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Leavitt interview transcript

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Old
10-02-2004, 08:22 AM
  #1
transplant99
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Leavitt interview transcript

Im not sure how so many can continue to discount his findings as "NHL propoganda". The guy is about as straight-forward as anyone who has spoken on this topic, and one of the very few who has SEEN the books and decided what constituted revenue.

I've had a long career in public service in dealing with numbers and I think the issue of the finances of the clubs should not be a negotiating issue at this point because I am satisfied that, not only our forensic accountants but every major accounting firm in America has created numbers that I believe are unassailable. The business is a terrible business -- it is not one I would invest in.

http://www.nhlcbanews.com/transcript...ipt100104.html

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10-02-2004, 09:21 PM
  #2
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"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.

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10-02-2004, 09:59 PM
  #3
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Quote:
Originally Posted by BlackRedGold
"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.
I don't think you need every national accounting firm to agree on how bad of shape the league is in; it seems pretty obvious to everyone.

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10-03-2004, 11:34 AM
  #4
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Quote:
Originally Posted by BlackRedGold
"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.

Soory but that means SQUAT in this argument. Nothing. Zip. Nadda.

The union has all the numbers at their disposal to refute the audit...they haven't done it. Other than to say "we don't believe it".

Why is that? WHy wont they hire an independant firm to come in and refute the NHL and the Leavitt report?


I suggest it's because they can't. They have no way of changing the outcome when using the formula that is accepted by 2 other unions to determine what a dollar of revenue is constituted from.

And before you spout your non-sensical and worn out excuse that " they would do it but fans are TOO DUMB to understand it", save yourself. They dont even have to put it in laymens terms, they only need forensic accountants to come out and say it...then at least their argument might have SOME backbone.

It's funny though, you claim average Joe wouldn't have a clue what was being said, but a group of mostly high-school educated players would have a handle on it perfectly.

Yeah, no bias there on your part.

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10-03-2004, 12:10 PM
  #5
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Quote:
Originally Posted by Seachd
I don't think you need every national accounting firm to agree on how bad of shape the league is in; it seems pretty obvious to everyone.
-just the teams that have no buisness being in the markets they are - bettman - he knows his hockey that man -

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10-03-2004, 12:13 PM
  #6
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Quote:
Originally Posted by transplant99
Soory but that means SQUAT in this argument. Nothing. Zip. Nadda.

The union has all the numbers at their disposal to refute the audit...they haven't done it. Other than to say "we don't believe it".

Why is that? WHy wont they hire an independant firm to come in and refute the NHL and the Leavitt report?


I suggest it's because they can't. They have no way of changing the outcome when using the formula that is accepted by 2 other unions to determine what a dollar of revenue is constituted from.

And before you spout your non-sensical and worn out excuse that " they would do it but fans are TOO DUMB to understand it", save yourself. They dont even have to put it in laymens terms, they only need forensic accountants to come out and say it...then at least their argument might have SOME backbone.

It's funny though, you claim average Joe wouldn't have a clue what was being said, but a group of mostly high-school educated players would have a handle on it perfectly.

Yeah, no bias there on your part.
- The union has all the numbers at their disposal to refute the audit...they haven't done it. Other than to say "we don't believe it". -


- you haven't been listening - bettman was asked that - the teams are private operations and don't have to reveal - the book's - or should i say - the real books - to anyone

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10-03-2004, 01:44 PM
  #7
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Quote:
Originally Posted by BlackRedGold
"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.

Thats such a bogus statement. Sure go throw $6mm out the window the day before an audit and you can turn a $4mm profit into a $2mm loss. People invest billions of dollars every day using GAP accounting. The whole business world relies on it. If it was so easy to make them lie, who could trust anything. The financial world would collapse.

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10-04-2004, 12:43 PM
  #8
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Quote:
Originally Posted by eticket
Thats such a bogus statement. Sure go throw $6mm out the window the day before an audit and you can turn a $4mm profit into a $2mm loss. People invest billions of dollars every day using GAP accounting. The whole business world relies on it. If it was so easy to make them lie, who could trust anything. The financial world would collapse.
That's why you have so many ''financial fraud & financial disaster'' these days. Since every company need to be more accurate than ever with their books when they have stockowners , we now see very much what was impossible to do before.

Enron , anyone ?

