don't disagree with that but what are you basing the assumption on that the cap is now going to go up every year? because the cap went up this year? the revenue bump from 30 teams to 31 teams was a one time thing. is the canadian dollar going to suddenly recover?
I hope you are right, i'm just not sure i see it as such a sure thing
No question about it. The underlying revenue of the NHL has grown steadily every season so far, despite some very harsh times. It’s the nature of a business like the NHL, it will grow steadily until fundamental changes occur.
More importantly, there are currently some built in cushions:
* 1/3 of the income comes from Canada, roughly. If the loonie drops 15% it translates to a 1/3 if that in terms of negative impact on the total NHL income, ie everything else equal the cap would shrink 5%.
The loonie is very low. Currencies always fluctuate, up and down, up and down. When it’s low, it’s like doping on the economy and it benefits the export industry tremendously. For the last years the loonie has constantly had a negative pressure on the cap. It is now so low that no drop can have a significant pressure on the cap. And strengthening of the loonie is on the horizon, whether it’s in 1 or 10 years is hard to know, but it will and has always fluctuated.
This means that the cap will no longer be heavily pressured by a crashing loonie and that a big upward push is coming.
* The CBA includes an inflator of which the cap is increased 5% year to year at the option of the PA.
In summary, the PA has more or less used it every year until the last years under which they have reduced the inflator to close to a percent. Everything else equal if the inflator is used Y1 and not Y2, the cap goes — down — 5% Y2.
This decrease is already in the bank. The underlying growth has been so strong that they have been able to stop using it without a decrease of the cap. If the NHL for the first time does not har underlying growth any of the coming years — they would surely use the inflator.
* Another expansion team is coming. It’s surely expected to generate more than average revenues the first years at least. And you of course have many scale effects which will positively impact revenue/team.
In short, the underlying growth the last years have been much bigger than 5%. That will not stop the coming years. There are no external factors that will have a direct negative impact on the cap any more (like he loonie or the stop of the use of the inflator). If the inflator was used this year (like so many years in the past), the cap would have been 84m.
I think everything points at a higher growth than 5% on average over the coming 4-5 years. With negative unforeseen events, it could be a low as 5%. There is absolutely nothing pointing at the cap stop going up the coming 4-5 years.
In 98’ HRR was 1.3bn.
This is the progression from 05:’: