Former Panthers CEO weighs in on lockout

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Stu Siegel, the former CEO and co-managing partner of the Florida Panthers, wrote an interesting article in the Oct. 1 edition of Sports Illustrated under the headline: “The Big Matters of Small Markets”.

Siegel notes that over the past two decades, the NHL has lost more games to lockouts (1,698) than Major League Baseball, the NBA and the NFL combined.

Siegel adds that when “most of these (NHL) owners say they’re losing money every year, they’re telling the truth,” noting that Forbes reported that 18 of the 30 teams failed to turn a profit last season.

Siegel also noted that while the NHL might seem more profitable than ever with $3.3 billion in revenue last season, players received 57 per cent of hockey-related revenue with owners getting only 43 per cent “to cover almost everything else”, including team management salaries, coaches, scouts, minor-league system, etc.

Siegel added that while the cap was set at $39 million following the 2004-05 lockout and the floor was $21.5 million, this year the cap would have reached $70.2 million under the old CBA and the floor would have been $54.2 million. He notes that represents an 80-per-cent increase for the top of the cap and 152 per cent for the floor, which would really have an impact the small-market teams struggling to reach the floor.

One of the most interesting comments from Siegel concerned the league’s board of governors meetings he attended while representing the Panthers: “I remain in awe of (Gary) Bettman’s ability to control the agenda at those meetings, given the resumes of some of the attendees.”

Stu Hackel responded to Siegel’s article at SI.com under the headline: “How much blame do NHL owners deserve for their economic woes?” You can read it by clicking here.

Meanwhile, Canadiens coach Michel Therrien has been watching the AHL Hamilton Bulldogs’ training camp in Sherbrooke and spoke with The Gazette’s Pat Hickey on Tuesday night.

“We’ll be ready whenever there’s a settlement and, in the meantime, we get things right at this level,” Therrien said as he prepared to watch a Bulldogs intrasquad game. “Development is an important part of our plan, and we’re working to have the AHL team use the same system we use in the NHL. It all starts here.”

You can read Hickey’s article by clicking here.

The New York Times had an interesting lockout article on Anthony Stewart, who earned $800,000 last season with the Carolina Hurricanes but is now playing for basically nothing and staying in a $97-a-night hotel while suiting up for the Nottingham Panthers in Britain’s Elite League. You can read that article by clicking here.

The exodus of players heading overseas continued Wednesday with the Boston Bruins’ Patrice Bergeron joining Swiss club Lugano and Colorado Avalanche captain Gabriel Landeskog signing with Djurgarden in Sweden’s second division, rejoining the team he played for prior to coming to North America.

If you’re already fed up with the NHL lockout and are longing for the good, old days when the game was the most important thing, you can check out an old video about hockey in Montreal from 1947 – before Bettman and the NHLPA decided they couldn’t figure out how to split more than $3 billion in revenue – by clicking here.

(Photo by Andy Clark/Reuters)

 

45 Comments

  1. Exit716 says:

    I don’t see where it’s Geoff Molson’s responsibility or obligation to prop up other teams in the league.

  2. JoaquindaPark says:

    In other words, the deal signed in 04-05, which was reportedly bad for the players, turned out to be a bonanza for them. Then these guys fired Bob Goodenow. Would you fire a lawyer that would get you an 80-152% increase in salary over 7 years? And now Don Fehr says The players don’t want to get ripped off like the last time. Wow this is going to be a long one. The only way out is replacement players. The sooner the better.

  3. Phil C says:

    I agree that with comments below that tying the cap floor to a percentage would help the situation a lot.

    What’s misleading about the Forbes numbers is that they do not include what each team spent. Among the 12 “have” teams that did not lose money was Edmonton and Colorado. But these teams spent closer to the floor than to the cap, according to Capgeek. If all the teams had shown restraint and set a budget like Edmonton, only 5 teams would lose money (Pheonix, Islanders, Etc), and there is no CBA possible that can help those teams.

    So while it may be true that most teams are losing money, it is not because the system is broken, it is because they cannot control their spending, or they chose to overspend because they can afford it. To me it just seems that the owners want the cap to be closer to the floor so that it is easier to build a competitive team and to have more parity, not because they can’t make money.

