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“This isn’t philantrophy”

By now, most with any interest in the drama surrounding Daniel Alfredsson's departure from Ottawa will be aware of most of the story. Paul has linked to James Gordon's great piece in Senators Extra where he interviewed Sens owner Eugene Melnyk (insert CSI joke here...and now that that's out of the way). Gordon attempted to get some answers, and ended up with a story that was a bit different from the one that the team put out in the immediate aftermath. It was also chronicled in a fullsome and thoughtful way in the pages of the Malik Report, from the perspective of one Wings fan who happens to have a Senators' jersey with Alfredsson's name on it hanging in his closet. I thought I'd offer one Senator's fan's perspective on the evolving drama, and the evolving explainations that have come from the Sens management and ownership.

First I'll get this out of the way: Melnyk's implication that Sens fans just don't understand the business of hockey and subsequent attempt to explain that business are more than a little patronizing. There has been a lot of very thoughtful writing in the mainstream media, Blogs, and even fan forums that demonstrates the opposite - many Sens fans do understand the business of Hockey, and are in fact acutely aware of not only the hockey business, but also the many business and personal interests that contribute to Mr. Melnyk's financial picture. But at a basic level, Melnyk is really just saying that as a businessman he wants to see black ink in the ledger of all of his businesses, and the Senators are one of those businesses. Fair enough.

Melnyk understandably doesn't want to take 'a few extra million dollars' right out of his pocket to make the team a contender. That's fine, and I don't think Senators fans have any particular right to ask that of him (whatever we may think of him personally).

The thing that makes some upset is that Melnyk effectively asked Daniel Alfredsson to take money out of his pocket to make the team a contender. That's not a business reality, that's a piece of potentially costly gamesmanship which didn't work precisely because the other side understood the underlying business reality. The fact that he effectively went to the beloved captain of the team and said 'I can make this team a contender, but the money has to come out of <i>your</i> end' is difficult to swallow. To paraphrase Mr. Melnyk himself, you have to understand that this isn't philantrophy.

Of course we all know how the story ended. Alfie's camp didn't just insist he be paid what they thought he was worth. They broke off talks and Alfie left town.

Melnyk has to consider the corollary of his own arguement. Yes, if the team spends more on player salaries he's the only one who loses money. However, if the better the team is the more revenue it stands to generate (and the more valuable it becomes). Melnyk alone reaps this benefit.  He's effectively saying he asked Alfie to take the loss so that he could make the gain. Taken at its worst, it could even be like saying 'I could afford to make this team better, if only I didn't have to pay you.' If that's how Alfie's camp chose to take it, small wonder they walked away and relieved him of the burden.

Maybe Alfie's side over-reacted. Maybe they should have understood that this is what goes on in a negotiation. Maybe they arrogantly thought there shouldn't be a negotiation at all, and that they just be able to dictate demands to the team - but even if that's true 'people have to understand this is a business' isn't enough to explain what happened or absolve Mr. Melnyk of his responsibility for what, in fans eyes, may be the biggest debacle in the history of the young franchise.

Filed in: NHL Teams, Detroit Red Wings, Ottawa Senators, | KK Members Blog | Permalink
  Tags: daniel+alfredsson

Comments

Da lil Guy's avatar

Apologies for the grammar and spelling errors. I tried to add a tag before doing my final edits and didn’t know that would submit the post. Should be legible, in any event.

Posted by Da lil Guy from Guelph, Ontario on 08/12/13 at 10:44 AM ET

Savage Henry's avatar

Yes, this.  Alfredsson could have made millions more had left via free agency earlier in his career.  He’s already passed on tons of money so the Sens could spend it elsewhere.  He doesn’t owe anybody an apology for wanting to be paid fair market value once before the end of his career.

Posted by Savage Henry on 08/12/13 at 10:46 AM ET

bezukov's avatar

Great post, and I couldn’t agree more. 

On a personal note, I’ve been agitated with the cultural trend over the last several years that seems to assert that business savvy is a synonym for intelligence.  The partner to this thinking is that laborers should accept the fate handed to them by management under the idea that management just knows better, and that workers aren’t owed a living, and that workers have to take the loss in all situations.  It’s pure paternalism.  It’s refreshing to see Alfredsson demur when faced with a “take it or leave it” scenario that many workers face on a smaller scale. 

Don’t get me wrong, I’d feel a little snubbed if my team’s version of Stevie Y took a walk, although I hope I would be able to understand.  But from where I stand, it’s nice to see someone flip their boss the bird and move on to greener pastures.  If only we all had that luxury.

Posted by bezukov from the kids are alright. on 08/12/13 at 11:25 AM ET

Mandingo's avatar

Good post.

