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Wild and NHL slide toward possible "lockout"
by Jeff Horwich, Minnesota Public Radio
February 13, 2004

Don Hess (left) of Prescott, Wis. and Denny Pladson of South St. Paul "warm up" at a nearby bar before a recent Wild home game. Pladson is a season ticket-holder, which brings him downtown -- spending money -- at least 45 nights a year. (MPR Photo/Jeff Horwich)

After the carefree atmosphere of the NHL All-Star Game, professional hockey is returning to more serious matters. For the Minnesota Wild, this means salvaging a season that has left them near the bottom of their conference. There's also the more grave question of whether, one year from now, there would even be a season to salvage. A new report from the NHL shows deep financial losses at a majority of teams, and a contract dispute between NHL players and owners threatens to bring the league to a halt in the fall. The Wild may not be a part of the problem, but Wild fans and the Twin Cities economy could suffer the consequences.

St. Paul, Minn. — It's a classic contract dispute: NHL players want to make more money, team owners want to control costs. Owners want to cap the amount they can spend on salaries, as in the NFL and the NBA. The two sides still have six months until their deadline for a new collective bargaining agreement, but there's definitely a feeling among fans that next season could fall victim to a "lockout:" Without a deal, owners shut the doors, and the National Hockey League comes to a halt.

	Lawson Commons: "ST. PAUL LOVES THE NHL"

"I think it's real. I think it's for sure," says Minnesota Wild fan Tom Peterson of Eagan.

Peterson says something's got to give to make NHL player salaries fit within team budgets. Dozens of concerned postings on the team website suggest he's not alone. Owners and players have taken it to the wire before -- a contract dispute in '94 led to a lockout that cost half the season.

But whichever side you come down on, Peterson says his hometown team has salaries under control.

"The Wild are probably in pretty good shape, because they haven't jumped on that (bandwagon), going after the high-buck guys," he says.

He's right. In its annual survey of the NHL, Forbes Magazine held up the Wild as a rare example of smart management in a league that is otherwise financially troubled. While Forbes found the NHL as a whole lost $123 million last year, the Wild made $20 million -- the most of any team in the league. Forbes rated the Wild the second "most efficient" team in hockey, in terms of wins per dollar of payroll.

	"Let's Play Hockey" publisher Doug Johnson

"The Wild is not a part of the problem at this point," says Doug Johnson, who publishes the Minneapolis-based, "Let's Play Hockey" magazine.

"They came into the league on an expansion team basis, and they didn't have to pay high-priced salaries in the very beginning. Their payroll has maybe hovered between $15 and $20 million the first three years, where some (NHL) payrolls are $50 or $60 million."

Johnson points out that the Wild do have a future stake in this dispute. Wild salaries will erode those league-leading profits if more players follow the lead of star forward Marian Gaborik, who held out this season for a reported three-year, $9 million contract.

But for now, the Wild will sink or swim along with the league -- and elsewhere the league is sinking. Critics say the NHL expanded too quickly, especially in the south. But even long-time NHL stalwarts like the New York Rangers and St. Louis Blues are in financial trouble. TV ratings are down, and many expect the contract to shrink when national TV rights are renegotiated this year.

Officials with the Wild referred all lockout related questions to the NHL, and declined to share details of the team's finances. Vice President for Communications Bill Robertson did offer one comment, saying the Wild has not heard any concern about next season from season ticket-holders or companies with corporate suites at the Xcel Energy Center.

	Martha Fuller has worked for both the city of St. Paul and the Wild

"We are coming off the most successful weekend in our brief history, and all we've been hearing from our fans, sponsors, media, civic leaders, is that this is the best weekend we've ever presented in St. Paul," Robertson says.

St. Paul officials are well aware of the lockout threat. But they say they are uninvolved at the moment, and certainly not panicking. Martha Fuller is St. Paul's director of planning and economic development, and also a former chief financial officer for the Wild.

