• If the carrot doesn’t work, break out the stick

    by Tyler Dellow • September 19, 2010 • Uncategorized • 26 Comments

    Something in John Shannon’s latest at Sportsnet has started me thinking:

    One small business note that might be worth following this season: Both the Versus contract and the NBC TV deals expire at the end of the season. The message at last week’s board of governors meeting was positive.

    The commissioner told the board that there is a tremendous amount of optimism that revenues from new national TV deals in the U.S. can mirror that of Canada. At present, Canadian TV deals account for between $30- $40 million dollars more in rights fees than the US. I don’t know if the impending merger between Versus and NBC will help or hurt the negotiations, but I can tell you that participation in the Sochi Olympics will play a key role in deciding the length of the contract.

    I’ve long thought that it was somewhat incorrect not to account for the contribution made by small market Canadian teams to the national Canadian TV contracts in talking about how much revenue those teams generate. While I suspect that the bulk of the value of the Canadian TV contract comes from CBC’s rights to Leafs games, teams like the Oilers obviously generate some marginal value. The pricing presumably includes the possibility of a Canadian team going deep in the playoffs, something that increases with the number of Canadian teams involved. The late game on CBC has a huge audience, even if it’s significantly smaller than the Leafs’ audience earlier.

    The Canadian national TV money is, of course, shared amongst all thirty NHL teams in the United States. Everyone in Winnipeg who watches Hockey Night in Canada, everyone in Quebec City who watches Soiree du Hockey, they’re helping to fund the operation of the Colorado Avalanche and the Phoenix Coyotes. Assume, for the sake of discussion, that there’s $120MM in Canadian TV money and $80MM in US TV money. If Canadian national TV money – essentially, the monetization of our interest in the game – was shared equally amongst Canadian teams, with American TV money being shared equally amongst American teams, you’d see the Canadian teams getting $20MM annually in national TV rights money and the American teams getting $3.33MM. There’s a vast interest in hockey here that funds hockey in the United States.

    In Canada, by and large, we don’t really believe in the funding of professional sport through free stadiums. We certainly don’t believe in it to the extent that our neighours do. Unfortunately, because we follow an NHL that straddles the border, we are, in effect, competing with American cities for professional sports teams in general, and for American teams specifically.

    Governments in Canada are still struggling with how best to respond to this. Quebec and Winnipeg left for the United States after they were unable to generate enough in the way of revenue in Canada. What’s frustrating is that this isn’t really a fair competition. These teams are lured away (and new expansion teams go to the United States) in part to play in facilities that American cities and states have foolishly decided to fund.

    It became anathema to talk about funding professional sport in Canada after John Manley was forced to withdraw a plan to January of 2000 that would have seen money handed over to Canadian NHL teams after widespead public criticism. There have been recent signs of a thaw, as City Council in Edmonton is (insanely) considering handing the Oilers hundreds of millions of dollars for a new arena and Stephen Harper is considering providing federal funds for a new arena in Quebec City – the province and city are already on board there – just for a whisper of a hope that a new team will come back to Quebec.

    It is, I think, beyond dispute that part of the reason that the NHL is such a wealthy league is because of the public subsidies that the league gets, mostly south of the border. Outside of New York, it looks like the public has played a role in financing every single NHL arena in America. This alters the economy of the league, in that you can presumably sell a nicer experience for more money, making it more difficult and less economically sensible to put a team in a place like Winnipeg or Quebec.

    While I’m of the view that Winnipeg and Quebec City would have a hard time generating enough money to compete in the NHL right now, I don’t necessarily think that they would be in a contest that wasn’t rigged with public dollars. I have a hard time believing that there are more hockey dollars in places like Carolina or Phoenix than there are in Winnipeg, although there may be more dollars for hockey + an opportunity to entertain clients.

    When Edmonton talks about funding an arena for the Oilers or when Stephen Harper muses about contributing to the funding of an arena in Quebec, what they’re really asking is this: how can we incent an NHL team to locate in Edmonton or Quebec? To date, the terms of the discussion in Canada have all been in positive terms – what can we give the NHL to come here? What carrot can we dangle?

