An article appeared on Reddit recently that prompted this post's creation. Nothing seems to get people more interested in writing for this blog (if you're not me that is) than the stink of hypocrisy and bullshit that follows NHL commissioner Gary Bettman like the dust cloud that followed Pig Pen. With that in mind, I'd like to introduce our newest guest blogger, Mikhail Bjørge to the team. He doesn't like Gary very much and wants to tell the world why. This is actually somewhat appropriate given the temporary new mission statement of bringing back the glory (the teaching blog) given that Mikhail will also be giving a guest lecture in my class next week. Here we go:
For the first time in recent memory, there has been some whining on the internet. Gary Bettman recently said in regards to relocation rumours: "Nobody's moving. And speculation to the contrary not only is wrong, it's unfair to the team and their fans who are being speculated about." The plural nature of "fans" in regards to the Panthers notwithstanding, I think people misunderstand the role of Bettman in the league.
His goal, his only and sole goal, is to make the owners money. Full stop. He doesn't want to “grow the game” for the sake of growing the game–he wants to make the owners money. He doesn't care about the "on-ice product," (suppressing vomit at the nomenclature), he wants to make the owners money. Everything he does, negative or positive, is to make the owners money. If the fans like it or not is purely incidental, he wants to make the owners money. In the 'True Facts About the Gary Bettman', “that’s what the Gary do.”
A big way Gary makes the owners money is by increasing the value of their teams, and there is no denying that he has done just that with aplomb. One of the big reasons, if not the biggest reason, that teams have value is because of their potential for relocation, mainly to Canada. Nobody is going to pay ~$1 billion dollars for a team that loses $10-30 million a year in the American south. Those teams, in any reality, are worth between a few million and a few tens of millions if they cannot relocate. They have no gate, they are hockey-revenue negative, and exist to excise rents from non-hockey related revenue (mainly the control of the arena, parking, and concession), all subsidized via revenue sharing and leeching off the local citizens via the local plutocrats/oligarchy. These hockey-as-vector teams value lies in the potential for moving, and this is good for the league, because it keeps team values artificially inflated.
Now, all hockey teams cry poor. Nearly every team claims they lose money. It's almost ubiquitously bullshit. Take the Edmonton Oilers, owned by Batman. Katz claims that the Oil loses money, and on paper, that's probably true. Their only revenue is the gate, and their expenditures are everything, from paying Rexall (Katz's pharmacy conglomerate) for naming rights on the (old) arena, to salaries to sundries - and teams are allowed to write off nearly anything as expenditure. It should be a scandal, but it’s not. Also, teams are private entities, their books are closed as fuck, so even trying to untangle the web of economic deceit is a nonstarter. One doesn’t need to know the recipe to get the essentials on the palate. The Oilers also own (through Katz Sports Entertainment) other teams that essentially lose money (like the OKC Barons, the primary farm team for the Oilers), appear to lose money, or are dormant, (like the local AA semi-pro baseball team). All revenue streams are in other, non-KSE numbered corporations. This is classic Hollywood accounting, maximize paper losses and minimize paper revenue. Collect losses onto the team, externalize profits into the non-team, and extract concessions from differing levels of government. The idiots in Edmonton bought his bullshit, and subsidized his team to the tune of hundreds of millions of dollars in a new arena/arena area/buildings/Wealth Extraction Devices for a local billionaire.
(Editor's note: this new arena of course had its naming rights conveniently purchased by Rogers, putting more profit into the hands of the billionaire we call Batman rather than back into the hands of the good denizens of Edmonton that subsidized its construction–the same Rogers group that just purchased control of the NHL media network in Canada.)
The thing is, some teams actually lose money, even with revenue sharing. And these teams are bad for the league. They cost owners money, because owners have to prop them up. The NHL isn't the NFL; self-socialism-for-the-rich (really, a boss-owned cooperative) only works if everyone is making decent money. Then it improves the product and produces equity which makes owners money. This is not the case in the NHL. There are very weak teams in incredibly weak markets, and this is not going to change going into the future. One could put a successful NFL team in Toronto, we have collectively seen that one cannot put a successful NHL franchise in deserts and tropical swamps. One can’t create fandom. A professional cricket team would fail in Phoenix, no matter how much the Cricket Commissioner talked about its intrinsic stability.
Florida is actually safer than people believe, as it's really only a vector for Sunrise Sports and Entertainment to make money from the venue. As long as that holds, the Panthers are not in terrible danger to move. The same cannot be said for Arizona, Carolina, and to a slightly lesser extent, Nashville. Even with Florida’s sweetheart deal, the owners cannot overlook the fact that if they moved to Quebec City, they could move, then immediately flip the team to Quebecor for an easy quarter-billion dollar profit, go back and buy half of Florida, and live the rest of their lives as the parasitic shit-lords they are, but with less stress and exponentially more little tiny umbrellas in tropically coloured drinks.
Speaking of making obscene profits, there are basically three-and-a-half markets that are salivating ATMs for the rich. Toronto, Hamilton, and Quebec City, and possibly Seattle if a billionaire tech parasite could be found to be a hockey fan, or at least a basketball fan that tolerates the cold. (We're looking at you, Steve Ballmer, especially if your bid to buy the Clippers collapses under the weight of all that litigation). I’m leaving Las Vegas out here, because the team wouldn’t be purchased to create a fan base, it would be created as a “draw,” probably by a conglomerate of casinos, and 100% of the tickets would be comps. It’s a differing situation for this analysis (although it exists within the same capitalist parameters). A team could conceivably be purchased for $110-$130 million, which is fair market value for a business that is ostensibly deep in the red, and moved in the middle of the night,
Baltimore Indianapolis Colts
style. Throw in a $60 million
"relocation fee" (bribe) to the owners, and voila, hockey moves to a
market that wants it. The problem is,
that's a fuck of a lot less than ~$1 billion, which is where the bidding would
go for another Toronto team, and ~$300M-~$700M for Quebec/Hamilton.
Relocation fees and expansion tickets are pure profit for the owners. Under the CBA, the players see literally nothing from them - except the headaches of an expansion draft or the pain of relocation. Bettman exists to make the owners money, and expansion is more profitable for the owners than relocation. However, the owners do not have unlimited patience, and propping up unprofitable (under whatever rubric) teams while there are potential wealth extraction units is leaving money on the table. What will probably end up happening, despite the relocation/expansion economic juxtaposition, is that two nonperforming teams will move to Seattle and Quebec, and the deep pockets in Toronto and Las Vegas (one corporate, one wealthy family) will pay an insane fee for a new franchise. This is the plan the makes the owners the most money, and that’s Gary’s job, so that’s probably the plan. They can’t say that, because then the teams are worth nothing, and that wouldn’t make the owners money. But anyone with any business acumen can see that the plan will not look substantially different. This will lead to league-wide stability, and huge profits for the owners going forwards. Bettman exists to make the owners money, and he will.
For more on profit scoundrelism see:
And finally, for more on the CBA and revenue sharing, this is essential reading: