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Where do the yankees get all their money?

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Postby Madison » Tue Oct 19, 2004 5:51 pm

LBJackal wrote:It was the owners who were trying to put a winning team on the ice instead of making a profit that led to this lockout.


I'm probably out of my league (get it :-b ?) on this one, but do you really believe hockey teams are losing money?

They said the same thing about baseball owners and we all knew that was a bunch of garbage.

Maybe it's true for hockey, but I doubt it.

Just a battle over money. Same old thing.
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Postby Lofunzo » Tue Oct 19, 2004 5:55 pm

Madison wrote:
LBJackal wrote:It was the owners who were trying to put a winning team on the ice instead of making a profit that led to this lockout.


I'm probably out of my league (get it :-b ?) on this one, but do you really believe hockey teams are losing money?

They said the same thing about baseball owners and we all knew that was a bunch of garbage.

Maybe it's true for hockey, but I doubt it.

Just a battle over money. Same old thing.


I will say that to prove it, the LA Kings hired an independent person to look over their books and it was found that they are losing big $$. :-o
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Postby Lofunzo » Tue Oct 19, 2004 5:58 pm

Here is an article on it:

http://www.andrewsstarspage.com/8-3cba.htm

CBA: The rising red ink
Tuesday, August 05, 2003
CBA Home

As NHL players and owners try to hammer out a new Collective Bargaining Agreement, there will be a lot of talk about the financial state of the teams. Several NHL teams say they are losing big money. Players, for the most part, aren't so sure about those financial claims.

Although the financial woes and bankruptcy filings of the Buffalo Sabres and Ottawa Senators got a lot of attention this past season, some would argue they are not good examples of what the rest of the league is facing financially.

Buffalo was plagued by problems with the ownership of the Rigas family and its Adelphia Communications company. The Rigas family raided its company to cover the losses of the Sabres. Adelphia went bankrupt and the Rigas family was indicted. Ottawa's problem stemmed from a bad business model that weighed the team with way too much debt. Of course, there are also the well documented financial problems with the franchise in Pittsburgh.

It's what is going on with several other teams that concerns a lot of people. The St. Louis Blues say they lost $43.1 million in 2001-02 and expect similar losses for this past season. The New York Islanders say they lost $22.5 million. Tampa Bay says its losses are $50 million over the past three years, including about $10 million this past season. Phoenix expects its losses to top $25 million for 2002-03. The Los Angeles Kings estimate they will lose between $12 million and $13 million for 2002-03. The Stars estimate their red ink at $3 million for last season. And the list goes on.

Those in management say the problem is that the league and teams can't generate enough revenue to keep up with the rising cost of player salaries.

"It's not complicated business, really," said Neil Smith, former general manager of the New York Rangers and now a consultant with the Pittsburgh Penguins. "If you get a product for 10 cents you are supposed to sell it for 12. That's the way business should work. You don't buy a product for 10 cents and sell it for eight.

"But that's what we're doing in the NHL. We're buying the players' services and we can't make our money back. You do that for long enough and you're out of business."

And Florida coach Mike Keenan says if teams suffer so will the players.

"The reality is going to hit hard, and there's going to be lost jobs," Keenan said. "Then maybe the players will understand. There could be some casualties here. I've been in this game long enough to know that the owners are not hiding finances."

But despite the dire warnings, players aren't sold on the proclaimed financial struggles of the teams.

"Everyone knows a good accountant can turn an $8 million profit into an $8 million loss, especially when owners have more than one business," Calgary defenseman Bob Boughner said during last season. "They own a cable company and the hockey team - the money's going in one pocket and out the other."

Or this from NHL forward Peter Worrell: "I definitely don't believe them. But one way they can prove it is to just open up the books. Plain and simple. If you're really losing that much money, prove it."

And one team -- Los Angeles -- did open its books. The Kings agreed to let season ticket holder Philip Propper, who also happens to be a portfolio manager and media stock analyst, examine their finances.

Propper's idea to look at the Kings' books came after there was a dispute over whether the Kings were making money or losing money. Forbes Magazine said the team made a profit of $7 million in 2001-02.

