Saturday, October 01, 2005

Pointing the finger at the wrong man

For the past couple weeks, I’ve mostly blamed new head coach Bryan Murray for the decision to only carry 20 players. A move I felt was boneheaded from the start.

In today’s Ottawa Citizen, Murray explains that it is not he who made this call, but rather GM John Muckler.

… as general manager John Muckler has told him he can only carry 20 players on the active roster.

“I’d love to take 25 players,” Murray said yesterday, “but John won’t let me.”

I find this strange that Murray is now deflecting blame for the stance. As recently as last week, Murray defended it, saying that he feels players are better suited playing than sitting around. Now, when the decision has been questioned by media and bloggers alike, he says if it was up to him, he’d carry the (previously) normal number of 23? Make up your mind, Bryan. Which is it?

The fact that it’s apparently coming from Muckler makes one think it is an economic decision. Contrary to what some think, the Senators are in great shape as far as the salary cap goes. Even if they were to carry 23 players, they’d still be more than $3 million under based on my calculations. This would indicate that they’re able to carry that many guys, right? Wrong. As of late, the Sens brass have been spinning a strange tale.

After years of claiming the new CBA was needed for survival, they (and a few other people) are not crying about how it hurts them. Obviously, a lot of us aren’t too pleased with this, as it seems like NHL execs will never be happy, and are eternally crying poor and disadvantaged.

Senators President and CEO Roy Mlakar was on Bob McCowan’s “Prime Time Sports” show, which is simulcasted both on Rogers Sportsnet for TV and on radio for Toronto’s FAN 590, a few weeks back. He talked about how the new CBA hurts the Senators for both economic and on ice reasons. Hockey related, previously, the Senators now expose their young players to UFA status at 25, 26, or 27 instead of 31. This has been discussed to death, and is a valid point. Most assumed, however, that teams sucked it up and took this hit to get the cost certainty they said they’ve needed for years.

While it’s been known that the Sens have operated under their own salary cap of sorts for a while, under a different name (a budget), he says that they still do so and cannot afford to spent up to the $39 million cap number.

"People think we have lots of room under the (salary) cap," he said. "We have absolutely no room."

Why is this?

The last time they played hockey, the Senators payroll was over $40 million. Mlakar has rationalized that they’ve had to lower their payroll due to the hits they’ve taken elsewhere, such as the now-non-existant Canadian Assistance Plan and the lost revenue from the ABC American TV deal. According to them, it adds up to $10 million they will be down this year.

With that figure, they seem to be failing to take into account the fact the Canadian dollar is up almost $0.13 from where it was the last time there was hockey. At the same ticket prices, it’s been estimated that this results in a 16% increase in ticket, concession, and local TV revenues. Mlakar has refuted this claim, suggesting that the impact of the Canadian dollar increase, though a positive for the team, is much less than that. The figure he came up with in the McCowan interview was half a million per dollar point, which equals about $6.5 million. That said, some have theorized that the Senators do not run their business based on the Canadian dollar because of it’s increasingly fluctuating status. The fear, of course, is that if they plan with the dollar at $0.84, and it drops to $0.76, they’d be in big trouble.

Mlakar has spoken recently about owner Eugene Melnyk’s desire to make money with this team. This is a new scenario. Previously, Melnyk was positioned, mostly by himself in interviews with the local media, as a diehard hockey fan who was willing to spend whatever to win. He was content with losing some money along the way. Apparently he’s had a chance of heart?

Even though they lost a shitload of money under the previous regime, the Ottawa Senators are not financially irresponsible. They’re about as tight fisted as they come and run a good business. Previous debts, as a result of bad deals, put them in the hole they used to occupy.

Old habits die hard, I suppose. Under cash strapped Rod Bryden, every dollar had to be accounted for. Most of the same people who worked under Bryden are still with the team now. Melnyk always spoke about how he didn’t want the philosophy of how this team was managed to change even though they were now financially stable. That one of the reasons he was interested in buying the team, and not any of the other NHL clubs up for sale, was how well they were managed.

Now, post-CBA, in a economic environment where owners are supposed to be able to survive, Melnyk wants to thrive and profit.

What this means to the team we see on the ice appears to be that the Senators will not spend up the $39 million limit we all assumed they would. They’ve done their best to rationalize why this is, and I guess some of you are buying it. I can’t say I am.


At 8:52 AM, Anonymous pale said...

Another reason for not hitting the cap this year may be the floating salary cap - if revenues are down, next years cap will be lower.

At 12:44 PM, Anonymous kjs said...

You're right to be sceptical, Chris. It's a load of hooey. Amazing how similar the chorus of complaints has been from clubs around the league in the past few weeks.

The 20-man roster was always a Muckler/Melnyk decision, not a Murray one. And IMO it was clearly a cap decision, whatever spin Murray tried to put on it.

For, despite appearances, the Sens' cap situation isn't so great. The new rules on injuries entail that salaries for replacement players are added on top of the injured players' salaries (except once the cap limit is reached). That means that any cap space will be eaten up fairly quickly if injuries are bad enough. If average injury rates stay the same the Sens will need the equivalent of roughly 25 full-time players on roster over the year. That means, by my calculations, that their cap space is a mere $1.5 million if they sustain an average number of injuries over the year. And they may need to have some left over to hedge against e.g. a goaltending disaster.

So there are some decent reasons to try the radical strategy of only having 20 roster players (if that's what they decide to do in the end). They're hoping they do pretty well on the injury front, allowing them to save up valuable cap space. That would not only enhance Melnyk's profits -- it would also provide Muckler some flexibility as a GM over the season should he need it. That's my take, anyway.

At 5:04 PM, Blogger sacamano said...

Maybe they just want to purchase fewer rings?


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