Development Money

[Purple Phart]

When OHL players get signed to NHL contracts, it's my understanding that the team who the player was drafted from, is paid a "development fee".
How does this work ?? In the case of traded players, is the development fee split between the 2 teams the player was a member of, or does the fee go to the team who had the player on their roster, at the time of the draft ? Are these fees pro-rated ? ( x number of bucks for a first round selection, and y number of bucks for a second rounder etc. )
Maybe my ignorance is showing, but why not pay these fees into a league-wide pool, with each team getting a fixed %, and those teams supplying more pick selections getting a weighted % of the pool, meaning the fees would be divided and the teams providing more selections get rewarded, but the other teams still getting a share of the pot ?
It would benefit some of the smaller market teams who struggle with getting revenues, since they do contribute toward development, by supplying competition.
I realize that the "have teams" might not find such a scenario too appealing, but sharing revenue and keeping the overall league strong, has to be a compelling arguement.

Your thoughts ??

 

[HockeyPops]

It makes sense and is fair to everyone, which is exactly why it will never fly.

 

[OMG67]

When OHL players get signed to NHL contracts, it's my understanding that the team who the player was drafted from, is paid a "development fee".
How does this work ?? In the case of traded players, is the development fee split between the 2 teams the player was a member of, or does the fee go to the team who had the player on their roster, at the time of the draft ? Are these fees pro-rated ? ( x number of bucks for a first round selection, and y number of bucks for a second rounder etc. )
Maybe my ignorance is showing, but why not pay these fees into a league-wide pool, with each team getting a fixed %, and those teams supplying more pick selections getting a weighted % of the pool, meaning the fees would be divided and the teams providing more selections get rewarded, but the other teams still getting a share of the pot ?
It would benefit some of the smaller market teams who struggle with getting revenues, since they do contribute toward development, by supplying competition.
I realize that the "have teams" might not find such a scenario too appealing, but sharing revenue and keeping the overall league strong, has to be a compelling arguement.

Your thoughts ??

Are you a closet Soviet?

 

[Purple Phart]

Are you a closet Soviet?

Nah, more like a twisted Republican.

 

[BadgerBruce]

When OHL players get signed to NHL contracts, it's my understanding that the team who the player was drafted from, is paid a "development fee".
How does this work ?? In the case of traded players, is the development fee split between the 2 teams the player was a member of, or does the fee go to the team who had the player on their roster, at the time of the draft ? Are these fees pro-rated ? ( x number of bucks for a first round selection, and y number of bucks for a second rounder etc. )
Maybe my ignorance is showing, but why not pay these fees into a league-wide pool, with each team getting a fixed %, and those teams supplying more pick selections getting a weighted % of the pool, meaning the fees would be divided and the teams providing more selections get rewarded, but the other teams still getting a share of the pot ?
It would benefit some of the smaller market teams who struggle with getting revenues, since they do contribute toward development, by supplying competition.
I realize that the "have teams" might not find such a scenario too appealing, but sharing revenue and keeping the overall league strong, has to be a compelling arguement.

Your thoughts ??

The system you are describing already more or less exists.

The current NHL-CHL Agreement sees approximately $12 million per year transferred to the CHL in development money.

This means approximately $4 million makes it to the 20-team OHL. Finding out exactly how this money is distributed by the league is the hard part — in theory, every CHL team “should” get around $200K per year, but each of the three leagues independently decides how to disperse the bucks, and there’s no public disclosure.

 

[OMG67]

Nah, more like a twisted Republican.

LOL. I get you. Your idea, to be honest, is good. The league develops the players. The teams just guide them. When draft pick status is what determines the fee structure, it doesn‘t mean the teams actually develop the players. They are drafted when they are young. They then spend two more years in the league. The calibre of play in the league itself should get the credit more than the team Unless they find different metrics to measure the compensation.

A first round pick may stagnate on a bad team but that team still gets the money as if they developed a player. Meanwhile a team could have a 5th round pick develop into a WJHC player and go on to a great pro career and that team gets less.

To me, give the money to the league and let the league distribute it. Or use it for their expenses and eliminate the annual fees the teams pay the league.

 

[LDN]

Perhaps the development money is paid ahead to the players ? Like an unofficial signing bonus?

 

[OMG67]

Perhaps the development money is paid ahead to the players ? Like an unofficial signing bonus?

The players would love that but that’s not the case. Teams need that money as part of their revenue stream.

 

[LDN]

The players would love that but that’s not the case. Teams need that money as part of their revenue stream.

What do teams gross yearly?

 

[OMG67]

What do teams gross yearly?

The value is dependent on the round. I’m not sure what the structure is. I’d like to say I know what O am talking about in this regard but I only know that teams get money and it is based on the round. I’ve heard some amounts for individual players but those amounts have varies quite a bit so I wouldn’t want to repeat them without truly know for a fact.

 

[LDN]

The value is dependent on the round. I’m not sure what the structure is. I’d like to say I know what O am talking about in this regard but I only know that teams get money and it is based on the round. I’ve heard some amounts for individual players but those amounts have varies quite a bit so I wouldn’t want to repeat them without truly know for a fact.

So if a team has no one drafted they do not generate that additional income? So that is an extra incentive to try to get your players drafted

 

[OMG67]

So if a team has no one drafted they do not generate that additional income? So that is an extra incentive to try to get your players drafted

I think at the end of the day, the development money is important but I wouldn’t be able to say where it lies on the priority scale for focus. It is an added bonus but it still wouldn’t compare to ticket sales as a priority.