    It strikes me, however, that we don’t just have to use carrots. Sticks are an option as well. There are two major sources of NHL revenue from Canada that are shared leaguewide – TV rights money, as I’ve referred to above, and the sale of league branded merchandise. While I don’t know what percentage of league branded merchandise sales are made in Canada, I’m pretty confident in guessing that it’s substantially more than 20%. It looks like Canada accounts for something like 65-70% of national TV revenues.

    The stick that’s available to governments is heavy taxation of these streams of revenue in order to either provide the kinds of subsidy that American teams do in the forms of stadiums and such for teams to locate here or, in the case of TV rights, by establishing a cap on the amount that the NHL could earn in national TV revenue per team located in Canada, to provide some incentive for more teams to be located here.

    For example, it would be hard to say that it would be inequitable for Canada to announce a formula whereby the sale of national TV rights in Canada will be taxed at a rate that results in the league netting the same amount, per team in Canada, that it generates from the sale of national TV rights in the United States. So, if they earn $3.33MM per team in the United States, you would want to leave them with $19.98MM from the $120MM in TV rights money that they generate in Canada, so the tax rate for 2010-11 would be 83.3%. That would leave you with a pot of money worth $100.02MM, which could then be redistributed to NHL teams in Canada, building stadia, whatever you want. Heck, the money could simply go into an NHL infrastructure fund – come to Canada and you’ll get a free arena. The Winnipeg, Hamilton and Quebec markets would probably look a lot more attractive in those circumstances. If you wanted to, you could come up with some similar scheme to apply to the sale of merchandise.

    The NHL acts as any business would, chasing the money that is available to it. As interest in the NHL is most substantial in Canada and free money from stupid governments is most available in the United States, we’ve ended up in a situation in which Canadians are effectively funding NHL hockey throughout the United States because that’s how the league maximizes revenues. I don’t blame the NHL for doing this but our governments have let them do it. The solution is not, I think, in handing over public money to them but in saying to the league that, they’re having decided to chase public dollars, we’re getting into the game. And we’re going to find the dollars to do so by confiscating a lot of the money that Canadians are already spending to have teams in Florida, Georgia and Arizona and redistributing it to teams in Canada. I’m a bit of a jerk, so if I was Stephen Harper, I’d do this by inviting Bettman to a ceremony at which I announce a major Canadian commitment to funding for the NHL, without telling him where the funding is coming from. You can probably do it without that though.

    I don’t usually think that giving public money to private organizations is defensible but this is a unique case. The interest in NHL hockey in Canada is certainly here. We’ve let an American run NHL cash in on our interest in our interest in hockey while they simultaneously cash in on the willingness of American governments to give them money, somethat that Canadians aren’t historically willing to do. This does not have to be the case and it is, in my mind, entirely justifiable for the Canadian government to fight back against the American willingness to do this in this way.

    About Tyler Dellow

    26 Responses to If the carrot doesn’t work, break out the stick

    1. September 19, 2010 at

      An interesting and original take on the situation.

      FWIW: La Soirée du Hockey doesn’t exists anymore. The clowns at the helm of the Société Radio-Canada decided it really wasn’t part of their mandate to have sports on the air back in 2004 or so.

      CTV, through RDS (the french version of TSN who owns the rights to the Canadiens and also is the sole french broadcasts source for other NHL games), has been laughing at them from a mountain made of a pile of cash ever since.

      Also, Quebecor, the prospective owner for an eventual Quebec city franchise, already owns a licence for a competing all-sports french network. The hockey team obviously is meant to be the big revenue-driver.

    2. DSF
      September 19, 2010 at

      First of all Tyler, I expect your taxation concept would likely run afoul of the North American Free Trade agreement in that it could be argued it is a subsidy to Canadian teams. A counter argument is that local governments in the United States are also subsidizing American teams but I expect a tribunal would find that direct involvement by a national government in expropriating and redistributing revenue from a private

      It would also result in a severe contraction of the NHL since many U.S. teams are already marginal at best and the loss of any revenue streams would be fatal.

