I’ve wondered for a long time how owners can buy teams for hundreds of millions of dollars, and lose cash every single year.  I had two theories:

1. Owners don’t view teams as a business (as Malcolm Gladwell and Bill Simmons have written about before), and more as a luxury objects to enjoy, like paintings .
2. There are some accounting tricks being played in order to maximize losses.

I still think 1) is true and now it appears 2) could be true as well.  Jonathan Willis wrote an interesting article, using some data he found about the Florida Panthers, a team that has claimed to lose $7M or more per season.  There is a little controversy about Willis’ points (and conclusions) but I think these facts are undisputed.

• A company called Sunrise Sports and Entertainment (SSE) owns the Panthers.
• This company has a division called Arena Operating Company (AOC), which runs the arena, and is an entity to which SSE apparently pays rent, because the Panthers use the arena.
• Because of the sweetheart deal the Panthers got, AOC also makes money on the other events in the area, paying some back to the local government.
• AOC has made $90M or so in profit between 1999 and 2008.
• The only reason AOC makes money on concerts is because it’s the Panther’s arena, and controlled by SSE.
• However, the Panthers (SSE) do not claim this profit as hockey related revenue, and get to cry poor to the league and held up as a model of why the current system is failing.

Since the audit Willis references is only in relation to AOC, and not SSE, it’s not entirely for certain SSE is in fact turning a profit every year.  But if they are claiming a $7.5M loss per year on average, $90M profit over that time period is more than enough to wipe away that red ink.

All in all, this is a nice deal if you can have it.  The only reason Willis got access to any of this is because the county performed an audit.  Otherwise SSE could keep on making money every year, having their initial investment in the team appreciate, and claim they are losing money all the while.  It should be mentioned that the Sharks (Silicon Valley Sports & Entertainment) also operate HP Pavilion, though the details of their deal with the city is not public information.  It’s entirely possible (though certainly not proven) that SVSE is turning a profit each year as well, due to those extra revenue streams- revenue streams that would not be available if they did not own the Sharks.

Sorry for another post explaining why there’s no podcast this week, but at least there’s a reason. But first, the lockout. I can’t help but be hopeful given all the negotiation that’s been happening the past few days. I wish I understood why both sides suddenly decided to stop with the press releases and start talking amongst themselves; some speculate it’s because of the Winter Classic cancellation, but really? No one saw that coming? For whatever reason, the “public posturing” section of the lockout has finished, and the “marathon negotiation” section has begun.  It certainly seemed obvious weeks ago that the two sides were not far apart, with the NHL practically branding their 50-50 offer (with supposed “make whole” provision) on the moon, and the players responding in kind with 50-50 proposals of their own.  Then both sides sat on their hands for a while- maybe they were scared about Hurricane Sandy? Or didn’t want to miss any Homeland episodes?  Even though all this time has been wasted, it certainly seems plausible the season could happen again, and some are even talking about a December 1 start date, and a 70-game season.

The out-of-sorts feeling is in full effect for me- I spent a lot of time sitting this week on the couch during the evening feeling strange.  I finally realized that this time of year, the 7-10 PM hours are almost always spent going to a game, watching a game, or thinking about a game.  I can’t wait for that feeling to begin again.

But alternatives still exist.  Scott Gomez actually signed a player contract with the Alaska Aces, who already have Joey Crabb and Brandon Dubinsky.  Seto just played with the Ontario Reign against the Bulls (who have a dismal record).  And Ryane Clowe signed a practice contract, but I could see him playing a few games, to get tuned up.

Here’s another alternative.  This is absolutely real, and explains why the podcasts have been sparser than usual.  Needless to say I already have tickets.

Master of the Hiz-ouse

We will be back next week, and I already have a guest booked, which I hope will make up for our absences.

I was all set to record last night, but Doug had to back out.  I refuse to accept his pitiful excuse that he has a busy life, a demanding job, and a loving family.

We’ll be back next week.

Good discussion in the comments section of the previous post about the CBA negotiations, be sure to check that out.

The players have responded with three separate proposals, all which move to an even 50-50 split.  The owners have rejected the offers.  Now, it certainly appears as if games will be missed, and possibly the season.

There’s no doubt the owners gained the upper hand in the PR war by offering the 50/50 split first.  We will see if the players win back some goodwill by proposing their own.  It looks as if the big difference right now is the NHLPA wants the current contracts to be honored in full, some of which were signed only days before the lockout, without impacting the 50/50 split.  The owners offered to honor those contracts, but they will count against the future players’ share, which led the players to say it was “the players paying the players”.  I can see this both ways.  Under the owners’ proposal, on one hand, the owners will be paying those players their actual salaries in the future.  On the other, the owners will suffer no financial repercussions for signing deals that are incredibly rich (Parise) and oftentimes foolhardy (Ehrhoff).

As disappointed as I am, I’m still on the players side.  Perhaps there are important terms that have not been made public, but the latest proposals seem to decrease the player’s future income and contract negotiating positions from the previous CBA in every case.  The players’ proposed deal weakens them across the board; they get no stronger position in any area. If games are lost or the season is canceled, it’s difficult for me to believe how people can blame the players for that (“You didn’t capitulate enough!”).

I’m glad to report that almost everyone that initially wanted tickets came through, and we have a impressive group- 38!  To those that are coming, I’m excited to meet all of you, and happy that you wanted to come out.  To those that missed out or found out too late don’t worry – tickets are still available.  Buy your own, and let’s meet up at the period break.

It may not be NHL hockey, but it’s still hockey.

