Tag: money matters

Dan Hamhuis, Martin Erat

Money poorly spent? Martin Erat will miss game against Blues

The Nashville Predators’ $6 million forward Martin Erat will miss tonight’s game against the St. Louis Blues with an “upper body injury,” according to Josh Cooper. Cooper and many others worry that the vaguely described problem is a recurrence of back issues that kept Erat out of 18 games last season.

Erat is in a tough spot going into 2011-12. The Predators are the NHL’s answer to the “Moneyball” Oakland A’s, which means that the team scrutinizes every dollar they spend. He tied Sergei Kostitsyn for the team lead with 50 points last season even with those back issues, but it’s natural for fans of the penny-pinching team to wonder if Erat is worth the money. (His cap hit is a more reasonable $4.5 million per year, but the Predators are a team that worries more about salary than cap space.)

With that substantial salary and the upcoming free agency of Pekka Rinne, Shea Weber and Ryan Suter in mind, Predators fans will shine a harsh spotlight on Erat. His numbers weren’t great in the Predators’ 3-2 win Friday, as he was on the ice for both Columbus Blue Jackets goals.

To temper the criticism a bit, someone needs to score for Nashville and Erat is one of their most capable forwards. However they feel about his paychecks, the Predators will want him back as soon as possible.

The obvious reason why the NHL won’t switch to a larger ice surface

Flames Canucks Hockey

The 2011 NHL Research, Development and Orientation Camp acted as a mad science lab to test rule changes both big and small, but it was also a sly way to generate buzz for hockey in August.

Naturally, the talk of altering the game encourages bloggers, fans and writers to chime in with their own suggestions. Some wonder if the sport should do away with fighting, making all head shots illegal or even remove body contact altogether. Others are a bit more realistic with their expectations.

The Toronto Sun’s Steve Buffery is the latest writer to offer a reasonable change that probably won’t happen for a long, long time (if it ever happens): switching to a larger ice surface.

On the surface level, it’s a big picture cure for whatever worries the league might have about scoring. As Buffery explains, more ice means more room, which is a great weapon for speedy and skilled players. The first dissenting point Buffery brings up is that a larger ice surface would likely make for less hitting, a reasonable assumption since it would be that much tougher to lay a body on shiftier players.

It’s not until he gets a little deeper into his argument that he hits on the obvious sticking point, though: money.

Opponents of bigger ice will also argue that, logistically, it’s too costly to widen the ice, that it’s too late the make the change.

Sure, it would probably cost each club a few million and a few rows of seats. But it’s a smart investment. It’s like the federal government increasing spending on health and fitness. Yes, there are big up-front costs but, down the road, the investment is going save money on health costs.

If the NHL spends the millions now to widen the ice, it would pay off in a big way down the road, because, as the game becomes more exciting and goal-scoring increases, more fans would get turned on. And it would make sense that TV ratings would go up. And perhaps, one day, the NHL would even get more lucrative TV deals outside of Canada.

Sure, in an ideal world, all 30 NHL teams would be forward-thinking enough to swallow the bitter, multimillion dollar pill that would come with such a change. But how many teams would actually be comfortable with losing some of their most lucrative seats for a change that isn’t guaranteed to work? The Florida Panthers’ “Club Red” is strong proof that, if anything, the league’s teams are looking for more ways to squeeze every last dollar out of their “premium” seats. Even bigger clubs who could stomach those millions in losses are unlikely to want to give up some of their best money-making rows in the name of an enormous change.

Yes, it’s tantalizing to imagine how entertaining the NHL would be on international-size rinks, but don’t expect that to take place anywhere outside our imaginations.

Tackling how the US debt debacle might affect the NHL

A picture shows the reflection of a man

In case you haven’t been paying attention to news and politics lately (it’s OK, we understand that little-to-none of the news has been good), the United States’ credit rating went from AAA to AA-plus according to Standard & Poor’s. It’s been called “an unprecedented blow” to the American economy and could “eventually raise borrowing costs for the American government, companies and consumers.”

If you’re visiting this hockey blog to escape that nightmare story, we apologize. The sad reality is that real-world economics often invade the comfy bubble of low-stakes sporting events.

On the Forecheck’s Dirk Hoag did a fantastic job of explaining how this scary situation might affect the NHL in general today. After giving an overview of how the values of the Canadian dollar and the American dollar changed over the years – and how those fluctuations affected the NHL in that time – Hoag gave three hypotheses on how this latest crisis might affect the highest levels of hockey.

Let’s take a look at each of the the main points he made.

1. More Canadian teams spending closer to the cap

… A windfall gain due to currency shifts could make it easier for those teams to boost their player salaries for the upcoming season, and/or increase off-ice spending to gain edges elsewhere (Calgary recently hired Chris Snow to conduct video & statistical analysis, while Toronto has a front office loaded with ex-GM’s from around the league).

Could these shifts also mean more Canadian teams, period? It certainly gives an extra bit of credibility to hockey-starved Quebec, if they could ever get that pesky NHL arena built.

2. Small market American teams face an additional challenge

The NHL has a revenue sharing plan that can benefit the league’s smaller markets, but those markets must reach certain spending and revenue benchmarks to enjoy those benefits. Here’s how Hoag described that possible situation.

For a team which earned a full share in 2010-2011, missing that target next year would mean they’d only get 75% for 2011-2012, a hit which could easily amount to $3-5 million depending on individual circumstances. Teams missing those targets for the second consecutive year only get 60% of their share, and for 3-year (or more) offenders, they get 50%.

The third point is more about minutiae, unless you’re asking Dan Ellis.

3. Players may benefit from decreased escrow

Again, that’s a concern that probably doesn’t register with many fans, but read the post if you’re curious.


