The Business of Hockey

I became curious about which owners are taking the most active roles with the NHL in the ongoing CBA negotiations.   An interesting article by Pat Hickey in yesterday's Montreal Gazette sheds some light on this http://www.montrealgazette.com/sports/hockey/montreal-canadiens/Hickey+proves+rich+people+different/7602720/story.html  He discusses the most involved owners and their motivation:

1. Jeremy Jacobs - the Bruins made a number of signings prior to the lockout.  Word has it he is one of the more driving forces behind the lockout as he attempts to pad his profit margin through these negotiations.  Curious, he could also have padded his margin by not going on a spending spree prior to the lockout.  
2. Craig Leopold - as Hickey points out in his article, Leopold's Minnesota Wild lost close to $6 million in 2010-2011.  Leopold was whining about his hockey losses this past spring.  So how does he address the problem?  He signs Zach Parise and Ryan Suter to 13-year $98 million contracts knowing that his attendance is already at 98.4% capacity.  The only way for Mr. Leopold to remediate this poor decision is to be staunch in his support for increased HRR - shocking he is an active participant in the ongoing negotiations.  
3. Ted Leonsis - in 2010-2011 Leonsis' Washington Capitals lost $7.5 million.  Hickey points out he is experiencing some buyer remorse.  Was he referring to Leonsis' purchase of the Capitals or the 0-10 Washington Wizards?    
4. Murray Edwards - the Flames made $1.1 million in 2010-2011, their average attendance was 19,289.  Not far away the Edmonton Oilers made $17 million in 2011-2012 with average attendance of 16,839.  That is a statistically significant revenue difference in markets that are not too distinct from each other.  

If these guys are not making enough money in hockey why can't they go back to businesses that are more lucrative for them - and let us get on with the season?  It will be interesting to see how the fan base in each of these cities supports these teams whenever the NHL gets underway.   

Fehr Factor

For hockey coverage, the Washington Post Sports Section does not compare to the likes of The Boston Globe, the Toronto Globe and Mail or the Montreal Gazette.  Today's Post, however, has a terrific article from baseball guru Tom Boswell who does a terrific job summarizing Donald Fehr's approach to the CBA negotiations.  Here's an excerpt, "Hiring Don Fehr, the Sun Tzu of jock labor, to face NHL owners in a lockout is like getting the Godfather to help you fix a parking ticket."  Details can be read at:  http://www.washingtonpost.com/sports/capitals/nhl-lockout-owners-shouldnt-underestimate-the-fehr-factor/2012/11/21/7529ec82-341b-11e2-bb9b-288a310849ee_story.html  At some point the NHL leadership will understand they are dealing with a highly solidified NHLPA led by a loaded gun.  

Another interesting article in the Toronto Globe and Mail discusses the numbers from the latest NHLPA offer  http://www.theglobeandmail.com/sports/hockey/globe-on-hockey/the-nhlpa-proposal-by-the-numbers/article5530468/  As this article points out, the make whole amount from the NHLPA is $393M and the make whole amount from the NHL is $211M - a difference of $182M.  Here's a brainstorming thought, how about we agree on $300M and get the season started?

Can Of Worms

Well before all this CBA drama took center stage, my prior blogs mention concerns with the KHL competing against the NHL.  The KHL continues to improve and this year is a haven for locked out Russian NHL players.  The oil-backed funding of many teams provides stars like Alex Ovechkin, Evgeni Malkin and Ilya Kovalchuk a good salary in their homeland.  Depending on the haircut these guys take on the final CBA agreement, it's quite possible a few of them may consider staying home.  After escrow, salary deduction resulting from the CBA and quality of life considerations are made, some players may determine that it is best to stay in the KHL.

The KHL is only five (5) years old, but they honor their contracts.  The NHL is increasingly being viewed by players as unstable given the recent lockout history.  In addition, the players are increasingly circumspect with regard to the contracts they sign.  The fact that owners negotiated long-term contracts during the CBA process is reprehensible.  If the players are asked to take a significant pay cut from an existing contract, breach of contract suits will become quite interesting as players decide to stay in the KHL.  This is where the can of worms comes in.

As Gary Bettman and the NHL geniuses continue to act like they are holding all the cards, the more they push HRR reductions the more they negotiate against themselves.