The Kings denied it, saying they were losing more than $10 million a year and amassed morre than $100 million in red ink since Denver billionaire Philip Anschutz bought the team back in 1995.

Propper presented his professional credentials and asked the Kings for permission to look at their financial situation. The Kings, to the surprise of many, agreed to let him do it. Propper went over the books and then posted his findings on the LetsGoKings.com web site.

And what did Propper find? That the Kings were indeed losing money.

Propper said the Kings lost $6.5 in operating cash in 2001-02 and then when you throw in items such as interest payments and deferred compensation the loss mounted to $11.3 million.

He estimated the Kings would lose somewhere around $12.5 million in 2003.

He said the Kings cash operating losses for the team are $108 million since the Anschutz Entertainment Group bought the Kings in 1995. The biggest loss came in 1998-99, when the team lost $31.7 million. The best year in the AEG era was 1999-00, when the team lost $8.2 million.
Here are some other interesting tidbits Propper's financial analysis revealed about revenues.

Revenues have grown 15.3 percent compounded annualy in the seven years AEG has owned the Kings. Gate receipts are up 18.2 percent thanks to the move to the Staples Center.

Gate receipts, broadcasting and sponsorships make up 95 percent of the Kings' revenue, which is approaching $67 million. Gate receipts make up 64 percent of the revenue, and were expected to hit about $42 million for 2002-03.

Other sources of revenue are things like parking fees, merchandise, concessions and an $800,000 payment from their minor league team, the Manchester Monarchs.

The Kings share in the NHL's television deals with the cable and broadcast networks. The Kings also have an agreement with Fox Sportsnet to broadcast 65 games per season. That deal pays the Kings in the high seven figures annually, according to Propper's analysis. The Kings must buy air time to broadcast the games on radio because no one has purchased audio broadcast rights.

Propper found that the Kings make about $1.3 million per season on concessions. The average Kings fan purchases only $6.50 in concessions per game, an indication that many people don't buy any concessions at all. The Kings take in $800,000 in parking fees.
And here is a look at some of his findings about expenses.

Operating expenses, including non-player salary costs, have grown at a 6.4 percent rate compounded annually since AEG bought the team. Right now those expenses have reached about $25.5 million. That's a growth rate of 8.9 percent slower than revenues.

Expenses for player salaries have grown 18.9 percent compounded in the AEG era and reached $45.4 million in 2001-02. It was expected to be higher (possibly $48 million) for 2002-03 because of several injuries that forced the team to pay higher salaries to players with two-way contracts.

The franchise has $54 million in debt and the annual cash payment on that is $2.9 million.

AEG pays $2.5 million per year to cover deferred compensation left over from the previous ownership.
So if you break it down in very simplistic form all this adds up to something like this. We'll say, for argument's sake, that the Kings player payroll was $48 million for 2002-03. Add in the $25.5 million for non-player expenses and $5.5 million for debt payment and deferred compensation and you get total expenses of around $79 million. Bring in revenues of between $66 and $67 million and you get a loss of about $12 to $13 million.

That's basically the bottom line, according to Propper's financial analysis of the Los Angeles Kings. The Kings, like many NHL teams, say they can't generate enough revenue to cover expenses.

But while owners may argue that rising salaries are the big reason for the rising red ink, others argue that there is a lot more to it than just that. There are some other issues, including a big one in the revenue area. A look at that in our next report.

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Postby Lofunzo » Tue Oct 19, 2004 6:01 pm

And another:

http://sportsillustrated.cnn.com/hockey ... nances_ap/

Nothing to hide

Kings open financial records to season ticket holder
Posted: Monday March 10, 2003 11:31 PM


LOS ANGELES (AP) -- The Los Angeles Kings for the last month have allowed a season ticket holder to review their books on behalf of the team's fans.

Money manager Philip Propper, 42, said the access is part of a movement on behalf of sports teams who are being pushed to come clean with the fans they charge $8.50 for a beer and $4,300 for season tickets.

"People are more sophisticated now, and there's too much competition for the entertainment dollar," Propper told the Los Angeles Times in Monday's newspaper. "You cannot ask for the fans to invest both their emotions and their cash without keeping them in the loop as to what's happening with the team."