  4. icky pop says:

    Double post is due to the app telling me it wasn’t posted. The second post has the extra point that made more sense, and no silly tagline.

  5. icky pop says:

    If the owners are having troubles paying management sale ties and such, perhaps they should have a cap on off ice personnel, including scouting. Makes no sense that only on ice personnel is capped if we are trying to keep small market teams competitive. Have to have good scouting to stay competitive. Cap all spending if the cap is going to save the league.

  6. icky pop says:

    If the owners are having troubles paying management sale ties and such, perhaps they should have a cap on off ice personnel, including scouting. Makes no sense that only on ice personnel is capped if we are trying to keep small market teams competitive. Have to have good scouting to stay competitive.

    Oh the hypocrisy!

  7. shiram says:

    Does anyone know if Mike Blunden as a brother named Sean, playing for the Concordian Stingers?
    I saw a bunch of Stingers players over lunch, and wondered if Sean Blunden could be Mike’s brother.

  8. jon514 says:

    If they want to recoup some of the losses, they should hold the bargaining sessions in the stadiums, and let the fans buy tickets. I’d pay to watch Bettman debate Fehr on the issues.

  9. habs11s says:

    The best lockout video I’ve seen in a while

    http://www.youtube.com/watch?feature=player_embedded&v=dcgpghm2tGw
    _____________________________________________________________

    “How would you like a job where when you made a mistake, a big red light goes on and 18,000 people boo?” -Jacques Plante

  10. kempie says:

    Pretty slow hockey day, so… this I guess:

    Don Cherry ‏@CoachsCornerCBC
    I have never in my life seen a kid treated like Nazem Kadri by the Leafs. It started in his first training camp where he led the team in..

    scoring but was blasted for his defensive faults. They don’t blast Kulemin who scored 7 goals. They give him 5 million dollars. Now the…

    Marlie coach comes out and rips Kadri in the newspaper saying he doesn’t eat properly. Imagine headlines saying he’s chubby and fatso.

    If anyone wants to get a blue print on how to destroy someone, just follow the Toronto Maple Leafs

    Retweeted by Tony Marinaro

    • savethepuck says:

      Good news, he’s one guy who needs to play competitive hockey right now.

      “They don’t hang Conference Championship Banners from the rafters here”
      Carey Price

  11. frontenac1 says:

    Great read on Anthony in Nottingham. Always liked the guy since his days with the Frontenacs.

  12. commandant says:

    Siegel is right in that the small markets are losing money.

    Where he loses the plot though, is why is it always 100% on the players to give back and solve this issue.

    The big market owners (you know, the guys who voted for expansion, who took expansion fees, and who have fought tooth and nail to keep a team in phoenix) should share at least part of the burden.

    We should be able to have a system with both the players taking a slightly lower percentage, and the owners doing a better job in revenue sharing, but the owners keep asking for more and more rollbacks, without taking any responsibility themselves.

    As for the cap floor issue, that is a problem that the floor is rising faster than the cap, but there is also a simple solution. Make the floor a set percentage of the cap instead of a set figure below the cap…. and then they both rise at the same rate.

    Go Habs Go!
    Check out Top Shelf Prospects, my Team by Team prospect reports
    http://lastwordonsports.com/

    • Hear hear — agree on all counts.

      Mike Boone: “With Gainey at my side, I’d walk into any dark alley in the world.”

    • ed lopaz says:

      it is always the players who have to give back because they have zero leverage – and that is the reality of collective bargaining.

      when donald fehr figures this out, the deal will be done in 1 afternoon.

      no one in the USA could give a rat’s as about hockey, and so there is zero pressure on the owners to cave. zero.

      business is not always “fair”.

      its about power and leverage.

      • commandant says:

        The Big Market teams will never recoup the losses they are suffering right now either. The small market teams might be benefitted, but these are dollars down the drain for Habs, Leafs, Rangers etc… that will never come back.

        Thats where the leverage lies, and thats where it lied in 1995 when the Owners caved.

        I agree its more likely that the players will cave, but i wouldn’t call it a foregone conclusion either… probably something like 70/30 or 80/20 right now in the likelihood of which side will fall first.