      If that is your goal, then I think you’re on the right rack but strangling the goose won’t get many stadia built in Canada.

      Why not cut right to the chase and create a Canadian Hockey League and let the economic cripples die on the vine.

      Back to the Future.

      The issue in small market Canada is that the dollars don’t exist to purchase an NHL team and, at the same time, build an arena to house the team.

      It works In Toronto because of the massive revenue stream and almost works in Vancouver and Montreal but Ottawa, Calgary and Edmonton are not economically viable under your model.

      BTW, the $100M you suggest be distributed annually works out to $12.5 million if you have 8 teams. Wouldn’t even be enough to pay half the annual interest on a $400 million arena.

      If you’re in favour of the broadcasting dollars being generated by teams flowing equitably back to those teams, why wouldn’t Toronto, Montreal and Vancouver also demand the same leaving the other three Canadians teams in the lurch?

      Be careful what you wish for.

    3. Woodguy
      September 19, 2010 at

      I was expecting a line about the added hilarity that a significant part of those revenues come from a Canadian government run/subsidized company. NHL hockey actually makes money for CBC, but you cannot lose sight of the billions in tax revenue that have been poured into that “company”.

      What portion of the Canadian NHL TV revenue comes from the CBC?

      Perhaps part of the stick could be the overt threat of removing hockey from CBC and therefore drastically lowering the competition for the broadcast rights, which would result in lower revenues for the NHL.

      Mind you, if Harper wins a majority, the CBC might be chopped entirely.

    4. mclea
      September 19, 2010 at

      Last week you were fantasizing about a world where public subsidies were completely eliminated from the NHL and every market would be left to stand on its own merits.

      Now you’re envisioning a world where the Canadian government sets up an elaborate wealth re-distribution fund which is financed through what can only be called expropriation, and has the stated objective of subsidizing NHL teams in markets where they’d otherwise be uneconomical.

      You’re sort of all over the map on this.

    5. Tyler Dellow
      September 19, 2010 at

      First of all Tyler, I expect your taxation concept would likely run afoul of the North American Free Trade agreement in that it could be argued it is a subsidy to Canadian teams. A counter argument is that local governments in the United States are also subsidizing American teams but I expect a tribunal would find that direct involvement by a national government in expropriating and redistributing revenue from a private

      With all due respect DSF, is this a considered legal analysis or are you just pulling things out of your ass? Do you have any basis for your theory that state subsidies are OK but national ones aren’t? If it’s right – and I strongly suspect you’re just blowing smoke – then good news – provinces control commerce. They can do this without the feds.

      It would also result in a severe contraction of the NHL since many U.S. teams are already marginal at best and the loss of any revenue streams would be fatal.

      It’d cost them about $3.5MM a year. Spend a bit less on players.

      BTW, the $100M you suggest be distributed annually works out to $12.5 million if you have 8 teams. Wouldn’t even be enough to pay half the annual interest on a $400 million arena.

      I’m not convinced an arena needs to cost $400MM.

      If you’re in favour of the broadcasting dollars being generated by teams flowing equitably back to those teams, why wouldn’t Toronto, Montreal and Vancouver also demand the same leaving the other three Canadians teams in the lurch?

      The problem that Toronto, Montreal and Vancouver have is that they can’t have a national TV contract without the consent of the teams in Alberta and Ottawa. The six of them can without the consent of American teams.

    6. Tyler Dellow
      September 19, 2010 at

      Now you’re envisioning a world where the Canadian government sets up an elaborate wealth re-distribution fund which is financed through what can only be called expropriation, and has the stated objective of subsidizing NHL teams in markets where they’d otherwise be uneconomical.

      You’re sort of all over the map on this.

      I’m not convinced that Winnipeg and Quebec are uneconomical in a world in which the Americans don’t build hockey stadiums for people. My suggestion last week is unrealistic. This could actually be done and presumably sold to politicians.

      “Hello, I have an idea that would be revenue neutral and immensely popular. Are you interested in this?”

