2012 CBA Negotiations Thread

[bustaheims]

That just fails on the face of it. Ask yourself a simple question. If Pittsburgh is losing money on a year to year basis, why would their franchise value increase? Do values of things typically increase when they lose money or decrease? You say that Pittsburgh's value is increasing because of "leaguewide revenues" but why would that impact a team's individual value if they're not turning a profit? Are investors more likely to buy the Penguins because the Maple Leafs are generating value?

Because franchise values are based on a number of factors, with league-wide revenue being one of them. Things like the value of the brand, goodwill, on-ice success etc, all factor into team valuations. The Penguins, for example, get a lot of value out of having two of the premier players in the world wearing their logo. Thanks to Crosby and Malkin, they have a very high visibility level, which increases the value of their brand.

Give your head a shake. You're arguing that the value of the property increasing dramatically doesn't play a role in it's strength as an investment.

According to Forbes, teams have been sold for less than they're being valued at, so, really, how much do these values really impact the various clubs' values as investments? I'm not saying it doesn't play a role, just that that role is negligible - especially in terms of CBA negotiations.

 

[Kin]

Because franchise values are based on a number of factors, with league-wide revenue being one of them. Things like the value of the brand, goodwill, on-ice success etc, all factor into team valuations. The Penguins, for example, get a lot of value out of having two of the premier players in the world wearing their logo. Thanks to Crosby and Malkin, they have a very high visibility level, which increases the value of their brand.

Yes, but that only positively increases a team's value in terms of how much money they can be sold for. It's not like Forbes' value estimates is like trying to gauge ephemeral, spiritual values. This is actually dollars and cents stuff.

 

[bustaheims]

Yes, but that only positively increases a team's value in terms of how much money they can be sold for. It's not like Forbes' value estimates is like trying to gauge ephemeral, spiritual values. This is actually dollars and cents stuff.

I'm not saying it's not, though, in a number of cases, it's an estimated monetary value attached to non-monetary influences. I'm saying that these numbers have no relevance in a CBA negotiation, as the relevant factors in how these numbers are determined have already been heavily discussed in the negotiations.

 

[Rebel_1812]

Maybe this is too simplistic but when I see someone claim they're not profiting, yet what they own is increasing in value substantially as a result of their business, I have a time accepting that as an outright hardship when, if what you say is true, the increase in revenue has had a direct impact on the value of the individual teams and the league.

I know there's more to the whole picture but it seems worthy of some consideration generally and, from the players pov, something that would give me pause before swallowing a paycut and a loss of contractual power.

Well, you have to remember the crux of the issue for both sides is their individual bottom lines, and team valuations don't help there. They don't increase revenue and they don't decrease expenses. As Nik showed with his Pittsburgh example, team valuations don't necessary rise in line with profitability.

Well no.  If you define capital gains as part of HRR, then it does add to revenue.  It certainly adds the the owners take home. 

 

[bustaheims]

Well no.  If you define capital gains as part of HRR, then it does add to revenue.  It certainly adds the the owners take home.

An increase in estimated value is not considered to be a capital gain. Capital gains only include real dollars, not theoretical dollars. So, capital gains would only exist when the team is sold, in which case, only the now former owners see any of it, and it does nothing to increase the league's revenue or the revenue of the current team owners.

 

[Rebel_1812]

Well no.  If you define capital gains as part of HRR, then it does add to revenue.  It certainly adds the the owners take home.

An increase in estimated value is not considered to be a capital gain. Capital gains only include real dollars, not theoretical dollars. So, capital gains would only exist when the team is sold, in which case, only the now former owners see any of it, and it does nothing to increase the league's revenue or the revenue of the current team owners.

So when a team is sold the revenue from the capital gain of the sale should be included in the next years cap.  It is easy to put into a CBA considering taxes are paid on this.

 

[Chev-boyar-sky]

Well no.  If you define capital gains as part of HRR, then it does add to revenue.  It certainly adds the the owners take home.

An increase in estimated value is not considered to be a capital gain. Capital gains only include real dollars, not theoretical dollars. So, capital gains would only exist when the team is sold, in which case, only the now former owners see any of it, and it does nothing to increase the league's revenue or the revenue of the current team owners.

So when a team is sold the revenue from the capital gain of the sale should be included in the next years cap.  It is easy to put into a CBA considering taxes are paid on this.

What's separating the two sides again? 750M or something like that.

The sale of the Leafs would be roughly exactly that amount.

 

[bustaheims]

So when a team is sold the revenue from the capital gain of the sale should be included in the next years cap.  It is easy to put into a CBA considering taxes are paid on this.

Why? Neither the league or the resulting group of owners see a penny of those gains. You're asking the league to give players money that was gained by someone who is no longer involved.

 

[OldTimeHockey]

So when a team is sold the revenue from the capital gain of the sale should be included in the next years cap.  It is easy to put into a CBA considering taxes are paid on this.