Propper's access is highly unusual for the Anschutz Entertainment Group, which traditionally closely guards details of its private ownership of the Kings and Staples Center. The access also is believed to be unprecedented for a professional sports franchise in any league.

Major League Baseball recently released financial summaries showing that the majority of its teams were losing money. The league, however, didn't allow outsiders to inspect individual franchise books, which fueled skepticism about the numbers. Critics believe the figures may have been rigged to justify contraction and hardball labor negotiations.

The NHL faces its own labor showdown next year and two of its teams have allowed journalists to view and report on their balance sheets. Only the Kings, however, have agreed to let a fan take a look and issue his own findings, NHL officials said.

Fans of the Kings, who have never won a Stanley Cup championship, are eagerly awaiting Propper's findings, which will be posted in about two weeks on a popular fan Internet site: http://www.letsgokings.com

"A lot of people think it's an excellent PR move by the Kings," said Mike Zampelli, a former Long Beach record store owner who runs the fan Web site. "A lot of people are waiting for Phil's report. Not only is he going to look at the numbers and see if they're losing money, he's going to tell why he thinks they're losing money."

Fans have gained an interest in the team's finances while watching the team struggle and lose favorite players, such as defenseman Rob Blake, who was traded to keep a lid on salaries.

Forbes Magazine estimated last year that the Kings made $7 million a year, but Tim Leiweke, president of Anschutz Entertainment, denied that estimate and opened up cash-flow statements to the Times.

Those showed that the company lost more than $103 million since Denver billionaire Philip Anschutz bought the team in 1995. The statements indicated the Kings were on track to lose another $10 million this year.

Propper wrote Leiweke in January saying he had doubts about the Kings' balance sheet and offered to study it.

Leiweke surprised Propper and agreed.

"I thought it was a unique way of being accountable, and a reasonable request," Leiweke said.
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Postby Madison » Tue Oct 19, 2004 6:13 pm

Interesting read. Thanks Lo. ;-D

Odd move for the Kings to let a season ticket holder go through the books, but he found the same things they were saying.

Definitely an interesting situation. If they could eliminate their debt, they would be in the black. Perfect example of only purchasing what you can afford to pay cash for. If you cannot buy the team, stadium, etc, and be free and clear financially with no debt, then you really don't need to own a team. Just my opinion of course. ;-)
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Postby Lofunzo » Tue Oct 19, 2004 6:19 pm

What do you mean?? Looks like you and I could buy the Islanders. :-b Posted for those who didn't know this or had forgotten:

Former Islanders owner John Spano, who surrendered to authorities on
July 23 on federal bank and wire fraud charges, still has not agreed
to a proposed plea bargain arrangement, sources said. The 33-year-old
Spano reportedly has been offered a deal that would see him serve
between 51-63 months in a minimum-security federal penitentiary --
in return for pleading guilty to charges in three, perhaps four,
separate jurisdictions, sources said.

The U.S. Attorneys offices in New York, Boston and Dallas all have on-
going investigations of Spano -- and the Dallas businessman has
been indicted in Dallas on fraud charges unrelated to his deal to
purchase the Islanders.

Spano agreed to purchase the Islanders and their cable-television
rights for $165 million on April 7, but federal authorities have
alleged he then failed to make a $16.8 million payment due at closing
to seller John O. Pickett. Authorities also claim Spano failed to
make a nearly $8-million interest payment to Fleet Bank, which now
claims Spano defrauded it into lending him $80 million.


John Spano Jr., whose deal to buy the New York Islanders fell apart when he was unable to meet the payments, pleaded guilty Tuesday in Uniondale, N.Y., to criminal charges related to his efforts to purchase the NHL team.

Spano was accused of making fraudulent claims to obtain the $80 million loan from Fleet Bank that he used to buy the team in April. Spano also spent $400,000 of the team's money after fraudulently assuming ownership.

Spano quietly said ``yes'' when asked by the judge if he were guilty of each of the charges against him; two counts of wire fraud, one count of mail fraud and one count of bank fraud.

Spano could be sentenced from 51 to 63 months in prison. He can also be fined $250,000 for each wire and mail fraud charge. The bank fraud charge carries a $1 million fine.

