Friday, May 29, 2009

The Sky Is Not Falling . . .

With the revelation that the Blue Jackets have lost in the neighborhood of $80 million since 2002, and that discussions were afoot to transfer ownership of Nationwide Arena to Franklin County, utilizing a "sin tax" increase, the full range of doomsayers, conspiracy theorists and panic-mongers are emerging and forecasting imminent Armageddon at the hands of black helicopter-flying team owners and NHL executives.  Enough already!!  

First, while the amount of losses seems staggering to many, they are well within the bounds of "reason" for modern sports ownership.  Keep in mind that only about half the teams in the league make an operating profit.  Consider that most estimates place Phoenix as losing $30+ million per year.  Coming into the 2008-2009 season, the Jackets were in the bottom third in operating revenue.  Also consider, however, that they lost out on revenue sharing the last time around, and that number alone makes some clubs profitable.  From all indications, that contribution will return this year.  In 2007-2008, we lost out on 25% of our contribution -- accounting for about $2.5 million in lost revenue by itself.  

The other side of the coin is debt.  According to Forbes, the Blue Jackets have a debt-to-value ratio of only 29%, placing them 10th best in the league in that category.  Debt is important, as the lack of debt provides flexibility.  I would submit that the New Jersey Devils, with a debt-to-value ratio of 119% and an annual operating profit of only $1.9 million, are in a substantially worse economic posture than the Blue Jackets.

There is actually good news in the information provided thus far.  First, apparently the NHL finds that the Jackets are in good shape in general, with the Arena situation being the one flaw in the business model.  That alone should be seen as encouraging.  Remember that we are not a Detroit, Toronto, or Montreal.  We are a young expansion franchise, with a season-long strike falling in the middle of our historical track.  

Blue Jackets management, despite their goofiness in the handling of the broadcaster situation, is acting as any responsible management team should act.  They are assessing where they are, getting input from experts, and exploring rational solutions.  The only mention of moving came in response to a question -- neither Priest nor McConnell have even mentioned moving the team as a primary strategy.  

Nobody should be surprised that the Jackets are exploring a way to remedy the one primary flaw in their financial picture, the Arena.  They aren't making threats or issuing dire projections. Instead, they are exploring a proven method that was used with success in Cleveland for pro sports facilities there.  Those types of steps take time, so the fact that they are starting the process is a sign of prudent management, not subversive intent.  

Nationwide had all of the leverage when the original deal was done, and now the climate is switching.  The Blue Jackets have a credible on-ice product, momentum is growing, and the Arena District is blossoming.  From a business perspective, the timing is perfect to get the wheels rolling to shore up the financial position.

The owners of professional sports franchises are not in the game for operating profits.  Ownership is about ego, tax benefits and increased franchise value over time.  Of $254.6 million in operating profits earned by NHL teams in 2007-2008,  $136.7 million was earned by just three teams (Toronto, Montreal, N.Y. Rangers), and  another 5 teams (Vancouver, Dallas, Detroit, Edmonton, Calgary) account for another $66 million.

Could McConnell turn around and sell the team out from under us?  Sure, he could.  Is that probable, or even likely?  No.  First of all, the "sin tax" plan calls for Nationwide to take a minority interest in the Blue Jackets franchise, further bolstering the uniquely local character of the ownership group.   Secondly, it would be a foolhardy move to sell a franchise in this economy, just as the team is poised to take some substantial leaps forward.  The appreciation in franchise value lies ahead.  Finally, with the Phoenix fiasco and the fact that other franchises are in far worse shape than the Blue Jackets, the NHL would be unlikely to approve a sale involving a move anytime soon.  

So, boys and girls, let's not panic.  Let's look at facts, get ready to congratulate Mason on the Calder Trophy, look forward to the draft and free agency, and stop worrying about the sky falling.  

Keep in mind, I am originally from the SF Bay Area.  There, the Raiders have moved to Los Angeles and back again, the California Golden Seals came and went, the Golden State Warriors changed names and moved across the Bay from S.F. to Oakland, the Giants have been on the verge of sale 2 or three times, and the A's similarly have been poised to de-camp on numerous occasions.  Even the beloved SF 49ers have not been immune to the relocation saber rattling.  

