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Panthers Having Financial Problems
by PuckStopsHere on 10/29/08 at 04:03 PM ET
Comments (6)
If a company has massive layoffs and makes multiple policy changes to save money such as stopping matching employee contributions to employees 401(k) and banning overnight and express mail, then it is usually a sign that the company is on shaky ground and may not be around much longer. The Florida Panthers are doing this according to George Richards’s blog.
The economy is taking its toll on the NHL and the weaker NHL markets will have some trouble. Most of the more recent NHL markets including Florida, Nashville, Phoenix and Atlanta will be tested. In good times, these markets have had trouble financially. In bad times, they may not all make it.
It is not impossible to imagine multiple NHL teams failing if there is a prolonged economic downturn. The NHL has strongly invested in the idea that franchises will be stable after losing a season to the lockout. They have already been tested, most strongly by the Nashville Predators, but so far no teams have moved.
In a worst case, if multiple teams’ ownership fails it will be hard to find multiple new NHL owners. At the very least, it could fill potential expansion markets with relocating teams.
The NHL will be strongly tested by a protracted economic downturn. The weakest markets (which are generally the Gary Bettman expansion markets) may not survive. If several of them fail, it would leave the Gary Bettman legacy as one of error.
As for the salary cap, since it is tied to revenues, many are predicting large drops in the salary cap. I do not think this is true. Sure the economy has weakened (especially in the US) and the Canadian dollar has weakened, but teams have already banked their season ticket revenue, a good portion of their advertising and sponsorship revenue and a good portion of their television and radio broadcasting revenue. Though the salary cap may drop this year, the worst is next year if conditions don’t improve. The biggest salary cap drop should come if these economic conditions remain in place through next season when season tickets and advertising will have to be re-sold.
The biggest financial test of Gary Bettman’s NHL is upon the league. There are a few weak markets that have struggled in the past. This struggle will be worse in tougher economic conditions. We will likely see a few teams making undesirable moves to try to survive. The Florida Panthers move of yesterday is the tip of the iceberg. The worst will come when ownership groups start to fail.
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Tags: Economy, Florida+Panthers,
Comments
who’s ever idea is was to write a floor into the cap is the artichetect of all these failing franchises..
it just hasn’t worked for many small market teams, the CBA needs to be reopened asap and fixed..
small market teams shouldn’t worry about competing, they should worry about surviving and the only way they can do that is to substantually reduce their wage bill..
if the CBA isn’t adjusted as early as next year, i think we’ll see the end of Florida, Atlanta, Nashville and Phoenix at a minimum…
Posted by Pharazon from England on 10/29/08 at 03:30 PM ET
In the WHA, that happened and teams did not complete their schedule.
The NHL would probably attempt to keep the team alive - at least long enough to finish the season. With all the other teams contributing to their payroll (essentially they would see this as increased revenue sharing). The team would probably keep their payroll at the salary floor and lose a lot of games, but I doubt we would see teams unable to complete the season. Likely that would only happen if several teams all were unable to finish the same season - and if that ever happened the NHL would be seriously threatened.
Posted by PuckStopsHere on 10/29/08 at 03:33 PM ET
Only have teams north of Ohio. It’s the only way. Obviously.
Posted by PredNeck from Hicktown on 10/29/08 at 04:09 PM ET
the salary cap floor is not the problem, trying to cram teams into markets that don’t give a crap about hockey is the problem. if the recession turns into a depression you can expect the league to field fewer teams in the future, which wouldn’t be a bad thing. what’s the point of having 30 teams for the sake of having 30 teams? if they can’t be competitive and financially stable there is no reason to have those teams.
Posted by bitterguy from san francisco, ca on 10/29/08 at 05:42 PM ET
Only have teams north of Ohio. It’s the only way. Obviously.
You’re being sarcastic… but not a bad idea!
Seriously though, I’m joking with you. There are good markets south of Ohio. Dallas is great. L.A., simply because of its size, is always viable. The Ducks’ success has kept them popular enough. And Tampa Bay has been okay… certainly not as bad as the Panthers or Thrashers.
The bottom line is that Atlanta, Phoenix, South Beach, and Nashville are horrible hockey markets. No question about it. I don’t say that to be rude to the fanbases of those teams. I fully understand that as a Preds fan you love hockey just as much as I do, and I support you and feel bad that you may lose the team you support. But the problem isn’t you or I, the problem is that there’s only 16,000 people like you, where there are a million like me. It’s not personal. It’s not that you don’t deserve a hockey team. It’s that the hard truth of the matter is no matter how die-hard the 16,000 Preds fans are, there just aren’t enough of them to make the team economically realistic.
Posted by Nathan on 10/30/08 at 09:38 AM ET
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What happens if one of these teams goes supernova in the middle of a season? We’ve seen some companies that we thought were strong go belly up in a matter of months.
If a reporter in the hockey world has the means and connections to put together a piece on this, with reputable commentary from league sources and external economists, it would be a great read!
Posted by Nathan on 10/29/08 at 03:24 PM ET