    7. Tyler Dellow
      September 19, 2010 at

      Also – mclea – thanks for that lengthy comment in the Quebec post. Fascinating stuff.

      I’d be interested to know if it’s possible to build an NHL facility that’s economical. The London Knights built a rink for $52MM in 2002, including the land. I’m not sure why it costs an extra $400MM to add 8K seats.

    8. Tach
      September 19, 2010 at

      On the NAFTA question, the overriding question of whether a particular government measure is offiside is the question of national treatment. Ie – is the Canadian government giving differential treatment to a product created in Canada to a product imported into Canada.

      That being said, there are a plethora of exceptions and distinctions that can be applied, and one area where they are applied with some regularity. I would think that there is at least an equal likelihood that Tyler’s proposal is found in breach as it slides by.

      From a more practical perspective, I question where the Gov’t scoops the money from. I imagine the CBC and TSN contracts get paid to the league office. So the government would essentially have to enact a tax specifically on those payments and have them withheld by the CBC and TSN. Also, I don’t think the RDS Canadiens contract would fall under this measure would it? I think that is a Canadiens contract and would be in the same vein as the Sportsnet agreements with Calgary, Edmonton, Vancouver.

      That being said, why not try and cut off the revenue sharing end of things too by taxing revenue received from pro hockey sporting revenues generally, and then creating a “Canadian Pro Hockey fund” which returns it back to pro hockey teams in Canada more generally.

      If the goal is to “level the playing field” between Canada and the US teams, why stop at just TV dollars? Put the tax on all stuff to keep Canadian revenues out of the NHL general coffers and promote more teams in Canada.

    9. Tyler Dellow
      September 19, 2010 at

      Tach -

      I’m with you on that generally, I just don’t know how much the merchandising is worth so I don’t have any hard numbers to throw out. The debate to present has been, in effect, about whether we need to make the revenue pool bigger in Canada through the source of non-market dollars. I’m of the view that there’s more than enough market generated dollars, they’re just going south. As long as the NHL’s policy is to basically say to hell with Canada and use our money to subsidize American teams, I’m not sure what case there is against doing this.

      The indisputable fact seems to me to be that NHL hockey generates an awful lot of money in Canada. It only goes to subsidize American teams rather than Canadian ones because we let it do so.

    10. Tach
      September 19, 2010 at

      I am not just talking about merchandising, I am talking about ticket revenues, food and beverage, local TV revenues – the whole nine yards. If the government puts that kind of a measure in before the next CBA lets see how long revenue sharing lasts without a deduction for the new “Canadian Hockey Tax”. Without the Canadian teams contributing to revenue sharing, and with a portion of that money going to fund new Canadian pro teams through funding arenas or some other method of subsidy, I don’t see the Nashville’s or Phoenix’s lasting too long as a line up of Canadian owners with arenas or arena guarantees start bidding on teams.

    11. Tyler Dellow
      September 19, 2010 at

      Hmm, that’s an interesting idea, although it hobbles the Canadian teams in the short term.

      The main point is, I think, indisputable though – the Canadian government is not without options to start putting some heat on the NHL.

    12. Adam D
      September 19, 2010 at

      But why would the existing teams try to pressure the NHL to move teams to Canada? Especially with this new revenue sharing scheme where money stays within Canada, wouldn’t it be in the interest of the larger markets to limit the number of parties sharing their revenues?

    13. September 19, 2010 at

      This is one of the most interesting ideas I’ve heard in a while. Great post, Tyler.

      The CBC money goes into HRR, which goes into revenue sharing, right? So you’re probably talking more than 3.5M for each small market team, and probably no difference for larger US teams that pay into revenue sharing. So maybe you’re talking probably more like 5-10M into several bottom revenue teams, which is enough to start adversely impacting their operation. Realistically, you’re talking about cutting out their legs and then pointing to free Canadian money. I don’t have a problem with that, but I think its worth keeping in mind that the effect is probably greater than the 3.5M you’re mentioning.

