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.
Where market size does matter is the fan base. Leonsis said the Caps have about 14,5000 full or “equivalent” season-ticket holders. The 119-day lockout didn’t seem to cut too hard into that, according to Leonsis.
“I think during the lockout we had about 150 seats, that probably represents 70 accounts [canceled],” he said. “Three of those accounts have already emailed me personally asking for us to reinstate them. We’re doing our best there because we, honestly, had to sell those seats to people on the waiting list.”
That there’s a waiting list for season tickets and has been for years shows how much the interest in hockey has grown in the D.C. area, due in no small part to Alex Ovechkin and the downtown rebirth around Verizon Center.
“People understood. People knew were we gonna come back. And they’re back,” he said. “We’re sold out. They’re happy.”
Attendance during training camp at the Caps’ practice facility was high, and the team said 10,000 came to the arena for Thursday night’s open practice.
“So our fans remain very, very loyal and I appreciate that. But we’re not going to take that for granted. We know we have a lot of work to do. All of these things that we’re doing like tonight — tonight’s a very innovative and, frankly, expensive thing to open building and say, ‘Anybody who wants to come into the building, come on in,’” Leonsis said. “We just want to continue to give back as much as we can.”
The NHL’s slogan for the lockout-shortened 2013 season is “Hockey is back.” Hockey itself never left, but with the Caps and the top hockey league in the world back in business, Leonsis is confident bygones will be bygones.
“Our fans will come back. But we know that we didn’t do right by them,” Leonsis said. “Missing 34 games is not what you want to do as an owner of a team or the commissioner. He’s been apologetic. We’ve all been apologetic. But now it’s time for us to move forward.”