For example, a team may focus on winning because winning helps ticket sales. A lot of players that are indeafted make that happen. A high first round pick may get you paid more in development money but if that player leaves early then it hurts the competitiveness of the team.

I expect there is some sort of balance the teams work with.

 

[rangersblues]

I'm shocked that we can't find out how this works. The OHL is usually so transparent

 

[SSMHoundsFan]

So if a team has no one drafted they do not generate that additional income? So that is an extra incentive to try to get your players drafted

I can't forsee that as being a thing as it then puts a financial strain on the players to play better to make their bosses more money when they themselves don't see any of that money unless there's some shady backroom dealings we aren't seeing

 

[BadgerBruce]

I can't forsee that as being a thing as it then puts a financial strain on the players to play better to make their bosses more money when they themselves don't see any of that money unless there's some shady backroom dealings we aren't seeing

I tried to figure it all out a few years back when Ronald Smith conducted a forensic accounting examination of the whole CHL (3 leagues, all 60 teams). Smith had the 2016 financials. It was Impossible to tease out the development money on a team-by-team basis. The CHL books showed how much money they forwarded to the individual leagues, and 2 of the 3 leagues reported how much they gave to the teams, but as a lump amount, not broken down team-by-team. When I looked at the disclosures by each team, there was no way to tell how much money they’d received in development money because most used catch-all labels (“Other Income” or “Additional Revenues”) without any specificity.

As an aside, the best one was Barrie. The Colts’ entire 2016 financials consisted of “$895,000 from Horsepower Sports and Entertainment Group Inc. to Barrie Colts Hockey Club.” In other words, the holding company got every red cent from every source and then gave the Colts $895K to operate for a fiscal year. And that’s the entirety of the filing.

I’d hoped for more transparency from the publicly owned teams (Kitchener, Peterborough, a couple in the WHL), but nope. Still impossible to tease out the NHL coin.

At one time, today’s “NHL-CHL Agreement” was the “NHL-CAHA Agreement.” This is from the days when major junior hockey was governed by the CAHA (later Hockey Canada). All the NHL money went to the governing body and it decided what to do with it. This basic system still exists in the States, where the NHL sends development money directly to USA Hockey, and that governing body decides how to distribute it (they won’t reveal the details either).

 

[OMG67]

I tried to figure it all out a few years back when Ronald Smith conducted a forensic accounting examination of the whole CHL (3 leagues, all 60 teams). Smith had the 2016 financials. It was Impossible to tease out the development money on a team-by-team basis. The CHL books showed how much money they forwarded to the individual leagues, and 2 of the 3 leagues reported how much they gave to the teams, but as a lump amount, not broken down team-by-team. When I looked at the disclosures by each team, there was no way to tell how much money they’d received in development money because most used catch-all labels (“Other Income” or “Additional Revenues”) without any specificity.

As an aside, the best one was Barrie. The Colts’ entire 2016 financials consisted of “$895,000 from Horsepower Sports and Entertainment Group Inc. to Barrie Colts Hockey Club.” In other words, the holding company got every red cent from every source and then gave the Colts $895K to operate for a fiscal year. And that’s the entirety of the filing.

I’d hoped for more transparency from the publicly owned teams (Kitchener, Peterborough, a couple in the WHL), but nope. Still impossible to tease out the NHL coin.

At one time, today’s “NHL-CHL Agreement” was the “NHL-CAHA Agreement.” This is from the days when major junior hockey was governed by the CAHA (later Hockey Canada). All the NHL money went to the governing body and it decided what to do with it. This basic system still exists in the States, where the NHL sends development money directly to USA Hockey, and that governing body decides how to distribute it (they won’t reveal the details either).

Then maybe the development money does go to the league and the league disperses it?

In the end, it would make some sense that the league itself gets the $$$, uses it to cover league expenses with the residue expenses being covered by the member teams. It could even go to the CHL and not the member leagues directly.

That does conflict with my understanding of “how” it works but if you can’t even deduce it then my understanding is probably based on someone else’s conjecture….

 

[Otto]

Weighing the pros and cons of changing the NHL-CHL player development agreement - The Win Column

In normal times, Connor Zary never would’ve had a chance to start the 2020–21 season playing in the American Hockey League. Of course, everything changed when the Western Hockey League opted to push back the starting date of its schedule in compliance with recommendations from governing health...

thewincolumn.ca

"Teams are also required to pay $60,000 for skaters and $75,000 for goaltenders who are eligible to return to junior but remain in the NHL."

 

[OMG67]

Weighing the pros and cons of changing the NHL-CHL player development agreement - The Win Column

In normal times, Connor Zary never would’ve had a chance to start the 2020–21 season playing in the American Hockey League. Of course, everything changed when the Western Hockey League opted to push back the starting date of its schedule in compliance with recommendations from governing health...

thewincolumn.ca

"Teams are also required to pay $60,000 for skaters and $75,000 for goaltenders who are eligible to return to junior but remain in the NHL."

Interesting but that is $$$ teams get paid for rostering their players early.

It would be cool to know what they get paid to develop the players and whether it is based on draft position etc. I’m assuming that could be the GRANT that the agreement allows for that goes to the CHL at $12.6mil in 2019-2020. The trail end of that season was cancelled so maybe the NHL kicked in a little bump for them.