    14. Tyler Dellow
      September 19, 2010 at

      It depends on how the revenue is shared. Right now, no Canadian team obtains any competitive edge from this revenue – every team in the NHL gets a taste. If you taxed it at 83% and used it to build a pool of money that funds arenas, the Canadian teams aren’t any worse off.

      Generally speaking, I think you’re right – but keep in mind that if revenue was shared this way, every US team out would mean a bump in revenue for American teams. That should be 24 votes “Yes”

    15. The Other John
      September 19, 2010 at

      I have never understood why the Canadian teams have allowed the NHL to touch the HNIC and TSN money. Not a penny of it is generated from US viewers and it denies Canadian teams of revenue they alone generate. Looked at in that context, the Canadian small market subsidy was not benevolence by Bettman it was necessary to keep HNIC revenue up.

      Great negotiation by Bettman with Cdn NHL owners……..share your CDN tv money with us now and when we land our NFL type tv deal we will all be rich. Phrased that way…….Bettman must be a very very good salesman because the Canadian owners are getting screwed

      I think the days oft American cities subsidizing any sports not associated with the NFL are over. At that precise juncture, Rexall sports says, we want a new building and, oh by the way we are a wee bit light on the money needed to build it. How much light, “er…., all of it”

    16. Tyler Dellow
      September 20, 2010 at

      TOJ –

      That’s an interesting piece of history. I wonder when it changed. Apparently, the reason no Canadian teams came in in 1967 was because MTL/TOR wanted to protect the HNIC money. MTL, VAN and TOR tried to scuttle the entry of WIN, EDM and QUE in order to protect the HNIC money.

      Obviously, at some point, the HNIC money became shared money for the NHL. I wonder when that was. Ziegler’s administration was pretty sleepy so I wonder if it might have happened once McNall took a leading role in the league – he had everyone convinced that the big US TV deal was coming.

    17. lb71
      September 20, 2010 at

      If I recall correctly, at one time Canadian TV revenue was split up by Canadian teams only. They decided to allocate the revenue to all teams on the theory that a large US contract was on the horizon and all teams would share that too. (I believe this was in Griffith’s Net Worth, but I could have my source wrong.)

    18. Schitzo
      September 20, 2010 at

      BTW, the $100M you suggest be distributed annually works out to $12.5 million if you have 8 teams. Wouldn’t even be enough to pay half the annual interest on a $400 million arena.

      Sure, if you decide to debt finance 8 new arenas tomorrow. If you build the arenas one at a time and roll them out over a 30 year period, on the other hand…

    19. Tach
      September 20, 2010 at

      It only hobbles them if the government isn’t returning the money to them in some form that is no longer subject to revenue sharing.

      For example, would the payments from the “Canadian Cultural Fund for the support of Hockey Heritage” be subject to revenue sharing? Even if such payment just so happens to exactly equal the amount that they were obligated to pay in tax on the money they brought in that would otherwise have been subject to revenue sharing? What if instead of an actual payment, it is given out as an interest free forgivable loan the government forgets to collect on? Maybe the only portion that is split equally amongst all teams is just the portion that is related to the national TV Contracts.

      Accounting shenanigans could abound if the Government really wanted to play hardball on it.

    20. Gerald
      September 20, 2010 at

      I am sorry, Tyler, but this is unbelievably wrong-headed.

      I would have thought that this was the last place that I would see jingoism dressed up in intellectual clothes, but perhaps I am not as familiar with your writing and approach as I thought I was.

      Putting aside the difficulty of any kind of taxation approach that singles out an industry and leaves other sports or entertainment options alone in the manner that you suggest, and giving you the benefit of the doubt that you were merely indulging a fight of fancy on a lazy Sunday, you are making a series of assumptions that are best left to kids.

      You assume that the value of the NHL TV contracts (whether US or CDN) is driven by the nationality of the teams involved, rather than the NHL brand itself. Specifically, you seem to assume that the value of the Canadian TV deals are driven by the six Canadian teams.

      Of course, that is utterly false. Here are some stats for you, based on last season:

      * Out of 83 regular season games on CBC, 64 slots were US-based teams. 22 games were CDN-CDN matchups, including a single day based on that theme.

