directory Light the Lamp - a Columbus Blue Jackets blog: Sunday Nuggets

Countdown to Rick Nash's contract expiration:

Sunday, May 31, 2009

Sunday Nuggets

First thing is first... update on the "arena" situation:

From Puck-rakers:

Talked to an attorney who represents Blackberry mogul Jim Balsillie, the guy who has tried buying Pittsburgh, Nashville and now Phoenix with the sole purpose of moving the club to Hamilton, Ont. The attorney said Balsillie has never had any interest in the Blue Jackets. Why? "They're not portable. They're not moving. The markets too good." Doesn't sound the Blue Jackets will become the Hamilton Handhelds, but if this drags out for five years and Balsillie still doesn't have a club ...

That is actually encouraging news and I think he's right on, Columbus certainly has the ability to be a strong hockey market. I will be interesting to see what a couple of winning season can do.

NHL Commish Gary Bettman also weighs in on the subject (link courtesy of Skraut on HF):

Q. This week the Blue Jackets announced that they had lost $80 million over the last seven seasons. I was wondering how concerned you are about the long?term stability there in Columbus?

COMMISSIONER BETTMAN: The Columbus issue really relates more to the privately financed arena, and their lease situation. And that's something that they're talking to the county and the city about adjusting. The club has terrific fan support, and long-term, I think it's important for the Blue Jackets as it is for any club to ensure that they have the right building arrangements. And that's something that they're working on.

Draft watch:

There seems to be consensus on the top five picks in the NHL draft -- John Tavares, Victor Hedman, Matt Duchene, Evander Kane and Brayden Schenn -- just no consensus on the order in which they'll be chosen.

Obviously we have no shot at any of these guys unless an unlikely trade of some kind unfolds. I'll have some posts later about names for Jackets fans to keep an eye on.

This morning's edition of the Dispatch talk about "Money problems familiar to the NHL":

At least eight of the NHL's 30 franchises are thought to be suffering significant annual losses.

Phoenix currently is in bankruptcy court. Atlanta, Florida, Nashville, the New York Islanders, St. Louis, Tampa Bay and Columbus are claiming big losses.

Also, owners in Dallas and Montreal are so overwhelmed with personal debt that rumors persist their clubs could be sold.

"No club is in jeopardy," NHL commissioner Gary Bettman said yesterday before Game 1 of the Finals. "We are in a recession, and there are a variety of issues affecting businesses and owners.

"It's happening in all sports. We are no stranger in dealing with harsh economic realities."

Bettman said he's not worried about Columbus as a franchise.

"As long as (the lease) can be fixed -- and I think it can get fixed -- people should not be concerned," he said. "I was there during the playoffs. I've seen the growth of the Arena District. Nationwide Arena and this club have become an integral and essential part of this community."

Here is some news on the expected cap number next season:

Sources within the NHLPA believe the league will suffer an approximate four-percent decline in revenue that would lower the salary cap by about $2.5 million next season, but that the union will exercise the five-percent bump to bring the 2009-10 cap up to an approximate $56.1M, a drop of about $600,000 per team

The cap staying the same or declining is a good thing for Columbus who is a budget team. That means less money in the pool which should drive down the prices of the players. The big guns will still get their paydays but the lesser lights, like the ones Columbus will be chasing this summer, should be a little more affordable.

Speaking of budgets, check out this little nugget from Puck-rakers:

GM Scott Howson has been told that his job and his budget have not changed. He told me in no uncertain terms that the Blue Jackets' contract extension offer to captain Rick Nash will not be effected, either. When asked if the ongoing lease issue could make Nash think twice about signing on long-term here, Howson said he couldn't say. I haven't been able to reach Nash yet this summer.

That is some good news as I feared that ownership may want to trim payroll. That tells me that at least that they understand spending less and icing a non-competitive product certainly won't contribute to helping solve the problem.

Remember winning cures a lot of ills. This team keeps winning, more interest is generated.. next thing you know there is more support gardnered to find a solution.

...but what's up with this "haven't been able to reach Nash yet this summer"? I know I read into a lot of things on this blog (hey, that's what I do baby!) but that strikes me a bit odd. They both have cell phone right? Regardless I can't help but think the news this week will impact negotiations. I still expect a 3 year extension around 21 million to get ironed out soon after July 1st.

