Penguins base salary now at $21.9 million

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Penguins base salary now at $21.9 million

Postby Southern Fan on Fri Mar 10, 2006 9:52 am

See the attached link.

http://proicehockey.about.com/gi/dynami ... Findex.asp

Could they actually make money this year?
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Postby Mad City Mike on Fri Mar 10, 2006 10:38 am

Highly doubtful. Don't forget that they already paid most of the salary of Recchi, and about half of those of Lemieux and Palffy. That doesn't show up on cap numbers right now, but it is money that was paid out. So no, they will not make money this year, considering they looked to lose maybe $8 million. Trading Recchi this late won't much help that.
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Postby ExPatriatePen on Fri Mar 10, 2006 10:53 am

Mad City Mike wrote:Highly doubtful. Don't forget that they already paid most of the salary of Recchi, and about half of those of Lemieux and Palffy. That doesn't show up on cap numbers right now, but it is money that was paid out. So no, they will not make money this year, considering they looked to lose maybe $8 million. Trading Recchi this late won't much help that.


I'm not sure about that number MCM.

They were projecting to lose $7 million assuming they made the first round of the playoffs.

They didn't spend as much as they budgeted at the begining of the season.

Figure that half of Palffy's contract is gone. Half of T-Bo's (Insurance).
Half of Mario's.

Virtualy no MAF bonus money.

I'm thinking they saved more than they lost out on. 2-3 million loss maybe?

Then if I remember correctly, some of the players escrow money gets spread to the teams if the league falls below a certain threshold.

And revenue sharing?

I'm not sure of my facts at all, but did you consider these points when making your projection?
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Postby ExPatriatePen on Tue Mar 14, 2006 10:30 am

More info about overall profitability/loss of the franchise.

http://www.post-gazette.com/pg/06073/669949.stm
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Postby Mad City Mike on Tue Mar 14, 2006 1:03 pm

ziggystardust wrote:I don't see how they could lose $7M.

Eh. I just don't buy it. I didn't buy it in the preseason and I don't buy it now.


Why not? Yes, they saved money on the guys they lost. But they didn't sell out every game, and that was part of the projection. They counted two rounds of playoffs, not one. That is about $6 million right there that is off the books. it is very easy to see how they will lose money this year, actually.
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Postby Jim on Tue Mar 14, 2006 1:15 pm

I didn't quite buy their "We need two rounds to break even" when they started the season. Granted their payroll went up this year, but has since plumited, but their attendence is way up. It's something like the highest percentage increase over any team in the NHL.

There is definately some questionalbe math going on...
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Postby ExPatriatePen on Tue Mar 14, 2006 1:16 pm

This is one argument that's going to be rather fun... the numbers will come out when the franchise is put up for sale, so let's see who's being honest.
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Postby Jim on Tue Mar 14, 2006 1:21 pm

Either they have been flubbing for the last few years, or they are flubbing now... one or the other.
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Postby Draftnik on Tue Mar 14, 2006 2:45 pm

There is no reason to think Sawyer is a liar. Nobody posting in this thread has any first hand knowledge of the Pens finances. They could be paying down principal on the debt they carried out of bankruptcy. They could be paying off a line of credit they used to cover expenses (Igloo lease, front office salaries, debt, etc) during the lockout. They may have had to contractually reduce fees they receive from broadcasters and sponsors because of the lockout... The list of factors that could account for their profitability or lack thereof go on and on.

Playoff revenue isn't the panacea it used to be. Those revenues are not 100% profit for the home team, but are now partially included in the revenue sharing fund for low revenue teams. They are also counted as part of overall NHL gross revenues when determining total player salaries.

The bottom line is the Pens play in the oldest building in the NHL with non-existent amenities and minuscule revenue streams compared to most NHL teams. It is not unreasonable to think they are not profitable under any circumstances.
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Postby Jim on Tue Mar 14, 2006 2:51 pm

Like I said... either flubbed before or flubbing now...
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Postby ExPatriatePen on Tue Mar 14, 2006 3:00 pm

Draftnik wrote: They could be paying down principal on the debt they carried out of bankruptcy.


There was a series of articles this past summer celebrating the fact that the Pens had paid off the LAST of the bankruptcy creditors. Other than that, I agree with the rest of your post.
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Postby Jim on Tue Mar 14, 2006 3:02 pm

I know what it is... the the Pens Squad, or whatever they are called. Those women are high maintence, EXPENSIVE!
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Postby ExPatriatePen on Tue Mar 14, 2006 3:08 pm

Jim wrote:I know what it is... the the Pens Squad, or whatever they are called. Those women are high maintence, EXPENSIVE!


