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Ice Man

Will clubs ever recover?

12 posts in this topic

As stated in this article the value of clubs have crumbled. Will they ever again retain their original value? I don't think so, not all. Maybe a few will. What happen this past season can happen again. Fans and advertiser may never come back in same volume or price. Merchandise won't be purchased at same rate or price. Price of tickets will have to go up so there will be fewer fans in the seats, less hotdogs and programs and beers sold. Less parking revenue. The Entertainment Product won't be as good as it was before the CBA fight and lockout. Owners suffered financially more than we think and will in the future, nore than planned for. I think the Devils will take a big hit attendance wise because they were alredy suffering before last season.

http://sports.yahoo.com/nhl/news?slug=afp-...v=afp&type=lgns

Disney dumps NHL Ducks during labor shutdown

June 16, 2005

NEW YORK (AFP) - When the National Hockey League returns from a labour dispute that wiped out the entire 2004-2005 season, The Walt Disney Company will not be coming back as owners of the Anaheim Mighty Ducks.

The NHL Board of Governors has unanimously approved the sale of the Ducks to Henry and Susan Samueli pending the expected closure of the sales transaction, the league announced in a statement here Thursday.

No purchase price was announced but it undoubtedly was less than the team would have commanded a year ago before the lost season.

Values of all NHL clubs have crumbled since the labour dispute that wiped out a 2.1 billion-dollar industry and left top players to play for European clubs or sit out and wait for union and league leaders to hammer out a deal.

Disney was a prized ownership group when it bought the franchise and named it for a series of movies about a youth ice hockey team, the Mighty Ducks, but the club had been for sale for some time.

Edited by Ice Man

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Thats the funniest thing ever, as soon as the new CBA is signed teams will be worth twice as much as they were a year ago, maybe more. What a laugh that you think the long term values of these clubs has been hurt by getting a much more favorable CBA.

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Who could have possibly imagined that a full-season lockout would result in immediate depreciation of team value. Novel concept!

Hang on, I'll be right back -- I gotta go alert the authorities, I think I just saw the sky start to fall!

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Price of tickets will go up?

I mistrust basic economics, but this one is incredibly simple: when demand goes down, so does price.

731 is also misguided, the franchise values will not come back for some time. The NHL has to re-acquire all its old revenue streams. I also think the 'sports franchise' bubble is bursting, and that the values of franchises will begin to level off.

Edited by Triumph

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I think demand is going to go up for these franchises. What was the motivation to get into hockey for the last 5 years? The desire to lose millions of dollars while having a select few teams make sure you couldn't economically compete with them? Now you have a system that allows you to keep your talent, bring competitive and still fiscally responsible teams, and a form of revenue sharing has been put in place.

That is a lot better deal than you got 3 years ago and therefore the value to getting that deal had gone up.

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I think you will see values of teams that you know will come back strong (Detroit, Toronto, etc) go way up at first since their profits will be guaranteed at a much higher level.

However, if the smaller market teams cannot rebound and end up with average attendances consistently below 10,000 (which could totally happen) then I really don't see their values going up at all.

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Franchise value is determined by how much profit it can drag in.

Before lockout:

Revenues: Relatively high

Expenditures: Extremely high

Result: Major loss of money

Franchise value: Low

During lockout:

Revenues: Virtually zero

Expenditures: Moderate.

Result: Major loss of money

Franchise value: Even lower

After lockout:

Revenues: ?

Expenditures: High

Result: Unknown

Franchise value: Unknown

So it all depends on the revenues.

Petey: I would think that would depend on the amount of revenue sharing.

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I really don't think franchise value had much correlation to profit expectation. People are buying teams, losing money with them, and selling them for more money than they bought them. That's just not good business practice, unless... you think the trend will continue. Even so, I think that trend has stopped.

Total revenues for the league will be down $500M or so when it comes back. I just can't see franchise values returning to their previous values for some time. They were overvalued to begin with.

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I am with Devils731 on this one.

I think the values of the franchises will improve greatly in the new few years with a new CBA and with new stadium deals.

I also think the NBC deal, even though the NHL took a hit in the short run, will turn out to be a blessing in disguise.

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IF the changes they make to the on ice product are significant, and the games are considered to be "more exciting" by the "average" fan, than it would follow that people would be more interested in attending games or watching them on TV. I believe the big unknown is whta the NHL will actually look like when it returns. If it is the same old, same old it will be a LONG time before it recovers, if the changes they propose make the game more appealing to Joe Average, than it could rebound quickly, thereby the values would do the same.

chris

Edited by chrisg19

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Petey: I would think that would depend on the amount of revenue sharing.

<{POST_SNAPBACK}>

This is true Don, but everything that has been written about the revenue sharing talks has said it is just token revenue sharing and not a full system like you see in the NFL or even MLB.

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