Now when companies announce their trimestrial report, they have to show their loss or profit NOW & not like before not saying everything right away & hoping the rest of the year is gonna be better. That's why the stockmarkets are recently very vulnerable. As soon as someone report something less than expected you see the stock drop very fast.

Since the NHL is not on the stockmarket, it's not mandatory to be as accurate as those company who are in Wallstreet. That's why you see a lot of lies.

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10-04-2004, 12:48 PM
  #9
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Quote:
Originally Posted by transplant99
Im not sure how so many can continue to discount his findings as
"NHL propoganda" <---------------------> http://www.nhlcbanews.com/transcript...ipt100104.html
still asking yourself why ?


it's like saying :

I don't know why everyone is saying that eating at McDonald's is so unhealthy, just read this article at www.mcdonalds.com/itsveryhealthy.html & you'll see.

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10-04-2004, 12:51 PM
  #10
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Quote:
Originally Posted by BlackRedGold
"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.
Pretty ambiguous statement. You can reallocate capitalized expenses to different years. A way to counter this is to apply a strict expense method to all teams. There, that argument is forever shot down. Please dont use it again. The only major expense a team would have is arena related (eg they financed the arena). Again, use a method that is consistent.

What Goodenow fails to outline is the revenue number which in the above quote is ignored. This is the key number. In a sports team, the revenue number is difficult to manipulate in any way. Therefore, any accountant would conclude, after basic reviews, that the revenue number is likely accurate.

A good argument from Goodenow is the various intercompany and related party transactions that may occur within various teams. If he has a problem with these, he should assign a fair value to the transactions which wouldnt be difficult. We are going for an approximation in the end anyways (i.e team pays $10M over fair value to Company XYZ for cable fees, both team and XYZ are owned by same company; this is done typically for tax purposes). Again this can be solved via audit.

Union has not performed their own audit. Levitt is a very well respected on Wall Street.

I'd say the numbers from the league are fairly accurate if they have compensated for non-arms length transactions. However, I do not believe these transactions are likely material to the overall league net loss position. The low tv contracts and empty seats speak for themselves. The union's argument on the financial side is baseless.

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10-04-2004, 12:58 PM
  #11
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Quote:
Originally Posted by Russian Fan
still asking yourself why ?


it's like saying :

I don't know why everyone is saying that eating at McDonald's is so unhealthy, just read this article at www.mcdonalds.com/itsveryhealthy.html & you'll see.
But it's not like that at all. Anyone can say the NHLPA is just spewing propoganda too. It takes very little effort to do so. But unless it's based on something (and McDonald's, for obvious reasons, doesn't count), it's pretty meaningless.

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10-04-2004, 01:00 PM
  #12
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Quote:
Originally Posted by Russian Fan
still asking yourself why ?


it's like saying :

I don't know why everyone is saying that eating at McDonald's is so unhealthy, just read this article at www.mcdonalds.com/itsveryhealthy.html & you'll see.
You don't get it, he's not talking about the article itself, he's saying that Levitt is an absolute professional, and WOULD not put his career, and his reputation on the line to join the NHL owners in a dispute that doesn't benefit him in any way whatsoever.

The NHLPA is using this as a card, they know the numbers, and the losses are real, they just can't admit it, or they basically hand the owners victory in this negotiation. The NHLPA has done a very good job in convincing their members that the numbers are false, when in fact, the numbers are very true, so says the most reputable, professional auditor known to man, today.

This is the NHLPA's one, and only bargaining card, without it, they'd be lost. They'll continue to blindly dismiss the numbers as false, what other choice do they have? If they acknowledged the losses, then everyone would say, "If you know the league is in financial trouble, then why won't the players take paycuts, and allow a salary cap to better the state of the league.."

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10-04-2004, 01:20 PM
  #13
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Quote:
Originally Posted by Russian Fan
Since the NHL is not on the stockmarket, it's not mandatory to be as accurate as those company who are in Wallstreet. That's why you see a lot of lies.
How do you know they are lies? Don't you need to know what the truth is to know what is a lie and what isn't?

Some people keep claiming the owners are lying, but I haven't seen anything that suggests even one owner is lying, let alone all of them. In the past, absolutely, some owners lied. Therefore they're all lying now?