Pens Patrol Jim, and you must have missed the recent 'news' :-)

http://www.letsgopens.com/scripts/phpBB ... ens+patrol
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Postby Jim on Tue Mar 14, 2006 3:15 pm

I saw that when it was talked about. I just blanked on the name. Going back to that though... I liked how everyone, including the media, was focusing on her, but no one really cared too much that the players, who are in relationships, were part of it too. She is a puckbunny hero, they are the cheaters.
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Postby Draftnik on Wed Mar 15, 2006 12:22 pm

ExPatriatePen wrote:
Draftnik wrote: They could be paying down principal on the debt they carried out of bankruptcy.


There was a series of articles this past summer celebrating the fact that the Pens had paid off the LAST of the bankruptcy creditors. Other than that, I agree with the rest of your post.


Those were unsecured creditors. It is highly likely the secured debt they carried out of bankruptcy was refinanced, maybe more than once as interest rates dropped in the early part of this decade, so I doubt if that would be classified as bankruptcy debt. It most likely would just be normal debt. If they did manage to pay off ~ $40-$60M of secured debt plus interest while missing the playoffs for the past 3 seasons (teams used to keep 100% of playoff revenue then) and missing an entire season of revenue in 04/05, the franchise is in much better shape than any of us could imagine.

Based on this there was ~ $65M of debt when the Pens came out of bankruptcy.

http://www.postgazette.com/pg/05232/557229.stm

If you factor in a ridiculously conservative estimate of $10M for interest that means the Pens paid off ~ $12.5M of debt per season on average between 00 and 05. I recall them having paid in capital reserves of ~ $52M when the Lemieux Group LP was formed, so it is possible they could have retired some debt from that $$$, but obviously we don't know for sure without seeing their balance sheet and income statement.

Either way, if the Pens truly have retired every single penny of their debt during seasons with no playoff revenue, a lockout no revenue season and declining attendance (prior to this season) they are a very healthy business despite their pathetic lease/revenue streams.
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Postby Stoosh on Wed Mar 15, 2006 12:51 pm

Along the lines of the base salary stuff, this is kind of interesting stuff from Bob McKenzie...

http://www.tsn.ca/columnists/bob_mckenzie.asp

In his column dated 3-14, McKenzie talks about the speculation that the cap and salary floor could increase next year. The salary floor this year was set at $21.5 million and the cap at $39 million. The rumor is that the cap could bump up to $46 million, and the salary floor would jump to $29 million.

Not sure exactly how the players under contract for next year will all hit the cap, but that tells me that the Pens will likely HAVE to spend at least some money this summer as well. Somewhere out there, there's a three-year, $2-million-a-year deal with a bad free agent's name on it that CP is just dying to hand out.
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Postby ExPatriatePen on Wed Mar 15, 2006 1:09 pm

Draftnik

Maybe we are under different impressions but read this paragraph from the article you posted a link to:

In an outcome considered unusual and pleasantly surprising, the Penguins have paid back in full the principal amount to all their creditors, including unsecured creditors. The only remaining debt from the bankruptcy is interest to four former players, and that will be satisfied this fall or next.

You're right about removing secured debt from the Bankruptcy through refinancing... but those are secured assets. Property that their are liens against (Like a mortgage), what franchise operates without debt?

I think you're right. The Franchise is more profitable than the current ownership group wants the community to know. Of course they're going to 'poor mouth' it in the press.

I'm still of the opinion that there's some creative accounting in the $7 Million loss number. That's a good thing when you're projecting to the future and their ability to spend to the Cap limit if they get a new Barn.
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Postby ExPatriatePen on Wed Mar 15, 2006 1:12 pm

Stoosh wrote: The salary floor this year was set at $21.5 million and the cap at $39 million. The rumor is that the cap could bump up to $46 million, and the salary floor would jump to $29 million.


Obviously the league came back stronger than anyone anticipated!

There's more fan interest out there than was expected.

How long is that OLN contract? :D :D :D
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Postby Draftnik on Wed Mar 15, 2006 1:36 pm

Stoosh wrote:Along the lines of the base salary stuff, this is kind of interesting stuff from Bob McKenzie...

http://www.tsn.ca/columnists/bob_mckenzie.asp

In his column dated 3-14, McKenzie talks about the speculation that the cap and salary floor could increase next year. The salary floor this year was set at $21.5 million and the cap at $39 million. The rumor is that the cap could bump up to $46 million, and the salary floor would jump to $29 million.

Not sure exactly how the players under contract for next year will all hit the cap, but that tells me that the Pens will likely HAVE to spend at least some money this summer as well. Somewhere out there, there's a three-year, $2-million-a-year deal with a bad free agent's name on it that CP is just dying to hand out.


