Posse81
March-5th-2004, 04:20 PM
http://www.washingtonpost.com/wp-dyn/articles/A31698-2004Mar4.html
This Is a Tale About Salary, Caps
Team, Fans at Odds Over Club's Direction
By Thomas Heath
Washington Post Staff Writer
Friday, March 5, 2004; Page D01
The Washington Capitals' recent unloading of high-priced players, which continued yesterday with the trade of center Michael Nylander to the Boston Bruins, has reduced the franchise's projected losses this year to about $25 million, down from a preseason projection of $31 million, according to the team.
But Capitals officials say the decision to dismantle one of the NHL's most star-studded but least successful rosters is also part of a long-term strategy to prepare for a new labor pact between the owners and players, with Washington betting that a new collective bargaining agreement will limit payrolls to around $35 million. The Capitals began the year with a payroll of around $49 million, seventh highest in the NHL, but have reduced that to about $40.8 million by trading five top-flight players in the past six weeks.
In his most extensive comments yet on the trades, team owner Ted Leonsis said yesterday that the Capitals are setting the stage to field a young, relatively inexpensive team under what they hope will be a salary cap system that will allow them to sign impact players for less money than they cost now.
The collective bargaining agreement expires Sept. 15, and owners are likely to lock out players next season if they do not agree to a pact that controls salaries. The union opposes any salary cap-style system.
"As we enter a new era in the NHL with the pending expiration of the CBA we decided to recraft the team by moving older, higher-paid players in return for prospects and for high draft picks," Leonsis wrote in an e-mail in response to questions. "Our goal is to blend new, younger, hungrier players with Caps veterans and new veteran players that we believe will be available post-CBA negotiations. Our goal is to play tough, hard-nosed hockey and to make a team that the community is proud of and that gets results."
The Capitals' strategy, however, is provoking an angry fan response. Placards denouncing Leonsis have appeared at home games at MCI Center, and dozens of fans have posted messages on the team's official Web site decrying the departure of many of the team's most popular players. Attendance, which was down at the beginning of the season, seems to have flagged further at recent home games. Some fans are vowing to cancel their season tickets next year.
"I'm always going to be a loyal Caps fan," said Tray Webb III, a longtime season ticket holder who owns a mortgage company. "But I feel like I've been kicked in the stomach. And that's the sentiment of the group of fans that I'm friends with. As a knowledgeable fan, I understand the collective bargaining issues regarding salary cap and how much player salaries take up of team revenues, which is way out of whack compared with other sports. But on top of that, there is no reason in the world that you trade a Peter Bondra, who is Mr. Washington Capitals.
"Normally, they would have my money for my tickets for next year by the time the playoffs start," Webb said. "But it's going to be a while before they are going to get more money from me. I'm not going to pay $200 to watch a minor league team play. It's disheartening to watch my hockey team become a garage sale."
Said another fan, Bob Sitnick, a 30-year season ticket holder, "I'm going to re-sign, but we're sure getting minor league hockey for big league money."
Season ticket sales, which stood at fewer than 5,000 when Leonsis bought the team for $85 million in 1999, peaked at around 11,700 two years ago, with the arrival of Jaromir Jagr from the Pittsburgh Penguins. The Capitals failed to make the playoffs Jagr's first season in 2001-02, and last year were eliminated in the first round. Season ticket sales have declined this season to around 10,500.
Leonsis, who is vice chairman of America Online, said in his e-mail that his strategy of signing high-priced superstars such as Jagr, Robert Lang and Sergei Gonchar to generous, long-term salaries in hopes of winning a Stanley Cup has backfired, with mounting financial losses, fewer fans buying tickets and a poorly performing team.
"We have failed in our five-year plan to bring a Stanley Cup championship to D.C.," Leonsis wrote. "Despite major ongoing investments, and acquiring many star players, our team today is in last place in its division, despite having the highest payroll in the division. We have learned some very valuable lessons on crafting a team during the past few years."