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10-04-2004, 01:45 PM
  #14
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Quote:
Originally Posted by BlackRedGold
"Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me." - Paul Beeston, former COO of Major League Baseball.
But can he turn a $1 profit into a $277M loss?

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10-04-2004, 02:27 PM
  #15
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It's not that people are questioning Levitt, what they are questioning is the numbers Levitt was givin by the owners. How hard is that to figure out?

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10-04-2004, 02:44 PM
  #16
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Quote:
Originally Posted by JWI19
It's not that people are questioning Levitt, what they are questioning is the numbers Levitt was givin by the owners. How hard is that to figure out?
Levitt wasn`t "given" any numbers. He was given FULL access to all financial records of every team, and he came up with the numbers himself. This guy knows the ins and outs of every conceivable business and knows how to find where every single penny went to. This guy is one of the most respected people in the business community and the fact that he signed his name to this reports leaves me with absolutely no question that the numbers are true. The fact that the NHLPA and its supporters keep questioning the validity of the numbers really just goes to show that they don`t have a leg to stand on.

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10-04-2004, 03:00 PM
  #17
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Quote:
Originally Posted by Chelios
Levitt wasn`t "given" any numbers. He was given FULL access to all financial records of every team, and he came up with the numbers himself. This guy knows the ins and outs of every conceivable business and knows how to find where every single penny went to. This guy is one of the most respected people in the business community and the fact that he signed his name to this reports leaves me with absolutely no question that the numbers are true. The fact that the NHLPA and its supporters keep questioning the validity of the numbers really just goes to show that they don`t have a leg to stand on.

Really??
Quote:
The Board of Governors has authorized the League office to obtain financial and other related information from the Clubs in order to annually compile a League-wide combined URO for each NHL season.
http://www.nhlcbanews.com/main.html


Quote:
We commenced our work in April 2003 and completed it in February 2004. During that 10-month period, over two thousand man-hours were incurred by Eisner, Mr. Turner and myself. In addition, thousands of man-hours were spent by the League and team personnel collecting data, meeting with us, and answering our inquiries
.

You really believe it took only 10 months to audit all 30 teams books?

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10-04-2004, 03:11 PM
  #18
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Quote:
Originally Posted by Seachd
But it's not like that at all. Besides, anyone can just say the NHLPA is spewing propoganda too. It takes very little effort to call someone names.
Did I say NHLPA is PURE ?

What discredit my comment by telling what I didn't say ?

NHL is spewing propaganda
NHLPA too

Are you satisfy ?

Grow up ! it's not black & white

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10-04-2004, 03:18 PM
  #19
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Quote:
Originally Posted by Russian Fan
Did I say NHLPA is PURE ?

What discredit my comment by telling what I didn't say ?

NHL is spewing propaganda
NHLPA too

Are you satisfy ?

Grow up ! it's not black & white
the posturing will continue - its not even october 15th yet -

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10-04-2004, 03:20 PM
  #20
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Quote:
Originally Posted by Russian Fan
Grow up ! it's not black & white
It's not black and white, but the NHL is lying about its figures because you said so?

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10-04-2004, 03:32 PM
  #21
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Quote:
Originally Posted by JWI19
You really believe it took only 10 months to audit all 30 teams books?
It's not as if one person was doing it. He had a team of Forensic accountants.

From Levitt FEb 12, 2004: "The nature of this study was so comprehensive, so broad-reaching, so detailed and followed so closely on audits done over a period of years and additional audits required, that I know of no way of challenging these numbers -- and remember we are not talking about, if I say a margin of less than 1%, I am talking about 30 different clubs and if you took this in its totality, it would be down to a fraction of 1%. Certainly nothing material can be questioned in this; in my judgment. Nothing material. .....I think this is close to being unchallengeable as anything I have ever been associated with."

"Q. Mr. Levitt, does this surprise you at all that the numbers that seem to have turned out are exactly the numbers the League has been saying all along going into this; would you have expected this to be the case?

ARTHUR LEVITT: I guess I might have been surprised at the fact that we found a lower loss than the League had reported; that the League was quite conservative in their findings; that even with the somewhat lower loss, the results were as close to catastrophic as I have seen of a business of this size go. These are not giant enterprises nor are they terribly complicated. Businesses of this size cannot sustain losses of this magnitude and be viable."