      * Out of 126 games on TSN, 48 games featured US-US team matchups, and US-based teams filled 171 out of 252 slots.

      THAT ALONE would be sufficient to dispel the thought that the CDN TV contracts are based on CDN team constributions.

      Except that this is not even the main point. The MAIN point is that CDN TV contract values are substantially driven by the value provided by the PLAYOFFS, where US teams contribute even more than CDN teams. The playoffs is where the real ratings bonanza is to be found.

      The truth is that the idea that Canadian TV dollars are driven by the fact that this is the NHL and this is NHL hockey – not the Canadian teams. The idea that this is generated by Canadian teams is one of the more mischievious lines of “thought” that has been introduced into the online hockey community discussion in recent years, and it is nonsense. Could one make an argument that people tune in to watch their favourite Canadian team? Sure, of course. Leaf Nation is strong. My fellow Habs fans are legion. However, one would have to have a very narrow life experience not to realize that there are many, MANY Canadian hockey fans who are fans of US teams (more people in my native east coast were fans of other teams beside the Canadian ones, in case you are not familiar with NB/NS/PEI/NFLD mores – at least when i was growing up there), or are fans of (or tune in to see) particular players, or simply will watch hockey between any two NHL teams no matter who they may be. All those things drive hockey ratings. Are ratings incrementally higher when Canadian teams are on a broadcast? Sure. Are they zero, or even anything close to minimal? You get the point, I am sure. CBC and TSN (and RDS) pay all that money to get their regular season games, but disproportionately for the playoffs (when there is not the slightest assurance of any Canadian team involvement and certainly no guarantee that a Canadian team will advance anywhere).

      This whole attitude upon which your tax scheme is based is emblematic of a toxic attitude that has taken root in the online hockey fan community – the attitude that there is actually a measure of significance in the 49th parallel as far as hockey goes. It plays into an unhealthy sense of victimhood for some and lends itself to an “otherization” that leads to nowhere good. For some who point to various events as proof of a conspiracy against Canadian teams from time to time, it can evidently lead to outright paranoia.

      The fact that the NHL, and NHL owners, have ignored this attempt to make a qualitative distinction between the two countries when it comes to hockey is to be applauded. It does nothing but divide people. It is based on some sort of weird desire by some of my fellow Canadian hockey fans to find ways to isolate people who share our obsession merely on the basis of accidents of geography. The NHL TV revenue is distributed evenly because the money is generated by the fact that this is NHL hockey, the best hockey played in the world. Is some additional relatively small amount of revenue from TSN/CBC generated by the inclusion of teams in local markets? Sure, but minimal, for the reasons stated above. As such, this entire post about taxation is moot, to put it as kindly as I can.

      I don’t understand why a reputable commentator like you would even go down this path.

    21. Deano
      September 20, 2010 at

      In the last 20 years, pro sports has moved its ticket prices into the levels where in most markets it only makes sense to buy them with before-tax dollars (expense-account money). There are markets in Canada that will support hockey with after-tax dollars. Common people as fans.

      The question is how do we get back there for the good of these common people?

      Contrary to DSF’s Chicken-Little pronouncements, I believe that this is not only possible, but desirable. Running the NHL for the benefit of corporate weenies in the blind pursuit of revenue to spend gratuitously on less-than-heroic athletes is a dubious goal at best. I am comfortable doing without this if this is what you define ‘viability’ as DSF.

      Mc, how about fixing the real problem, and changing the tax treatment of pro sports as an entertainment expense? Instead of the businesses having the rights to a $200-a-game ticket, the business owner could now own the rights to the same seat @ $100 a game. Adiust salaries acordingly, and get the game out of the hands of the corporate class and into the hands of the public again.

      I think this is what you are after mc. It is much simpler and reduces the amount of unnecessary circulation that money has to undergo to be spent. (What I think of as ‘false GDP’).

    22. Mr DeBakey
      September 20, 2010 at

      Of course, that is utterly false. Here are some stats for you, based on last season:
      * Out of 83 regular season games on CBC, 64 slots were US-based teams. 22 games were CDN-CDN matchups, including a single day based on that theme.
      * Out of 126 games on TSN, 48 games featured US-US team matchups, and US-based teams filled 171 out of 252 slots.