        Go Habs Go!
        Check out Top Shelf Prospects, my Team by Team prospect reports
        http://lastwordonsports.com/

        • Blondie says:

          I fear this season is toast.

          The main problem with the current lockout is, unfortunately, the last lockout. Both sides learned that they can survive the loss of a season, yet also seem to believe the other side can’t weather the storm as well as they can.

          Most players will find stop-gap measures to dull the pain and most owners will trim expenses to the bone to minimize their losses. When the dust settles though, the players will lose. The owners have a lot more time to recoup their losses than the players do. The fans will be back because, well, they’re fans, and if revenues dip a little at first then ticket prices will rise to make up the difference.

          The players will be better off in the long run capitulating because they are not likely to make up a years salary through the rest of their careers but Fehr’s Svengali-like persona will probably keep them in line until next summer. If Goodenow could do it it should be a piece of cake for Fehr.

          The rich teams will, likely, recoup their losses on the strength of reduced player salaries over the long haul.

          Who’s right and who’s wrong is irrelevant. It’s business.

        • ed lopaz says:

          apparently, (I’m just speculating) the big market teams are ready to lose short term revenue if they can force a system that just about guarantees a break even for all 30 teams – without more revenue sharing.

          this is not Major League Baseball where George Bush was an owner of the Texas Rangers, and Americans were ready to go to war if there was no where to eat hot dogs.

    • New says:

      It always comes down to the same thing. Everybody wants the money. The whole arguement can be broken down into a thousand subarguements from sweaters, to gate, to TV, to appearances, top…well it just goes on. Flights, hotels, scouts, development, equipment, endorsements.

      What is not obvious is that neither side wants to play hockey before resolving the issues. If there were not a lockout would there be a strike? Lift the lockout and start the league up 11 Oct while letting the big kids argue it out?

      If that can’t be done then it is because the owners don’t want to do it. Since you have to believe the owners don’t want to lose money then you have to infer that they won’t lose money with a lockout. Probably the only one to lose money will be the taxman.

      That leaves 3 billion dollars a year in revenues up for grabs in Canada and the US. Unfortunately the moment a few agents establish a competing league the networks and sponsors will advise the NHL who will cease the lockout. The fans would follow and the startup money would be lost.

      Only thing I know for sure is that the 3 billion will be spent on something. Just not NHL hockey this year. Or probably next.

      • Blondie says:

        Wouldn’t that be something? The NHL already set the bar pretty high being the only pro sports league in North America to lose an entire season to labour negotiations, but to lose two in a row less than ten years after that?

        Maybe someone should alert the Guiness people – records or beer, I’m sure either could make money out of it. :)

    • B says:

      I believe the top 10 revenue teams sent about $150M to the bottom 10 revenue teams last season. That sounds like sharing the burden to me. It may not be as much as the PA is calling for going forward, but it is certainly not chopped liver. How much money did the players send to struggling teams last season? The PA is still proposing that the players overall salary dollars do not decrease one cent going forward, but that the owners spend even more ($250M) on revenue sharing. So Montreal alone every season could have to cough up an extra $10M or more from their slice (on top of what they are already giving up – in excess of $15M I believe) while the players money pile does not drop by even one cent.

      I just read that revenues from the sale of logo products are split evenly among the teams. That means that a hugely popular team like Montreal does not get a share that reflects their much larger popularity, instead they get one thirtieth of what is left over after the players take their 57%.

      Do you really think that a big market team like the Canadiens is not “sharing at least a part of the burden”? Perhaps I misread your post.

      • Blondie says:

        Logo product sales would only count towards the available money for players if that is included as HRR.

        Another thing to consider is that the players do not necessarily split up every penny of that 57% of HRR. How can they? They have individual contracts with their respective teams. The amount of money available to players is limited by the cap, the cap is limited by the aforementioned 57%. The only way the players get all of it is if every team spends to the cap and we know that doesn’t happen.

        • B says:

          Logo product sales ARE included in HRR under the most recent CBA. What ever money the teams get from those sales is still split equally among the 30 teams, regardless of how much of those sales are actually generated by each individual team. That sounds like big market teams giving up some of their share to smaller market teams to me. Am I mistaken about this?