"I think we should not overreact in terms of what the potential impact might be, if there's a lockout," Fuller says. "A lockout's not a certainty."

The $175 million Xcel Energy Center was financed largely through state and city money, which the team is paying back through its lease. The team still owes more than $150 million. Fuller says there's no reason to believe a lockout would compromise the Wild's ability to make its payments. But she says even if the team runs into financial difficulty, taxpayers are protected.

"In the unlikely event that there were ever an issue, there is a debt service reserve, there is insurance on the bonds, there are a number of other features that will protect the city and state in terms of any risk of failure to repay," Fuller says.

	Xcel Center in-demand for more than just hockey

Even if the Wild were forced to suspend payment completely, the team's $7 million reserve could carry them through almost 18 months, if needed. But no one expects the Wild's cash-flow would dry up in a lockout.

The team manages all events at the Xcel Center, and also gets the revenues. The 45 or so home hockey games each year make up only 30 percent of the events there. The Xcel Center is well-regarded as a concert venue; top draws like John Mayer and an "American Idol" tour are on the way this spring.

Wild officials would not say how much money other events generate, or how revenue from external events compares with hockey games. They did confirm figures from the St. Paul Convention and Visitors Bureau, that a basic day's rent for the Xcel Center varies between $18,000 and $26,000.

If hockey is put on-hold, Fuller expects the team will try to fill the gap.

"We shouldn't presume that if there were to be a reduction in hockey games, the arena will just sit dark," she says. "I suspect the team will do everything it can to attract other events into the building."

	McInenly: Crowd on hockey and non-hockey nights "a complete difference"

Still, there's no doubt the consistently sold-out Wild games are a strong boost for the Center's neighbors in downtown St. Paul. Though the games represent less than a third of Xcel Center events, Wild fans make up almost half the Center's total attendance for the year.

About an hour before a home game recently, bars and restaurants in St. Paul were filling with green and red jerseys. At the Wild Thymes Bar and Grill, one of those was worn by Denny Pladson, a season-ticket holder stopping as he always does for dinner and few beers.

"I'm here about 45 times a year for that, and maybe 10 other occasions," Pladson says. "I'd say it'd be about 70 percent less people (in the bar) than it is right now if it wasn't for hockey. It's every establishment within a mile of the Xcel."

Jami McInenly is behind the bar. She says Wild Thymes thrives on hockey traffic. In fact, the business is only three years old and has never existed without it.

"We'll be packed on a hockey night," she says. "When the game starts, everyone leaves. When the game's over, they fill up the bar again. It's awesome."

Officials have tried to put a figure to these beers, burgers, and all the other spending that derives from the Xcel Center. A recent impact study from the St. Paul Area Chamber of Commerce claims that spill-over effects from events there provide a yearly boost of about $250 million to the Twin Cities economy.

Assume a worst-case scenario: The Wild have no season at all and the Xcel Center sits empty during hockey nights. If, in line with attendance figures, hockey accounts for 47 percent of activity there, that would mean a yearly hit of $117 million to the metro area. (In reality, the effect might be somewhat smaller; there is reason to believe hockey fans might not spend as much as other Xcel audiences, more of whom tend to come from outside the metro area).

Many economists would suggest this number is too high, saying the impact study overstates the Center's benefits to begin with. But even they would agree these figures don't capture the psychological benefit of NHL hockey in Minnesota. A lockout could well tarnish public enthusiasm and goodwill. And that, says Let's Play Hockey's Doug Johnson, could in turn have economic consequences down the road.

"You hope that the problem does get fixed and the players are happy, the fans are happy," Johnson says. "Because at the end of the day, that's what you want -- for the fans to be happy -- because you're in the entertainment business."

For now, most fans are happy, more focused on following the puck than following the buck. But the fact that NHL hockey is, after all, a business -- a somewhat troubled business, in fact -- could become starkly apparent next season.

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