Haha where did all that money go I don't know Zach it could be anywhere! (AP photo)

Haha where did all that money go I don’t know Zach it could be anywhere! (AP photo)

Tough to read the news about the Minnesota Wild that came out last weekend.

After finally getting two noteworthy free agents after years of having to sell off all the good players in franchise history (Marian Gaborik and, um.. well somebody probably) and making the playoffs for the first time since Barack Obama got elected — the first time — the team got a boatload of bad news: It lost $30 million in a lockout-shortened season.

Woof. That’s a lot of money to lose. That’s more than 40 percent of the salary cap last year, when it wasn’t pro-rated.

A lot of that item is pretty funny, though. “A little birdie,” says the Wild lost that much money. But boy, that birdie probably looked a lot like a front office type leaking monetary details — of which I tend to doubt the veracity — and it probably also looked pretty familiar (as Greg Wyshynski points out, the writer also got similar information from what we can only assume is the same birdie last summer).

It’s hard to feel too bad for the Wild losing that much money last season, given that exactly two-thirds of that $30 million was paid directly to Ryan Suter and Zach Parise for their signing bonuses on those two identical $98 million contracts. So yes, they lost $20 million right there, before the season started, but it’s not like they didn’t know it was coming. You can’t agree to pay that much out and then act like you’re shocked at the losses, which is what this report was supposed to draw out of readers. “They lost $30 million? Boy oh boy.” Softening the beaches for a ticket price increase? It would be, except that already happened. So it’s more like softening the beaches for people who were previously upset that prices went up the season after a lockout.

This kind of unconscionable cash grab should come as no surprise, because while the Wild listed themselves as having sold about 104.7 percent of their seats last season (an average of nearly 18,800 per night), it’s reasonable to assume that at least some of that was the house being “papered,” that is, tickets being given out for free just to get people in the building. Suter and Parise may have sold a lot of jerseys and got people excited about the Wild for the first time in what feels like forever, but not all of those were SOLD-sold, so obviously the team feels it needs to take a little more from the fans in this regard.

Of course, that would be all well and good except for how hypocritical this team is and has been over the last 13 months or so. Remember, it’s now turning out its pockets because it signed to big-name players to massive cap-circumventing contracts, of the type that led directly to the lockout. You know, just months after crying in the local newspaper about how they’re spending too much money.

“We’re not making money, and that’s one reason we need to fix our system,” Leipold said last April, presumably through a veil of tears he dabbed away with antique $5,000 bills that have been out of circulation since the 1930s. “We need to fix how much we’re spending right now. [The Wild's] revenues are fine. We’re down a little bit in attendance, but we’re up in sponsorships, we’re up in TV revenue. And so the revenue that we’re generating is not the issue as much as our expenses. And [the Wild's] biggest expense by far is player salaries.”

So that’s a funny way of doing it. And now the leaked $30 million number is intended to justify those words. Oh, and don’t forget the fact that Leipold was one of the three or four hardest of hard-line owners who helped to drive the lockout. The hypocrisy is obviously well-explored territory at this point, and if you want to say that the reason the team lost that much, instead of far less, is that they didn’t have 41 home dates worth of revenues to draw upon, then it would appear as though the answer is, “Too bad.”

The fact of the matter is you can’t contribute to inflationary salaries and then say, “Players get paid too much,” and you also can’t cause a lockout and then say, “The lockout is the reason we lost all this money.”

The fact of the matter is that the Wild were set to lose $20 million this season no matter if they played 82 games or none at all, because that’s the lockout insurance Parise and Suter very wisely had built into their contracts. If Leipold didn’t want to lose that money, then maybe he just shouldn’t have signed those players. If he was so worried about not-getting them, and thus not making the playoffs for the fifth straight season, then maybe it’s time to reevaluate why you’re in the business of owning a hockey team. The number of NHL owners who can say they turn a profit on their teams is not yet in the double digits, and so it should come as no mystery that doing it as a means of making money isn’t necessarily the wisest tack to take.

Depending upon how much stock you take in those Forbes Team Valuation stats, you might be convinced that the Wild lost $3.9 million over the course of the 2011-12 season, when player expenses were $60 million altogether. You can see where an owner who thinks losing $3.9 million would thus see losing $30 million in a shortened season as unacceptable. But without the extra 17 home games, and even with the two playoff dates (which usually net teams about $1 million a night), you can’t make up that extra ground lost.

Turning out your pockets over player costs you knew were coming seems ridiculous, really. I would imagine that it’s pretty hard to lose $30 million over the course of about four and a half months if you run your business anything other than “poorly.” Crying to the media about it isn’t the kind of fundamental change the Wild, who have added free agents like Matt Cooke and Keith Ballard this summer, seem to need, according to Leipold. If player costs are too high, continually raising them doesn’t seem like a good course of action to get things under control, even if the split of revenues improved (from an ownership point of view) to 50-50.

