Almost every major professional sports team plays in a government-funded arena. That is a huge State subsidy to sports league owners.
If NHL owners had to pay for their own stadium, that would be a lot of idle capital during a lockout. With no arena expense, the owners’ biggest expense is salary. With zero capital expenses, that make a lockout less costly.
For example, the Barclays center cost $1B. However, no NHL team plays there. In other cities, arenas would cost less. Suppose that the typical NHL arena cost $500M, and is shared with an NBA team.
Most arenas are shared with an NBA team. The arena holds other events on other days. However, during a lockout, it’s hard to schedule other high-paying events on short notice. If the arena costs $500M, the NHL fraction of the cost is approximately $150M.
The capital cost of each arena is approximately $150M. There are 30 teams. The NHL’s total arena capital expense should be $4.5B. In 2011, NHL revenue was $3B.
However, actual profits are much less. With a profit margin of 10%-20%, NHL profit would be approximately $300M-$600M. That’s a profit rate of approximately 10% compared to the capital cost of the arena.
If sports leagues had to pay for their own arenas, it would barely be a profitable business! The State assumes the capital expense. That is a huge State subsidy to sports owners.
Sports are bread and circuses, keeping the masses complacent. Also, sports league owners are billionaires and insiders. They can afford to lobby, in exchange for a State subsidy. If I start an entertainment business, I wouldn’t get the government to pay my capital expenses. That gives sports leagues an unfair advantage over smaller entertainment businesses.
The government finances sports league owners during a lockout, by paying for their stadiums and reducing their capital expense to practically nothing. With almost no capital expense, their biggest expense is player salaries. If owners had to pay for their own stadiums, a lockout would cost a *LOT* more money, due to the large amount of idle capital, the arena expense.
Almost all professional sports leagues play in government-financed arenas. That makes them more profitable. That subsidy also encourages owners to lock out their players. With State-financed arenas, owners don’t have idle capital during a work stoppage, making a lockout more financially attractive.