Are NHL Owners Owed a Profit?

I would like to address an idea that seems to float around on boards such as this, and others that I read. The idea that the owners, by paying the expansion fee, have a right to make a profit.

I would like to address an idea that seems to float around on boards such as this, and others that I read. The idea that the owners, by paying the expansion fee, have a right to make a profit. That if an owner does not make money every year then something is wrong. To that I say why?

The point I see written by others is that this is a business and thus the owners deserve to make money off of it. I have a newsflash for you; every business does not make money. I’m sure every restaurant did not make money last year, but I don’t see the public arguing for a salary cap on waiters and cooks. Owning a hockey team is a business, and as such you have a right to make money if you run it well. Owners that run their hockey teams well seem to make money.

Running your business well starts even before you obtain the business. If you are unable to properly assess the market for the product you wish to market then why should I feel sorry for you? I don’t feel sorry for the man who starts an ice store in the Arctic, nor do I feel sorry for the man who buys a hockey team in a southern American state. These are places hockey should not have gone, and the only people who can be blamed for this are the owners who decided to pay good money to put the teams there. They knew the current NHL economic environment they were getting into, and should have analyzed the market they wished to enter before making the investment that they did.

That being said, I do believe that something needs to be changed. Not because I care about owner profits, but because I would like to see greater parity in the NHL. I think this will happen with either an effective luxury tax or a salary cap. A strong enough luxury tax becomes a salary tax for most teams, and a point that teams may go beyond but not by much. I think the owners are pushing for cost certainty and a salary cap because they believe that they are owed a profit from their business (or at least would like to be guaranteed one). I disagree with this, but would be interested to hear your comments.

58 Responses to Are NHL Owners Owed a Profit?

  1. 19Yzerman says:

    YEA Your right with both of them having had their hands in what was a 2.2 billion dollar industry and now getting what is clearing no where near that they would both have to panicking a little.

    My guesses were statements made without the use of a crystal ball so your right again.

    Its been tuff to find any topics other than this CBA to debate on here lately.

  2. goodfela26 says:

    The NFL is the most popular league in North America, not including NASCAR (making left turns all day long isn’t something I call exciting, but that’s my opinion). I’d say they are doing something right, which is more than I can say for the NHL and the NHLPA.

  3. Aetherial says:

    It is entertaining though. At least more entertaining than watching the trap for 60 minutes 😉

    There will be no 2,2 billion pie, both sides brought that on themselves.

    I really don’t know if either side will recover what they lost. If the owners are honest about their losses though, then they will be MUCH harder to convince. We know for sure what the players are losing by staying out. If the owners are actually financially ahead by staying out then the players are making a HUMONGOUS mistake here.

    Then again, I do not believe for a second the owners are honest about their losses.

  4. greatlife15 says:

    You are right about what you have said but the Leafs haven’t won the cup in how many years???

  5. 19Yzerman says:

    The NFL team salary cap is an excellent example of mediocrity and NOT pairty.

    Tampa Bay 5-8

    New Orleans 5-8

    Detroit 5-8

    Chicago 5-8

    N.Y. Giants 5-8

    Dallas 5-8

  6. rojoke says:

    The NHL wants to make the salary variable from year to year based on revenues.

    I’ve haven’t heard or read anything that indicates this is what the NHL is looking for. Players will still negotiate their individual contracts in the same manner as they always have. It’s just that the team’s total payroll will have to be under a specified amount, as a percentage of total league revenue.

  7. rojoke says:

    If I may offer an outside voice to this on two points.

    The NHLPA is not a union in the same way the UAW or the Teamsters are. Those “unions” actually negotiate the wages their membership receive for their work. In the NHL, the players are left to negotiate their own salaries.

    Unions normally do have acces to arbitration. It’s reserved for grievances filed by employees for what they see as actions which are in violation of their collective bargaining agreements. I don’t think any employee has sought to have their own salary determined by arbitration. Many public services unions do have the right to use arbitration to set salaries and benefits when negotiating CBAs, but not individual employees during an active agreement.

  8. rojoke says:

    Since they have fixed these costs against their revenues, they will be fixing profits. Profit certainty.

    Just because I know what one of my expenses will amount to, that does not guarantee that I will make a profit. Player salaries are but one expense that teams have to budget during the year. There’s also the coaching staffs, the scouting departments, the training staff, the equipment made available to players, the travel expenses, etc. There’s also building maintenance for those teams that own the arenas. Do they always know when something will break down with the ice plant, the zamboni, the physical building itself? The more reliably I can predict what my costs will be during the year, the better I can deal with the unexpected costs that arise. But when I have to deal with those problems with only 25% – 30% of my revenues, then that makes it difficult to deal with those situations.

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