Interview: Money & Sports
>> it’s official, the nhl and its players ratified a new collective bargaining agreement this week after years of complaining from owners about rising payrolls and franchise values in this week’s “money & sports,” we’re joined by mike buteau out of our atlanta newsroom. mike, how are you?
>> good, derek, how are you?
>> good. what effect will this agreement have on team values now?
>> well, it’s interesting, because as you said, for years, owners were saying salaries were going up, franchise values going down, now, talking with sports bankers who study the finances of teams, they say this will boost revenues of the teams by as much as 35%. how it does that, simply is now there’s a salary cap in place, salaries are tied to 54% of overall revenues so by doing that, you increase the chance of a team essentially making money and when you’re making money, the franchise value goes up. interestingly, though, it will benefit most, according to sports bankers, teams like toronto which is a cash cow to begin with and a team like the new york rangers which has no trouble having enough money to pay players anyway. those are the big markets , most interesting teams as far as fans go, so it will significantly help those teams.
>> what teams benefit the most?
>> well, like i said, the big market teams, toronto, new york. but when you look at the taemmeds that also will benefit from this, hopefully the small market teams is what the nhl hopes for, the carolina hurricanes, national predators, non-traditional hockey markets , here in atlanta, as well, hopefully they’ll be able to get free agents, get the players they haven’t been able to afford in the past because the big money teams that over spent in the past will have the salary cap.
>> now, there were a number of rule changes approved today, no?
>> absolutely.
>> how could they affect the casual hockey fan?
>> the biggest thing you hear from casual hockey fans is there’s not enough scoring, not enough excitement and too much defense that goes on. the rule changes implemented starting this year, they’re getting rid of the center red line, allow a two-line pass, essentially allowing a pass from in your own zone to the far blue line, something you haven’t been able to do in the past, hopefully creating for breakaways and scoring chances. they’ll shrink the goalie equipment a little bit because the goalies are looking like michelin men these days, giving area for more scoring by shrinking that down and there will be a shootout at the end of the day so you’ll always have a winner.
>> let’s turn to the league’s draft, buzz about a guy named sidney crosby. is he the next gretzky, or no?
>> even wayne gretzky says he could be the next wayne gretzky. he doesn’t say that too often. sidney crosby out of nova scotia. they finished the draft lottery and the pittsburgh penguins won it and there’s no question they will select sidney crosby. that’s good for the conferences. pittsburgh filed for bankruptcy a couple of years ago and they need a new arena. it’s the oldest in the league. hopefully, this kid will get them a new arena.
>> is everybody happy with the results?
>> well, when you look at the scenario, the best scenario would have been, according to people looking into this, put the kid in new york, the rangers, the biggest market , would get the most benefit for the nhl because you have him in the biggest market but pittsburgh is a pretty good end result here because, like i said, you keep him in the eastern time zone, that conference and that division playing philadelphia, new york a lot. so you’ll see sidney crosby. plus mario lemieux is still in pittsburgh.
>> let’s turn to football, the jets might not get their new stadium before after the settlement reached today, they won’t have to pay as much rent in giants stadium. tell me about that.
>> the jets sued the new jersey sports and exhibition authority not long ago saying their rent was higher than the new york giants who also share the building. by about 5%, so they settled today and they will be paying 10%, which is what the giants were paying. so they’re still trying to get a new stadium in lower manhattan.
>> thanks for that, mike. mike buteau, live from atlanta. we’ll be right back.
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Listen Market briefing --- Derek (slow)
Interview: Analyst with energy security
>> crude oil prices continue to fluctuate amid speculation about china and worries over supply. are they headed up to $80 a barrel or down to $50? joining me from alston, massachusetts, rick mueller, analyst with energy security lis lis. thanks for joining us, rick.
>> my pleasure.
>> with the chinese economy growing and the latest move to revalue the yuan, what do you see global demand heading for this year?
>> i think it will come in significantly below last year, probably near 2.9 million barrels a day.
>> how about the supply imbalance, now that reserves in saudi arabia have been depleted?
>> i think that’s plenty of oil out there. it’s a question right now where we’re caught with a lack of spare capacity. it will take a while for the new production to come on stream. we’ll probably see elevated prices for a while.
>> do we actually have enough supply to meet global demand at this point?
>> oh, i think so and i think that’s borne out if you look at the inventory numbers, especially here in the u.s. crude stocks and distillate stocks have been rising at comfortable levels. i don’t think there’s much to worry about from that standpoint unless we see a disruption in supply.
>> do you see prices rising above $60 a barrel?
>> there’s always that potential, especially when we’re in a capacity-constrained market where the spare cushion is lower than we’d like to see. that being said, prices seem to be moving toward a lower range, probably in the mid 50’s.
>> what’s the appropriate range for prices? can we see prices return to the $25 to $30 range in the near term?
>> probably not in the near term unless there’s a massive economic dislocation and slowdown similar to the asian financial crisis in 1998. of course, back then, we saw prices go down as low as $10 a barrel. i don’t think that will happen. i think the global economy is much stronger than it was then. i think we’ll probably see prices stay near where they are currently.
>> what’s the speculation in the market , rick? how are investors feeling?
>> there’s nervousness in the market . there is, understanding that saudi arabia is not the big brother we’ve come to depend upon in the oil markets , their spare cushion has fallen to levels where they can’t automatically open up the tap and cover an outage in iraq or venezuela. so i’d have to characterize the mood as nervous.
>> you’re talking about saudi arabia. why would the reserves depleted in the first place and can they, in fact, be rebuilt?
>> basically, there’s a lack of investment there because we had an extended period of relatively low prices after the financial crisis in 1998 and with crude prices in the low 20’s, high teens, there wasn’t incentive for producers to invest in additional capacity. last year, when we saw the dramatic jump in growth, especially in china, that caught the market by surprise, no one factoring that into projections, so we saw that spare capacity number really come down.
>> rick mueller, analyst with energy security analysis, thank you for joining us.
