Posted on 02/13/2004 5:30:57 PM PST by SamAdams76
The National Hockey League's finances are in 'catastrophic' condition and 19 clubs, including two in Canada, lost more than $340-million (U.S.) last season, a league-commissioned study has concluded.
The year-long review, which cost $1.5-million, was done by Arthur Levitt, a former chairman of the Securities and Exchange Commission and a senior adviser to the Carlyle Group, a $15-billion investment fund.
Levitt painted a bleak picture of NHL finances saying the league is facing obscurity and cannot survive without dramatic change.
"I wouldn't invest in [the NHL]. I wouldn't bank it, I would say 'stay as far away from it as you possibly can. It's a lousy business'," Levitt said in an interview. "There is no rational business reason to own a National Hockey League franchise."
According to his report the NHL lost $273-million on operations in the 2002-03 season and had about $2-billion in revenue. The loss would have been $100-million higher if other costs, such as interest expenses, were included, he said.
Of the league's 30 clubs, only 11 made money, posting a total profit of about $69-million. The others lost a combined $342-million including one club that lost $41-million.
Levitt said five clubs are facing insolvency and two of those are in such poor shape they did not have their financial statements audited because the audit would have raised problems with lenders.
The six clubs based in Canada are in comparatively good shape, Levitt found. Three made money, two lost money and one broke even. The report did not identify the winners or losers. Because the study reviewed the 2002-03 season, it did not take into account the 20-per-cent rise in the Canadian dollar, which benefits Canadian clubs because players are paid in U.S. dollars.
The report comes as the NHL is trying to negotiate a new labour contract with its players. The league argues drastic changes are needed because players' salaries eat up 75 cents of every dollar in revenue, which is far higher than other professional sports.
The players have rejected a cap on salaries arguing owners should pay what the market will bear. Yesterday, the National Hockey League Players' Association dismissed the report saying it was biased and based on flawed assumptions.
"It is clear the Levitt report is simply another league public-relations initiative," said Bob Goodenow, the NHLPA's executive director. "To suggest the report is in any way independent is misleading."
The union pointed out that Levitt was paid $250,000 by the NHL to do the study. Levitt also hired a team of accountants to work on the report, including Lynn Turner, a former SEC chief accountant, who received $50,000.Goodenow said the Levitt study is flawed because it used the National Basketball Association and National Football League, which both have salary caps, as a basis to define hockey revenue. He said the union is convinced clubs still under-report revenue.
"We continue to believe that a market system, not a team of hired-gun accountants, provides the best measure of the value of the hockey business," he said.
Vancouver Canucks player Trevor Linden, who is president of the NHLPA, said both sides have to compromise. "We've put our best foot forward and tried to make a difference. There's a point in time where you have to be met part of the way," he said.
NHL commissioner Gary Bettman called the study "very sobering" but said it backs up what the league has been saying for months.
"Now is really the time to get this behind us and to reason together in an attempt to take this game forward, to make it healthy for everyone associated with it," Bettman said.
"We on all sides of hockey are accountable for where we are and the issue is going to be, do we fix it. If we don't fix this I want you to hold me accountable."
He rejected the union's position that salaries should be determined by the free market. "There is no such thing as a free market. Every market is determined by labour, management, economy, geography and a hundred other factors. This marketplace isn't working."
Bettman said the NHL has to be below the other major sports in terms of how much revenue is devoted to salaries.
Levitt, who said he is a boxing and football fan, said his review captured all sources of revenue for NHL clubs including money generated from concessions, other arena events and broadcasting rights. He also said he had complete independence from the league to conduct the review.
The report "is close to being unchallengeable as anything I've ever been associated with," he said.
Edmonton Oilers' president and chief executive officer Pat LaForge said the Levitt report was further proof of how skewered the NHL has become as a business.
"To me, it's confirmation of a need for a new economic system, the kind the Oilers have supported for a long time."
David Cobb, chief operating officer of the Vancouver Canucks, said it is important not to lose perspective in the debate.
"We're in a period of time with our franchise where we have an excellent team, we have excellent support from our fans, we have the top retail sales in the league, we have the busiest website in the league," Cobb said. "Everything's going well for us."
I, too, am a Bruin fan, #24 who showed everyone what determination and hard work can do. Taz gave 110% every night, bled bruin black and gold and never asked for anything. He was an inspiration.
Dittos to that sentiment.
I used to go to 30-35 Ranger games a year and I didn't live within a hundred miles of the Garden. But there came a point where I realized that I was paying to watch other people work, and that I cared more about the outcome than they did. Brad Park was getting about 35c of every ticket ($8.50 top) that was sold and he kept tripping over the red line. Now I wouldn't walk across the street to see a game for free.
The only point I would disagree with you on is scoring. High scoring is not good for hockey, anymore than it is for soccer. There's never a dull moment in a 1-0 game (where the players care more about the score than who won some fight). There can be lots of dull moments in a 5-3 game.
ML/NJ
I used to be a Kings fan too back in the Dionne, Goring, Simmer, Taylor, Vachon era. Losing teams, but had some great talent.
CCM, our hockey vendor, just came out of bankruptcy and I can't even get a hold of them to order jerseys. I'm losing thousands of dollars in sales AND the league is suffering from their vendor's incompetance.
Just another sign that the NHL is broken.
I say bankrupt the entire NHL and cancel all contracts (including their licensed vendors) and start over.
This is the logo for the Green Bay Gamblers, part of the USHL league. Great amateur hockey action.
I just have to ask . . . Do you remember the book Only the Lord Saves More Than Bernie.
I think the NHL is saying the same thing. If the Flyers end Philly's 21 year drought, it'll do wonders for the league.
Damn shame what that nasty puck did to JR last night. Hope he's back for the playoffs.
21 years??
Stop your whining there, we're going on 43 years here in Chicago
The last time we won, Philly wasn't even in the league.
*hangs head in shame at the patheticness of Chicago sports
That's for the whole city. It's been 7564 days since Philadelphia won it's last championship, in anything (it was the '83 Sixers, if you ever get the trvia question). At least you had the '85 Bears and a Bulls dynasty to hold you over.
Chicago's got nothing on Philly in the futility dep't.
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