The commish has three groups of owners: the ones who want to play; the ones in the middle, including Tampa and Nashville, who want a better collective bargaining agreement but recognize not playing is worse; and the hardliners. It would be a mistake to underestimate the last group. There are several who would rather cancel the season than accept a bad deal because they are hemorrhaging money and need immediate satisfaction.
While the players believe Boston Bruins owner Jeremy Jacobs is calling the shots, an educated guess at the final group includes but may not be limited to Anaheim, Columbus, Florida, the Islanders, Phoenix, St. Louis, Washington and Dallas[.] – Elliotte Friedman, 10/31/12
It didn’t take long after Elliotte Friedman’s 30 Thoughts dropped the other day for the Internet (or at least hockey’s ever-diminishing corner of it) to ignite with variations on “Where does Ted Leonsis get off crying poor after signing Alex Ovechkin and Nicklas Backstrom to monster contracts?”
(Which apparently is this week’s version of “Where does Craig Leipold get off crying poor after signing Zach Parise and Ryan Suter to monster contracts?”)
But it’s a nuanced issue, one-liners notwithstanding, and since our last beer summit apparently didn’t solve the lockout, we’re here to sort it out a bit – two dudes doing some figuring over beers. So, Rob, when you see the Caps’ owner being identified among the “hardliners,” what are your initial thoughts, as a Caps fan or otherwise?
Rob: On a purely emotional level, it’s frustrating. My team’s owner is holding back the process? You have to take a step back and realize this isn’t (or shouldn’t be) an emotional decision for the owners and the players, but I still think it looks bad for Leonsis. Only a small handful of teams have seen their fortunes (figuratively and likely literally) change more for the better under the last CBA – the Verizon Center has been full, season ticket prices have been jumping up annually (and the secondary market isn’t keeping pace, ask any season ticket holder about that…) and yet Ted Leonsis is among the hardline group that thinks things are so bad that it’s worth scrapping another season.
JP: The reality is that no one who has enough money to buy an NHL team got rich by giving money away, and that includes Leonsis. And when a new Collective Bargaining Agreement is being negotiated, the owners – all of them – are going to try to get as favorable a deal as they can, just like the players. Short of the “perfect” deal, owners (and players) will vary widely on what they’d be willing to accept as a compromise to get a new CBA done. Sporting News‘s Sean Gentille wrote that the hardliners identified by Friedman “would rather cancel the season than accept a deal they perceive as unfair” – which may be accurate but under-inclusive. After all, is any owner willing to accept a deal he sees as unfair?
It’s the definition of descriptors like “bad” and “unfair” which would seem to be the sticking point – one man’s “unfair” is another’s “let’s drop the puck.” Which brings us back to Leonsis and the Caps. You mentioned the Caps’ literal and figurative fortunes, but it’s unlikely that anyone on the outside knows what the Caps’ financials really look like. Forbes, for example, has them among the League’s biggest losers in terms of operating income; that may be some combination of accuracy and a high-dollar shell game, but it’s likely that the Caps are rocking the red both in the stands and on the balance sheet. And that begs the question: If the Capitals – who own their building, sell-out every game (with relatively reasonably-priced tickets), have a highly marketable star and go to the playoffs every year – can’t come close to turning a profit during an enormous period of League-wide revenue growth, isn’t there something legitimately lacking in the current system?
Rob: If Leonsis’ position is that the Caps can sell out the arena, perpetually increase ticket prices, employ one of the most marketable players in the game, and still not make money, then I wonder why the Washington Capitals were the first team to sign a player to a $100 million contract. A lot of teams operate on internal budgets that match their respective financial realities. If the Capitals don’t/didn’t have the money to spend beyond the salary cap (needing Tom Poti’s LTIR to save them some room to get a legitimate NHL blueline last season, for example), then they shouldn’t be the team pushing the envelope on NHL salaries. Teams like the Nashville Predators manage to stay competitive on a budget; the Anaheim Ducks won a Cup on an internal budget; the Tampa Bay Lightning unceremoniously dispatched the Caps two seasons ago on an internal budget.
Maybe the Caps should have settled for a lower-salary roster rather than pushing their salary structure to the limits if they didn’t have the money to maintain that structure. At least Caps fans got to watch the high-priced team score some goals, but it must be extremely frustrating for fans of teams that have a sound financial structure to watch the Caps push the salary structure northward, only to be the very same team obstructing a CBA resolution because they can’t afford player salaries!
