Minnesota owner Craig Leipold is seeking more revenue after shelling out nearly $200 million for Zach Parise and Ryan Suter. (Photo by Hannah Foslien/Getty Images)
Whether you like it or not, the owners are the most important group in the current collective bargaining agreement. And the second-most important group just may be other owners. That's according to someone who would know, a former NHL executive who spoke to me about the perspective those in the driver's seat have when it comes to the state of finance in the NHL.
While negotiations between the players and their bosses got off to a contentious public start thanks to the revealing of the NHL's opening offer – pretty sure the media ran out of huffy adjectives on that one – commissioner Gary Bettman's largest obstacle doesn’t involve those who make their living wearing skates.
“The bigger problem is between the have and the have-not owners,” said the ex-exec. “That's going to be Gary's biggest challenge.”
We all know the owners got the CBA they thought they wanted in the last labor dispute, then gave their GMs the company credit card to sign huge deals that flew in the face of fiscal sanity. And of course Minnesota Wild owner Craig Leipold has been raked over the coals for crying poverty and then turning around and signing Zach Parise and Ryan Suter to deals that added up to nearly $200 million overall. But it's those teams that barely peek over the cap floor that are griping the most. As the former exec noted, there are a lot of teams right now way under the new floor of $54.2 million (based on a $70.2 million cap for next season) and they’re not scrambling to sign up talent in the way a team like the Florida Panthers did last summer. The Cats brought in a slew of talent and weren't afraid to spend dollars on free agents such as Ed Jovanovski and Scottie Upshall, while also taking on Brian Campbell's big contract in a trade with Chicago. But right now, even Detroit is technically under the floor (Nashville needs to spend at least $13 million, though Shea Weber will take up a good chunk).
One of the tenets raised in the NHL's first offer was the clawing back of hockey-related revenues that players receive from 57 percent, where it currently stands, to 46. That will most likely get negotiated down, but for the ex-exec, the question of revenue sharing rears up here.
“Say it's 50 percent,” he said. “Where does that other seven percent go? Is it divided between every team, or just the bottom 10?”
To be sure, there are franchises losing money. For me, I've never denied that – I just don't really care. My philosophy has always been that people buy hockey teams for reasons other than profit. These are largely multi-millionaires and billionaires who were really good at something else – oil and gas, big pharma, media – and used their corporate genius to buy a fun toy. But obviously they don't see it that way.
“At some point you have that moment in the shower where you say, ‘why am I spending (i.e. losing) $25 million to be a hockey fan?’” the ex-exec said. “Plus, you're competitive. This is a group of people who aren't used to defeat.”
The former exec's two cents involve the cap floor, which right now is tied to the ceiling by about $16 million. For the have-not teams, the increasing “ante” to be in the league is what's straining their finely tuned financial spidey senses. For example, the floor during the first capped season in 2005-06 was just $23 million – that’s $31 million less than what it will be for 2012-13.
“If the floor was lower, you wouldn't have so many problems,” he said. “There's not enough players to get teams up to the floor right now.”
Unless Shane Doan gets Alex Ovechkin money, I suppose.
A lot of information is coming out right now and I've minimized the math here for a reason: there are a lot of interpretations over how much everybody has been making and what they are entitled to. That frenzy, according to the source, is driving him crazy because he can see the players' perspective as well. Obviously we in the media don't always help.
It's hard to sympathize with owners when things like the CBA or new arena deals come up and I'm not trying to sway anyone's opinion. But it is important to keep the owners’ stance in mind as this negotiation continues. Because as we saw in 2004-05, those are the guys with the most poker chips at the table.
Ryan Kennedy, the co-author of Young Guns II, is THN's associate senior writer and a regular contributor to THN.com. His column appears Wednesdays and The Hot List appears Tuesdays. Follow him on Twitter at twitter.com/THNRyanKennedy.