Again, all of this comes with the caveat that the team lost $30 million only insofar as you can believe the “birdie” who seems to only talk to columnists about the times the team loses money. It would be terribly interesting to see what the Wild’s actual revenues versus player costs were, because that Forbes list has the Coyotes as having lost the most in 2011-12, and they only hemorrhaged $20.6 million.

Granted, they didn’t have to give out any signing bonuses their owner cried about, but they also didn’t have an owner to cry about it, so they were in tough all the way around. The Wild don’t exactly have that excuse to fall back on.

Comments (16)

  1. Valid points about the team having “made their own bed” by signing $200m in contracts to two players, which was clearly going to hurt badly with the bonuses in a lockout season. But casting doubt on the size of the reported loss, and then throwing in complete guesses like “tickets being given out for free just to get people in the building” is more than a bit hypocritical.

  2. “Granted, they didn’t have to give out any signing bonuses their owner cried about,”

    Yeah, that’s the difference, The Wild, in a full season, would’ve lost… what, $10 million, even after the signing bonuses were factored in? Saying the Yotes lost twice that amount makes sense.

    Or, more specifically: All things being equal, next year, with 20 more home dates (exhibition games balance out the chance that they might not make the playoffs), they’ll make $10 million.

    • It’s hard to say what they’d lose in a full season. Sure there’s a lot more revenue from home games, and Minnesota no doubt gets a nice amount of revenue per game, but there would have also been the increase in player salaries and operational costs. I don’t think it would have helped as much as you think, but it would have helped a bit.

  3. The owners are starting early for crying poor. We still have what 7 or 8 seasons until the next CBA contract. You just know there’s going to be another lockout after this contract is done.

  4. I wonder if they counted the signing bonuses for Parise and Suter on “both ends” of the year in their losses. $10MM each for 2012-13 (paid last summer) then another $10MM each for 2013-14, which would probably have been paid July 1st. That’s $40MM for two players in less than 365 days, so if you’re flexible in your start/end dates of a “year” they could count two years of signing bonuses in their losses. That’s exactly the kind of shell game that’s used in these PR-fueled stories.

  5. I would also add the argument that a lot of this loss is a paper-loss only and not even close to a cash loss. Hollywood accounting at it’s finest.

    For example, a lot of these owners or companies will create a holding company to collect parking revenues on behalf of the team. The holding company will then hold back a portion of the fees collected as the “payment” from the team to the company for running the parking. However, the same principle(s) own both companies so it is simply re-allocating profit from the team to another entity to enable the team to cry poor.

    Owners will also do this for special events, concession, etc. to maximize the losses the team reports.

    • One example of funny accounting principles is the Roster Depreciation Allowance.

      http://hfboards.hockeysfuture.com/showthread.php?t=1296251

      When Leopold bought the team for $225M in 2008, he is allowed to depreciate 100% of the value over 15 years ($15M per year). Basically, you count players’ salaries as one expense, and the “depreciation” as another. Not saying this is where the $30M loss is coming from, just wanted to bring up a funny accounting trick sports owners use.

  6. I was born in St. Paul and as a result feel like I need to be a Wild fan. Leipold is a real crybaby though. If he would just shut up maybe I would spend money on his product. But that seems unlikely.

    PS. It’s also hard to feel bad for a guy whose GM had previously continually missed the playoffs and traded for Danny Heatly’s contract yet kept his job.

  7. when did birds become a reliable source? They also offered season ticket holders a 10% interest during the lockout. http://www.startribune.com/sports/blogs/170035286.html

    even though I still I think we would better of with different owner rather then a new GM or Coach

  8. If this latest lockout has taught me anything, it’s that some of the owners will always find ways to throw away their money, and then come back later saying “the system is broken!”.

    During the last CBA, some owners got themselves into a bind by approving very very long contracts to try and circumvent the cap/spread the cap hit. Now, with the new CBA, we’re seeing some teams throw big money AND long term at players that don’t necessarily warrant the investment (I’m looking at you, Clarkson and Clowe). It boggles the mind.

    In 3 years or so, when these deals start to look really bad, will there be grumbling again about the CBA from owners?

  9. This story, and others like it, seem to suggest that Leopold has actually been complaining about losing the $30 Mil. In reality, he hasn’t. And why would he? The team got exponentially better, not just by adding two all-stars, but by not having to give up part of the current or future team to get the two all-stars. Sure, if Parise and Suter both got injured or went to the KHL this year, I could see how the owner may cry “boo-hoo.” but in this case, it didn’t happen.

  10. Throwing early blows at player costs in anticipation of the next lockout… Thanks Obama..er i mean, Craig

  11. I would imagine that it’s pretty hard to lose $30 million over the course of about four and a half months if you run your business anything other than “poorly.”

    Well said.

  12. Suddenly everyone on here is a certified jew and knows everything about money… good ol’ google

  13. it’s stuff like this that will make the next lockout if it happens my last one. I had a hard time coming back this time because the owners complain about money but at the end of the day they are the ones handing it all out, if it happens again I’m done. It’s become way to much about everything but hockey.

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