Why Capitals remain a taker in NHL's revenue sharing system

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Loose Pucks,Sports,Brian McNally

They sell out every game now, claim a waiting list of season-ticket holders and have several star players capable of moving merchandise off the shelves at a rapid clip. And yet the Capitals have long lost money, according to owner Ted Leonsis, and receive revenue sharing money from the NHL. Why?

“We received revenue sharing. We’ll continue to. I’ll be direct, though, I hope to continue to grow the franchise,” Leonsis told reporters on Thursday. “I hope one day we’ll have a better TV deal because we’re in a big market. And that my goal, I would like to be a payer [into the revenue sharing system]. I don’t consider us a small-market team. We’re a model franchise. We make the playoffs. We spend a lot of money. We keep our players. We’re a destination. We sell out every game. And we aren’t able to make money.”

The TV deal is intriguing and has plenty of moving parts. Leonsis claimed his organization has “three or four” years left on its contract with Comcast SportsNet, though he didn’t get into specifics. When that negotiating window opens again, Leonsis can try to pry more money out of Comcast – record ratings in recent years should help – or he could attempt to form a more formal partnership with that network. He could also use another local cable network like MASN to boost his price. Of course, MASN Itself is in the midst of a dispute between its baseball co-owners, the Baltimore Orioles and Washington Nationals, over rights fees. Who knows if that network will even exist in three or four years. But Leonsis’ point stands: The Caps won’t cut the deficit versus the truly wealthy NHL franchises without more television money. Gate receipts, the lifeblood of the sport even still, can only do so much.

Washington claims about 14,500 full or partial season-ticket holders – a number capped, Leonsis says, so that the team can continue group sales and to offer individual single-game tickets. He said 150 seats – or about 70 accounts – were lost during the lockout to fans angry at the league. He even said three of those customers reached out to the team to recant and get their tickets back. Leonsis sees parity between teams in the NHL – revenue sharing is a huge part of that – as the way to generate interest and keep people packing the stands.

“I believe that when you have a season where the playoffs are decided like the last day of the season and every team is bunched together and every game matters, that that’s when fans come every game,” Leonsis said. “And that that competitiveness, what the NFL has where on any given Sunday and it doesn’t matter what size your market is, how big your stadium is, that every fan base and every team thinks it can make the playoffs and win the Super Bowl. We have a system that should allow every team to do that. The revenue sharing is very aggressive. I think it’s the most aggressive of the four sports.”

Leonsis maintains that his organization played by the rules during the last CBA. There were no absurd long-term contracts with little money in the final years – a transparent attempt to circumvent the spirit of the NHL salary cap. They didn’t start scheduling concerts and events during the lockout to make money and therefore have a reasonable home schedule in 2013. Leonsis claims his team has also followed new NHL rules on ice quality. Anecdotally, Verizon Center is a much colder place this winter. New coach Adam Oates wanted a second video coordinator to go with Blaine Forsythe. That person – the hire turned out to be former Caps web producer and, literally, one-time back-up goalie Brett Leonhardt – would allow the video staff to focus on both systems and individual players.

“So we’re continuing to make the investments, we’re continuing to do what’s necessary to make the franchise a winner,” Leonsis said. “When I call us a ‘have’, my goal is to generate enough revenues that we can be a contributor and I would expect that that can happen during this CBA.”

Follow me on Twitter @bmcnally14

 

 

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