An inflated sense of loss?

The timing isn’t particularly good for the NHL, one short day after Bill Wirtz expressed concern over the lack of movement by the players and a reticence to accept the Levitt report as a Gospel came a report for Bob Goodenow to wave around for all to see.

No less an authority than Forbes magazine, a much respected and widely read business publication has come out with a story that says Gary Bettman and his band of entrepreneurs haven’t lost quite as much money as they say they have.

The article which carries a publication date of November 29th provided its take on a number of NHL led issues including: estimates that league losses were closer to $96-million, that player costs did not gobble up 75 per cent of the league revenue as the NHL alleged, and that all the Canadian clubs but the Ottawa Senators, which lost $5-million, enjoyed a profitable 2003-04 season.

The controversial article has struck a raw nerve with the NHL which claims that the article is factually incorrect. Vice President Bill Daly was quick to the press releases with the NHL’s take on the story.

“The Forbes article is factually inaccurate in numerous respects and is not based on any of the actual information that would be needed to support its claims,” he told Canadian Press. “It is nothing short of irresponsible journalism.”

Needles to say the NHLPA is trumpeting the Forbes story as proof that they’ve been right all along and thus claim the high ground in the ongoing dispute. PA spokesperson Ted Saskin broke down the Players Association’s response to the article like this:

“It is no surprise that Forbes found the NHL has vastly overstated its losses by not including all of the revenues earned by NHL teams,”

“We agree with Forbes' conclusion that the NHL should show more transparency and disclose all of an owner's sources of revenue in their financial reporting. We have been saying the same thing for many years.”

“Forbes' report and conclusions on NHL finances make it clear the NHL should be negotiating off of our proposals rather than shutting down the game to try to get a salary-cap system.”

The article should go a long way in helping the Players Association hold the lines for the short term at any rate. As the lockout heads into day number 60, the rank and file (those that haven’t gone off to Europe) can point to the Forbes article as an independent review of the situation, one which gives them more ammunition in the ongoing battle.

Forbes also questioned the validity of the Levitt Report, the NHL commissioned report that has basically become the Holy Grail for the NHL owners, as they try to redefine the financial rules of their game. Forbes claims that Levitt’s numbers of a 273 million dollar loss for 2002-03 are vastly over inflated, suggesting that any real loss was probably only around 123 million.

Almost lost in the rumble of reply to the article is an interesting little side story, the heartwarming tale of the Minnesota Wild. They the small market team which is toiling away with a low payroll and only a few short years along from their expansion birth. The Wild, if the Forbes story is correct are the second most financially successful franchise in the league, with only the juggernaut Maple Leaf Empire ahead of them.

Forbes suggests that the Wild made 11.5 million in operating income, second only to the Leafs who collected 14.1 million in income. Though all is not golden in the land of the Wild, missing the playoffs last year did hit the bottom line a bit, reducing the team’s value by 3 million dollars to 163 million. Still not bad for a team with not much in the way of star power and as far removed from the NHL centre as any Canadian franchise. Basically if a team like Minnesota can still manage to hold its own with its structure, the need for cost certainty and all of the other league desired changes may seem to be more associated with bullying rather than business.

Expect the NHL to start to fill the airwaves with rebuttals, charts and figures. The Forbes article gives the NHLPA some valuable reading material for its efforts. It also will put the NHL on the defensive for the first time since the dispute began, since the games have been cancelled the fans seem to have taken the NHL’s point of view to heart over the Players. It will be interesting to see what impact this report might have on the fans as we get closer and closer to a shutdown of the entire season.