February 25, 2004

Intelligent CBA analysis.....via blackredgold "In this three-part series, we will take a look, in this first installment, at the various components included and excluded from operating income and how NHL teams fit into the structure of their parent organizations (most often as one of several entities), then provide some case studies in a second installment, and conclude by examining a wholly different way of measuring gain and loss, a way that is of tantamount importance to investors -- capital gains."

posted by garfield to hockey at 12:42 PM - 19 comments

Since I brought up the concept of scruples, it might be worth reminding people that the worst thing any player has done is get into a car accident, get into a tussle off the ice, get too involved with drugs or alcohol, or hold out for a new contract before his current contract is up. NHL ownership on the other hand includes Jim Norris, who went to jail for antitrust violations, and the Wirtz family, which acted as his Chicago beard for so many years; Bruce McNall, a Kings' owner who went to jail for fraud, and Philip Anschutz, another Kings' owner who has so far escaped the criminal charges that four of his executives have been unable to avoid for the well-publicized accounting fraud at his company Qwest, but has not been able to escape civil charges; the Rigas family, who will go to jail for fraud when all is said and done for looting their company, Adelphia Communications, Harold Ballard, who among many notorious attributes that included racism and sexism, went to jail on 48 counts of fraud, one of them misappropriating funds from his Toronto franchise to renovate his home, and John Spano, who went to jail for defrauding the NHL itself; Alan Cohen, who made his fortune infringing patents but survived patent infringement suits brought upon him by rival drug companies like Eugene Melnyk's Biovail, which itself is being sued for accounting irregularities; Peter Pocklington, who criminally sold off one of the best teams ever assembled for the benefit of his personal finances; George Gillett, who went bankrupt after making a billion in junk bonds; Cablevision and Time Warner, a pair of cable operators who have both been involved in multiple, high-profile legal battles, often with each other, in which they held customers' programming hostage, sometimes even for years, and who are both currently troubled by allegations of accounting irregularities; and Ted Leonsis, who got into a tussle off the ice. And I won't even get into the ethics of people who made hundreds of millions or billions in leveraged buy-outs, venture capital, liquor distributorship, parking garages, airport restaurants, commercial real estate, billboard advertising, and other such savory industries." I love this guy.

posted by garfield at 12:56 PM on February 25, 2004

"And I won't even get into the ethics of people who made hundreds of millions or billions in leveraged buy-outs, venture capital, liquor distributorship, parking garages, airport restaurants, commercial real estate, billboard advertising, and other such savory industries." What's wrong with venture capital? Or airport restaurants? Okay, they're expensive, but the rent is ridiculous in those places. Billboard advertising? Ugly, but effective. Parking garages? God forbid! Ooooh, savory indeed! I don't get that last sentence at all. If you hate rich people and all they do, fine with me, but you would have to toss the players in the same boat for making their millions in the savory industry of playing a game (and eating at airport restaurants no doubt). Furthermore, that little car accident he glosses over at the top killed a person. I'm more than willing to forgive Dany for the incident, but if you're outlining all alledged indiscretions and fringe relationships between owners and legal events, you'd probably want to hold the players to the same standard. But wait, Ted Leonsis got in a pushing match!!! I'm sure someone could make a compelling list the other way as well especially is they tilt the playing field to fit their purposes and call Spano's actions (to pick one at random), a little "too involved with fraud." Anyway... It's a good read.

posted by 86 at 02:24 PM on February 25, 2004

Billy Tibbets got too involved in raping girls. Anyway, this isn't about that paragraph and I don't think we need to really cover it much more. Owners aren't all bad. Players aren't all bad. But they're all bastard punks if they can't agree to something.

posted by 86 at 02:47 PM on February 25, 2004

Nothing is wrong with venture capital....(though leveraged buy outs leave much to be desired from a business ethics stand point).....unless you are complaining about how much money you aren't making from x, when y is bringing in the duckets. And the players, the majority by far, aren't even in the same league in terms of capital flow, so no, you don't have to include them. But that's not really the point. Don't you think the player's transgressions have had enough attention, in light of the relative anonymity the owners enjoy? And I'm saying this because when was the last time you saw such a list compiled. Yes, its reactionary to the lopsided media coverage. And thats a good thing. On preview: the owners are alot worse than what the average fan thinks of them.

posted by garfield at 02:53 PM on February 25, 2004

Or is white crime not as damning?