      THAT ALONE would be sufficient to dispel the thought that the CDN TV contracts are based on CDN team constributions.

      Uhhh?
      If there were less American teams, those numbers would change how?
      And what resulting impact would there be on the NHL’s TV revenue?

    23. Tyler Dellow
      September 20, 2010 at

      You assume that the value of the NHL TV contracts (whether US or CDN) is driven by the nationality of the teams involved, rather than the NHL brand itself. Specifically, you seem to assume that the value of the Canadian TV deals are driven by the six Canadian teams.

      I think that you’re attacking an assumption I didn’t make. I explicitly said that I thought that the value of the deal was probably driven in large part by the Maple Leafs.

      With that said, I do think that the other Canadian teams add value to the deal. You can see it just if you scroll through the late games and look at the ones featuring a Canada/US matchup – frequently with a sexy American opponent – and the ones featuring a Canada/Canada matchup that doesn’t include the Leafs.

      * Out of 83 regular season games on CBC, 64 slots were US-based teams. 22 games were CDN-CDN matchups, including a single day based on that theme.

      * Out of 126 games on TSN, 48 games featured US-US team matchups, and US-based teams filled 171 out of 252 slots.

      THAT ALONE would be sufficient to dispel the thought that the CDN TV contracts are based on CDN team constributions.

      Not if the Canadian games are being disproporationately watched. I’m not sure what your point is beyond “Regional broadcasters want some of the sexy Canada-Canada matchups in their contracts too and ther are vastly more teams in the United States than Canada.” If you were allow for number of Canadian games, you’d find that Canadian teams feature disproportionately more on Canadian TV. Why? Presumably because Candian fans aren’t all that interested in watching Nashville and Columbus get it on.

      This whole attitude upon which your tax scheme is based is emblematic of a toxic attitude that has taken root in the online hockey fan community – the attitude that there is actually a measure of significance in the 49th parallel as far as hockey goes. It plays into an unhealthy sense of victimhood for some and lends itself to an “otherization” that leads to nowhere good.

      Get over yourself already with this point. When I start advocating ethnic cleansing, you might have something.

      As it stands, the game in the NHL is to obtain public funding of arenas. I think that this is distasteful and would prefer that it wasn’t the case. That being said, the world is what the world is, so what can we do about it? If we have to play the game if we want NHL teams in Canada, we need to find a revenue stream to tax so as to produce public funds to pay for the arenas. My entire point is that taxing the sale of TV rights in the Canadian market is a far more morally justifiable way to go about doing it than by upping the sales tax. I’m proposing to tax the people who like the sport.

      The NHL’s problem here is that it is completely exposed to such a tax precisely because the game is so popular in Canada. The game that they’ve played has been to take our TV dollars and the Americans’ public dollars. I for one am happy to start playing that game with public dollars found in the streams of revenue that the game generates as opposed to a general tax on business like a sales tax. If the NHL didn’t play the public dollar for arena game, I wouldn’t support but them’s the rules.

    24. matt
      September 20, 2010 at

      Gerald: you’ve missed the boat. Tyler is not suggesting that TV revenue is generated by Canadian teams. He is suggesting that it is generated by Canadian fans who would prefer that they continue to have Canadian teams.

    25. September 21, 2010 at

      You assume that the value of the NHL TV contracts (whether US or CDN) is driven by the nationality of the teams involved, rather than the NHL brand itself. Specifically, you seem to assume that the value of the Canadian TV deals are driven by the six Canadian teams.

      It’s less this and more about Canadians wanting more Canadian teams, and potentially having a source of leverage to get them. The NHL product (and the rights to broadcast it) are still presumably worth the same, with or without the proposed Canadian Hockey Heritage Tax. Whether the teams playing on CBC are Canadian or not is actually irrelevant. The difference is the Canadian government would intercept a large chunk of the money, using it as a way to lure a couple of US teams to Canada. As long as Canadians continue to consume the NHL product, the scheme works – even if they’re consuming US teams.

