Monday, October 20, 2008

Is the KHL The Real Russian Threat?

1) Last week several blogs including mirtle as well as under review did posts concerning the salary structure of the "rival" KHL. With the admittedly difficult task of translating Russian to English AND Rubles to American Dollars they came up with a run down of the individual team payrolls. According to the KHL bylaws they have a league's salary cap is set at 620 million rubles, which at this time is about $24-million American Dollars. They apparently don't have a salary floor which explains why the lowest payed team, Khimik with a TEAM payroll of $4.3 mil is far below Avangard which has a payroll of $30.8 mil. (MLB would be proud!)

2) Several things jump out at us:
  • Even the top team's payroll is FAR from the NHL. Only 1 team has a payroll over 30 mil. ( They apparently have a 'soft' cap? The median payroll is about 12 million. Even bottom revenue NHL teams BEFORE the salary cap were above that level. The NHL shouldn't have a huge issue retaining talent if only a handful of teams over there can throw away money.


  • With so much disparity, (highest payroll is more than 700% the lowest) the lower teams won't compete/won't attract an audience. Although so far, this similar issue hasn't hurt MLB attendance, can a league that is trying to expand, build up a reputation have many teams remain bottom feeders and retain/attain a decent following?


  • When the KHL began to 'flex its muscles'/play hardball against the NHL oil was hovering at $145/barrel. Today its falling below $75. Why does this matter? A great deal of the income for the majority of the KHL owners either comes directly or indirectly from this. With commodities falling like a rock can even the top teams throw money away?
  • The recent death of Alexei Cherepanov illustrated better than any opinion we could give how the KHL, and Russia in general is still in many ways a 3rd world country. Players go there at their own risk.

3) The bottom line/our conclusion to all this is that its looking less and less that the KHL will/can become a TRUE rival league to the NHL. The folks over there are not stupid, and are probably starting to see this as well. Which is why we at FAUXRUMORS believe that we will see a gradual softening of the KHL positions as they relate to pilfering off NHL talent. They should see the NHL as a possible partner that could supply them with talent when NHL teams may want to 'hide' salary by "loaning' a player to the KHL. (see Vitaly Vishnevski- N.J. Devils) Thereby circumventing the salary cap here. We may also finally have some meaningful discussions about a fair transfer agreement. The Russians may have to give in a little here (as should the NHL), but getting something is significantly better than getting nothing for their home grown players, niet?

6 comments:

Capital Fanatic said...

Plus, the other argument I've heard against the KHL is that they don't have the stadium's that we have in the US. So they play in front of crowds of about 2,000-4,000. That is the real reason they will never be a threat to the NHL.

Mad Monk said...

Great post talking about my old country. I like picture of new tsar mr. putin. he is real danger to world, not khl. khl make big talk to scare more money to it. they know they can never be as good as the us league here. it is russian way to do things. make big talk then talk to make better deal.

FAUX RUMORS said...

1) Caps: Good point. From what we can tell the KHL is less a profit-achieving enterprise than it is a ego thing for the owners there(mostly oil barons/government big wigs/Russian mob bosses)-yes, all the same thing. ; )
2) Monk: Great to have ya back. Yes, Vlad Putin is the new Tsar. Make no mistake, he's the boss, and will be until he's dethroned (killed or retires)

DMG said...

Is the KHL a real threat? Perhaps we should look into its eyes and see its soul to figure it out?

All kidding aside, the KHL doesn't have long term potential. The Russian owners/government (often the same entity) my be high on their petro-dollars for now but that will fade and even billionaires get tired of losing money at some point and the market in Russia or in other countries the KHL is trying to recruit teams from just doesn't match up with the North American market.

Antzmarching said...

The biggest threat to the NHL is Gary BUTTMan!!! Nobody should be even remotely concerned about the KHL... Russia invading other countries is a problem, not their silly hockey league...

FAUX RUMORS said...

1) DMG/Antz: We agree with both your points here. Many were looking at the KHL as if it was going to cause a mass loss of NHL talent. It hasn't, and it won't.
2) Radulov is regretting his decision. He has been ostracized not only by the team/NHL, but more importantly by his fellow Russians (See our Malkin post below)

 
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