posted by garfield at 03:01 PM on February 25, 2004

I was meaning to post this too...great, great read, and I'm looking forward to the rest of the series. It amazes me that neither the NHL nor the NHLPA is capable of this level of candidness (or thoroughness) in talk of the league's finances. The author, who isn't a journalist, put together this analysis based on information that's freely available online and from easy-to-find media sources. WAKE UP LEAGUE/UNION! Perhaps the report should be emailed to Bettman and Goodenow.

posted by Succa at 03:07 PM on February 25, 2004

Dude, white (collar) crime not as damning?!!? What the hell is that? I never said anything of the sort and you damn well know it. In fact, I tend to believe it's a hell of a lot worse than many other crimes, but it's also irrelevant to what I was talking about. I merely pointed out that the guy wrote a helluva slanted paragraph. The fact is if you wanted to write the same thing against players you could easily do so. As an example I pointed out that the guy glosses over a car accident that results in the death of a person and lands hard on Ted Leonsis for getting in a third-grade girl-fight. The way it was presented was not balanced in the least and if he was hoping to score points against the owners (something that is rather easy to do) he should have worked a little harder and not stretched things so far to favor his viewpoint. My comments about him hating rich people come from the author's rather odd inclusion of airport restaurants, billboard advertising, etc in a discussion of business ethics. How merely being involved in these industries, or perhaps evening making boatloads of money in them, should cause someone to suspect your ethics is beyond me. And yet there it is. "He won't even get into it". Nice. I'm not here to defend of anyone, let alone the goddamned owners. You know my stance on this issue better than most. I think it's millionaires fighting with millionaires and I'll be damned if I'm coming to the defense of any of them. I'd just rather see things put into the apprpriate context, particularly when it is easy to do. Also, I'm not entirely sure what lopsided media coverage you're talking about. You read a lot more about this than I do, but I haven't seen many stories coming to the defense of the owners (or the players for that matter). I'd be awed if sports-writers were deeply entrenched on one side of the debate or the other. That said, writing lopsided articles on either side is not, "a good thing".

posted by 86 at 03:45 PM on February 25, 2004

We've all heard about how bad athletes behave, and I ride that pony when the ride is in town. But I got the sense from your tone that you were downplaying the owners' transgressions, most of which I'd never heard of. Which is why the lopsided reporting is self evident, and remains a good thing for this situation. And I didn't want my posting of one of the author's free-wheeling rant to detract from the rest of the article.

posted by garfield at 04:13 PM on February 25, 2004

...and you know I like to stir the pot....

posted by garfield at 04:25 PM on February 25, 2004

among other things

posted by garfield at 04:36 PM on February 25, 2004

That is a very good article, although it would be better is he posted his links (he says they are coming...). Just a couple of thoughts. First all of his comparisions between Canadian teams and the Forbes numbers don't mention currency conversion. Maybe he did it, but he doesn't mention it anywhere. All of a sudden the local TV revenue and ticket sales don't look so good anymore. That's why teams like the Flames cry poverty. BTW... the Flames have a very good deal on their arena... they own it. So his comment... The oil barons who own the Flames and let their front man cry poverty aren't angry that they can't get a deal like the one the SEA proposed on behalf of the Penguins -- they're just livid their local, national, and provincial governments refuse to hand it to them on a platter, free of charge. doesn't make much sense. They did however ask the government for help and they didn't get it. Which is the way it should be. Secondly all of his exmaples are for what I would call good hockey centers (NY, NJ, Dallas, Montreal, Toronto, Vancouver, Buffalo, Detroit). What about Nashville, San Jose, Tampa Bay, Florida, Columbus, Carolina, Phoniex etc. That is why even if there is a hard cap, a revenue sharing model for the owners is also a must. He brings up a very good point though. Most NHL owners don't own just a NHL team. If they could I think a lot of these owners would sell the team, but they can't get much for them these days. No doubt about it these guys would love to see a better CBA so they could actually sell the team for more money. In the end in order for the NHL to survive the teams must be able to stand on their own in the market.

posted by camcanuck at 10:17 AM on February 26, 2004

In the end in order for the NHL to survive the teams must be able to stand on their own in the market. Don't you think this article disproves that myth? And most owners wouldn't sell their teams, as eager investors are waiting in the wings to snatch up a franchise. In the end, its about striking a balance. Arbitrary company borders don't necessarily dictate where that balance can be struck.

