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Wild in Financial Trouble

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Old
05-01-2011, 09:44 PM
  #1
BigT2002
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Wild in Financial Trouble

Posted by Retail1L0 in the Business section:

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ESPN Insider subscription required to view link.

http://insider.espn.go.com/nhl/featu.../20110429#6425

"Mike Ozanian of Forbes reports the Minnesota Wild are short on cash. According to majority owner Craig Leipold, falling short of a berth in the playoffs results in a financial deficit for the 2010-11 season. And there are further complications than a simple loss of money.

Another potential problem for Leipold is the team's general partner and minority owner billionaire Philip Falcone, whose Harbinger Capital hedge fund is facing two SEC investigations. Although Falcone is obviously quite wealthy, his business fortunes have diminished greatly over the past year or so. Our figures show that the Wild post a loss of $2.3 million before interest, taxes, depreciation and amortization for the 2009-10 season, when they also missed the Stanley Cup tournament. Given the Wild?s attendance dipped a bit in 2010-11 from the prior season it is safe to say they again lost money.

This means the unless the Wild hit the banks up for a loan the team will likely be making capital calls to owners for cash. The SEC investigation coupled with the relatively poorer performance of Falcone's investments could make it more difficult for Leipold to get cash from his partner.

Under pressure to reach the playoffs - at the very least - next season, general manager Chuck Fletcher was expected to make a splash once the free agent market opened up this summer. This financial news won't help Fletcher's ability to sign the players he covets, at the very least.

- Victoria Matiash"

I will comment that this is from the "Rumors" section of ESPN's NHL page, but I found it interesting nonetheless. Did not figure the Wild to be in this kind of trouble.
What says you guys....little hard to swallow but should we really be surprised?

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05-01-2011, 09:51 PM
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nickschultzfan
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This just makes me think that we will sign zero significant free agents this year, and go with cheap youngsters next year.

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05-01-2011, 09:56 PM
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Quote:
Originally Posted by nickschultzfan View Post
This just makes me think that we will sign zero significant free agents this year, and go with cheap youngsters next year.
Not that there are going to be a wealth of all stars out there on the block, but I do agree with you. They are going to start trying to cut down on the cap spending as much as they possibly can in order to maximize profits if this is the case. Sounds like Craig was expecting at least 2 playoffs runs already where, IIRC, they say its about $1M in pure profit. That would be at least $4M right there to make up the difference of shortfalls.

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05-01-2011, 10:04 PM
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It is what it is. They've been having financial issues for the last several seasons and you could see it coming as Naegele wanted to jump ship. Hopefully they can get back on track over the next few years. Infusing some young talent, competitiveness, and excitement back into the team will go a long way towards bring the dollars back.

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05-01-2011, 10:07 PM
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Originally Posted by this providence View Post
It is what it is. They've been having financial issues for the last several seasons and you could see it coming as Naegele wanted to jump ship. Hopefully they can get back on track over the next few years. Infusing some young talent, competitiveness, and excitement back into the team will go a long way towards bring the dollars back.
Oh totally. I will give it that, but in all honesty they need a deep run in the playoffs to really ignite everything. 2003 may have been the saving grace for this team if you think about it. Without it, would there really be the type of support we are even seeing now?? Could you imagine a team that only makes the playoffs once in 10 years? Ouch...

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05-01-2011, 10:20 PM
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Quote:
Originally Posted by this providence View Post
It is what it is. They've been having financial issues for the last several seasons and you could see it coming as Naegele wanted to jump ship. Hopefully they can get back on track over the next few years. Infusing some young talent, competitiveness, and excitement back into the team will go a long way towards bring the dollars back.
know what really hurts...You know Latendress wasn't insured so that was how much money in medical bills right there. a couple million, probably, with all the specialists.
BOOM.
Harding, too.
Jesus. Together they probably cost us $5 million. Or rather cost the ownership group. Not sure what kind of percentages are involved between Falcones and Leipold but that has to hurt a lot.

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05-01-2011, 10:28 PM
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Originally Posted by rynryn View Post
know what really hurts...You know Latendress wasn't insured so that was how much money in medical bills right there. a couple million, probably, with all the specialists.
BOOM.
Harding, too.
Jesus. Together they probably cost us $5 million. Or rather cost the ownership group. Not sure what kind of percentages are involved between Falcones and Leipold but that has to hurt a lot.
since Falcones is a minority owner, I would assume he would only foot probably $1M-$1.8M for it, rest would be out of Craig's pocket....typically picked up I'm sure by merchandise sales. Not exactly sure how the inner workings play out with that kind of stuff, but I'm sure they aren't going to hold back bonus's of their employees (regular ones, not the players or coaches) because of it.

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05-01-2011, 10:37 PM
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That a team that has drawn as well as the Wild since day 1 could be in financial trouble just goes to show that there is something f&*%ed big time in the world of pro sports.

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05-01-2011, 10:45 PM
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I don't think it's as bad as their making it out to be. I think it's a ploy for sympathy to get people to go to the games. I mean, why hasn't anything surfaced about the likes of Columbus being in financial trouble? If it has, I certainly haven't heard about it. Even this year, while not being sold out, the arena was often pretty full. So either they're not getting a lot of Merch sales or they're spending loads of money in other places on things that might not need so much money.

Edit:: Just googled Blue Jackets financial problems, and I guess they are having problems. So I retract that comment but something just isn't adding up to me

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05-02-2011, 12:32 AM
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I don't buy it at all, the Wild have drawn well their entire existence and have prices in the top half of the league.

More than half the league would have to be in trouble.

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05-02-2011, 09:01 AM
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Quote:
Originally Posted by rynryn View Post
know what really hurts...You know Latendress wasn't insured so that was how much money in medical bills right there. a couple million, probably, with all the specialists.
BOOM.
Harding, too.
Jesus. Together they probably cost us $5 million. Or rather cost the ownership group. Not sure what kind of percentages are involved between Falcones and Leipold but that has to hurt a lot.
Wouldn't insurance have footed most of the bill for medical stuff?

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05-02-2011, 09:33 AM
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Originally Posted by Vashanesh View Post
Wouldn't insurance have footed most of the bill for medical stuff?
I don't know where i got the impression the team was self-insured.

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05-02-2011, 10:59 AM
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The organization does not have "health insurance" as we think of health insurance. The last time i looked into it, professional sports are considered a "high risk" and thus not really coverable.

So yes, most professional sports teams are "self insured". All of Latendresse's surgeries were paid for by the team, same with rehab expenses, etc.

The few additional insurance things that I do know;
- The top 5 Wild salaries are covered 100% by injury insurance.
- The next 8 are covered 80% by supplemental insurance. I confirmed (last fall) that the Wild are one of a small subset of teams which carry this type.

Top 5:
Backstrom
Havlat
Bouchard
Zidlicky
Burns

Next 8:
Schultz
Cullen
Mikko
Barker
Latendresse
Kobasew
Brunette
Miettinen

Essentially, Harding came right out of the owners pockets. Plus, they had to spend to replace him which essentially meant that was a straight 1.1. million dollar loss. It was also why we were so close to the cap because it made no sense to put Harding on LTIR.

Right there is a 1.1 million dollar loss...

Not that I feel terribad about it, considering that owning a sports franchise is wrought with inherent financial risk. What's hitting Leipold's wallet is more of the fact that the team has *lost* value since he purchased it.

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05-02-2011, 11:13 AM
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BigT2002
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Quote:
Originally Posted by melinko View Post
I don't buy it at all, the Wild have drawn well their entire existence and have prices in the top half of the league.

More than half the league would have to be in trouble.
I haven't looked deeper into this yet, but I assure you when I get some time I will find some of the numbers. But to my knowledge, while the league is making money...most of the markets are actually losing cash flow.