Our schedules are a little crazy this week, but we are still planning on recording- it might just be a bit later than usual.  Also, if you emailed us about going to the Bulls game, I just sent a response with some details, so check your inbox.  If you are late to the party and still want to go, it’s not too late, but please email in the next few days so you can make it in.  We will have a really good turnout, and this is the time of year where I’m starved for hockey, as I’m sure you all are as well.  The Bulls may not be in the NHL, but the hockey will be damn good, and the experience lots of fun with us and your fellow listeners.

Even though basically nothing has happened in the Sharks world in the last two weeks, the Dudes soldier on, talking about the CBA, the Sergei Samsonov rumor, and other minutia.

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First of all, listen to the podcast if you haven’t already.

Kevin Kurz has a post about a Q&A session Kevin Compton and Stratton Sclavos (two of the Sharks owners) had over the weekend about the state of the franchise. They revealed some (alleged) information about the Sharks’ financial situation, stating that they lost around $15M last year. In fact, here are the main points of the article as I read them:

1. The Sharks owners lost money last year, even through every home game sold out.
2. The Sharks consider themselves at about the midpoint of teams in terms of market size and revenues.
3. The cap has gone up a lot since the cap was first put in.
4. The Sharks owners don’t care about making money, they just want to win.

Reviewed in this easy, albeit jaded format, this could be a blueprint for the PR strategy of any ownership group in the NHL this summer. We lost a lot of money, even though we are doing everything right.  We sell out the building, we work hard to ice a competitive team, but our P&L looks like a horror show. But hey, that’s ok, we just want to win. It looks like this is the owners doing what owners have always done when labor negotiations happen, cry poor, but save personal face with their customers by saying it’s all just part of the deal, and they’re fine with it. In this context, the headline (“Should Sharks owners be allowed to profit?”) and the first three points are brilliant in serving those purposes. This makes me want to launch into a whole argument about the nature (and type) of profit the owners are in fact making, but that will have to wait for another day.

Frankly, I have no concrete reason to doubt Mr. Compton’s and Mr. Sclavos’ sincerity on any of this. However, it’s worth mentioning that only statement #3 above is proven. All the others either burnish the owner’s own reputations, or further the NHL’s bargaining position. It think it goes without saying that these points should be taken with a grain of salt.  Plenty of the commenters on the article noticed correctly that this loss number is not audited, and not present in any public disclosure statement, because SS&E (Sharks Sports & Entertainment, the entity that owns the Sharks) is not a publicly traded company, and therefore not required to release any such numbers. In fact, during the lockout in 2005, there was quite a row made over the players’ claims that they wanted to see the real financial statements of the teams, and they were not being provided the information requested.

The fact that this conversation took place less than a week after the owners submitted their initial bargaining position is not a coincidence.

Our nightmare continues as the Kings are one win away from raising the Stanley Cup over their smog infested, Knotts Berry Farm loving, 45 minutes to get to anywhere heads. We just have to hope that the Devils can be the 2nd team in NHL history to come back from an 0-3 hole in the Stanley Cup Finals to win it all. The last team to do it, from what I understand, was the Toronto Maple Leafs in 1942. (Matt D’Agostini)

Honestly, I fully expect it to happen because the Stanley Cup playoffs this year has been so bizarre. Like Richard Simmons bizarre. Why not cap it off with the completely absurd? Charlie Sheen throws a fit at Game Four at the Staples Center and the Kings lose. How did they ever let him into the building? He is the black cloud of all things good and he has infested the Kings with his madness.

The Curse of the Billy Goat.

The Madden Cover Curse

The Curse of Charlie Sheen. It has been laid upon the Kings and will forever live in infamy. Devils win in Seven.

Mike and I will be back next week with our landmark 200th episode as we begin to pick over the Sharks roster in our offseason preview.

I'm just like the Coyotes. I feel a blowout!

My daughter is now 16 days old and I feel like I’m living in an alternate universe. My days revolve around keeping track of how many times this small version of me poos and pees, singing silly songs about poos and pees and washing poos and pees off my Dudes on Hockey t-shirt, which appears to be her favorite target….not sure what she’s saying about our podcast….

I’m also pretty sure that I feel fairly poopy and pee-pee about the LA Kings making the Stanley Cup Finals, which is a virtual certainty at this point. Is this really happening? Are the Sharks really keeping T-Mac as head coach and thinking that adding Bryan Marchment will fix the disturbing penalty kill? Why am I still covered in doo-doo?

As I stumble into next weeks podcast, we are creating two Dudes on Hockey award categories and we would like your help in forming the nominations. Let us know your nominees in the comment thread below and we’ll run with it.

KING DOUCHEBAG

What NHL player is the lamest, either on or off the ice? An obvious nominee would be Patrick Kane, for his drunken escapade after Round One in the playoffs coupled with his classic Vancouver limo incident and punching a cab driver in the face in his native Buffalo. Plus he’s just a tool in general. That’s my nominee.

Who is your King Douchebag? State your case and provide your evidence.

THE DIRTY DIAPER AWARD

Which current San Jose Shark player would you like to see NOT return next season. No rules apply here, no logic, or trade clauses. Just you being able to toss this player into the Diaper Champ like a nutty surprise on the NHL landfill. With the new CBA, there could be an amnesty clause that would allow you to dispose of this dirty diaper. You could also choose to not resign this players soiled baby shorts as a UFA or RFA.

Who is your Dirty Diaper and why do they stand out from the other Pamper nightmares?

We will be back next week. Until then, my hockey friends…I reek of Boudreaux’s Butt Paste.