- The Washington Times - Friday, October 19, 2001

To get a clear picture of how much Washington Capitals owner Ted Leonsis is staking on star right wing Jaromir Jagr, consider this: Jagr's new seven-year, $77 million contract, with an eighth option year for the same $11 million per season average, beats the $85 million Leonsis and his partners paid for the entire franchise just 21/2 years ago.
Nobody in hockey doubts that Jagr should be one of the game's highest-paid players, and the $11 million per season paycheck ties him with Colorado's Peter Forsberg for the highest in the league. Jagr, 29, is coming off four straight league scoring titles and claims to be entering an even more potent prime.
But the contract, the most lucrative in NHL history, comes with few guarantees to Leonsis and could test his firm pledge that Jagr will pay for himself in increased team revenues.
To be sure, Jagr's arrival has brought a predictable and significant surge in ticket, merchandise and sponsorship sales. However, the new deal going to 2008 extends well past the duration of TV deals both on the team and league levels, as well as the NHL's collective bargaining agreement with the players' union.
The renewals of those pacts could be dicey. ABC and ESPN are believed to be losing money on their five-year, $600 million TV deal with the league because of miniscule ratings and the sport's traditional difficulties on the small screen. The $600 million is dwarfed by the TV revenues of the other major leagues, and even getting that much again in the next TV deal could be difficult.
And since the league and players have diametrically opposing viewpoints on the idea of a salary cap for the NHL, a lockout or strike when the current deal expires in 2004 appears inevitable. Although Jagr or any other player would not be paid during such a stoppage, fans and sponsors might not return in full numbers or with as many dollars when the stoppage ends.
Leonsis yesterday expressed no concern over being fiscally tied to Jagr into this unknown scenario. Season ticket sales of 11,800 are nearly 2,000 more than when Jagr arrived in July, corporate sponsorship sales have similarly ballooned and team revenues have more than doubled to nearly $65 million per year since Leonsis' 1999 arrival.
"This is like the early days of America Online," said Leonsis, an AOL senior executive. "You go full tilt after market share, increase every metric and face challenges head on when they come. Jaromir is a valuable asset to this organization, and with him this franchise has lot of room to grow yet. We still have the capacity to grow that can accommodate this investment."
Many other teams have cut long-term player deals that extend past the 2004 collective bargaining deadline; Alexei Yashin's contract with the New York Islanders is even longer than Jagr's at 10 years and $87.5 million. But if Jagr stays healthy and reaches that option year, he will beat Yashin's deal by $500,000, leaving the Caps arguably with more at stake in the league's long-term future than any other club.
Beyond the immediate, short-term buzz over Jagr's arrival, Leonsis does still hold a few key long-term cards to help pay for the contract. The Caps' TV deal with Comcast SportsNet, with five years left, appears a lock to increase from its current level of about $5 million per season, either in 2006 or sooner through renegotiation. Early ratings this season have been strong, and the cable sports network has made a significant commitment to promoting the team.
Also, the Jagr contract may outlast the tenure of Abe Pollin, chairman of Washington Sports & Entertainment L.P. Leonsis and his partners hold first and last rights of refusal to purchase the 56 percent of WSELP they don't already own. With that purchase would come full access to luxury seats, MCI Center sponsorship and concession revenues.
And the team's Web site, www.washingtoncaps.com, continues to stand among the NHL's leaders in visitor volume and time spent on the site.
"The market opportunities remain very, very strong," said Raul Fernandez, Caps minority owner. "We've made a statement with the contract, to our fans and Jaromir, that we want to keep delivering and keep growing."

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