As the Capitals prepare to start a shortened 48-game season Saturday, owner Ted Leonsis disputed that he was a “hardliner” during the labor dispute and said he believed that the 119-day NHL lockout was worth the end result – a new, long-term collective bargaining agreement.
“The big deliverables for me, were a 50-50 deal and a long-term deal,” Leonsis said Thursday night at Verizon Center in his first public comments to local reporters about the lockout. “I was very, very adamant that if we could get a decade of peace that would be terrific and we have that. So I’m thrilled with the deal.”
Of their approximately 14,500 season ticket holders, the Capitals lost roughly 70 accounts or 150 seats to cancellations during the lockout Leonsis said. He thanked Capitals fans for their loyalty and apologized that the process resulted in the loss of games.
“I’m very apologetic that we lost the 34 games,” Leonsis added, “But I’m not apologetic that we had to get a new system that was good for everyone and I think we achieved that.”
The new collective bargaining agreement is a 10-year deal, with a mutual opt-out option after eight, that splits hockey related revenues between the owners and players 50-50. Some of the other major changes pertain to player contracts, which can be a maximum of seven years in length, eight for a team to sign its own player. There is a 35 percent year-to-year variance limit to prevent teams from constructing front-loaded deals that circumvent the salary cap.
Leonsis was a member of the owners’ four-man negotiating committee along with Boston’s Jeremy Jacobs, Calgary’s Murray Edwards and Minnesota’s Craig Leipold. He was consistently involved in the early stages of the negotiations but no owners were in the room as the NHL and NHLPA pieced things together in early January before ultimately hammering out a deal in the wee hours on Jan. 6.
“I’d like to tell you that we had a really big role but it’s mostly sitting at a table and listening,” Leonsis said. “If I said 500 words in the 50 sessions in total that I attended, I think that would be an exaggeration.”
Revenue sharing also changed under the new agreement. The NHL will commit 6.055 percent of hockey related revenue to a revenue sharing pool each year with half of that pool coming from the top-10 revenue grossing organizations. It also removes previous criteria — being in the top half of league revenues or in a large media market — that disqualified teams from receiving revenue sharing funds.
The Capitals received revenue sharing under the previous agreement and will continue to under the new deal, Leonsis said. He hopes that the Capitals will some day pay into the revenue sharing system, rather than draw from it.
“I would like to be a payer. I don’t consider us a small-market team,” Leonsis said. “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. And we weren’t able to make money.”
He added that the Capitals will need to sign a more lucrative television rights contract once their current deal expires.
“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 explained. “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. That would be fine with me.”
Leonsis said he has yet to make “a penny of profit” with the Capitals, which he bought from Abe Polin in 1999, and said that the new collective bargaining agreement will help the organization to break even. According to Forbes annual valuation of NHL teams, the Capitals had an operating loss of $1 million in 2012 but the organization was valued at $250 million, 11th in the NHL.
“Since I’ve owned the team, we’ve never been profitable,” Leonsis said. “This system will help us to get to break even.”
In addition to insisting that his role in the labor negotiations was minor, Leonsis denounced reports that the Capitals hid hockey related revenue. Back in November 2011, the New York Post’s Larry Brooks reported that the Capitals “had been cited for failure to declare hockey-related revenue.” Leonsis called that assertion completely untrue.
After Leonsis’s ownership group purchased the NBA’s Washington Wizards and Verizon Center in 2011, the NHLPA exercised its right to audit the organization. Leonsis said there was never any discrepancy found in the accounting and that there was no grievance or fine filed because of it.
“In 2011 we bought the Verizon Center and the Wizards and the union asked, ‘Could we come in’ – which was their right – and look at the accounting to make sure that the accounting was proper,” Leonsis explained. “And they did their accounting and they said the accounting was proper. End of story. That was it.”