Not necessarily. Larry Brooks has been on this story for months because it makes Saskin look like a Bettman lackey and plays into the NHLPA hardliners dissatisfaction with Saskin's leadership . Saskin is recommending the NHLPA vote to only raise the Cap by ~ $2M-$3M. In return the escrow withheld from players will go down or be eliminated. What McKenzie didn't report and Brooks covered is the split between the Cap and Floor will widen with the approach Saskin is recommending. I'm not sure of the exact figures, but I don't think the floor will go up if the Saskin approach which is obviously favored by the NHL goes through.
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Postby ExPatriatePen on Wed Mar 15, 2006 1:48 pm

Draftnik wrote: Saskin is recommending the NHLPA vote to only raise the Cap by ~ $2M-$3M. In return the escrow withheld from players will go down or be eliminated.


I would think elimination of the escrow would be the first priority of the players. Then in subsequent years they can work on raising the cap and floor. You can't always get EVERYTHING you want.

Draftnik wrote: What McKenzie didn't report and Brooks covered is the split between the Cap and Floor will widen with the approach Saskin is recommending. I'm not sure of the exact figures, but I don't think the floor will go up if the Saskin approach which is obviously favored by the NHL goes through.


Why would the players OR the league want a larger disparity between cap and floor? I would think a large gap would only benefit teams like the Penguins (sans Arena) who might have trouble meeting a 'raised floor'.
A large gap, longside revenue sharing, seems to open the door for baseball style economics where some small market teams just pocket money and don't improve their operations.

Long term, I think the Floor might be a mechanism for eliminating troubled franchises in the future. If a franchise like Buffalo can't cover the 'floor' they'd be forced to move or disolve.
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Postby Draftnik on Wed Mar 15, 2006 2:39 pm

Here is the Brooks' article. I mistakenly thought the band would grow, but it actually will narrow (to $10M vs. $16M) if Saskin's approach is adopted and the Floor will go up to ~ $31M:

http://www.nypost.com/sports/59440.htm
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Postby ExPatriatePen on Wed Mar 15, 2006 3:42 pm

That makes much more sense.

Thanks for the link!
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Postby Pitts on Wed Mar 15, 2006 4:10 pm

I swear Brooks must have "NHLPA Forever" tattooed on his back side. Why does he care so much about how much the players can make? Is he married to a player somewhere? It's just funny how he goes off on all these "givebacks" made by the players "under duress". It boggles my mind! :evil:

Gee, not only will the band narrow, meaning the cap may go down, he fails to mention that the floor must also rise accordingly. Meaning, sure, you might not get a few more players htting top end in the dollar figure, but more players will get more money due to teams like the Pens who will have to hit a $31 mil floor from a current salary structure of $21 mil. They have to give that money to someone!
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Postby Pitts on Wed Mar 15, 2006 4:14 pm

ziggystardust wrote:
Stoosh wrote:Along the lines of the base salary stuff, this is kind of interesting stuff from Bob McKenzie...

http://www.tsn.ca/columnists/bob_mckenzie.asp

In his column dated 3-14, McKenzie talks about the speculation that the cap and salary floor could increase next year. The salary floor this year was set at $21.5 million and the cap at $39 million. The rumor is that the cap could bump up to $46 million, and the salary floor would jump to $29 million.

Not sure exactly how the players under contract for next year will all hit the cap, but that tells me that the Pens will likely HAVE to spend at least some money this summer as well. Somewhere out there, there's a three-year, $2-million-a-year deal with a bad free agent's name on it that CP is just dying to hand out.



either that or Lemieux comes back for $8M per.


I told you all, he will want that one last shot at the Cup. Again! :shock:
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Postby Draftnik on Thu Mar 16, 2006 10:56 am

ExPatriatePen wrote:Why would the players OR the league want a larger disparity between cap and floor? I would think a large gap would only benefit teams like the Penguins (sans Arena) who might have trouble meeting a 'raised floor'. A large gap, longside revenue sharing, seems to open the door for baseball style economics where some small market teams just pocket money and don't improve their operations.


ExPat, my first recollection actually was somewhat accurate. There is a proposal to move the Floor $11M below the average and the Cap $5M above the average. It would not widen the $16M band, but it would push the low and high ends down (relative to % of gross revenues) which is what the NHL wants. Why the NHLPA would want this I have no idea, but Saskin is advocating this proposal. It won't be voted by the player reps until after July 1, so free agency may be pushed back in the offseason until this is settled.

http://www.tsn.ca/nhl/news_story/?ID=153659&hubname=nhl
Last edited by Draftnik on Thu Mar 16, 2006 4:12 pm, edited 1 time in total.
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