No business can take crushing losses forever.  However, the CBJ do not even come close to the definition of a desperate franchise.  Indeed, everything they are doing is to insure that they do not get to that point.  Interest is high, as is the upside in town.  Don't worry, be happy, mon . . . 

Thursday, May 21, 2009

Stop Me If You Have Heard This One Before . . .

Work has been a nightmare for the past few weeks, so I have been unforgiveably absent from the blogosphere for that period of time.  For better or worse, I am back, and am working on several pieces on the draft, broadcasters, etc.  Watch this space!

Anyway, could not resist the opportunity to point everyone to this piece, written by one of my colleagues over at Inside Hockey, bemoaning the mercurial Nikolai Zherdev, his lack of work ethic, consistency and long term reliability.  He concludes that the Rangers cannot afford to sign Z this summer, and should package him while they can.  

So, does this refrain sound at all familiar to anyone???  All hail, Scott Howson . . . we are not worthy!!!

Saturday, May 2, 2009

Ryan Salmons Loses His Battle

The CBJ family lost one of their most ardent and courageous followers yesterday, when Ryan Salmons succumbed to the cancer that he had so valiantly battled for the past year.

Ryan's death comes just eight days after I saw him in the locker room after the Jackets' Game 4 elimination at the hands of the Detroit Red Wings. Thought the CBJ players were by turns angry and disappointed at the loss, they all took the time to visit with Ryan and his family.

Shown at left with the one day contract with GM Scott Howson "signed" him, Ryan appeared to be thrilled by the attention the Blue Jackets favored him with during these last months, particularly forwards Jason Chimera and Manny Malhotra. Salmons father, Brad, strongly believes that the involvement and caring of the Blue Jackets organization, and the team's playoff run, gave Ryan something to grab onto and live for each day. According to the Dispatch, Ryan finally asked to be sedated yesterday, and died shortly thereafter.

His saga captured the hearts and minds of not only the Blue Jackets and the Columbus community, but the broader hockey and sports worlds as well, as ESPN and the NHL Network both did recent features documenting his battle.

Hopefully, Ryan and Mr. Mac are seated comfortably together, speculating about the draft, free agency and the season to come. Rest well, Ryan.

Friday, May 1, 2009

Another Level

In the aftermath of Game 4 vs. the Red Wings, my gut instinct was to pounce on the keyboard, vent about the officiating, decry the injustice and gush about the energy and atmosphere in the arena.  Somehow, I thought better of it.  Instead, I decided to take a bit of a breather, let the immediate emotion fade a bit, and try and put some overall context on things before I put finger to keyboard.  The details of the game are a matter of record, and I don't intend to re-hash those here.  Lots of posts coming on the season, the players, what's ahead, etc.  This one is all about the experience of Game 4, and what it means for the future.

I happened to watch Game 4 from the Press Box, as part of my free-lance writing for Inside Hockey.  It was a fascinating venue from which to view this particular game, for a lot of reasons.  FIrst,  I was more physicaly removed from the action than I am in our customary lower bowl seats, about 8 rows up.  The bird's eye view of the game is conducive to a more analytical approach, as you can see the ebb and flow as forechecks succeed and fail, goalies scramble for position, and calls are missed (or ignored) by the assembled officials.   Of course, no rooting is permitted in the Press Box, which was more agonizing in this game, due to the emotional tugs as the ice tilted dramatically, first in one direction, then the other.   However, a periodic nod, a clenched fist, an exasperated squinting of the eyes -- these tiny gestures betrayed the allegiences of those around me, and as the game wound down, the tension thick, with no outlet or release possible.

One thing you miss when you are in the midst of the crowd is the magnitude of the crowd response as a whole. Sure, we always know when the place is rocking, but this particular Thursday elevated the experience to an entirely different plane.  From the relative silence of the Press Box, the entire arena is visible, and the sound appears to cascade upward from all angles and crash down again, magnifying the impact.  I have been to many, many events over the years, ranging from the Winter Olympics in Innsbruck  to the infamous "Earthquake Game" -- Game 3 of the 1989 World Series between the Giants and A's, disrupted by the 7.2 Loma Prieta Earthquake.  I have never, ever experienced a sound quite like that emanating from the Army of the Ohio on Thursday.  Combined with the vision of 18,889 people standing for the entire third period, it was a jaw dropper.

