NHL deal could help Wild become profitable

Minnesota Wild
Minnesota Wild forward Jack Dowell takes a shot on goal during a practice and media availability Monday, Jan. 7, 2012 at Xcel Energy Center in downtown St. Paul. The NHL owners and players' union have reached a tentative agreement to end the lockout.
MPR Photo/Jennifer Simonson

For the Minnesota Wild and other struggling National Hockey League teams, a collective bargaining agreement reached over the weekend offers an opportunity to return to profitability.

Team owners and players are expected to approve the agreement later this week, ending a 113-day lockout.

Wild players returned to the ice at St. Paul's Xcel Energy Center this week, preparing for an abbreviated, 48- or 50-game season starting later in the month. After practice, the players were more interested in talking hockey than contracts. Left wing Zach Parise was glad to put the lockout behind him.

"Unfortunately, there is a business side to sports, and we've seen it in football. We've seen it in baseball before. You've seen it in basketball recently. And now, unfortunately, we've seen it in hockey," Parise said.

Parise is new to the Wild. He and Ryan Suter each signed eye-popping 13-year, $98 million contracts with the team this year — placing them among the highest-paid players in the league.

That might make you think the Wild is swimming in profits. But Mike Ozanian, a pro sports finance writer for Forbes Magazine, said nothing could be further from the truth.

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"The Wild have been through their history sort of break-even, flirting around there, making a little money, and in more recent years, losing a little bit of money as the NHL salary cap has been rising each year," Ozanian said.

NHL teams keep their finances private, but Ozanian's analysis of publicly available information shows the Wild hasn't turned a profit since 2009, and the team is not alone. Almost half of the teams in the NHL had operating losses last season. But Ozanian said parts of the league are doing extremely well.

Minnesota Wild
Minnesota Wild players skated during a media availability Monday, Jan. 7, 2012 at Xcel Energy Center in downtown St. Paul. The National Hockey League owners and players' union have reached a tentative agreement to end the lockout.
MPR Photo/Jennifer Simonson

"You have some teams like the Toronto Maple Leafs making over $80 million, the [New York] Rangers, the Montreal Canadians, extremely profitable. Those three teams alone account for over 80 percent of the league's operating profit," he said. "You've got this bifurcation of the haves and the have nots more so than any other major sport."

The new labor agreement attempts to address that disparity through increased revenue sharing, where wealthy teams subsidize poorer ones. And it reduces the amount of money teams can spend on player salaries — meaning owners get to hold on to a bigger share of the revenue.

Economist Andrew Zimbalist, who studies the business of sports at Smith College in Massachusetts, said the new collective bargaining agreement should help make the Wild profitable.

"Of course that's all depending on how well the team is managed and promoted and how successful they are ultimately on the ice," Zimbalist said. "But it gives them more of a fighting chance, I think, than they've had in the past."

The Wild had the worst scoring record in the NHL last season. And the team no longer sells out every game, like it did for its first 10 years at the Xcel Energy Center. The team faces other challenges, as well.

Many professional hockey teams share arenas with the local NBA franchise. But the Minnesota Timberwolves have their home court across the river in Minneapolis at the Target Center.

The facilities compete when big musical acts come through the Twin Cities, and that competition will become fiercer when Minneapolis renovates its facility — currently the subject of negotiations between the city and the Wolves.

The Wild declined to comment for this story. But in an interview last summer, Chief Financial Officer Jeff Pellegrom acknowledged the team's financial challenges.

"I struggle, because I have a lot of pride in what we have," Pellegrom said. "We have a lot of things that are going well for us to say we're struggling. But certainly our job is very, very difficult right now."

The new collective bargaining agreement will make that job easier, but analysts agree: The team's financial prospects would look even better if it could make the playoffs.