      The NHL is no worse off having a team in Winnipeg instead of Phoenix, for example, so the NHL product does not lose value due to the scheme either. Once a couple (4 or less, probably less) of the basketcases in the US have moved north, you probably reach a point of equilibrium between US/Canada, where nearly every franchise is stable, and each is sustainably supporting its teams.

    26. Gerald
      September 23, 2010 at

      I think that you’re attacking an assumption I didn’t make. I explicitly said that I thought that the value of the deal was probably driven in large part by the Maple Leafs.

      Last time i checked, the Leafs were located in Canada. Furthermore, you explicitly referenced another CDN team beyond the Leafs. At no time did you suggest that even an iota of value comes from the NHL itself, which is comprised of 30 teams and carries its own cachet which is applied to all of its members – including the CDN-based teams, by the way.

      With that said, I do think that the other Canadian teams add value to the deal. You can see it just if you scroll through the late games and look at the ones featuring a Canada/US matchup – frequently with a sexy American opponent – and the ones featuring a Canada/Canada matchup that doesn’t include the Leafs.

      Yes, Tyler, i know what you said. I understood it fully. I am saying it is nonsense and based on a false assumption. I would have assumed this to be clear.

      Not if the Canadian games are being disproporationately watched. I’m not sure what your point is beyond “Regional broadcasters want some of the sexy Canada-Canada matchups in their contracts too and ther are vastly more teams in the United States than Canada.” If you were allow for number of Canadian games, you’d find that Canadian teams feature disproportionately more on Canadian TV. Why? Presumably because Candian fans aren’t all that interested in watching Nashville and Columbus get it on.

      CDN fans are clearly interested in watching NHL hockey. Whether they like NSH or COLUM (although i am sure some do), they like watching Rick Nash and Shea Weber. The reaosn why i pointed out the participation rates to you, since you do not seem to have been clear, is that the networks clearly believe that CDN fans like hockey regardless. Otherwise they would have paid less money for fewer games.

      more to the point, as i noted above the money is in the playoffs. I assume from your response that you do not dispute that point.

      Get over yourself already with this point. When I start advocating ethnic cleansing, you might have something..

      Well, I was not aware that not advocating ethnic cleansing was the bar that one had to jump over in order to qualify as valid commentary. That being the case, then, yes, you are cleared of the charge of advocating ethnic cleansing, on account of a lack of evidence. Mission accomplished. It does nto make your point any more valid, but I certainly see no evidence that you are advocating wiping American hockey fans from the face of the earth.

      Kidding aside, Tyler, that is a dodge.

      If we have to play the game if we want NHL teams in Canada, we need to find a revenue stream to tax so as to produce public funds to pay for the arenas. My entire point is that taxing the sale of TV rights in the Canadian market is a far more morally justifiable way to go about doing it than by upping the sales tax. I’m proposing to tax the people who like the sport.

      Indeed, but you seem to have completely missed the boat, the forest for the trees, whichever metaphor you prefer. Neither option is morally superior. The presence of a hockey team in a market benefits that market and that market alone. Trust me, no one who has an ounce of sense and values their pocketbook really wants to have their money go to having a team or arena in a place where they will never go. I believe that many of the loudest folks supporting public sector funding don’t pay much in taxes and thus do not have much skin in the game.

      The people that should decide to pay – or not – are the people who will reap the benefit of a team in their market, however they perceive the value of that benefit. What is buggin you is that many US markets have made one decision, while the CDN markets have made another decision. There is nothing wrong with that, other than the fact that it lights up the hot button of nationalistic fervour for you and others. Those markets get their money from the public representatives who see (and obtain) votes for it. That is no differen than the markets raising that money through seat licenses. it is all part of the market providing the support. In canada, DESPITE HAVING THE VERY SAME OPPORTUNITY AS THOSE US MARKETS, they decline said opportunities. Evening it out by stealinig money from US markets is utter nonsense. It does not compute, except as a “get them lousy Americans with their lousy arena subsidies” meme.

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