The atmosphere at NHL board of governors meetings: "Doom and gloom"
PALM BEACH, Fla. -- The NHL's salary cap may remain status quo for next season, but the spending habits of its 30 teams won't.
Two days of "doom and gloom" meetings had NHL owners and GMs predicting a much more cautious approach going forward.
Regardless of what the salary cap number is, there will be more penny-pinching going on in more markets than before. Or so they say.
"You should set your own [cap], not allow the league to set it and go from there," said New Jersey Devils president and GM Lou Lamoriello. "In this day and age, you have to have a cushion if you want to have success. We're no different than anyone else. We self-inflict some things and keep our own philosophy, but don't ever lose sight of what's going on in the economic world."
We'll see if most teams follow that lead. The salary cap has acted more as a magnet than anything else since its inception almost four seasons ago. But the worldwide economic downturn, detailed at length during seven hours of meetings here Monday and Tuesday, will likely have more NHL clubs tightening the purse strings regardless of what the NHL allows them to spend.
It's called a budget, a word that may replace "cap" as the most popular term in NHL boardrooms. That's certainly the message Ottawa Senators owner Eugene Melnyk had already given his GM, Bryan Murray.
"You have to have caution, and that's exactly the marching orders that Bryan has," Melnyk said. "I give him a number, I say, 'Assume this number' -- and I won't tell you what that number is -- but I say, 'Work on that kind of number and that's the budgeting and don't go beyond it.' What I'm not going to do is cut checks to buy out my contracts.
"Those are real dollars flying out the door; it's not hypothetical. So we're working on various scenarios, and one of them is based on a significant downturn in the economy, if it happens."
We'll see if this is contagious. NHL owners haven't shown themselves to be the most cost-conscious folks in the history of pro sports. The spending and outspending got so out of control in the late 1990s and early-to-mid 2000s, the NHL was willing to sacrifice an entire season to finally extract a hard salary cap from its players. That was the only sure way to stop irresponsible owners from spending themselves into oblivion in a sports league that doesn't exactly rank near the top of the pecking order in North America.
The tricky part now is NHL teams will need to show some measure of restraint, especially on July 1, or risk Armageddon in the 2010-11 season, when the salary cap possibly goes down.
"The smart teams are [budgeting]. I hope everyone is," said Melnyk. "Yeah, they have to look at it, they have to look at what could be very, very bad scenarios in their own marketplaces, and what it means to them, just like we are.
"These people are smart business people that have been successful in other businesses, and you have to look at running a hockey team or owning a hockey team not as an expensive hobby, but as a business. Otherwise, it's going to be a very, very, very expensive hobby."
Because most of the league's revenues -- season tickets, TV deals, corporate sponsorships -- were in the bank in September before the world financial crash, the salary cap likely won't budge too much from its current figure of $56.7 million.
"I don't expect it to be dramatically higher or dramatically lower. It'll be somewhere in its current ballpark," confirmed NHL commissioner Gary Bettman.
But the season after that? It's hard not to think revenues won't take a hit if the world economy remains in the toilet, and hence, the salary cap should take a hit. That's why teams have to be careful how many players they have tied up to contracts for that season and beyond.
The commissioner's tip: Stop signing players to all these long-term deals.
"I've always been a believer that if I were running a team, I would try and keep it to shorter-term contracts so that I have more flexibility," Bettman said. "If revenues decline next season, which we don't know, but let's say they do, and we get to 2010-11 and the cap goes down and you've got a lot of big contracts, unrelated to your economics, you're going to have cap-management issues in terms of your player personnel.
"That's why I've always believed in flexibility because you never know what you're going to get."
Some teams hope to survive long enough to see the 2010-11 season. The Phoenix Coyotes are hemorrhaging.
"We've lost a lot of money over the last number of years, and we're continuing to lose money," Coyotes COO and president Douglas Moss said Tuesday. "The good news is, the team is playing much better on the ice. Off the ice the indicators are really positive.
"We don't like losing money. Nobody does. But we think we're heading in the right direction with this team," he added. "In Phoenix, where the housing market has been in a significant downturn for the last year or so, we're really happy where we are with attendance [up 1,100 per game] and support from the fans."
Moss denied rampant rumors that the club may have trouble making player payroll at some point this season.
"We haven't missed payroll," Moss said. "We don't anticipate missing payroll at all. We're just losing money. Our ticket sales are up; the team is playing better on the ice. ... If we stay on course and compete on the ice like we have, we're going to be in great shape."
Bettman also downplayed the Phoenix situation. "They're going to get through the season just fine," said the commissioner. "That won't be an issue."
It wasn't overwhelming assurance from Bettman. The fact is, for teams like Phoenix, Florida, Nashville, Atlanta and the New York Islanders, among others, the picture isn't pretty -- empty seats, a worsening economy and no light at the end of the tunnel.
"Some of it relates to performance. Those issues haven't changed," Bettman said. "In other words, if you blur them with the economy, that's not the accurate portrayal. The Phoenix situation this year isn't a whole lot different than last year. Actually, their [TV] ratings are up, their attendance is up, the team's performance seems to be improving with a good, young team. ...
"Phoenix or any other club will do the things it needs to do to move forward. But nobody is in any immediate jeopardy."
Immediate jeopardy might be depending on which vantage point you take. When asked at the end of his media scrum what number the Coyotes season-ticket base stood at, here's what Moss said with a chuckle: "We've never really released our season-ticket base. It's too low. That's a number that's too low."
Even the wealthy teams are a little shaken, especially after the presentations from two economic experts here.
"They brought in a banker and an economist, nicknamed Dr. Doom and Gloom, I think, after hearing it," Richard Peddie, the CEO and president of Maple Leaf Sports and Entertainment, said afterward.
Yes, even the mighty Leafs, the highest-valued franchise in the league and the biggest moneymaker, are feeling the effects.
"Each of us has to look at our own situation, and the Leafs, you know, it's soft around the edges," Peddie said. "We're still a very strong franchise, but we're seeing the impact."
The Stanley Cup champions announced $9 tickets at Joe Louis Arena in Detroit. The state of Michigan has been hit hard by the collapse of the auto sector. Who knows what awaits the Wings?
"We're going into territory that nobody's really been in," said Red Wings GM Ken Holland. "So to say I've got a game plan, I don't know how anybody could have a game plan. You don't know from week to week what's going on.
"It appears it's going to take a long time to pull out of this."
The experts brought in by the league didn't pull any punches.
"The biggest conclusion [from the economic experts] was that there's a lot of uncertainty as to how deep the economic situation will be or how long it will last," Bettman said. "I think they were prognosticating somewhere between 18 months and two years."
In the end, Holland said, the industry will survive.
"Whether it's the NHL or the NBA or whatever, we feel our business isn't going away," he said. "Professional sports has been around for 100 years."
Pierre LeBrun covers the NHL for ESPN.com.
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