Friday, October 31st, 2014

(Far from) A Nashville No-Brainer

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I think David Poile is one of the best general managers in the NHL. I’d go so far as to suggest that Poile more than anyone else has been responsible for the survival of the Predators in Nashville. At the time the league chose to expand to Nashville, I thought it was the most bizarre place any sports league had ever decided to establish a franchise. It is one thing to put a hockey team in a non-traditional market like Phoenix or Atlanta because they are huge cities. But Nashville? This is a small market for any major league sport, let alone one with little familiarity with the game.

But David Poile managed to build a quality organization and a hockey team that won a lot of games while spending very little money on players. While he has not been able to grow significant revenues, he has managed to build a passionate fanbase. That fanbase is still far too small, but revenue sharing, generous subsidies from the community and the team’s success has prevented the franchise from becoming a money pit for ownership. That’s great work for a zombie franchise in Gary Bettman’s hockey league.

Unfortunately, Poile does not have a formula that can convert an organization that does not generate significant revenues into a team that can legitimately contend for a championship. He can afford to ice a decent team – perhaps even a good one – but that will never be good enough for the best players. They want to win more than anything. That’s why the Predators could not re-sign Ryan Suter and it is why Shea Weber decided to accept a lucrative offer from the Philadelphia Flyers. Weber is making it clear that he does not believe that Nashville will ever challenge for the Stanley Cup. That’s why he wants out.

The Flyers offer is indeed beyond the Predator ability to pay. The cap hit hardly matters to them, but the actual cash they would have to lay out over the first six years of the deal – $68 MM – doesn’t make any sense for a team that generates about $25 MM in ticket revenue a year and maximises revenue sharing by keeping the payroll low.

All that said, I don’t have any doubt that David Poile will match the offer, and Shea Weber will be a Nashville Predator next season. In fact, I think Paul Holmgran did David Poile a favour by making the offer. Absent an RFA offer, Poile and Weber would have agreed to a one year contract and David would have spent most of the season trying to extend Weber. Since Shea wants out of Nashville, the effort would have failed and Poile would have been faced with the prospect of trading his superstar next season at the trade deadline.

Now? Poile does not have to worry about trying to sign Weber. He knows exactly what it will cost him to keep Weber over the long term – too much – and exactly what it will cost him to keep him for next year. Poile has to find an extra $6.5 MM in his budget to keep Weber for next year. (Last year Weber cost $7.5 MM. Next year he will get $14 MM.) That will not be easy, but it is surely doable even if it means cutting talent elsewhere and even if it means that the Preds ice a poorer team next year.

What does Poile get for the extra $6.5 MM? First, he gets to keep Weber for one more year and he does not have to worry about finding a trade in the middle of next season. If he can pull a couple of other rabbits out of a hat, he may be able to ice a competitive team yet again. Second, he – and Weber – can pretend Shea may not be traded next summer. Third, he gets to auction off the Weber contract next summer and it is guaranteed that he will get far more than four draft picks for him, particularly if the new CBA eliminates lifetime contracts.

About the only rub in the deal is the prospect of a lockout. It’s one thing to pay Weber twice what you would like to pay for a season, but it is another to pay Weber not to play and Shea will get his $13 MM signing bonus even if the season is cancelled. Predator ownership will have to step up to that risk.

But this is really a no-brainer for Nashville. It’s worth way more than $6.5 MM to have Weber for one more year and to maximise the return in a trade. David Poile would match the contract in a heartbeat. If the Predator’s let Weber go to the Flyers, the ownership is making a mistake.

Update: I stand corrected on the cost of matching for Nashville. As commenters make clear, this is far from a Nashville no-brainer.

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Comments

16 Responses to “(Far from) A Nashville No-Brainer”
  1. James Mirtle says:

    One issue with a trade is that 2013 signing bonus. They’ll have to pay out another $13-million before moving him, meaning it’ll be $27-million total for a (likely) partial season.

  2. Greg says:

    The don’t have to come up with an additional $6.5M in the first year (to match the $14M in the offer sheet) they have to come up with an additional $19.5M in the first year (the first signing bonus, the first year salary and the second year signing bonus due 7/1/13 that takes the first year comp to $27M. While I agree they should be able to come up with the $6.5M, coming up with roughly 80% of your annual ticket revenue in additional compensation is a much tougher nut to crack.

    • Tom says:

      An extra $13 MM, so its nearly $20 MM? Even if the ownership was willing or able to come up with it, Poile can’t get that much hockey player back in any trade, I don’t think. He’s probably better off with four first round picks.

      I’d delete the post if I could. Oh, well. It does lead to two questions:

      1) Jebus. Did the Flyers just kill this franchise? They are starting over. Poile can manage that of course, but can he sell tickets while he does it?

      2) Does it help or hurt the league in the CBA negotiations? On the one hand, Bettman gets to go “Poor Nashville, Boohoo.” On the other hand, the players can respond, “We weren’t the ones to fuck over David Poile. Why is it up to us to do the mouth to mouth respiration this time?”

      A wash, I guess.

      • Giles says:

        Tom,

        You column is easily amongst the better hockey reads on the internet. It consistently provides direct and honest commentary. I don’t always agree, but certainly always look forward to new posts. Thank you.

        The specifics of the deal, as they became public, tripped up more than one journalist. One radio show theorized that considering Holmgren’s relationship with Poile, the deal was a favour to help determine market value and buy some time. There’s 27 million reasons now why this doesn’t make any sense.

        I’m finding the infamous Dustin Penner offer sheet served up by Kevin Lowe a few short years ago quaint by comparison. Didn’t Burke ultimately want to ‘fight Kevin in a barn’ over this? Where’s the outrage by other general managers? Or, as everyone prepares for CBA armageddon, would that be ‘bad for business’?

