Read the next couple sentences:
"misleads investors by either falsely suggesting that profits are derived from legitimate business activities (whereas the business activities are non-existent), or by exaggerating the extent and profitability of the legitimate business activities,"
You are simply utterly wrong about what a Ponzi scheme is and how it works. Having expansion fees paid to incumbents does not a ponzi scheme make, such structures are extremely common in legitimate business. A fast food franchising model, for example. It's only a ponzi scheme when those fees are the primary or only source of revenue and the legitimate business model can't sustain the business without continual expansion. That is simply not even remotely close to the case with the NHL. You're not the one sane voice saying the emperor has no clothes, you're the guy ranting to thin air on the subway.
Fast food franchises pay
to the corporate headquarters, not to all of the other McDonalds owners in the area. They do pay some up front licensing fees, but they pay costs throughout the life of the franchise. And if McDonalds started charging $50m for each restaurant which was then divvied up between all the local franchise owners to encourage them to accept more franchises, that absolutely would be a Ponzi Scheme. The NHL isn't pocketing the money from expansion, they're cutting checks for each of the teams in the league. Ponzi Scheme 101, and while your example of franchise fast food is quite clearly wrong, it very nicely illustrates the difference between legitimate and illegitimate.
I believe the league expanded to Vegas in good faith and splitting the money between the existent teams was a valid enough measure of profit sharing. Adding the 33rd and 34th teams less than 10 years later is the Ponzi Scheme taking over.
by exaggerating the extent and profitability of the legitimate business activities,"
They're charging a billion dollars to join the club. You know how long it's going to take any of these teams to make enough profit that it's worth a billion dollars today? Long enough that it's not a good investment. There's no big TV deal on the horizon, it's going to take decades of gate revenues and $20 beers for these franchises to scrape the profit together that's worth anywhere near the billion dollars of their buy-in. A seat at the NHL table is not worth a billion dollars, the profitability is absolutely being exaggerated because those fees are driven by franchise values, which are already being driven up by expansion. It's a self-feeding cycle, expansion causes franchise values to rise, which causes expansion fees to go up, which causes franchise values to rise, etc.
The part about legitimate activities being non existent, the part that you've been hammering away at,
is an OR.
"misleads investors by either falsely suggesting that profits are derived from legitimate business activities (whereas the business activities are non-existent),
or by exaggerating the extent and profitability of the legitimate business activities,"
There is a legitimate and profitable hockey league, but everything in their financial big picture has gone absolutely squirrely since they started factoring expansion checks into their franchise values.
You're not the one sane voice saying the emperor has no clothes, you're the guy ranting to thin air on the subway.
Cool ad hominem. I never claimed to be sane, but the more we talk, the more I'm sure that I am actually the one who knows what a Ponzi Scheme is.