To my knowledge though, a big part of sports is pushing your team in the playoffs. While players want to go for the Cup, and fans wanna go for the pride of their team, owners are doing it for the $$$$ that comes along with it. To put that in perspective. I go to a lot of Blackhawks games when I head to Chicago since i have friends with Season Tickets. They sit in Section 300, the seats are typically $33.00. During the Stanley Cup Finals, those same seats were $170. That is WELL over a 300% increase in price just for a seat. Imagine what their glass seats were costing for those games. Tie in merchandise sales of shirts that say "Division Champion" "Conference Champion" "Stanley Cup Champion" and you basically are sitting on a goldmine in sports. As I said earlier, it is $1M-$1.5M for the 1st round in pure profit, it doubles all the way up to the Stanley Cup if I remember correctly from the FSN special about making the playoffs. That means EACH game played at the Xcel is around $4-$6M in profit to Leipold. That is great money to have on the side in case things like this happen. At this point there is no "emergency stash" of cash laying around I would assume.

Keep in mind we are still consistently in the top tier of the league when it comes to merchandise sales, although it is getting stagnant. That is for 2 reasons I think.

1) You can't win over more fans, to include casual, unless you are successful. This team can't even make the playoffs

2) You can only buy so much stuff before you have everything so to speak. Without things like the Finland trip, the Decade patches, etc....there wasn't something new this year that you HAD to have. I wonder how much money Chicago made off of merchandise sales during the playoffs - offseason this year. I know my friend got a personalized "yearbook" from the team that cost around $600 and it was only offered to STH's. Considering the team hadn't won a cup in over 40 years, you know damn well a majority of them picked that up.

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05-02-2011, 11:18 AM
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I'm also not too terribad upset because any article that pre-cedes this summer when it comes to league finances is bunk.

the tv deal with nbc brings in 200 million more to the league, which is then revenue split across all 30 teams.

leipold will have cash from that.

Edit:
oh... one more point to expand on T's good info...

The player salaries? Only apply to the regular season. The players essentially "play for free" during the play-offs.

From an amortization perspective, think about all of the payroll spread out over each home game. The teams only net money during home games. The Wild only had 40 home games this season, which is roughly 1.5 million in salary per home game played.

A playoff home game not only has increased ticket prices, but also no player salary to cover.

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05-02-2011, 12:24 PM
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I could buy it, but only because I think that the Wild are paying down their loan from St Paul early and that Leipold is using the Wild's losses as a tax write off. I have no proof of either but that's just my assumption.

I would not be sad if they didn't sign anyone this summer and/or dumped a bunch of dead weight (Barker, Cullen, a defenseman, etc). This team needs to get lean and hungry.

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05-02-2011, 12:26 PM
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Quote:
Originally Posted by Jarick View Post
I could buy it, but only because I think that the Wild are paying down their loan from St Paul early and that Leipold is using the Wild's losses as a tax write off. I have no proof of either but that's just my assumption.

I would not be sad if they didn't sign anyone this summer and/or dumped a bunch of dead weight (Barker, Cullen, a defenseman, etc). This team needs to get lean and hungry.
...but not starving of course.

Keep Cullen, get rid of Barker, Kobasew, Miettinen etc.

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05-02-2011, 12:44 PM
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I really don't think having or not having Cullen in the lineup would make a bit of difference. Gillies could be an upgrade. Almond/McMillan would be just as good. Unless Cullen has some secret injury from November on.

Luckily, Kobasew and Miettinen are gone this summer. We won't miss either of them...maybe Miettinen but we should be able to bring in Granlund and have an upgrade.

"Overpaid" guys like Backstrom, Bouchard, or Schultz would be highly missed though. Zidlicky, we'll see. We missed him...even when he was in the lineup.

