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What new CBA does for Capitals
Ted Leonsis doesn’t expect immediate profit
Ted Leonsis was up-front about being “thrilled” with the NHL’s new collective bargaining agreement, based on it being a “system where all 30 teams and all 30 fan bases feel that their team can qualify for the playoffs and win a Cup.”
Winning a Stanley Cup has been an elusive task for the Washington Capitals, and not just since Leonsis bought the team in 1999. In 37 seasons, the franchise has one Cup Final appearance and just two conference finals appearances.
So what does the CBA do for the Caps? Financially it doesn’t make them the Toronto Maple Leafs or New York Rangers anytime soon.
“I’ve never made a penny of profit with the Washington Capitals. Not recent years. Since I’ve owned the team, we’ve never been profitable,” Leonsis said. “This system will help us to get to break even.”
The new CBA doesn’t hurt Washington like it might other teams that front-loaded long term contracts to circumvent the salary cap.
“One of the things that I think it’s important to me, it’s important to George [McPhee], important to Dick Patrick, to all my partners: We’ve played totally by the rules,” Leonsis said. “We didn’t backdate any contracts. When the league tells us, ‘Keep your dates open for scheduling for playoffs or for the season,’ we do that.”
There are things the Caps will need to improve; Leonsis singled out new rules for ice quality as something that his team was committed to adhering to. And despite not winning a championship, Leonsis spoke highly of the organization at large.
“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,” Leonsis said. “And we weren’t able to make money.”
Leonsis‘ Monumental Sports & Entertainment owning the NBA’s Washington Wizards and, more importantly, Verizon Center, should help. But the Caps have received revenue sharing from the league and will continue to, he said.
That’s because of the team’s television rights deal.
“How we’ll make our money is not through continuing to raise ticket prices. It’ll be getting a better TV deal and unfortunately I still have several years, three, four years left on our contract,” Leonsis said. “But if you just look around the league where you get the step function up on revenues coming in is your TV deal. And if we can get a dramatic step up in the TV deal, then we would be a payer [in revenue sharing].”
That’s no subtle shot across the bow of Comcast SportsNet Mid-Atlantic, which owns the rights to the Caps and Wizards. Other franchises that own TV networks or have more profitable deals include the Philadelphia Flyers (CSN Philadelphia), Boston Bruins (NESN) and New York Rangers (MSG).
The Caps spend up to or close to the limit, but they can’t quite make money like the big boys. According to Forbes Magazine, the team lost roughly $1 million last season.
“I hope to continue to grow the franchise. I hope one day we’ll have a better TV deal because we’re in a big market,” Leonsis said. “I don’t consider us a small-market team.”
What the new, 10-year CBA does, though, is close the gap between big- and small-market teams. Revenue sharing is expanded — “very aggressive; I think it’s the most aggressive of the four sports,” Leonsis said. He and many owners want the NHL to be like the NFL, where the profitability of a franchise doesn’t directly equate to competitiveness.
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