Sabre Rattling

TBN - Sabres predict a profit

Link: Buffalo News - Sabres predict a profit.

Kukla's Korner

An enocuraging article from the Buffalo News this morning regarding the state of the Sabres finances after the first twom onths of the season.  They are projecting (without a playoff berth) a small profit in the range of $200-300k.  Encouraging is too weak a description really.  Bloody fantastic is more apt.  From the depths of bankruptcy and a year-long lockout to the beginnings of a self-sustaining business in three years is nothing short of impressive.  Almost as impressive as the Sabres current 6-game winning streak. 

Those who know me personally (or from my now-abandoned personal blog) know I have a keen interest in things economic, and think of myself as a specific type of economist, namely an Austrian.  So, this side of the game of hockey is of particular interest to me and I'm constantly reviewing the mechanisms of how this game translates into economic terms.   As a believer in the pure power of the unfettered free market the Sabres return to profitability is encouraging.  Granted nothing about the NHL exists in a free market, certainly not in economically socialist America, but given the context of the business, namely the very tough local economy and the competition from other sports and acitivites, the projections for this year imply that management has figured out how to provide a product worth paying for.  That's what profit is, the arbitrage between your cost of production and the willingness of someone to pay for what you are offering.  Without profit there is no reason to continue. 

Revenue sharing will certainly account for part of the Sabres income... they will be subsidized somewhat by the other teams in the league.

But, to my mind that's perfectly fine.  The NHL is a voluntary association, one that just went through a painful reorganization not only with its labor but also within its membership.  The result of that reorganization could have been very different, and one that would have made it a lot tougher for markets like Buffalo to either remain or become viable. 

Does hockey still belong in Buffalo?  I think so.  There was a time when I thought that the Sabres were going to be a casualty of the Federal Reserve's profligate money creation.  But, now, after the lockout and the change in ownership, I don't think that as much anymore.  There will come a time, perhaps sooner than people suspect, when this team will not need revenue sharing to remain viable, and that money will either be provided to another team undergoing a painful transition or not be needed whatsoever. Providing a good value to product ratio is the biggest governing factor in profitability and that's the attitude Mr. Golisano has been trying to instill in both his organization and his team.  Give us a reason to come to the games and we'll give you our money, support and love.  If you lose, lose with dignity and effort and if you win, do so with style, class and talent.  First and foremost give us a reason to care.   

So far this year, I'm more a fan of the guys in the AGH than I've been in a while.  It may just be time to decide on whose jersey I want a copy of....

Ta,

 

Keenanization Means Never Failing to be a Prick

Link: Herald.com | 08/15/2005 | 'Keenanization' of Panthers is under way.

Mike Keenan is a prick.  That's it, and recently, not even a winning prick.  Check out this surprisingly good article from the Miami Herald.  It's a great run-down of why Keenan may not succeed in Florida.  Who says there are no knowledgable hockey people in the south?

His moves with Luongo will backfire on him, in my opinion, even if Roberto shows class and plays Vezina-class hockey for him this year.  If Keenan is around next year when they do this again, expect the same result.  All contract overtures will be denied and Luongo will move from Miami when he's able. 

Ta,

Throwing the Orzsagh out With the Bath Water

Link: Tom Benjamin's NHL Weblog: Just Business.
I've never really felt that Tom Benjamin was all that balanced in his view of the business side of the NHL but this latest piece shows a considerable lack of insight.

Under the old CBA, a player like Orszagh was still an asset, so paying him while he was hurt could pay off for three years after his recovery. Obviously, there were risks attached to doing something like that, but at least there was also a reward. The equation has changed under the new agreement. Instead of just risking money, the Predators are also risking cap space.

This is a sincere stretch.  Under the old CBA Orzsagh might have retained more value because the price of mid-level Free Agents was too high for the Predly's budget with which to replace him.  Even if that were true, which is pure conjecture, that is definately not the case now.   In effect, what Tom is saying is that the value of players like him when injured was artificially inflated due to the restrictive UFA rules under the old CBA.  So, a team like Nashville would keep a guy with a blown ACL and MCL on the payroll (paying him millions of dollars, mind you) for hoping he'd return to form in the three years they still held his rights as a RFA. This course of action is in opposition to finding a suitable replacement for him right now.  This sounds like bad management of resources to me. Is this what you want your teams spending your ticket money on?  Furthermore to think that the cap had anything to do with Poile's decision is ludicrous.  Nashville is going to be nowhere near the cap this year, even with signing Paul Kariya. 

If the old CBA was in place, does anyone think the Sabres would have qualified Tim Connolly if he was still feeling the effects of that concussion from the year previous?  I doubt it.  And, if we did would you as a fan be happy about it.  Spending 1/26th of your budget on a player that may not ever be able to play again?

Now, don't get me wrong, I do have a lot of sympathy for Orszagh's situation.  It's a real shame his career at this level may be over, but that's the way things go sometimes.  It's not right or wrong.  It just is.

But, crying a river over how the Predators treated him and that the new CBA is at fault?  Please!

I feel bad for him, of course.  Who doesn't?  A career threatening injury is nothing to laugh at or write off, but it's also not the Nashville Predators responsibility either.  Playing NHL hockey is not a right.  Guys get injured in these tournaments (the World Championships where Orszagh blew out his knee) all the time and it's one of the reasons why the teams are reluctant to let the players participate.  It's an issue every time the Olympics come around.  The Preds are out a forward that they spent all that precious time and money developing only to see it come to naught in a tournament that is, at best, to them just advertising.  It certainly isn't the core of their business.

Personally, I'm hoping Orzsagh is right, Poile is wrong and the guy can still play.  I'd love to have him sign with the Sabres at or near the minimum, and give some of our underachievers a kick in the pants.  If I were Darcy Regier I'd offer him a tryout at camp certainly.   

Ta,

And the Salary Deflation Begins

Apparently Sandis Ozolinch didn't get the NHLPA memo about trying to keep his salary near the level of his old contract. With the changes to both the Ducks front office and the NHL's rulebook, Ozolinch looks to be a much more valuable player tomorrow than he was yesterday.

So, if that's the case why is TSN reporting that he signed for nearly half of what he would have made under his old contract of $5.5 million? If he signed a 2 year deal at $2.8 to $3.0 million that's still more than a full million less than what his old contract was worth after the 24% rollback.