posted by garfield at 12:19 PM on February 26, 2004

garfield: I think the key point is if a NHL team cannot be run unless it is part of a large entertainment group then a lot of smaller markets will not have teams. Sure I would buy Toronto or Philly in a second, but I sure as hell wouldn't buy Atlanta, Carolina or Edmonton. Until there is some better revenue sharing and a salary cap how can market like Edmonton (~ 1 million people & community owned team) ever compete with New York(~15 Million people, owned by massive Cable Company). Sure the Rangers suck, but New Jersey doesn't. A $5 million loss to the Rangers is just a small line in a big balance sheet and is chalked up to the cost of doing buiness. While in Edmonton even though the team does well, and sells well a loss of $5 million is big dent for the team. Unless costs are controlled the NHL will price itself out of a lot of markets (just like baseball). Without a doubt though the players should not be the only people who 'solve' this problem. A good league revenue sharing program is a must as well.

posted by camcanuck at 01:22 PM on February 26, 2004

Edmonton is profitable. Why wouldn't you want to buy them? Anyways, this is a tough debate because $ doesn't equal success, so it is possible to be profitable while not winning it all, and it is possible to win it all without spending a ton. Under this assumption, Edmonton is as viable a franchise as NJ. I think you have a point about the NHL pricing itself out of markets, but this control should come from within, rather than some external mechanism. But, that's because I believe in the expansion era too many owners tried shoot the moon. The owners just need a lesson in fiscal responsibility. Ted Leonsis is learning that lesson this year. Mr. Hicks is starting to get it. Even today he said if Modano and Guerin had given back part of their salaries, he could've signed Hatcher. Well, if Modano and Guerin didn't have such big contracts, he couldn't signed Hatcher. According to the article, the key point is to own your own stadium, or have a very favorbale leasing arrangement. A large cable conglomerate would be nice, but a building of your own will suffice.

posted by garfield at 01:54 PM on February 26, 2004

Edmonton won't be making a profit this year... unless they make the playoffs (which doesn't look likely at this point). The big thing that is missing from small market teams is the local TV revenue. While owning your own stadium will go a long way, with little or no TV revenue you're in trouble. You're right the owners got themselves in theis mess, but I don't really see how they can get themselves out. If all the owners just agree they can't afford this anymore the NHLPA starts screaming collusion.

posted by camcanuck at 03:19 PM on February 26, 2004

Q: Hasn't the increase in the CDN$ closed the profit/loss gap for most Canadian teams this year? Aren't they looking at several extra $million a piece? And I'd make the argument that coddle first/personal vendetta second style of management employed when dealing with Comrie is a major factor why the Oilers won't make the playoffs.

posted by garfield at 03:40 PM on February 26, 2004

Actually, Comrie's story is an excellent microcosm of what went wrong over the past 5 years or so with NHL player contracts. First he is given an unheard of contract for a player with his experience. Then he gets pissed when the special treatment stops coming. Subsequently, the Oilers detract from their on-ice product two-fold: distraction to team, and minus one good young hockey player. If contract signings were within the team's parameters, (meaning the cash strapped Oiler's shouldn't have been breaking new ground when it comes to extravagant contractual terms), none of this would've happened. Ain't 20/20 in the rearview grand?

posted by garfield at 03:46 PM on February 26, 2004

CDN$ is doing better, but a loonie is still only worth 0.745116 US. However it has only been that high in the last 9 months or so. That $70 million in gate / tv revenue for Vancouver cited in the article is 'only' worth ~$52.2 million with today's rates. These rates are the best they've been in 10 years. Last year it would have been closer to 47 million. Vancouver is an example of how to manage a team very well. They have a low payroll, and make do in what most people in the NHL today would call a medium sized market. They at least have to money to retain key players (Bertiuzzi). Edmonton is the poster child for what is wrong. They sign the players they can afford typically young and unknown. Then have them leave when their contracts are up (see Doug Weight), or players hold out for something better (see Comrie). With the current setup Edmonton will never really be a threat to win the cup. Ever. No matter how well they draft they will never be able to hang on to good players for more than a couple years. I still think that guaranteeing player contacts is a big problem. Someone like Jagr is the perfect example. He isn't worth half of what he is being paid. Give teams the power to fire a player and some of these ridiculous salaries that were handed out would be corrected, and would be more in line with 'market levels'. Oh well at least the race for the final 4 playoff spots in the west and the top 6 spots in the east is going to come down to the wire. It should make for a great last couple weeks.

posted by camcanuck at 05:18 PM on February 26, 2004

agreed. the race is sweet this year.

btw, thanks for going back and forth with me. sometimes i come off as an ass...well, quite often really....and i appreciate the dialogue.

posted by garfield at 06:10 PM on February 26, 2004

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