, are a greater long term benefit to the NHL in perpetuity. Interesting argument.

How many Canadian teams have joined the NHL since 1993?

I'll give you that, according to Forbes, 6 of the 20 most valuable franchises are in Canada as of 4th quarter 2008. But will you accept that those 14 US teams contributed significantly to the growth of those 6 teams?

 

[RR]

Not sure what you mean by that last part. I might point out that we're also redistributing revenues from market to market, albeit as a means to contain player costs (the tradeoff for the bigger teams).

Simply trying to point out that one needs to look at the collective of 30 NHL teams, rather than pulling out one or two over-achievers or under-achievers. No one argues that Phoenix is a drag on the league at this point in time. The question is, will Phoenix always be a "drag" market? And is the answer to that an emphatic "yes," and that the solution is to blow up the league's rules and bylaws and give owners the right to sell to anyone, at any time, who can move franchises anywhere without concern for the league as a whole?

I always like these answers where posters are told to disagree, but the NHL believes in ______________. I mean, isn't that the point of discussing these things, to dissect and often times disagree? Just because they're committed to something (and yes, it is their money) doesn't mean some us can't say it's a pie in the sky pursuit.

Discuss? Absolutely. To state imperatives as so many do that Phoenix is and always will be a crap market, and that Hamilton will and always be a financial goldmine for the league and its 29 other teams, is what I object to.

We all love this game. It's the 1st professional major sports league to attempt to simultaneously reach deep into both the US and Canadian markets. Canada may not like the 24-6 ratio, but after Phoenix what is next? Strip Nashville, Atlanta, Florida, NYI, Carolina and Tampa of franchises? Move those teams to Canada and have 17 US and 13 Canadian teams? If so, enjoy your minor sports league.

You'll need to revise your average franchise value. It's all well and good to lump in the outliers in the $300-450+ million range (I think there are 4-5 of them in a 30 team league; however the mean and median values can look quite different. Furthermore, those are estimates. The last franchises that have sold since the lockout all were sold in $150-204 million range. Correction. Minnesota was higher, around $260 million if reports were true. Franchise values nevertheless have increased for some teams. Ducks were sold for a paltry $75 million, and the Yotes situation may not be great, especially if mobility is denied. (StL, Tampa, Nashville sales)

I hear you, but that's a micro, not macro argument. When trying to grow a business taking a micro approach is short-sighted.

These global figures are always a bit misleading. Team by team, the situation can look a bit different. The league can pat itself on the back if it likes, but as others mentioned, a lot of this growth is coming in places that don't support the footprint strategy.

Having said all that, the reasoning behind the footprint strategy has been the pursuit of the national TV contract. During the time period that you cite of increasing revenues and franchise values, US national TV revenue has in fact declined.

It's an accepted news source that claims their sources have divulged this tidbit. Thus it is accurate to say that MLSE hasn't stated this as a public record. I too was surprised that they'd bother given the legal positions as we understand them. However, I don't think the Sportsnet writer is making this up just because it's a slow news day.

So give up? Again, I hear you, but what you're proposing is to abandon a US or Canadian market when it's in financial trouble, regardless of whether new local ownership is interested in buying and keeping the team there. It's so reactive and short-sighted, in my opinion. And I would make the same argument for Phoeni, Winnipeg or Edmonton. Had someone been willing to step up in Winnipeg to buy the team and keep it from moving to Phoenix, I'd have been in line with the Jets fans screaming at the NHL for not giving local ownership a chance.

How long is too long to give a market a chance? Can't answer that. But if local ownership can be found to keep the team in Phoenix and keep the league's strategy on track, it deserves the chance. If not, move the team. But do so keeping the league's rules and bylaws in tact.

 

[MAROONSRoad]

Announced, Paid and Actual attendance #s of the Coyotes?

Let's break it down, shall we?

Total "paid attendance":

2008/09: 13,075 (however, less than 11K in "actual attendance" is reported; query if any tickets were purchased for revenue sharing purposes by Moyes)

2007/08: 11,817 (paid attendance)

2006/07: 12,604 (paid attendance)

2005/06: 11,340 (paid attendance)

Cumulative since 96/97: 12,109 (paid attendance)

And the supposed "announced attendance" for the above years, respectively: 14,866, 14,818, 14,988, 15,570 and cumulative since 96/97, 14,824.

Link:

http://i85.photobucket.com/albums/k42/Jhendrix70_/Jets/tickets.jpg

And this from a team that has had one of the lowest ticket prices in the entire league.

GHOST

 

[Northern Dancer]

How much of that growth has come from Phoenix? Could it have been more if the Jets stayed in Winnipeg or moved straight to Hamilton? Who knows? It's still however a far stretch to believe every "sun belt" team contributed to the growth of the game. Most have, that is concrete. But to claim every expansion/relocation has grown the attendence/viewership of the league is short sightedness. If Winnipeg/Hamilton had generated more then Phoenix, the league would be stronger & claiming victory in Florida and Tennessee.

How were the Jets suppossed to stay in Winnipeg, there was no buyers then?? The owners at the time either had to sell or fold their tent. The team was bleeding badly.

 

[Northern Dancer]

Do you mean that's what they'd charge at Copps for a suite? I think that's on the high side. What I recall from other cities (excluding the Leafs) is something in the $200K+ range.

They would have to be more than 50% lower than Toronto as at the ACC you get the Raptors and the Leafs plus all concerts as a suite holder. So at that reduced rate you would be catering to a different snack bracket but still not enough to sell 100 suites, imo.

 

[CGG]

How were the Jets suppossed to stay in Winnipeg, there was no buyers then?? The owners at the time either had to sell or fold their tent. The team was bleeding badly.

And how is this any different from the Coyotes now? Still no confirmed local buyers, only rumours of some guy paying $130 million or less with a sweeter sweetheart lease deal and operating losses covered by the NHL and a 2-year esacpe clause to the US market of his choice.

 

[Northern Dancer]

And how is this any different from the Coyotes now? Still no confirmed local buyers, only rumours of some guy paying $130 million or less with a sweeter sweetheart lease deal and operating losses covered by the NHL and a 2-year esacpe clause to the US market of his choice.

Well that is better than Winnipeg had back in 1995, they had NO buyer and NO rink.

And what do you mean by sweet-heart lease for the new buyer , is that not the exact same thing that Balsillie is trying to pull over the eyes of taxpayers in Hamilton?

 

[mnwildfan79]

And how is this any different from the Coyotes now? Still no confirmed local buyers, only rumours of some guy paying $130 million or less with a sweeter sweetheart lease deal and operating losses covered by the NHL and a 2-year esacpe clause to the US market of his choice.

Do you have a source that the NHL is going to cover operating losses? Even though you did say rumor, I haven't heard that rumored anywhere.

Also the escape clause is complete speculation, no credible source has reported that.

 

[TaketheCannoli]

And how is this any different from the Coyotes now? Still no confirmed local buyers, only rumours of some guy paying $130 million or less with a sweeter sweetheart lease deal and operating losses covered by the NHL and a 2-year esacpe clause to the US market of his choice.

All that is known is that some offer was about to be delivered to Moyes. The Judge determined it does not have to be submitted to the court prior to an auction, therefore only the people involved know the terms, not even Moyes because he failed to attend the meeting with Reinsdorf's representatives and the NHL to actually cover the letter of intent.

Why do you and other posters keep quoting the price and terms of an offer that was never made public. You know damn well this is just someone's guess. Until you can provide a link to the actual offer, please don't post a guess as fact.