Jagr, Lang, Gonchar and Bondra, all of whom have been traded, together earn more in salary (about $25 million) than the Capitals earn in ticket revenues for an entire season ($20 million), according to team officials.
Leonsis said he is confident he is making the right moves, despite the public relations fallout.
"I'm confident that if we craft a team that plays well and gets results, our fans will come and fall in love with the team," Leonsis said in a telephone interview yesterday. "I am always worried about what our fans think. And if I was only concerned with [public relations], we wouldn't make these tough decisions."
An NHL official yesterday voiced no objections to the Capitals' roster moves. "There are any number of times when a team's management has decided that the path they are following with the personnel they have accumulated is not the path they want to pursue any longer," said Frank Brown, a league spokesman.
Over the past five years, the Capitals have lost nearly $100 million, have won five playoff games and will fail to reach the postseason this year; Washington has posted one of the worst records in the league with just 50 points. Attendance through 31 home games was down more than 5 percent compared with last season, according to Sports Business Daily.
NHL owners are seeking a new collective bargaining agreement that will limit the amount of league revenues that go toward players salaries. Player costs consume about 75 percent of total NHL revenues, according to the league; the NHL Players Association disputes the NHL's figures.
Owners want the percentage going to players closer to 50 percent, which could mean a salary cap in the neighborhood of $35 million to $40 million per team. The players' union opposes a limit on salaries because it believes it prevents players from earning top dollar for their services. Players are not paid during a lockout or strike.
Even if a $35 million salary cap is reached under a new labor agreement, which is far from certain, the Capitals would probably lose millions unless they can find a way to increase revenue.
Despite his losses since 1999, Leonsis has a strong investor group that has a net worth in excess of $2 billion, according to members of the group. Leonsis's fellow investors in the past have said they have the financial wherewithal to weather the team's losses and see them through to success. The Capitals and the rest of the group's properties are in closely held Lincoln Holdings LLC, which owns 100 percent of the Capitals and 44 percent of the NBA's Wizards and MCI Center.
This Is a Tale About Salary, Caps
Team, Fans at Odds Over Club's Direction
By Thomas Heath
Washington Post Staff Writer
Friday, March 5, 2004; Page D01
The Washington Capitals' recent unloading of high-priced players, which continued yesterday with the trade of center Michael Nylander to the Boston Bruins, has reduced the franchise's projected losses this year to about $25 million, down from a preseason projection of $31 million, according to the team.
But Capitals officials say the decision to dismantle one of the NHL's most star-studded but least successful rosters is also part of a long-term strategy to prepare for a new labor pact between the owners and players, with Washington betting that a new collective bargaining agreement will limit payrolls to around $35 million. The Capitals began the year with a payroll of around $49 million, seventh highest in the NHL, but have reduced that to about $40.8 million by trading five top-flight players in the past six weeks.
In his most extensive comments yet on the trades, team owner Ted Leonsis said yesterday that the Capitals are setting the stage to field a young, relatively inexpensive team under what they hope will be a salary cap system that will allow them to sign impact players for less money than they cost now.
The collective bargaining agreement expires Sept. 15, and owners are likely to lock out players next season if they do not agree to a pact that controls salaries. The union opposes any salary cap-style system.
"As we enter a new era in the NHL with the pending expiration of the CBA we decided to recraft the team by moving older, higher-paid players in return for prospects and for high draft picks," Leonsis wrote in an e-mail in response to questions. "Our goal is to blend new, younger, hungrier players with Caps veterans and new veteran players that we believe will be available post-CBA negotiations. Our goal is to play tough, hard-nosed hockey and to make a team that the community is proud of and that gets results."
The Capitals' strategy, however, is provoking an angry fan response. Placards denouncing Leonsis have appeared at home games at MCI Center, and dozens of fans have posted messages on the team's official Web site decrying the departure of many of the team's most popular players. Attendance, which was down at the beginning of the season, seems to have flagged further at recent home games. Some fans are vowing to cancel their season tickets next year.