Why? Neither the league or the resulting group of owners see a penny of those gains. You're asking the league to give players money that was gained by someone who is no longer involved.

Do we view the Atlanta sale and movement part of HRR?

 

[bustaheims]

Do we view the Atlanta sale and movement part of HRR?

No. Teams being sold are not included as HRR, because the revenue generated by a sale does not go to the league or the resulting group of owners. It goes to a (now) outside entity.

 

[Kin]

No. Teams being sold are not included as HRR, because the revenue generated by a sale does not go to the league or the resulting group of owners. It goes to a (now) outside entity.

But I think the relatively valid point being made is that the players are contributing to the increase in value of these properties, which is a large reason why someone might have for buying into the league, and not seeing any of those monies.

 

[bustaheims]

But I think the relatively valid point being made is that the players are contributing to the increase in value of these properties, which is a large reason why someone might have for buying into the league, and not seeing any of those monies.

Sure, but neither are the resulting owners, since they are the ones paying those monies, quite frankly, the players are being paid quite handsomely for their role in increasing the value of these assets. Taking away any significant portion of profits that can be made from the sale of a team would essentially eliminate the only real financial incentive to own the majority of the league's teams in the first place. If I'm going to spend close to $200M to buy something that's barely making a profit or running at a loss, why would I do so if I don't get the full benefits of any profit that can be made by selling it? No matter how much someone may love the game, there has to be some potential financial incentive there for them to make that kind of financial commitment.

 

[Kin]

No matter how much someone may love the game, there has to be some potential financial incentive there for them to make that kind of financial commitment.

But that's all that people are trying to say. That financial incentive exists so we can't simply look at owning a team entirely from the perspective of the yearly operating income. That's a factor in why someone would own a team even if they're experiencing relatively insignificant losses from year to year and, because it exists, it certainly doesn't make running the Penguins an "act of charity" as some are keen to describe it.

 

[Bates]

But not all teams get sold so the value of the team is not relevent.  My house value went up 50% in last few years but that puts zero dollars in my bank account.  I need somewhere to live so I can't really use that money.

 

[Kin]

But not all teams get sold so the value of the team is not relevent.  My house value went up 50% in last few years but that puts zero dollars in my bank account.  I need somewhere to live so I can't really use that money.

All of which highlights some of the many differences between a house and a hockey franchise.

 

[bustaheims]

But that's all that people are trying to say. That financial incentive exists so we can't simply look at owning a team entirely from the perspective of the yearly operating income. That's a factor in why someone would own a team even if they're experiencing relatively insignificant losses from year to year and, because it exists, it certainly doesn't make running the Penguins an "act of charity" as some are keen to describe it.

Yes, but, what's being proposed here reduces that incentive (possibly - or in the case of a number of teams, likely - to the point where it's no longer enough incentive to purchase a team), and either results in half the profits from a now non-NHL owner going to the players or in owners paying out money to the players that they've already paid to acquire the team. The league does not earn any revenue from the sale of a team or from an increase in the valuation of a team.

 

[Kin]

The league does not earn any revenue from the sale of a team or from an increase in the valuation of a team.

I'm not disagreeing. I'm saying it has to be included when considering the financial realities of the league. No more, no less.

 

[bustaheims]

I'm not disagreeing. I'm saying it has to be included when considering the financial realities of the league. No more, no less.

I suppose, though, as far as I'm concerned, it's something that would rank below things like revenue, expenses, profits, growth, sustainability, etc., and it's certainly not something that should be included as part of HRR.

 

[Kin]

I suppose, though, as far as I'm concerned, it's something that would rank below things like revenue, expenses, profits, growth, sustainability, etc., and it's certainly not something that should be included as part of HRR.

Well, my argument wouldn't so much be that it should be above those things but rather that it factors into some of the things you mention.

As the Gladwell articles I link to argue, if we're going to look at these teams as businesses then when arguing what a "fair" share is for the employees we have to take a pretty broad view of the realities of what they're actually worth, in every sense of the word, to the people who own them.

 

[Chev-boyar-sky]

But that's all that people are trying to say. That financial incentive exists so we can't simply look at owning a team entirely from the perspective of the yearly operating income. That's a factor in why someone would own a team even if they're experiencing relatively insignificant losses from year to year and, because it exists, it certainly doesn't make running the Penguins an "act of charity" as some are keen to describe it.

Yes, but, what's being proposed here reduces that incentive (possibly - or in the case of a number of teams, likely - to the point where it's no longer enough incentive to purchase a team), and either results in half the profits from a now non-NHL owner going to the players or in owners paying out money to the players that they've already paid to acquire the team. The league does not earn any revenue from the sale of a team or from an increase in the valuation of a team.

I was under the impression that there's a pretty large fee for re-location or a new franchise that goes directly and exclusively to the owners and not the players.