If not, this could turn into one dicey summer.



rocket said...

I don't know a lot about franchises or the NHL "business model" but to me, the whole idea of a team financed arena doesn't seem like a good idea here (not sure how many NHL teams finance their own arenas). But it doesn't seem smart, especially in columbus, where the Schott steals events from the Nat, such as Britney Spears and such, that would make a ton of money.

Can't help but be angry with us tax payers who voted not to fund the arena (in '98 i think?)... Just think about it... If we paid a measly amount of money, the CBJ would not have to worry about covering arena fees AND hockey operation costs. Then MAYBE we wouldn't have had a garbage on-ice product for the past 8 years (not counting this last year). Just a thought.

RadioJohnson said...
This comment has been removed by the author.
RadioJohnson said...

The CBJ claims to have lost $80 million over the last seven years. (Fun fact: GM loses almost that much everyday.) In one of those years, the team played well and was swept in the first round of the playoffs. In one of those years, there was no hockey. In five of those years, the team stunk out loud.
Here is my plan for saving the Columbus Blue Jackets: Win more games.

rocket said...


Maybe the whole reason the team can't win games is b/c the organization constantly worries about covering the arena lease. When you have that on your back, it probably makes it difficult to run a good hockey team. The team not to be named never worries about that... screw them, but they've been winning cups almost non-stop since 97.

DP@WFNY said...

I don't know what the popular concensus is on guys like Priest et al, but I feel like for the first time in awhile all of the oars in the CBJ boat are finally rowing in the same direction.

I know there are some outliers (the whole broadcaster thing is still a head-scratcher), but when Priest said repeatedly on Thursday and Friday that he took the job with two goals (first, to get a good team, and second, to fix their business model including the arena), I'm hard-pressed to say he's done anything other than a great job.

Hitchcock was a solid hire, of course, and it's becoming more and more clear that Howson was as well. And, now that the team looks to be a perennial playoff contender for the next few years (assuming a Nash deal gets done, of course), it seems as though Priest can now leave the day-to-day hockey to Hitch and Howson, and will be able to turn his attention to fixing the building issue. Knowing what we know how about his tenure thus far, is it unrealistic to think he won't figure out a way to get that done, too?

LTL said...

Good points DP.

My main worry is if John P. is as invested in this franchise as John H.

Also is there a worse time to be asking for a bailout?

As akward as this sounds Basille's lawyers comments have given me more comfort than anything Priest has come forth with in regards to this market/situation.

Hopefully this group can come up with a solution as we definitely appear to have it on the hockey ops side.


JAL said...

I think we need to stop with the "bailout" language. Look at the structure of the deal more closely -- who gets what?

1. Franklin County gets a top flight sports facility to go with Huntington Field, at a fraction of the cost it actually took to build. They will also get the revenue from the teams that use the facility, concerts, etc.

2. The "cost" to Franklin County is borne by a nominal "sin tax".

3. Nationwide undoubtedly gets some huge tax breaks from the arena transfer, takes an ownership share in the Jackets, and likely gets some share of parking.

4. Jackets fix the one gap in their financial structure by having access to revenues they should have had access to all along. They gain a well-heeled minority owner in Nationwide.

Considering the millions of dollars annually that the Blue Jackets inject into the economy, this is a no-brainer from a dollars and cents standpoint. There will need to be improved clarity of communication on what this deal is and isn't.

A Shot From The Point

DP@WFNY said...

That's what I think people miss, JAL. The county gets A LOT of money in the long-term from this that they can use for other things.

I also think the person who wrote into Hunter's column about the Schottenstein Center was right on. What a freaking waste.

LTL said...

The problem is your still asking the tax payers to cover it. There was clear benefits in the 1997 bill yet it was still shot down.

The bottom line is folks here the word "tax" and their immediate knee jerk response is always "NO". They could talk until their union blue in the face about all the benefits and it will fall on deaf ears.

They need to get more creative b/c I just don't see a "sin tax" happening. You, me and the folks that read this blog would support but are there enough of us?