      • snafu says:

        Yes, I think the Flyers just killed this franchise.

        I’m still in a state of disbelief that they’d actually devise something that so blatantly exposes the large market advantage in Gary’s CBA. The cap, the floor, the UFA age, the bonuses and AAV… it all makes a complete mockery of the system they wanted badly enough to lockout out the fans and players for a year— ostensibly to protect the small market teams.

        Had this come from a franchise that wasn’t one of the Gary’s hardliners, I might understand.

        • ColinM says:

          I was thinking the same thing Snafu. If the Devils first contract with Kovalchuk was illegal under the CBA, couldn’t someone in the NHL offices find a reason why Weber’s contract is also illegal given how ridicously front end loaded it is. I understand Weber’s contract only goes to 40 rather than 44, however 40 is still a long way off.

          To answer Tom’s 2 questions:

          1) No this does not kill the Pred’s franchise. I think right now there’s only one Quebec City and the Coyotes are going to end up there.

          2) I expect this contract will be held up by Bettman as something that would never happen if player salaries were 46% of revenue rather than 57%. Whether that is to be expected as truth or not depends on what you believe of the man.

  3. snafu says:

    That’s the beauty of this offer sheet from Philadelphia. Kick the guy when he’s down and where it hurts and below the belt. KO.

    I also think Poile is a great GM. It’s too bad this doesn’t happen to a hot airbag like Burke, but alas, this shows that life in the NHL is anything but fair.

    I still can’t believe that this SPC is valid under the CBA. Surely there’s something about the bonus language to prevent this type of abuse by the big boys against the little guys. (I mean, I know there isn’t, but the NHL has that ‘intent’ to circumvent’ clause where they can say that’s what it is…)

  4. Fehr Time says:

    This is pretty much the kill shot for Nashville. They can’t afford to match and everyone knows it. This offseason has just confirmed to their fanbase that they are just a feeder team to the teams that actually count in the league. Poile can put on the ‘rebuild’ and the ‘future is bright’ song and dance but who is going to believe him? Under the current CBA format the Preds and their fans know they can never have a great team and will be put back in their place as soon as they even get pretty good.. It’s a hopeless situation and I don’t see alot of fans buying in.

    Fans in places like Nashville must be wondering if Goodenow’s December 2004 offer is still on the table haha…I wonder how many will be gullible enough to swallow Bettman’s bullshit this time around?

  5. Fehr Time says:

    On a further note, especially if the current CBA or something similar was to play out for this next season, the Preds could be in a position where they lose their top two players and have to replace their salaries and then some with significantly lesser talent just to get to the floor. Talk about getting dirt kicked in your face after already getting kicked below the belt…

  6. ICDogg says:

    RFA for most players is not FA at all, because there are few players worthy of giving up that much value for. But that does not excuse Poile from not considering that something like this could happen.

    If it were a hockey decision it would have already been done by now. I think this becomes an issue of whether one or more owners wants to devote personal resources to increasing the budget of the team for the next few years.

  7. PopsTwitTar says:

    To me, its a no brainer to me for Nashville to sign, even if its difficult from them from a short-term cash perspective. We don’t know what their financial picture is – do they have a line of credit to pull from? Do they have a call requirement by which the equity owners could be forced to kick in a few million more each? I find it hard to believe that an NHL team cannot find this money if absolutely necessary.

    Other things to consider. (1) Is Nashville getting some some revenue sharing $? If so, it helps cushion the blow when some of your costs are being paid by your competitors.

    (2) If the NHLPA has its way, Nashville will get more revenue sharing $$ in the new CBA, so their owners may be betting on getting some of the Weber signing bonus cash back in future years.

    (3) The NHL has shown more and more willingness to financially support struggling franchises in markets it wants to be in. Not saying it would do it with Nashville, but it might play into the team’s decision-making if the high cash outlays in years 1-6 are really an issue.

    (4) Its really only the $13M they need to worry about. The $13M for next July? That’s so far away in real life terms. There is going to be a new CBA, which could theoretically help them with revenue sharing money, with ability to raise capital, etc. Plus, they have the NHL to bail them out if they have a really crappy cash year.

    So unless they are unbelievably cash poor at this very moment, they have almost no risk in matching. Its a good *cap* structure. Its not a good *cash* structure. “Make promises now, figure out how to pay later” is a crappy business model, but the NHL has proven that its willing to support those crappy models for years if necessary. The future of the NHL appears to be that the needy teams will be able to cost-shift some of those burdens to the wealthy teams – whether by revenue sharing or NHL loans or otherwise. So if I’m Nashville – make Bettman put his money where his mouth is. Make him show that the small market teams are *really* going to get a system that works for them by forcing the real revenue generating teams to share that with the zombies. Match, then show up to the table of the next Governors’ meeting, and when Snider comes to shake your hand, tell him to stuff it with $100 bills.

    • ICDogg says:

      There will be a new CBA, but there also potentially could be a lockout, in which case there is no income coming in to offset the $13M going out.

      I don’t see where there is any guarantee that there will be more revenue sharing just because the NHLPA wants it that way. Obviously the small clubs want more, but the big clubs want less. There will only be as much as they agree on, and I see no reason to think it will be substantially more than they’ve been able to get in the past.

      I still think it is out of Poile’s hands. It’s ownership’s call.

  8. Fauxrumors says:

    Looks like you had it right the first time! It might have cost them uber $$ but if they wanted to remain a viable NHL franchise the move they made yesterday was necessary!

  9. NHL Alert says:

    IMO with the talent he’s been given, he’d been able to keep Nashville very competitive.

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  1. [...] CANUCKS CORNER: Tom Benjamin explains why he expects the Nashville Predators will match the huge offer sheet from the Philadelphia Flyers for defenseman Shea Weber. [...]



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