          Another thing to consider is that under escrow as it currently works, the players get back less than what was held back from their paycheques if revenues are less than expected. On the other hand, when revenues are more than expected, then the players actually get back more money from the owners than was held back from their paycheques (this is on top of the interest gained while in the escrow account). Many folks don’t realize that escrow works both ways (or that the league actually wanted to reduce the players escrow holdback % but were surprisingly and gruffly rebuffed on it by the PA).

          • Blondie says:

            Hmm, no, I wasn’t aware that it worked both ways. Does it work enough both ways to ensure that 57% of revenues are received by the players?

            No you’re not mistaken that big market teams are giving up something for smaller market teams. But apparently they’re giving up just enough to let them die a slower death as opposed to enough to ensure their survival. Of course if they had any sense they’d move those teams to markets that could be profitable on their own thus eliminating the need for revenue sharing altogether.

      • commandant says:

        The Revenue Sharing System as it is, is flawed.

        The New York Islanders and New Jersey Devils are not allowed to participate in revenue sharing because they play in a market that is 2.5 million homes or larger. The fact that there are 3 teams in NYC doesn’t matter…. all three are counted as if they have 100% of the homes in the area as potential draws, which isn’t really true, the Rangers dominate the market.

        The Florida Panthers get hit with the same restriction, as do the Anaheim Ducks (even though market it split with Kings)… these are small market teams… By NHL revenue sharing definition they are big market and cannot receive revenue sharing.

        The Phoenix Coyotes of all teams will not qualify for revenue sharing within 2 years, based on population growth in Phoenix and best estimates.

        The system is outdated. It was created in an era when the Calgary Flames and Edmonton Oilers and Ottawa Senators were the bubble teams due to a low Canadian Dollar. It does not take into account the realty today.

        If it did…. far more than 150M would be thrown into the pot.

        Also the Players are already taking a reduction…. they are proposing doing a wage freeze despite the fact that revenues went up last year. They would go down to 54% instead of 57% this season… and further down to 52% in 2013. This is a significant reduction.

        All the players are saying is… hey, owners… you signed these contracts… you are going to pay them at the rate you signed them for. We aren’t taking an across the board paycut. Nor should they, in a business that grows every year, even despite serious recessions.

        Go Habs Go!
        Check out Top Shelf Prospects, my Team by Team prospect reports
        http://lastwordonsports.com/

        • B says:

          I am not saying that the current revenue system is not flawed or outdated, just simply that it exists (to the tune of about $150M last season). That still sounds like “big market” teams like the Canadiens “sharing at least a part of the burden” to me. Do you think I am wrong when I say that?

          Also, I don’t see a % wage freeze going forward as being the same thing as a salary reduction. One can easily spin statistics, percentages and such to make it sound however suits ones purpose, but I have not seen any reduction offered in actual comparable salary total dollars yet (not a single cent yet).

          • commandant says:

            When I say “share the burden” if the CURRENT revenue sharing is $150 million, and you are asking the players to take a paycut from their CURRENT contracts… sharing the burden would mean that owners also increase revenue sharing, no? If the Owners insist on the players taking paycuts while they maintain status quo in revenue sharing, thats not “sharing the burden.”

            Also agreeing to keep the cap at 64 million, when it should go to 70million based on last year’s results is a lot of “pennies” that are reduced.

            Further if my company had record revenues in each of the last 6 years, I wouldn’t think they would be asking me for a paycut…. a wage freeze while the company keeps growing is more than fair.

            Go Habs Go!
            Check out Top Shelf Prospects, my Team by Team prospect reports
            http://lastwordonsports.com/

          • B says:

            commadant, the site won’t let me reply to you directly, so I am doing it here.

            It was not clear to me until your last post that you meant share the burden beyond the current level of revenue sharing. Sorry if I did not not pick up on your intention.

