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KHL Collapse?


oofrostonoo
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It seems as if the KHL is in pretty big trouble.  Many teams were already having financial problems, but in the past year (and specifically the past 2 weeks), the Ruble has crashed and the energy sector which subsidizes much of the league is in big trouble.  

 

Kovy signed his contract with the Ruble valued at .33 to 1 USD, now it's .14 to 1 USD.  I'm not sure the "tax-free" aspect of that contract matters much now.

 

James Mirtle has been tweeting about the subject, saying many players haven't been paid, and although some contracts are protected to currency devaluation, if the teams don't have to money to pay, it won't matter much.

 

 @mirtle

 

It could be an interesting rest of the season over there.

Edited by oofrostonoo
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yea Russia seems to be in some trouble in general.  I wrote an essay not long ago and touched on the fact that the US and many of the EU countries are project to greatly reduce their dependence on oil in Russia, which would certainly bring the Ruble down even more.

 

It'll certainly be interesting to see how this plays out.. all of a sudden the KHL doesn't seem such a good idea anymore

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I'm not sure if Kovalchuk's contract is in rubles instead of dollars, and even if it is, I'm sure they can tear up his deal and give him a larger one if he wants that.  I doubt that the bigger teams are in trouble and I bet they still will pitch to NHL stars as they like to do.  

 

I do think a lot of the North American players will go elsewhere next year, and that yeah several teams will end up folding.

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I'm not sure if Kovalchuk's contract is in rubles instead of dollars, and even if it is, I'm sure they can tear up his deal and give him a larger one if he wants that.  I doubt that the bigger teams are in trouble and I bet they still will pitch to NHL stars as they like to do.  

 

I do think a lot of the North American players will go elsewhere next year, and that yeah several teams will end up folding.

Regardless of if it's in Rubles vs. Dollars... wouldn't that then put twice the financial burden on the owners?  (Assuming his contract is currency deval. protected)  The owners of that team are a gas company.  I'm assuming they are having some issues right now.

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I'm not sure if Kovalchuk's contract is in rubles instead of dollars, and even if it is, I'm sure they can tear up his deal and give him a larger one if he wants that. I doubt that the bigger teams are in trouble and I bet they still will pitch to NHL stars as they like to do.

I do think a lot of the North American players will go elsewhere next year, and that yeah several teams will end up folding.

This. Kovy is with the Rangers of the KHL (as in still flush with cash), and I'm pretty sure he's being paid in US dollars anyway.
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Regardless of if it's in Rubles vs. Dollars... wouldn't that then put twice the financial burden on the owners?  (Assuming his contract is currency deval. protected)  The owners of that team are a gas company.  I'm assuming they are having some issues right now.

 

I mean, sure, but they are also an enormous company.  According to wikipedia in 2012 it had revenues of $153 billion.  Gazprom's stock price has gone down but certainly not catastrophically.  I can't pretend to know anything more about it than that, but nothing indicates right now that they still don't have lots and lots of money.

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The KHL has 28 teams.  Whether it can withstand the current economic climate might depend on how many of the teams are oligarch playthings.  I figure ten to half of the teams would have to go under until the enterprise just isn't valuable anymore, or that the ruble gets killed to the point that enough of the players would rather try their hand on an AHL roster or in another European league. 

 

And even then, I could foresee some kind of merger with another European league, perhaps the SEL.   

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I mean, sure, but they are also an enormous company.  According to wikipedia in 2012 it had revenues of $153 billion.  Gazprom's stock price has gone down but certainly not catastrophically.  I can't pretend to know anything more about it than that, but nothing indicates right now that they still don't have lots and lots of money.

 

 

If Russian corporate law is anything like it is in the US, but a good chance it isn't, there could be some kind of shareholder revolt or lawsuit if the team starts to lose a ton of money, to the point that the company might be forced to divest itself of the team. 

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If Russian corporate law is anything like it is in the US, but a good chance it isn't, there could be some kind of shareholder revolt or lawsuit if the team starts to lose a ton of money, to the point that the company might be forced to divest itself of the team. 

 

The company is majority owned by the government.

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Well, in that case... although I imagine there's still enough foreign institutional money in the company to make a big stink about it.

 

It's a company with revenues above $100 billion per year.  How much do you think a hockey team costs to run?  Even being ridiculously generous, it would cost .1% of yearly revenues.

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BTW, the ruble is in free fall, it actually stopped trading on the FX lines becuase its such a mess, Apple stopped selling online in Russia as they are not sure where the Ruble will be in the next few hours....

 

As the price of Crude continues to drop I explect the Russian economy to go with it & the KHL might be in more trouble then some want to admit...

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It seems as if the KHL is in pretty big trouble.  Many teams were already having financial problems, but in the past year (and specifically the past 2 weeks), the Ruble has crashed and the energy sector which subsidizes much of the league is in big trouble.  

 

Kovy signed his contract with the Ruble valued at .33 to 1 USD, now it's .14 to 1 USD.  I'm not sure the "tax-free" aspect of that contract matters much now.

 

James Mirtle has been tweeting about the subject, saying many players haven't been paid, and although some contracts are protected to currency devaluation, if the teams don't have to money to pay, it won't matter much.

 

 @mirtle

 

It could be an interesting rest of the season over there.

You do realize what you wrote here means the ruble has gotten stronger against the dollar, right?  Maybe you wrote it wrong?  But like this you are saying that $1US back then got you 0.33 rubles and now that same $1US gets you only 0.14 rubles.

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You do realize what you wrote here means the ruble has gotten stronger against the dollar, right?  Maybe you wrote it wrong?  But like this you are saying that $1US back then got you 0.33 rubles and now that same $1US gets you only 0.14 rubles.

 

I think he flipped the currencies. 

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I really don't know enough about macroeconomics to discuss where the KHL is going to go based on Russia's situation. I honestly don't really understand exactly what backs up and determines currency value. But, if the KHL did collapse, the quality in the other European leagues would jump dramatically. But I feel like collapse is extremely unlikely.

 

But I suppose at least some teams with decent players are going to lose a lot of money, and good players will be going to other European leagues, or here I suppose. Does the KHL use a promotion/relegation system?

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