Spano, who forfeited ownership of the team when he missed a payment, is to be sentenced in federal court in Uniondale in six to eight weeks.


John Spano has been charged with bank and wire fraud charges, after his purchase of the New York Islanders collapsed for nonpayment of funds. Spano managed to get the NHL to believe he was a multimillionaire businessman but he seems to be a deluded con artist.

In retrospect it's apt that Michael Rudman first met John Spano on Halloween night, for that's when nobody is quite as he appears.

Rudman, a longtime New York Islanders fan and habitue of the skyboxes in Nassau Coliseum, took an instant liking to Spano, the Dallas businessman who was negotiating to buy the floundering team from owner John Pickett last year. Rudman appreciated how Spano would invite him into his box and ask advice. "He was like someone who'd been given a new toy and was having fun with it," Rudman says. "He was on a big high. He was flying his private jet back and forth from Dallas, and he talked about how much he was spending on fuel."
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Postby wrveres » Tue Oct 19, 2004 6:22 pm

Lofunzo wrote: Not everything that hits the internet or the news is true, you know?? :-?


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Postby LBJackal » Tue Oct 19, 2004 7:47 pm

Madison wrote:
LBJackal wrote:It was the owners who were trying to put a winning team on the ice instead of making a profit that led to this lockout.


I'm probably out of my league (get it :-b ?) on this one, but do you really believe hockey teams are losing money?

They said the same thing about baseball owners and we all knew that was a bunch of garbage.

Maybe it's true for hockey, but I doubt it.

Just a battle over money. Same old thing.


You really believe teams aren't losing money? I agree it's the owners' fault, but they're definately losing money. Link to the 2003 Summary of Operations

Operating costs of $2,215,000,000.00

Revenues of $1,851,000,000.00

Did the NHL skew the numbers to show that they lost hundreds of millions of dollars? I don't think so. They have openly offered for the NHLPA to conduct an audit, and the NHLPA has declined. Arthur Levitt, Former U.S. Securities & Exchange Commission Chair has done a 10 month investigation and come to the shocking conclusion that: yes, NHL teams are losing a ton of money.

Here is the entire report: Link

Levitt wrote:...it is my opinion that the teams of the NHL have, in all material respects, accurately reported the financial information requested by the League's UROs


Levitt wrote:the current relationship between League-wide player costs and League-wide revenues is inconsistent with reasonable and sound business practices.


Levitt wrote:The average loss reported on the combined League-wide URO for the 30 teams was $9.1 million.


Those are a few of the things in his report. Do you still think the NHL is making a profit and just wants to cancel the entire season anyway? They've said many times it would be cheaper for them to cancel the season then to play it out. Yeah, I can see that as being a threat they'd use even if they were making a profit, but based on the independant review done by Arthur levitt, I find it entirely possible that not playing the season would be cheaper for them. In the long-run, I'm sure it woudl be detrimental, but as of now it's the players who are losing out on their salary while the owners are actually in a better situation for the time being.

I'm definately not excusing the owners, because I believe it's their fault, which is why I say baseball owners are smart for not spending too much money on players who might make the team competitive. If the Royals having a firesale at the end of the year instead of making a playoff run is a better financial move, then that's what they should do. Same goes for every team.
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Postby Madison » Tue Oct 19, 2004 8:24 pm

Good reading there Jackal. ;-D

How an entire sport gets so upside down financially, I'll never figure out. I will say this though, the lockout might be saving owners money this season, but it's costing them in the long run. I boycotted baseball for 2 years after their last strike. I watched on TV, read the papers, and was on the net, but I didn't go to a single game or purchase anything to benefit baseball in the least. I'm sure hockey fans are just as upset. Then again, most might understand since the money issue seems to be relatively availiable to anyone willing to take the time to read it.

Either way, it's a sad thing that NHL fans don't have a season this year no matter what caused it. :-/
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Postby LBJackal » Wed Oct 20, 2004 12:58 am

Yeah definately it hurts everybody in the long-run. For this year though the owners will benefit from the lockout and the players obviously won't since they don't get paid. I guess it can be used as incentive for the players to agree because superficially it looks like the owners would rather not have a season. But I'm sure both sides are well aware it will destroy both of them to not have a season.
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