"Q. The $273 million figure being bandied about, is that based on generally accepted accounted principles? I just need to know what exactly that represents?

LYNN TURNER:The URO is based upon trying to get all the collective revenues and all the collective expenses of the hockey operations regardless of where they are in the team or in the affiliated arena. So it is not a gap-based number.

For example, it doesn't include the debt costs that an owner will have to pay for in cash in terms of interest; doesn't include the cost of buildings and facilities, the depreciation, so this $273 million number in all likelihood, if it was on a pure-gap basis like a public company would have to report to its investors, would be significantly higher. "

The number including those other debts was determined to be $374 million.

The numbers are truthful as determined by the best in the business. A guy who is not going to just go along with what the NHL said but looked into every scrap of evidence and every piece of revenue.

And low and behold it has been nearly 8 months and the numbers STILL have not been challenged. That has got to tell you something.


Last edited by tantalum: 10-04-2004 at 03:38 PM.
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10-04-2004, 03:35 PM
  #22
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Quote:
Originally Posted by JWI19
Really??


http://www.nhlcbanews.com/main.html


.

You really believe it took only 10 months to audit all 30 teams books?
First of all Levitt didn`t conduct his report simply by looking at the numbers provided by the league in the form of the league`s URO. He was given complete financial records to every club and compared the numbers HE obtained to the numbers given by the Owners in their URO (btw he found that the UROs accurately described the numbers).

Secondly, regardless of where the numbers are coming from my point is that Levitt signed his name to this report. This guy is an expert and knows everything that can conceivably be done to hide money or inacurately report revenues and expenses. Levitt was satisfied that the numbers given by the league in their URO was accurate, and that to me is proof enough. How you people can say the numbers are wrong is beyond me. This guy would not allow his reputation be tarnished by something that in no way benefits him. I mean come on guys, lets drop the numbers issue.

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10-04-2004, 04:45 PM
  #23
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Where's this best in the business stuff coming from? This political patronage appointee? Who ever heard of him before?

If he did an audit, how come the Flyers real audited books contradicted him? HE did a report, not an audit. Otherwise he should be in jail because the real audits contradict him.

If the league is on a treadmill to obscurity why are the Canucks being sold for a quarter billion dollars? Some investors obviously dont believe Levitt either.

Anyway, the players are acknowledging the market needs to be reset lower and the trend has already started, and they have offered further methods to continue this trend. Just because the owners are losing money doesnt mean a cap is required. It more likely means a better market is needed. Or perhaps they really dont care about losing money.

And Levitt never said WHY they are losing money. Perhaps it is totally because of overpaid Commisioners, GMS, and lawyers.

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10-04-2004, 05:06 PM
  #24
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Quote:
Originally Posted by thinkwild
Where's this best in the business stuff coming from? This political patronage appointee? Who ever heard of him before?

If he did an audit, how come the Flyers real audited books contradicted him? HE did a report, not an audit. Otherwise he should be in jail because the real audits contradict him.

If the league is on a treadmill to obscurity why are the Canucks being sold for a quarter billion dollars? Some investors obviously dont believe Levitt either.

Anyway, the players are acknowledging the market needs to be reset lower and the trend has already started, and they have offered further methods to continue this trend. Just because the owners are losing money doesnt mean a cap is required. It more likely means a better market is needed. Or perhaps they really dont care about losing money.

And Levitt never said WHY they are losing money. Perhaps it is totally because of overpaid Commisioners, GMS, and lawyers.
Boy you really are scraping the bottom of the barrel now aren`t you.

Question the credibility of Levitt... check!

Suggest that the reason the league is losing money is because of salaries paid to commisioners, GMs and lawyers... check!

Use the fact that the Canucks (one of the top teams in the league) have been sold for a quarter billion, while strategically leaving out the fact that several other teams (such as Anaheim) can`t even find a buyer... check!

I mean come on guys, give me a break.

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10-04-2004, 05:08 PM
  #25
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I don't like Leavitt.

I've heard him interviewed a few times and how anyone can say that he ISN'T NHL propaganda is beyond me.

Regardless of the numbers, the guy is obviously biased. If he's so much of a "professional" he should stick to the numbers and stop spouting off his opinion because that's not his job.

Furthermore, answer this question.

If it's true that the NHL will lose less money by not playing this year, why did they see the need to build a $300 million war chest?

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