            Interesting that you wrote “sharing the burden would mean that owners also increase revenue sharing”. The word also is what I find interesting in that it implies the players are currently contributing to revenue sharing. Semantics aside, I don’t see the players currently giving any money to the weaker teams from their 57%, it comes strictly from the owners 43% (or more correctly from the stronger team’s owners). I wonder if the players would offer to increase the amount of revenue sharing going forward by the same amount as the owners have would to increase it? Somehow I doubt it.

            The players are still not willing to reduce their amount of total salary and the owners still think they are paying too much in total salaries. All the rhetoric aside, until one side is willing to move on this basic stance the standoff will continue.

          • Blondie says:

            Salary reductions on current contracts is sheer nonsense. It was nonsense last time and it’s nonsense this time. A contract is a supposedly legally binding agreement whereby players are to be paid x amount of dollars for services rendered for x number of years. The numbers should not be adjusted from time to time unless there is language in the contracts that allow for it.

            It’s even more egregious to have it apply to contracts negotiated in the waning days, hours even, of the previous CBA.

            I don’t think the owners would go for an across the board increase if they were all making money.

          • B says:

            Blondie, the site won’t let me reply to your post directly either, so I am doing so here. This makes it awkward to follow so I won’t bother pursuing this thread here beyond this reply (nothing personal).

            I don’t agree that the salary reduction last time was nonsense. This sounds to me like those I have heard complaining about how the players got so screwed over by the league in the last CBA. As it turns out, the players have never done better. Player salaries have by far increased beyond inflation and have also outpace increases in league revenues. I just don’t buy or feel sorry for players or those who cry about how they were screwed over. Things have never been better for the players. The last CBA was negotiated. The league wanted a cap (and got it), but they certainly did not want it at 57% and they did not want all the changes such as those that made it way easier to become a UFA (and drive up salaries even more). This was all part of the give and take of the last CBA negotiations.

            As far as contracts being binding agreements, I don’t see it as that simple in pro sports. It would be interesting if the NHL could adopt non guaranteed contracts as per the NFL. How many Habs fans would love to see Montreal be able to walk away from the Gomez contract? Of course the PA would never want to see that happen. I have seen players walk out on a signed contract (and get away with it) because they thought they should get more money. Pro sports is a strange world unto itself that is difficult to compare or relate to the real world IMO.

            As for the contracts being signed just before the last CBA expired, well it takes two to make a deal and both sides were very much involved in making those happen. Yes, GMs will try to take advantage of any loop hole they can find. The same is true of players and their agents. GMs are very competitive, just like the players. They all want to do what ever they can to win. To me, this just makes it even more important to close any dumb loop holes in the next CBA. For example, I don’t believe in front loaded contracts and hope that going forward every year of a contract will have the same salary and cap hit. I think that would prevent strong teams from trying to screw over weaker teams. I also think it would make those silly long term deals less palatable if they could not be front loaded. Things like that make sense to me going forward.

            I believe that both sides are to blame for the work stoppage and I don’t have any sympathy for either side in this. It is simply a business exercise (involving too may high priced lawyers) of arguing how to split up a ton of money. I do not, however, agree with those who think the players are hard done by or getting screwed over. I think they are very fortunate. Both players and owners will survive this seemingly unnecessary mess (and probably every one of them with way more money than I will ever see).

  13. shiram says:

    Hagel already getting into a scrap, with Ian Schultz, I guess he’s trying to win a spot.

  14. Xsteve50 says:

    Let’s look at this lookout situation from a different angle. If we consider the players as product (and not salaries). I would gladly take and industry with $3+ B, in sales, with a gross margin of profit of 47%. I know for a fact that in my business our margins are NO WARE near, that percentage and we manage to cover our overhead. Perhaps the NHL overhead is rather high. The CEO of my corporation is VERY well paid but he does not make close to what Bettman makes. The managers of our company are also well paid, but I am willing to bet the equipment manage of any NHL team is 2 or 3X their salary. Let’s up the blame where it belongs. Owners, get your house in order, control your spending, buy your product better (control your player contracts), settle for 50/50 and play hockey.

    • Ozmodiar says:

      gross profit margins aren’t a good comparison across industries.

      for example, even within the tech sector:
      Dell: ~25%
      Microsoft: ~80%

      apples and oranges, as they say. ;)


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