Sunday, September 16, 2012

Without the Owners, Part 2

Let me play out a new thought process based on a post from a couple of weeks ago where I had some thoughts about what the league would be like if there were no owners.

Putting aside the logistics of the league acting for itself locking out the players, where that last theory ended, for a second, what if there were no owners? I suggested in another recent post what "Hockey Related Revenue" actually is (without having specific numbers).

The original idea was that Hockey Related Revenue (HRR) should be enough to sustain the league's operations and player's salaries. Now, I don't know what that number actually is, and the two sides in the CBA dispute can't agree on the definition, and I have no idea how much money is needed to actually sustain the league.

But let's say that HRR alone is enough to pay players salaries on par with the average ticket fans. Maybe the league's elite get $250,000 and rookies start with $50,000. Nice round numbers. I'd actually have a ton of sympathy for the players if that was the pay scale and the owners were pulling tricks. The league would also make a small profit, maybe a couple million per season. Remember that "profit" is after operating costs for all the teams and the league itself.

Now, we know that elite players earn many millions of dollars per season, and even just average players earn a couple million. So if HRR isn't enough to sustain those salaries, then HRR must be supplemented with other income (that's "income" for the league). That's where the owners come in.

The owners then must be pumping lots of money into the league, collectively, via the 30 teams that make up said league. Just to be able to pay higher salaries to the players. And of course, they'll want some return on their investment (which is where smart business decisions come in). So owners will try to take money back out of that pot. If they didn't, then why own a sports franchise?

So where does this leave us? Players and owners fighting over what is essentially the owner's investment into the league that helps pay for the multi-million dollar salaries of the players, supplementing what HRR cannot do on its own. Of course, there's more to the fight (and I don't mean the different definitions over what "Hockey Related Revenue" actually means, but I think it's pretty clear what it is) than that. But in a nutshell, that's what it all boils down to. Owners investing to help pay salaries while making a return on their investment, and owners deciding they want to give less in order to take back more.

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