So, the basic takeaway is that Canadian teams could benefit across the board while small market (non-traditional?) American teams might be under even more stress if the downgrade has a significant impact on American currency. In a way, it almost seems like Canadian teams are getting revenge for the ’90s, when their teams were bleeding money and the Sunbelt expansion was in full swing.

Of course, while Hoag’s post is grounded in logic, it’s still speculation at this point. That being said, could the NHL actually consider putting together an American Assistance Plan in the next Collective Bargaining Agreement to echo the Canadian version from the latest one? There are all kinds of possibilities at play here … and most of them are rather depressing.

We could have more than a year to discuss these and many other issues as the CBA races toward expiration, although most of us will spend the majority of our time simply begging for both sides to avoid another lockout.

Arguing against publicly funded arenas

New York Islanders Fan Rally With Performance By Blue Oyster Cult

Perhaps this might not be the case for New York Rangers and New Jersey Devils fans,* but most hockey fans probably feel a bit bad for New York Islanders fans right now. A lot can change between now and 2015 – when the team’s lease with the decrepit Nassau Coliseum finally expires – but engineering voting on a low turnout day still couldn’t nab public funding for Charles Wang’s new arena referendum. There have been a variety of escape routes discussed around the Internet, but the outlook appears to be pretty bleak for the Islanders’ chances of staying in Long Island.

That’s a shame, but the lukewarm response indicates that the Islanders aren’t important to enough people. That’s not to say that they are without hardcore fans and people nostalgic for the days of Mike Bossy, Bryan Trottier and Billy Smith. It’s just to say that memories haven’t been enough to gloss over a long span of losing and limited hope for significant change.

That being said, Arctic Ice Hockey makes a strong argument against public funding for arenas even if the Islanders did hold a stronger place in the heart of fans in the region. Let’s take a look at the four-point argument against public funding for arenas.

1. Economic studies show that the impact is minimal

The economic impact of sports teams on an area ranks as one of those arguments that are too complicated for sports writers. That’s why the author points to two studies (here and here) to back up that point. I don’t think many would argue that there is no impact at all, but those studies point to the fact that the benefits probably don’t outweigh the drawbacks in most (if not all) cases.

2. If it was a good investment to increase property value, owners would want to use all their own money.

The second one also rolls into Point 1: if building an arena in an area would make that area flourish so much, they wouldn’t a deep-pocketed businessman (like that team’s owner) want to jump on the opportunity?

3. Subsidies reward poor financial management

The funny thing about publicly funded arenas is that you don’t exactly see those lucky owners giving money back to the taxpayers. Maybe there are plans in which some kickback does take place (and not just based on the hypothetical increase in property values) but when owners don’t have to fork over their own money, one of their biggest costs is taken away. That allows them to continue to make the mistakes that probably got them in that predicament in the first place: spending their money on the wrong players or giving good players too much money.

4. If a team can’t survive in a market, it shouldn’t be there.

One other bitter pill to swallow in that failed referendum on Monday was the tepid turnout (and the fact that it was designed to take advantage of lower voting numbers). If you’re confident that a market couldn’t stand the idea of losing its team, wouldn’t you call on a vote at the busiest time possible?

Nassau Coliseum has been derided for its condition, but the bottom line is that sports fans will sit in uncomfortable seats (often with bad sight lines) if it means they get the chance to root for a good team. Maybe a new arena would help them earn more money from the tickets they sell, but the tenor of the arguments would be about maximizing profits rather than mere survival if the Islanders were a contender.


Ultimately, these arena deals often come down to leverage. Jerry Jones received plenty of help in building his absurd stadium because Arlington wanted to attract the Dallas Cowboys. The Pittsburgh Penguins got Consol Energy built because of Sidney Crosby and their image as a rising team. It would be a shame if the Islanders relocate, but right now, not enough people care to make something happen. That’s the sad bottom line.

* – Unless they’re worried that their teams won’t get to beat up on them anymore.

Money matters: Canadiens win tax squabble with Montreal, Alberta won’t fund Oilers’ new arena

Philadelphia Flyers v Montreal Canadiens - Game Four

Here are a couple of stories about NHL teams fighting with city/regional governments for money related to their new or previous arena deals.

  • First, news that’s good for an NHL team: the Montreal Canadiens won a tax-related battle with the city of Montreal regarding the Bell Centre. The Habs will receive a $5.8 million rebate after this legal victory. The Canadiens’ annual tax bill will also drop from $10 million to $8.5 million. The combined rebate and first year of savings (about $7.3 million) would almost cover Scott Gomez’s $7.5 million salary in 2011-12. No word regarding whether or not the Canadiens’ brass began an “Ole” chant after hearing the good news.
  • The Edmonton Oilers are desperate to leave the 37-year-old Rexall Place once their lease expires in 2014. To do so, the Oilers reportedly need a big boost from either Alberta or the federal government.

Unfortunately for the Oilers, both sides seem reluctant (at best) to give them a $100-$125 million boost to build a $425 million arena project.

“There won’t be any direct dollars flowing to the arena. It’s a private sector business,” said Premier Ed Stelmach at an event in Calgary Wednesday.

“We’ve always said if they are improvements that can be made to the infrastructure around the proposed arena — LRT, water, sewer all of those that are joint responsibility of the city and the province. But we are continuing to meet.”

The federal government has been equally reluctant.

Prime Minister Stephen Harper made it clear earlier this year that his government is not in the pro-hockey business and will not spend taxpayers’ money on a professional sports arena or stadium.

This Oilers arena issue has been brewing for a few years now, but still seems like an under the radar problem. We’ll keep an eye on it as it develops, though, because it could get quite a bit thornier if the word “relocation” is thrown around even more than it already has been.