HRR and GREED


I will admit, that this lockout is driving me crazy.

Simply put, as a former "C-Level" executive, the anti-owner crowd annoys me beyond belief. Sure, it was a made up C-Level (Chief Information Architect) but at age 25, I was still on the executive board of a failing dot com era big IT consulting company.

The players just don't get the business side of things. They throw out the label on how the owners are being greedy as if it is a bad thing.

The NHL owners, being businessmen, do. This select group of billion-and-million-aires accept the greedy label. Because they are and they know it.

The thing is, through all of this?

I am fine with Greed. As a pure capitalist, I fully support the players wanting to get paid what they are owed, I am fine with the owners trying to figure out a way to become profitable.

Greed. Is. Good.




I admitted that the lockout is driving me crazy, yes? I was crazy enough to read the entire 2005 CBA section on what defines HOCKEY RELATED REVENUE, hereby referred to as HRR. To be more clear, it is actually easier to talk about what is NOT considered part of HRR.

From the monies that a team or the league generates, the only two sizable non-HRR items are; Relocation fees and Expansion fees. First, expansion fees are few and far between. Sure, the rumor is that the NHL wants to expand two teams, but the economic benefit to the players via expansion means more HRR to split and 100 more NHL/AHL contracts. Second, the relocation fees. Relocation also happens rarely, and should  a team relocate, I would actually propose that some of this is sent to the players side of the house, considering the impact relocation has on players.

Everything else? All wrapped up into HRR.

For the players, getting a guaranteed 57% (or more) of the calculated HRR was a huge gain. It was a gradual increase over the course of the 2005 CBA but it was still sizable. Dropping this down to 50% over the course of three years at 4% growth seems a no brainer. I am working on a re-vamped numbers proposal based on current HRR calculations which would shift the players portion down to 50% of HRR over three years and still see them get paid for their current contracts.

However...

What is NOT considered part of Hockey Related Revenue are all of the endorsement deals that players can ink. By the virtue of being a hockey player, employed and paid handsomely by the owners, who in turn are funded by the fans, a player like Sidney Crosby can ink an endorsement deal with Reebok. He has pushed their skates, their sticks, their gear, and even their ZigTech shoes. I don't know what the reimbursement of this endorsement was, but it was NOT part of that year's HRR calculation.

Does anyone else remember the Ovechkin floating head commercials? Sure you do... What about his CCM endorsement deal? Were those deals considered part of that year's HRR calculations?

No. They were not.

Even Cal Clutterbuck endorsed and appeared (without Wild Gear on, by the way) a Heating and Cooling Company last season. This was also, although not in the scope of a Reebok deal, NOT considered part of Hockey Related Revenue.

Think about that for a moment. Cal Clutterbuck gets paid an endorsement fee by that HVAC company to appear in their commercials. That HVAC company pays Fox Sports North to air the commercials during Wild games. The monies paid to Cal are not calculated into HRR but the monies paid to FSN, to air specifically during the Wild games, are wrapped up into Hockey Related Revenue.

Clutterbuck essentially got paid TWICE for appearing in a commercial. Sure, it is probably pennies as that ad revenue gets wrapped up into HRR, but still.

Silly thing is, these players wouldn't be set to endorse jack or shit without hockey. Sidney Crosby would just be another ugly kid if he didn't have elite talent to play hockey. By virtue of his elite talent, Crosby is able to make millions (on the side) that are not part of HRR calculations just by appearing for 5 seconds in a shoe commercial. Would I care about him or his opinion if he wasn't an elite hockey player? (I don't particularly care about his opinion anyway, but I'm not a schill...)

Yet, I do not fault the players for using their celebrity status to ink these endorsements. Michael Jordan and Larry Byrd made some of the most memorable commercials for McDonalds ever. I am betting that those endorsement deals were never figured into BRR either. Why do I not fault the players?



Greed. Is. Good.

Players are, however, whining about the greed of the owners. There are countless examples of players taking to twitter to label the owners as greedy. This is what I don't understand about their PR position; They label their bosses as greedy at the same time that every single red cent of NHL monies an owner generates gets lumped into the HRR calculation, which goes into the players 57% purse.

I wonder...

How about we start lumping in player endorsements into HRR calculations? Let us treat them the same as the dasher board advertising revenue that owners have to report as HRR. Let us treat those endorsements the same as the television commercial revenues that the clubs all have to report as HRR. All of those small blocks of ads for gear cleaning in the back of the game programs, the teams have to report that as HRR.

So if Ovechkin signs a 10 million dollar endorsement deal?

Add that to the annual calculation of HRR instead of it going into his personal bank account. In a 50-50 fair split, 5 million goes to the 30 owners to divide equally and 5 million goes to the 700+ players to divide equally. I am sure that the owners would love to have an annual bonus check of $167,000 from that endorsement deal while the players would love the...

...$7,000 check from Ovie's deal.

What? You mean that Ovechkin wouldn't get his $10M endorsement deal himself? He'd only get $7,000 to be a floating head?

That is only "fair". At least according to the definition used by all of  players that went out on Twitter this week and cried up a new Rio Grande...

1 comment:

  1. Clutter should pay US for how bad his hair was in those commercials.

    ReplyDelete