"I'm always going to be a loyal Caps fan," said Tray Webb III, a longtime season ticket holder who owns a mortgage company. "But I feel like I've been kicked in the stomach. And that's the sentiment of the group of fans that I'm friends with. As a knowledgeable fan, I understand the collective bargaining issues regarding salary cap and how much player salaries take up of team revenues, which is way out of whack compared with other sports. But on top of that, there is no reason in the world that you trade a Peter Bondra, who is Mr. Washington Capitals.
"Normally, they would have my money for my tickets for next year by the time the playoffs start," Webb said. "But it's going to be a while before they are going to get more money from me. I'm not going to pay $200 to watch a minor league team play. It's disheartening to watch my hockey team become a garage sale."
Said another fan, Bob Sitnick, a 30-year season ticket holder, "I'm going to re-sign, but we're sure getting minor league hockey for big league money."
Season ticket sales, which stood at fewer than 5,000 when Leonsis bought the team for $85 million in 1999, peaked at around 11,700 two years ago, with the arrival of Jaromir Jagr from the Pittsburgh Penguins. The Capitals failed to make the playoffs Jagr's first season in 2001-02, and last year were eliminated in the first round. Season ticket sales have declined this season to around 10,500.
Leonsis, who is vice chairman of America Online, said in his e-mail that his strategy of signing high-priced superstars such as Jagr, Robert Lang and Sergei Gonchar to generous, long-term salaries in hopes of winning a Stanley Cup has backfired, with mounting financial losses, fewer fans buying tickets and a poorly performing team.
"We have failed in our five-year plan to bring a Stanley Cup championship to D.C.," Leonsis wrote. "Despite major ongoing investments, and acquiring many star players, our team today is in last place in its division, despite having the highest payroll in the division. We have learned some very valuable lessons on crafting a team during the past few years."
Jagr, Lang, Gonchar and Bondra, all of whom have been traded, together earn more in salary (about $25 million) than the Capitals earn in ticket revenues for an entire season ($20 million), according to team officials.
Leonsis said he is confident he is making the right moves, despite the public relations fallout.
"I'm confident that if we craft a team that plays well and gets results, our fans will come and fall in love with the team," Leonsis said in a telephone interview yesterday. "I am always worried about what our fans think. And if I was only concerned with [public relations], we wouldn't make these tough decisions."
An NHL official yesterday voiced no objections to the Capitals' roster moves. "There are any number of times when a team's management has decided that the path they are following with the personnel they have accumulated is not the path they want to pursue any longer," said Frank Brown, a league spokesman.
Over the past five years, the Capitals have lost nearly $100 million, have won five playoff games and will fail to reach the postseason this year; Washington has posted one of the worst records in the league with just 50 points. Attendance through 31 home games was down more than 5 percent compared with last season, according to Sports Business Daily.
NHL owners are seeking a new collective bargaining agreement that will limit the amount of league revenues that go toward players salaries. Player costs consume about 75 percent of total NHL revenues, according to the league; the NHL Players Association disputes the NHL's figures.
Owners want the percentage going to players closer to 50 percent, which could mean a salary cap in the neighborhood of $35 million to $40 million per team. The players' union opposes a limit on salaries because it believes it prevents players from earning top dollar for their services. Players are not paid during a lockout or strike.
Even if a $35 million salary cap is reached under a new labor agreement, which is far from certain, the Capitals would probably lose millions unless they can find a way to increase revenue.
Despite his losses since 1999, Leonsis has a strong investor group that has a net worth in excess of $2 billion, according to members of the group. Leonsis's fellow investors in the past have said they have the financial wherewithal to weather the team's losses and see them through to success. The Capitals and the rest of the group's properties are in closely held Lincoln Holdings LLC, which owns 100 percent of the Capitals and 44 percent of the NBA's Wizards and MCI Center.