Dudes talk about stuff. Happy Thanksgiving.

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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.

The Dudes have almost run out of things to talk about, so Kevin Kurz is gracious enough to join us.  He fills us in on the lockout comings and goings (or lack thereof) the JR-Marleau spat, and other Sharks topics.

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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.

There is no end in sight to the NHL lockout, but some players are moving to the ECHL.  The Dudes talk about that, where the Worchester Sharks are, and the long term ramifications of the whole mess.

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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!”).

The owners presented a deal that at first glance does not appear to be bat guano, and the Dudes are a little encouraged.  They talk about what is currently known about the deal, how it might affect the Sharks were it to be ratified by the union, and the Bulls game the DOH group went to last weekend.

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The Dudes’ trip to the Bulls game is coming up, and Doug does a full team preview.

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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.