Hockey Headlines

Tuesday, 23 August 2011

1991 Was A Barometer

I took the NHL to task about the cost of their franchises back on August 2, and I'm still quite baffled by the amount of money that owners throw at the NHL for a lot of nothing. When you factor in the amount of the money that prospective owners throw at the NHL to simply gain entry as an expansion team, you have to wonder how these millionaires and billionaires ever earned a dollar in their lives. Couple that with the "relocation" fees that the NHL is establishing, and it seems that the NHL can literally charge a fee for anything and everything when it comes to finding successful markets. Again, I have to ask why the prices are so high to join this group? What makes owning an NHL team worth hundreds of millions of dollars just to say "I'm in"?

For that answer, we jump back to 1991 where Sports Illustrated's Jay Greenberg takes a look at the ballooning costs involved in joining the NHL's fraternity. 1991 proved to be a year where a lot of measuring sticks were established: expansion fees, expansion protocols, and the NHL's lure of the greenback in any situation. These three items established how well the San Jose Sharks would do, and would spell out how future expansion teams would fare when compared to the Sharks. Let's take a look at where the NHL may have gone wrong in their quest to be a 28-team league.

The NHL has always been a forward-thinking establishment, in my opinion, but it needs to slow down once in a while and check out its own history. Mr. Greenberg also states that the NHL's reluctance to check its own past has led to the NHL fighting some uphill battles. He writes,

"Since the absorption of four World Hockey Association clubs in 1979, the NHL has been a 21-team league. Its self-proclaimed 'vision of the nineties' calls for expansion to 28 teams by the year 2000. The first of the new teams, the San Jose Sharks, begins play this season, and conditional franchises have been granted for '92-93 to Tampa and Ottawa. The addition of San Jose and Tampa is intended to move the NHL toward its goal of becoming a truly national entity in the U.S., as it already is in Canada.

Unfortunately, in executing this grand scheme, the NHL brass has been looking myopically at the horizon without first consulting the rearview mirror. Little has been learned from the past, when the NHL's growth was stunted by its eagerness to beat the WHA into virgin territory and to collect expansion fees in the process. Between 1967 and '74, the league added 12 teams, but it often awarded franchises to owners ill-equipped to run them. Worse, it didn't allow the new clubs to claim enough solid major league players in the expansion draft to achieve quick respectability."
This seems to be the case in each and every expansion model that the NHL has gone through. The best example of this poor expansion strategy is the Atlanta Thrashers. The Thrashers started off with a collection of discards and grinders filling out their roster. Can you name the player who scored the first goal in franchise history? Can you name the leading scorer that year? Their names will be revealed below, but neither wore the names of Kovalchuk or Heatley.

Expansion, especially when there are two teams in the same year, have shown remarkably poor results. The NHL Entry Draft, once thought to be a saving grace for teams needing an infusion of talent, has turned into a roll of the dice, especially when you consider the number of players who don't turn into legitimate NHL stars. The NHL handicaps the new teams by limiting the talent available through the expansion drafts, and then leaves them to chance when it comes to the entry drafts. With poor teams and no marketability other the appeal of being new, the owners find out pretty quickly that the membership into the NHL is a lot more expensive than just the expansion fee. Mr. Greenberg writes,
"Instead of giving its new clubs the means to turn into winners within, say, three or four years, the league is using them as trash heaps for unwanted players. Too many teams are being brought in too quickly. The NHL is also overcharging for the expansion clubs, increasing the possibility that they will be undercapitalized. Teams are going to owners who may not be able to afford them—and, in two instances, to those who have done poor jobs running other franchises."
Names like William "Boots" Del Biaggio III, Bruce McNall, John Spano, Sanjay Kumar, John Rigas, Greg Reyes, and Dennis Kozlowski have all owned or been part of an owenership group of an NHL team, and all of them have been convicted and sentenced for some sort of fraud. Of course, there are notoriously bad owners like Bill Wirtz, Gordon and George Gund, Peter Pocklington, and Jerry Moyes who simply stopped investing what little money they had into their teams, and drove them into ruins after trading and releasing high-profile players from each of their teams. This is the NHL's legacy when it comes to ownership. For every Mike Ilitch, there seems to be three owners who never should have been considered for ownership.

Peter Karmanos, the current owner of the Carolina Hurricanes, wanted to establish an NHL team in St. Petersburg, Florida around the same time that the Tampa Bay Lightning team were being considered as a potential expansion franchise. He was baffled by the NHL's demand of $50 million itself, as well as the payment in three installments - $5 million down, $22.5 million in June and $22.5 million in December. Mr. Karmanos stated,
"'When I asked [NHL president John] Ziegler how he justified a price that was 65 percent more than the NBA charged its last four expansion teams, he shouted that it was none of our business. We should either pay or forget it.

'We offered them $29 million up front and proposed to split the profits with them [other NHL owners] over the next seven years. The other two groups [from Miami and from Hamilton, Ont.] who made offers came up with similar parameters. We were the only three that had the money, too. It was like a comic book.

'The NHL owners are perpetuating a sham. The basketball people have worked hard to build their game and the value of their franchises. Ziegler isn't anywhere near the businessman that the NBA front-office people are.'"
Pretty harsh comments from a guy who bought the Hartford Whalers for $47.5 million just three years later. He bought an established franchise without having to go through the headaches of an expansion draft and lousy seasons for LESS than what San Jose, Ottawa, and Tampa Bay paid to be an expansion franchise. Anyone else see a problem there? How does an established NHL team with a lengthy history sell for less than a team that hasn't written one word of its history? Anyone think the NHL's expansion fees are, in fact, overpriced?

