Tuesday, August 09, 2005


Capital Ideas

Have you ever wondered "What the hell is my team's GM (or owner) thinking?". Of course you have!

While the Washington Capitals have been the Crapitals under the George McPhee/Ted Leonsis regime, for the most part, they have certainly tried everything in their power to be more appealing to their fanbase.

Millionaire Ted Leonsis has always been very well connected with the fans and very receptive to their complaints and questions. In his latest letter to the fans, Ted gives us an insight into the minds of one NHL organization. It's not often that we get such a transparent look at what an NHL team's executive structure is planning and how they view the NHL landscape.

Some of the best excerpts from his long and interesting letter

The CBA allows teams to spend a maximum of $39 million on player salaries this year, but the eventual spirit of the CBA is that players receive 54% of revenues. Therefore, I believe the salary cap will be adjusted downward in the following years, and if that is correct then there will be even more shedding of salaries as teams look at ways of downsizing. We have done our downsizing, and we are only looking at ways to add to our team.
The Caps aren't the first team to say this (The Blues stated as such) and it makes me wonder why other NHL teams are spending some wildly. One theory is that the NHL owners know that if the expenses exceed the revenue threshold of 54%, they can keep the funds held in their escrow account...or maybe other teams think revenues will actually rise.

Secondly, the new CBA will make the spread between the lowest and the highest spending teams much smaller. Before the lockout there was a $55 million spread. On a normalized basis we believe the spread under the current CBA will be more in the $12- to $15-million range. That should add to the competitiveness of the league and take away a lot of the discussion regarding a team’s ability to compete based on its payroll.
Good. I don't want to hear about how the Edmonton Oilers can't compete because they don't have the right payroll. Ted's $55 mil spread doesn't take into account that the teams with very low payrolls purposely held payrolls at such a low level until the new CBA forced them to spend a bit more.

Third, with a $25 million payroll, our team will still lose money, but in the vernacular those losses will be considered a "gentleman’s loss." As a league, we will have less TV revenue, and locally I don’t think we can expect to increase our ticket revenue. However, our ticket prices are going down even more. That price reduction may help attendance, but we don’t anticipate it helping overall revenues.
If the Capitals can't make money in the NHL with a $25mil payroll, is that really a market that we want to have an NHL team in? Basically, it sounds like Ted is expecting the NHL revenue sharing to help bail him out because his market can't support the team very well.

Fourth, I believe the teams that have the most financial flexibility to act at the appropriate times will be viewed as the smartest and the most well prepared for the new NHL world.
Note to teams who are spending foolishly (like $2mil a year for Rob Niedermayer... and the Philly Flyers): flexibility will be the key word for the next few seasons.

As far as free agency is concerned, I will admit that we made offers to several players who would have helped our team in the short term. We were competitive as it related to salary, but we lost out because of the term of the contract. We are prepared to sign the right players, but we have to factor in their age, salary and length of the contract. We didn’t want to be saddled with longer term contracts to older players. We have to allow our young players an opportunity to play and progress. For some that opportunity will be this year. For others, it will be next year or the year after.
It’s been interesting to watch many teams in the NHL deconstruct their teams and get absolutely nothing in return for players. We deconstructed our team earlier than most and got draft picks and prospects. For example, we traded Sergei Gonchar to Boston in exchange for a former first-rounder (Shaone Morrisonn) as well as first- (Jeff Schultz) and second-round (Michail Yunkov) draft picks. Gonchar is now in Pittsburgh making $5 million a year for five years. We couldn’t have paid him that amount, so if he was still with us, we mostly like would have received nothing in return. If we would have kept Jaromir Jagr, we would have had to buy him out by writing him a bigger check than we currently do and we would have received nothing in return. We now have Jared Aulin in our organization as a result of the Jagr trade.
Our belief is that the new collective bargaining agreement will reward teams that draft well and have prospects stockpiled within their system. This summer, most of the unrestricted free agents are aged 31 and older, just as they were under the old CBA. Many 31-year-old players have already had their best years for another club. In signing such players teams are too frequently paying them for what they have already done for another club rather than what they will be doing for your club.
That last paragraph just makes so much sense! You wonder how other NHL GM's and owners in the past just didn't get the fact that they were rewarding past performance, and not paying for current/future performance! Of course, a market with few good players available will inflate costs, anyway. (Supply and demand, always hand in hand)

It's just quite refreshing and interesting to hear an NHL team lay out their plan in such plain view with a dose of common sense. I can see why the Toronto Maple Leafs wouldn't want to do anything like this (imagine the media and the fans ripping everything to shreds), but it pays for a small market/revenue team like the Caps to be more open and honest with their fanbase.

Now, Ted needs to realize that George McPhee isn't really the best man for the GM's job...

Miroslav Zalesak signs with the Caps

Miroslav Zalesak, the bombastic and offensive-minded forward from Skalica (they produce these types of players like clones), signed a free agent deal with the Capitals.

He told hokej.sk that he and his agent were in talks with the Leafs, Canucks, and Caps, but decided on the Caps because they presented the best opportunity for him.

As much as I'd love the Canucks to have an actual Slovak on the roster, I am glad he made the choice to go to Washington. Toronto and Vancouver would have just been like his tenure with San Jose, and he would have never been given the chance to succeed at his type of offensive game. I hope Miro makes the most of his big chance.

If it doesn't work out with the Caps, I'd expect Miro to go back to Europe, rather than the AHL. There is nothing left for him to gain at the AHL level, and his comments to the Slovak media basically suggest that he'll make the decision to return to Europe if he can't maintain a regular pro spot.

* - Assist to Sharkspage.com, which has more detailed information on the signing.

Jes - One of the best posts I've seen in a long time. I'm linking to this right away.
Thanks, Phil

but credit is really due to Mr. Leonsis himself, since he wrote a pretty awesome letter to the fans. I'm just the messenger, in this case.
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