- The Washington Times - Thursday, February 12, 2004

The NHL and its 30 teams collectively lost $272.6million during the 2002-03 season, according to a league-contracted, 10-month review of financial records made public yesterday.

Conducted by Arthur Levitt Jr., former chairman of the U.S. Securities & Exchange Commission, the study is the latest attempt by NHL commissioner Gary Bettman to ease tensions between hockey management and players over the veracity of the league’s accounting.

Bettman has long said the NHL’s economic system is fundamentally flawed, and the findings of the Levitt report are nearly identical to Unified Report of Operations (URO) documents for each team that the NHL has delivered to players.

The NHL Players Association says millions of hockey-related dollars are being hidden in the ledgers of related companies and should be part of any discussion of player compensation.

Either way, Levitt, also an investment banker and former owner of the Roll Call newspaper, delivered a damning assessment of a league that has had two franchises file for bankruptcy protection in the past 18 months.

“The results are as catastrophic as I’ve seen in any enterprise of this size,” Levitt said. “They are on a treadmill to obscurity. That’s where the league is going. I have to say, I would not underwrite as a banker any of these ventures, nor would I invest a dollar of my own personal money.”

The $272.6million figure compiled by Levitt is an operating loss. That loss swells to $374million when interest and depreciation expenses are included.

Levitt estimated that player costs consume 75 percent of the NHL’s $1.99billion in annual revenues. That percentage nearly matches the 76 percent previously stated by the league and is significantly higher than in any other major American sports league.

Nineteen of 30 clubs were unprofitable last season, Levitt said, led by a group of six unnamed clubs that collectively lost $188million.

Union officials yesterday strongly criticized the report and Levitt’s claims of full independence in his work. The players association did not participate in the Levitt study and did not even know about it until Wednesday.

“It is clear the Levitt report is simply another league public relations initiative,” union executive director Bob Goodenow said in a statement. “We continue to believe that a market system, not a team of hired-gun accountants, provides the best measure of the value of the hockey business.”

Union officials say their own review of four team URO documents has found $52million of previously unreported income. Levitt said his analysis included all hockey-related revenues, including broadcast contracts and luxury seat fees that may not fully show up in the UROs.

The NHL paid Levitt $250,000 for his work.

Bettman said during the recent All-Star break that the union understood the depth of the league’s financial problems, regardless of its public comments to the contrary. But the commissioner yesterday said he hoped the Levitt study would help “finally get this debate behind us.” Bettman is seeking salary restraints and wants to tie player costs to revenues.

“The condition of the league is as we’ve been portraying it,” Bettman said. “To describe [the league as something] he wouldn’t invest in under the current economic system is, to say the least, very sobering.”

Four teams were not fully audited in the report: the Ottawa Senators and Buffalo Sabres because of their bankruptcy proceedings and two unnamed teams because they were not deemed “viable ongoing concerns.”

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