Looks like the hypocrosy is running wide and deep @ the NHLPA. After
claiming for months that the NHL’s numbers are “fundamentally
flawed”, they
claim to have pluged those very same numbers into the NHL’s forcast
projects and “proved” a difference of nearly a billion dollars, from
losing $569 million over three years to making $412 million. Wow, if
that’s true, that’s some pretty shitty math by the NHL. Of course, it’s
complete bullshit.
The NHLPA’s argument rests on the projected revenue and player cost
growth for the next three years. The NHL projects that revenue will rise
at 3% per year while the players claim the NHL’s own historical numbers
suggest that revenue will rise 7.8% per year. And it’s true that over
the past five years, the NHL’s Y/Y revenue growth has been 7.8%. Of
course, during that time, there has been three new teams added as well
as TV contracts that have come and gone (the current NHL TV contract w/
NBC is worth much less than the previous one with Fox). If you look at
just the past four years – a much more relevant time frame – revenue has
gone up between 4.3% and 6.4% per year. Given the effect of the lockout,
I’m thinking 3% is a pretty good estimate.
The NHLPA goes on to argue that the NHL’s own numbers suggest that
player salaries will only go up 7.3% rather than the 12% the league
suggests. Again, the 7.3% number for five years is accurate, but if you
at the player cost growth for 01-02 and 02-03 the increase was 11.6% &
11.8% Y/Y. (03-04 was a paltry 1.8% Y/Y increase, but I would attribute
that to the looming lockout.) What’s really scary is that in 01-02 and
02-03, total player costs went up more per year than in the two years
prior when new teams joining increased the total number of player
jobs! In 00-01, when two new teams (around 50 new players) joined the
league, total player cost went up $121 million. The following two
years, when no new teams were added, total player cost went up $127 and
$144 million respectively. Gee, looks like the 12% estimate is pretty
close to reality too. Plus, the league admitted that the player cost
growth might drop as low as 9% based on the 24% salary rollback and
other deflators the players proposed. But last I checked 3% revenue
growth + 9% player cost growth = bad news for the owners in the long
run.
I’m thinking the NHLPA has a bunch of excel users punching in random
historical data into the model to see what provides the best outcome for
the league. In their “rebuttal”, they keep switching their historical
model - first they use 10 year historical revenue growth numbers, then
they use five year historical revenue and player cost growth numbers.
Then, in their final chart uses an unprovided player cost growth
estimate that is actually marginally higher than what the league is
projecting, cutting the difference from the NHL’s projection in half to
$440 million.
If they can’t even keep their story straight on their web page, do they
really expect to fool anyone else with this Enron-esque number
crunching?