• Which of these things is wrong?

    by  • March 17, 2009 • Uncategorized • 7 Comments

    I’m pretty sure that not all of these things can be true. It may well be that points 2 and 3, which involved my work, are incorrect, although I’m pretty sure I’ve done that properly. Explanations would be welcomed:

    1. David Shoalts is reporting the following:

    Paul Kelly, the executive director of the NHLPA, confirmed yesterday that the union estimates the league’s 700 players will have to give back about 13 per cent of this year’s salaries to the owners because revenues are not expected to match projections made at the beginning of the season. The payments will come out of the escrow money deducted from players’ salaries over the season.

    This will be the largest escrow payback since the system was introduced as part of the salary cap following the 2004-05 lockout. The only other time players had to give escrow money to the owners was following the 2006-07 season when they were assessed 2.5 per cent of their salaries.

    2. NHLscap.com currently estimates that the NHL is on pace to pay out about $1.597B in salary, before escrow. (I added up the numbers in the far right column).

    3. 13% of $1.597B in salary leaves the players share of revenues at $1.390B. By my math, a player’s share of $1.390B in revenue means NHL revenue somewhere around $2.471B in revenue, with the players getting 56.23% of it.

    4. NHL revenue was apparently $2.6B last year and, as of late December, expected to be $2.65B this year:

    After accounting for the Canadian dollar’s decline, league revenue is projected to rise to $2.65 billion during the 2008-09 season from $2.6 billion in 2007-08.

    “That’s a variable based on whether the projections hold and a variable based on what the Canadian dollar does,” Deputy Commissioner Bill Daly said last week. “It confirms what [NHL Commissioner] Gary [Bettman has] been saying, which is that at least for this year the economy doesn’t seem to have had a large impact on our expected revenue growth. That doesn’t mean it won’t take hold at some point during this season, or for next season.”

    If the projections held true, the floor and ceiling of the league’s salary cap probably would remain relatively flat during the offseason. Daly said he doesn’t expect the salary cap to increase or decrease by more than $1 million or $2 million, adding, “I don’t think the cap will change much if at all.”

    That’s far different than what the NHL Players’ Association expected. The union set player escrow fees at 13.5 percent of players’ salaries this season, the highest percentage set by the union since the current collective-bargaining agreement was instituted for the 2005-06 season.

    By my math, $2.65B in revenue would amount to a player’s share of about $1.525B in revenue.

    5. A month ago, Gary Bettman said the following:

    “This will be our fourth consecutive year of record revenue growth and, because our attendance historically increases month by month, 2008-09 also likely will be our fourth consecutive season of record attendance.

    The whole issue of benefits is a murky one and it’s never been entirely clear what they cost. Maybe that clears it up? As I recall, there’s a figure of something like $70MM in the CBA; even if that’s the number, I can still only push the league revenues to about $2.58B, which doesn’t seem to jive with Bettman’s statement about record revenue growth.


    7 Responses to Which of these things is wrong?

    1. March 17, 2009 at

      So, what you’re saying is that Bettman is lying?

      I’m shocked! Shocked!

      Actually I’d be really amazed if someone pointed out to me that he told the truth. When he says something my brain immediately processes the exact opposite as truth.

      Its like Pavlov’s Dog, my brain.

    2. mc79hockey
      March 17, 2009 at

      I’m not even sure he’s lying Pat. Maybe things have changed, maybe I’m screwing up the benefits number or the calculation. I’d be interested to know whether the dollar/cap hit this year is 1:1; maybe it’s more. That would probably explain it.

    3. March 17, 2009 at

      Isn’t there a difference between “hockey related revenue” which drives the salary/escrow calculations, and overall league revenue, which is what Bettman was referring to as the $2.65 billion figure?

    4. March 17, 2009 at

      Naw, I’m pretty sure he’s lying.

      Why start telling the truth now?

    5. Daoust
      March 18, 2009 at

      from your calcs, it looks like there’s about $135M in salary costs that are ‘missing’… $1.39B (13% of the total salary number you calculated on NHLscap) vs $1.525B (56.23% of 2.65B). $135M of $1.39B is about 9% of total salary, which wouldn’t be an outrageous number for benefit costs (based on what I’ve seen at my own job).

      either way, we’ll never know the exact ins and outs of this calculation. The NHLPA, on the other hand, likely receives a detailed accounting of it and wouldn’t allow Bettman to be loosey-goosey with his numbers.

    6. March 18, 2009 at

      Your numbers are probably correct. Some teams have seen attendance fall since those December projections. Ottawa for instance has had several games a couple thousand people short of a sell out (the previous couple years they have sold out nearly every game) plus they have had a number of 35% off promotions. Also, Playoff revenue could drop off as well if one or both of Montreal and the Rangers miss the playoffs or if Detroit or Philadelphia have early exits, both possible with their goaltending.

    7. March 18, 2009 at

      I’d be interested to know whether the dollar/cap hit this year is 1:1; maybe it’s more. That would probably explain it.

      Didn’t you already discuss in the Tom Gilbert’s contract post a while back how the dollar/cap ration is greater than 1:1? Those payroll numbers you added up to get to $1.597B appear to cap hits. Because of the prevelance of front loaded deals, actual dollar amounts are certainly higher. That has to be causing the discrepancy, no?

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