The brutal suddenness with which it all ended was jarring.  The whistle, the goal, the debris flying on the ice --- done.  Elation turned to anger, then back to appreciation as the team saluted the fans from the ice.  The press contingent was unusually quiet while filing out and down to the locker room for the post-game interviews and press conferences.  Even for many of the jaded veterans, it was difficult to process what they had just witnessed.  

The contrasts extended to the locker room, where Chimera and Peca were demonstrably agitated.  Kristian Huselius sat solemnly, staring straight ahead.  Steve Mason, the focus of a throng of reporters, responded graciously, in a voice barely audible, seeming to take the weight of the entire series on his shoulders.  The counterpoint was provided by Mike Commodore and R.J. Umberger, both of whom readily shared their pride in the effort the team put together and the prospects for the future.  Befitting a Captain, Rick Nash entered the room and sounded a middle chord -- disappointed at the loss, but proud of the effort and anxious to attack the future.

Through all of this, Ryan Salmons and family took in the entire experience from the perimeter of the room.  In turn, virtually every player spent some time with Ryan and his family, setting aside their own temporary disappointment to bring some measure of comfort to someone whose thoughts they could scarcely comprehend.  

The final contrasts of the night were provided by the coaches.  On the one hand, Detroit's Mike Babcock presented an ultra-confident, bordering on arrogant, presence in the conference.  Some would argue this is the demeanor of a champion.  Others might be less charitable.  However, whatever the view, it was a glaring contradiction to the understated, contemplative Ken Hitchcock.  Despite the contrasts in demeanor, it was apparent that both coaches shared a deep and abiding pride of their clubs and the efforts that were made on the ice that particular Thursday night.

It is easy to dismiss the playoff experience, and this game in particular, as just another loss to a superior team.  Pessimists might argue this was business as usual.  I submit, however, that this was markedly different -- that the run to the playoffs, and in particular the last 4 periods of hockey--- represented an elevation to a different level for the Blue Jackets and their fans.  They overcame fatigue and awe, stared down a champion hockey team playing in top form, and went toe-to-toe for the duration.  

The Jackets underwent an education in 4 short games -- they saw the other gear that is needed for championship playoff hockey.  The character they developed incrementally during the course of the season was jolted to a higher level.  Down 3 games to zero, and down twice by two goals, the team found another level to reach.  Though disappointed at the outcome (and the unfortunate role of the officials), you could see in everyone that they were pleased and proud that they found that fifth gear.   

Game 4 also served as the culmination of a transformation of the fan base and the community.  For the stretch run and the playoffs, the fan base was energized, the community engaged in a way not seen since the inaugural season.  Finally, in Game 4, the glass ceiling was broken and the  Jackets' fan base reached its own new level.  While the bandwagon jumpers have now climbed off, and others will now be satisfied with nothing less than a Stanley Cup next year, there is an enhanced core of fans that "get it."  They appreciate the value of effort for effort's sake.  They have now glimpsed the possible and are tantalized by the prospects for the future.  While the CBJ may never unseat Ohio State as the primary fall attraction in town,  this season, and Game 4 in particular, firmly established the Blue Jackets' place at the table.   There will be good seasons, and bad seasons, elation and disappointment, but a new foundation has been laid.  

As of last Thursday, the "old" Blue Jackets were laid to rest.  The team has thrown off those old shackles, and the core fans have done the same.  Having seen goal, and now understanding that it is attainable, neither the team nor the fans can look back.  

This year, there was no fairy-tale ending for the Blue Jackets.  In the final analysis, that may be the best thing that could have happened.  Ken Hitchcock is methodical -- he is a marcher, not a sprinter.  Perhaps that explains his attraction to Civil War re-creations.  Scott Howson is the same -- careful, almost surgical, in his approach.  For the Jackets to have some sudden flash of brilliance would have been out of character for this group.  They grew step by step this year, learning to play together with half the team brand new.  Learning to play in front of a 20 year old phenom in net.  Learning to overcome injuries and the most arduous schedule in the NHL. Learning to squeeze out vital points in the playoff chase.  Learning what playoff hockey is all about.

Given all of this, it was only fitting that the playoff attendees in Columbus found flags draped on their seats.  They said -- "March On".  We will.