JP: Who said the Caps can’t afford to pay their players or are living beyond their monetary means? I certainly haven’t heard that. Just because their internal budget has at times in the past aligned with the upper limit of the salary cap doesn’t mean that they don’t have a sound financial foundation or that other teams with lower payrolls are necessarily more fiscally responsible. (There once was a time when actually spending money on hockey players in this town was viewed as a positive indication of a commitment to winning. Alas…)
More to the point – and the crux of the criticisms – I don’t think there’s anything intellectually inconsistent with operating to the best of your ability under one set of rules and advocating for a different, more favorable set of rules when the opportunity presents itself, as it has here. If I pay the maximum (or minimum) amount of Federal income tax that someone with my income is bound by law to pay, does it preclude me from arguing that my rate should be higher or lower?
Rob: There’s nothing inconsistent about playing under one set of rules and arguing for another, but that’s not the full picture. Not only were the Caps playing under the rules of the prior CBA, they were consistently pushing the salaries higher, and their actions were inconsistent with an organization that was financially strapped. If you have a Ferrari in the driveway, then you go and cry that you need to pay less in taxes because the current tax structure is too burdensome, you don’t make enough income, and now you might not have enough to pay your mortgage, then you just look like someone who is either a hypocrite or has no concept of money management. Given that NHL owners have not gotten where they are by having terrible money management skills, that leaves us with one conclusion…
I also don’t begrudge any of the owners the opportunity to negotiate for a more favorable deal. But every deal the players advance that accepts less than 57% of revenue is, by definition, “more favorable” than the one that just expired. Ted Leonsis isn’t just part of the group of owners that wants a “more favorable” deal (at least not per Friedman, and it’s a shame that he won’t have an opportunity to defend himself and his position on the negotiations… although he’s certainly learned his lesson there); he’s in the group of owners that would rather cancel the season than accept anything the players have offered.
Predictably, the Twitter blowback was not directed at the first two groups of owners that want to play the season. It’s only that group of owners that would rather cancel the season than accept a “bad” deal that has inspired the ire of fans everywhere. If a “bad” deal leaves enough money for $66 million in salary, one can only wonder what a “good” deal looks like.
JP: Consistently pushing salaries higher? They signed one player to a mega-deal… that might not really have pushed much of anything. Vincent Lecavalier of your well-budgeted Tampa Bay Lightning made more then and makes more now. Moreover, Ovechkin’s deal is an above-the-table contract that doesn’t circumvent the spirit of the CBA by tacking on bogus, cheap years at the end to lower the cap hit. If you want to cast stones at teams pushing the limits of the CBA and exposing what amount to its loopholes, look elsewhere.
And while you keep circling back to the organization being in dire financial straits and acting irresponsibly, I’m not sure where that’s coming from (especially when you consider the baths the team has taken on guys like Poti and Michael Nylander). Your Ferrari analogy falls short in that neither you nor I get the opportunity to negotiate our tax rates, and if we did, chances are we’d want to lower them, regardless of what was parked in our respective four-car garages.
Rob: It’s not just the Ovechkin deal. You just referenced Nylander; the Caps out-bid another team at the final minute to get Nylander on the Caps. And then they had to bury him in the minors just a couple years later… so that they could again spend more money on player salaries and creep up to the salary cap. Tom Poti got a very generous contract extension when his career was just about over. Why should a team that isn’t making money be taking a bath on any player contract? If you don’t have the money, don’t spend it. If the Rangers were complaining about the situation after burying Wade Redden’s contract then they’d look similarly to the Caps right now. But they knew the rules, they spent what they could, and they are living with their financial decisions; not holding up an NHL season because they chose to take a bath that many other, more restrained, teams wouldn’t have taken.
JP: Again, there’s nothing hypocritical here nor is there evidence of terrible money management skills – at least without more information. NHL ownership, for most, isn’t about making money (which is good, since there isn’t money to be made for most… like 90% most). But if the numbers say that the Caps, who have been a model franchise in many ways since the last work stoppage, are (as Friedman put it) hemorrhaging money, is Leonsis wrong to fight and hold out for a deal that meets his definition of “fair” even if others might settle for something less? In many ways, the Caps could be the League’s poster boys… if the dollars corroborate the theory.
Furthermore, while these hawks that Friedman has fingered may well be bearing the brunt of public angst about holding up a deal, we’d likely be watching hockey right now if the big-market, big-money teams were more favorably inclined to share some of that bounty. But those teams want all the “give” to come from the players – and so we sit. Are those owners not being as much of a roadblock? Maybe, maybe not. It’d be great to know more about which issues are holding up which factions, but instead we’re left to speculate.
It’s easy to paint this as a pure money-grab or assume the worst intentions and motives, especially as we’re staring into the proverbial abyss. And all of that may very well be an accurate depiction. But it could be about more than that. It could just be about getting a “fair” deal.
Let’s hope it gets fair enough real soon.