Also I'm not convinced that selling the arena to the county would fix all that ails the Jackets financially. Its certainly a good story to tell but so was a privately funded arena with what I was always told was a "sweetheart" lease deal.

I'm also very interseted in learning about how committed John P. is towards this franchise. Hopefully the Dispatch can get some quotes from him soon - and I hope its not a canned/vanilla response.

I agree about 'Schott vs. Nationwide'. Not sure how practical it is but I liked the idea of "taxing" the Schott for any non-college related events.


RadioJohnson said...

I'm not going to pretend to know anything about the lease, except this: The team signed the lease. They read it; their lawyers read it; their accountants read it; and then they signed it.
What about the lease made sense in 2000 that doesn't make sense now?

As for letting the lease get in the way of winning, I don't buy that. The hockey operations staff is not keeping the books.

JAL said...

Sure they reviewed it, and it probably seemed fine, at the time However, keep in mind that Nationwide had all the leverage at the time. Who else was going to provide an Arena? Nobody. As we used to say in the legal biz, this was not an "arms length" transaction. Sure, Nationwide did lots of good things for the community by putting this in place, but they kept a lot of goodies for themselves.

Also, at the time of the lease being signed, who would have predicted the year long lockout (and the $17 million in losses the Jackets took then)? The salary cap helps protect the upside, but also pushes up the floor of spending.

It is way too simplistic to say "they signed the lease, live with it". Just like athletes never "renegotiate" their contracts, right?

The parties to the lease, Nationwide and the CBJ, seem to be close to the same page here, they just need some third party help.

I suspect that in the end everyone will give a bit -- the County will take the lion's share of ownership, with Nationwide retaining a slice and the CBJ buying a slice, perhaps with an option to buy the whole thing.

A Shot From The Point

rocket said...

Exactly JAL, so then why do people refinance their mortgages? Things come up, markets change.

As for this affecting hockey ops, you're right they don't do the books... but maybe they get a cut when the team loses 10mil a year? What's the incentive of doing a good job there...

I obviously don't know much about this whole situation (just like most of us, i assume), so this is all just anecdotal speculation.

JAL said...

The incentive for the hockey operations people is to put the best product on the ice. That attracts fans, it attracts sponsors, it attracts foundation contributions, it raises advertising revenue, provides leverage for better media contracts, etc. etc. etc.

Most of all, building a franchise that is successful on the ice increases the value of the franchise itself, which is ultimately the way that owners make their money (besides the tax breaks of ongoing operations).

Don't seriously argue that the Jackets' hockey operations are not attempting to put the best product on the ice. Just 10 months ago they spent a lot of money to drastically improve the team, and you can expect more this year.


RadioJohnson said...

I have no doubt that hockey ops are doing everything they can to ice a competitive team, and they are icing a competitive team, which makes me happy.

The Jackets are positioned to be competitive for the next several years. All I would like is for the brass to wait and reassess the financial situation after a few consecutive winning seasons. Unless you are the Cubs or the Browns, the financial picture never looks good when you're losing, and in their short life, the Jackets have lost...a lot.

As for the lockout, you’re right. Ownership probably did not expect the lock out, but they have only themselves (and 29 other owners) to blame.

rocket said...

You also can't seriously tell me that the $10mil a year loss doesn't affect the hockey ops at all? I never argued that they're not doing their best job of putting ppl on the ice... just look at last season.

But as far as incentives... yes, putting the "best product on the ice" and feeling good about a great team has a big part of motivating them to provide a great on ice product. But, when they're worried that they will get a pay cut, not get a raise, or not get a bonus, or not get a promotion.. that puts a damper on their motivation. The problem here is the lease (and tv contract)... not attracting fans, sponsors, and ticket sales. They don't have a problem doing that... even if they went deep into the playoffs we would still see a loss.

Just imagine how great of a product we would have with our staff if they had some breathing room. They are doing a phenomenal job with what they have.

So yes, I am arguing that hockey ops is being prevented from doing their "best" job... which with somebreathing room would be a stanley cup competitor every year. I believe we have great staff now.

It is all under the same organization, the whole organization is feeling the losses and it definitely trickles down to all the levels.