Mr. Greenberg thinks the expansion fees are a large part of why NHL expansion franchises take years to get off the ground.
"In fact, at $50 million, the chances of a franchise being a business success are ridiculously low. So are the chances of those teams being interesting to watch. Under terms of their deal with the league to abandon the North Stars in favor of the Sharks, the Gunds won the right—their final pillage of hockey in the Twin Cities—to take several of Minnesota's best prospects with them to San Jose. So the Sharks have a slight head start. But as part of the Gunds' bargain with the NHL, San Jose also had to share the picks in last May's expansion draft with Minnesota. With the league's remaining 20 teams permitted to protect 16 skaters and two goalies (each could lose only one player), the likelihood that San Jose would land useful players was slim. The Sharks had the usual options: lugs and thugs.

The protection lists when Tampa and Ottawa choose their teams next spring will consist of only 14 skaters and two goalies, but because the expansion pool will have had only one year to regenerate, the pickings will probably be even worse than they were for San Jose."
And they were. Ottawa's leading scorer in their first year was defenceman Norm Maciver. He finished 15 points ahead of centerman and runner-up Jamie Baker. That's horrendous. Tampa Bay was lucky to get Brian Bradley who led the team in scoring. John Tucker finished second in scoring, a mere 30 points back of Bradley! That, readers, is why both of those teams were horrible for the next decade - zero talent on those two rosters. Maybe they could build with youth?

Mr. Greenberg finds fault with that idea. In the past,
"... the best way for new teams to build a foundation for success is through the amateur draft—but that requires considerable luck. That's because rule changes in 1979 and '80 lowered the minimum age for eligibility for the amateur draft from 20 to 18. Since scouts have more difficulty discerning greatness in an 18-year-old prospect than in a more developed 20-year-old, drafting mistakes have become more common."
Indeed, draft mistakes can destroy an expansion team. The 1999 NHL Entry Draft saw the Atlanta Thrashers draft Patrik Stefan in what was thought to be the first of many fruitful drafts. As of last year, not one of the players selected by the Thrashers in the '99 draft were playing in the NHL. Is there any wonder as to why that franchise failed?

So if expansion teams can't make it through the expansion draft, and they can't get any better through the draft, maybe they can improve through free agency, right? Mr. Greenberg addresses that, too.
"Forget it. There was virtually no free-agent movement in the NHL in the '70s and '80s, but now, at least, there is a trickle. Bob Goodenow, the NHLPA's tough new director (he replaced the ever-compliant Alan Eagleson last year), may be able to negotiate greater leverage in the collective-bargaining agreement for teams and players trying to better themselves."
Free agency, before the 2005 shutdown, was wild and free where players could sign multi-year, multi-million dollar contracts with no regard for the team they were leaving or the impact on the teams bidding for their services. Gone were the days of the one-team player, replaced by hired mercenaries who went to the highest bidder.

Ok, so that might be a bit of an overstatement, but free agency in the 1990s benefited the teams in the largest markets with the most money, and the little guys be damned. Mr. Greenberg makes a very prominent statement when he wrote,
"Bobby Orr's three visits a season didn't save the Oakland Seals from their inept management. Neither will one or two appearances a year by Wayne Gretzky or Brett Hull sustain the Tampa Bay Lightning if it doesn't quickly become a winner."
It took Tampa Bay over a decade to build a Stanley Cup winner, but the original ownership group was long gone and the second owner, Art Williams, bailed as well. Again, that's three different owners in the span of twelve years before the Lightning hit pay dirt. There's something wrong with that picture.

What does Mr. Greenberg suggest to fix the expansion problem?
"The franchise fee should be cut, first to bring relief to Tampa and Ottawa and second to encourage sound businessmen to apply for future franchises with their own money, not somebody else's. The pace of expansion should be slowed to accommodate no more than one franchise every two or even three years so that the talent pool would have time to replenish itself. Expansion drafts that allow for the protection of only 10 players and one goalie would give fledgling franchises a core of solid players while they wait for draft choices to develop."
I totally agree with Mr. Greenberg 100%. The ludicrous expansion fee should be lowered so that brand-new teams aren't operating out of a well of red ink. Businesspeople who actually conduct sound business ventures might be interested in investing in a league where the start-up is reasonable, and not the same as the GDP of some third-world countries.

Secondly, give the talent pool a chance to replenish. It takes approximately four to five years for the pool to balance itself out again at the bare minimum, and there shouldn't be more than one expansion team every decade. Multiple expansion teams in the same year cause the talent pool to drain even faster, and the replenishing of talent takes exponentially longer.

Lastly, teams should only be able to protect two lines of players and one goalie. That's eleven players total that each team can hang on to, and the rest go into the expansion draft. Teams like Detroit, Pittsburgh, Boston, Vancouver, Chicago, and Washington would have to make some tough decision on who to keep, but it would give a vast number of players a chance to step in and be a first-liner on an expansion team instead of a third-liner on a solid team. The expansion teams get a lot better a lot faster, and the competition is higher between all the teams in the league. That's a win-win for everyone.

Mr. Greenberg wrote, "The NHL already has a map of the road to ruin. All it has to do is read it." With the shutdowns of hockey in 1994 and 2005 over CBA disputes, it was clear that the NHL didn't even bother unfolding the map. Before anyone even suggests that the NHL look at expanding its borders once again, it might be a good idea to check the path the NHL is on. The relocation fee charged for the Thrashers to move to Winnipeg was nauseating, and I still can't believe that True North Sports and Entertainment agreed to the price.

If those who do not know history are doomed to repeat it, the NHL is nothing more than a broken record.

As for the above trivia, the player who scored Atlanta's first goal in franchise history was Kelly Buchberger. The player who led the Thrashers in scoring in their first season? Andrew Brunette. Would you consider either of those names to be marketable stars?

Until next time, keep your sticks on the ice!

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