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05-02-2011, 02:20 PM
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Originally Posted by BigT2002 View Post
Oh totally. I will give it that, but in all honesty they need a deep run in the playoffs to really ignite everything. 2003 may have been the saving grace for this team if you think about it. Without it, would there really be the type of support we are even seeing now?? Could you imagine a team that only makes the playoffs once in 10 years? Ouch...
I disagree, 2003 hurt more than it helped. It made DR think that staying the course with the roster was the way to go, and it also kept this team from another prime draft pick. Making the playoffs so early set this team back a long ways IMO.

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05-02-2011, 02:44 PM
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Originally Posted by Jarick View Post
I really don't think having or not having Cullen in the lineup would make a bit of difference. Gillies could be an upgrade. Almond/McMillan would be just as good. Unless Cullen has some secret injury from November on.

Luckily, Kobasew and Miettinen are gone this summer. We won't miss either of them...maybe Miettinen but we should be able to bring in Granlund and have an upgrade.

"Overpaid" guys like Backstrom, Bouchard, or Schultz would be highly missed though. Zidlicky, we'll see. We missed him...even when he was in the lineup.
I do love the rage against guys like Backstrom, Bouchard, and Schultz. Yes, those guys are overpaid, but if they were gone, you can't replace them with guys like Theodore, Miettinen, and Zanon. If that happened, people would notice the huge value those guys have.

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05-02-2011, 04:12 PM
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I disagree, 2003 hurt more than it helped. It made DR think that staying the course with the roster was the way to go, and it also kept this team from another prime draft pick. Making the playoffs so early set this team back a long ways IMO.
Its a double edge sword. If you look at who most of the expansion teams drafted in subsequent years after their first year, it really isn't that optimistic outside of a few names in the Top 5. With how we were competing regardless, we wouldn't of gotten the Kovy's or Nash's that came later on. Who knows about the Toews/Kane type picks though.

But then again if you don't get into the playoffs that soon, how long until the fad of having a pro team wears off? The Gophers were still playing great hockey at that point and so was St. Cloud and UMD was the up and rising. We've all seen the type of players who've come out of our high schools as well as of late. Who knows if we sell out every game for close to 10 years?

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05-02-2011, 05:10 PM
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Quote:
Originally Posted by nickschultzfan View Post
I do love the rage against guys like Backstrom, Bouchard, and Schultz. Yes, those guys are overpaid, but if they were gone, you can't replace them with guys like Theodore, Miettinen, and Zanon. If that happened, people would notice the huge value those guys have.
Yep, and that's why I called them "overpaid". Technically yes, but they aren't whopping busts by any means...like Cullen was last year.

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05-02-2011, 09:05 PM
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sorry, but Nick Schultz is dramtically overpaid for what he has provided since signing his most recent contract. His play can/is replaced my moving Stoner into his spot, at about $3million cheaper a year.

Sadly, Schultzie has peaked in his career, and is already dropping back down in value and performance.

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05-03-2011, 12:59 PM
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sorry, but Nick Schultz is dramtically overpaid for what he has provided since signing his most recent contract. His play can/is replaced my moving Stoner into his spot, at about $3million cheaper a year.

Sadly, Schultzie has peaked in his career, and is already dropping back down in value and performance.
Clayton Stoner is also due a raise after next season. There are many d-men making 3M+ that Nick Schultz is better than.

His low-point in the last 5 years was the beginning of the 09-10 season when Fletcher/Richards screwed with his head. Nearly took him the rest of the season to get back to normal, and came back strong this year. Our only consistent d-man this past season.


As for this financial trouble, sounds like Leipold/Fletcher can use this as an excuse to no longer spend near the cap, and then when we miss the playoffs Fletcher might get to keep his job because not spending to the cap can be his excuse. Sounds like a good plan....

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05-03-2011, 01:15 PM
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Right, I was going to say...how much should Schultz be making? He's only at $3.5m. He could be overpaid by maybe $1m at most? At MOST.

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