Posted by Mandingo from The Garage on 08/12/13 at 12:40 PM ET

awould's avatar

Sounds like Melnyk is trying to play the victim as a put-upon billionaire who was getting squeezed a million dollars at a time. Tough sell.

Posted by awould on 08/12/13 at 12:43 PM ET

Avatar

Melnyk’s implication that Sens fans just don’t understand the business of hockey and subsequent attempt to explain that business are more than a little patronizing.

It’s also true.  I mean, I suppose people can feel patronized if they must, but his point is largely valid.

Yeah, some minority of people ‘get it’, but it’s certainly a minority and really a pretty tiny one. All you really need to do is go back and look at some of the spectacularly uninformed things being said both here and elsewhere about the lockout.

The thing that makes some upset is that Melnyk effectively asked Daniel Alfredsson to take money out of his pocket to make the team a contender.

Well, yeah.  Ownership also asked Wings players on numerous occasions to restructure their salaries in order to accommodate other roster moves pre-cap.  I mean, does the phrase ‘hometown discount’ mean anything?  This isn’t even remotely approaching a new phenomenon.

However, if the better the team is the more revenue it stands to generate (and the more valuable it becomes). Melnyk alone reaps this benefit.

Right, but in order for it to be a relevant corollary it has to actually be, you know, true.  There has to be some kind of straight line comparison between payroll, performance, and revenue.  There’s a general one, sure, but it’s certainly not direct and it’s double certainly not foreseeable.

The reason Melnyk says fans don’t get the financials is in large part because fans who think they do get the financials say things like you just said.

Dude, it’s entirely possible that Melnyk (or any GM) could spend 5+ mil more this year on his team and not see any real improvements.  Hell, it’s not just possible but in a whole bunch of situations it’s darned near likely.

In 2012 the BJ’s spent 61+ mil and finished dead last in the West.  In 2013 they spent 7+ mil less and finished 6 spots higher.

Philly spent 6 mil more and went from 5th to 10th in the East.

The Islanders went from 49 to 53 mil and went from DFL in the East to 8th.

Minnesota went from 55 to 70+ mil and went from 12th to 8th.

Montreal went from 62 to 66 mil and went from DFL to 2nd overall.

Yeah, maybe an extra 2-3 mil would have nudged the needle a tiny bit, but it’s just as likely it wouldn’t, especially when said needle is being nudged by a 40+ player.  I think the Wings did okay in signing Alfredsson, but let’s be honest here for a minute… there’s a really good chance the guy flops.  His ceiling, his freaking ceiling, is around 25 goals and 60 points.  The last three years his pace has been 24 goals and 30 assists per 82 games (playing 19+ a night, by the way), and he already plays in the East so he won’t see a bump like a lot of other Wings will.  He’ll certainly see an IT dip of 2+ minutes a night.

Just because a guy is worth a billion dollars doesn’t mean he should be willing to throw 3+ mil of that out the window on a hunch… just like guys who make mid 5 figures don’t just waste a hundred bucks just because.

Seriously, even if Melnyk realizes a 7% profit on his net worth every year (which is pretty strong nowadays), you’re talking about 6.58 mil a year.  Of which pretty much 29% immediately gets taxed. 4.61 mil left.

Now you’re saying a guy should throw 60-70% of his estimated yearly profit into the kitty on the off chance Alfredsson would do… what?

Come on.  We all saw the Sens last year in the playoffs.  They aren’t a Daniel Alfredsson away from bleep.

Not for nothing, but if I had to levy a criticism on Melnyk as an owner it’d be that he spends too much and doesn’t commit to a full rebuild.  Detroit gets away with it because they have a top 2 or 3 GM in Holland.  I don’t see any other teams in the NHL spending midpoint+ and being competitive year after year after year who didn’t first suck for 3-5+ years and roll up some great prospects first.

Posted by HockeyinHD on 08/12/13 at 08:35 PM ET

awould's avatar

The thing that makes some upset is that Melnyk effectively asked Daniel Alfredsson to take money out of his pocket to make the team a contender.

Well, yeah.  Ownership also asked Wings players on numerous occasions to restructure their salaries in order to accommodate other roster moves pre-cap.  I mean, does the phrase ‘hometown discount’ mean anything?  This isn’t even remotely approaching a new phenomenon.

Hometown discounts aren’t usually asked for just to save the owner a few bucks. Usually it’s related to the salary cap, as in, take a discount so we can get in another quality guy. Figured a smart guy like yourself would make that connection.

Asking a player to take a discount because the owner doesn’t like the math is BS. I mean, it’s his prerogative but let’s not act like the player shouldn’t be insulted. If the owner thinks they’d have a shot at a Cup, it’s him who’d benefit most financially. So spend the money. Unless you don’t think it’ll pay off. So then don’t. But then don’t point fingers when Alfredsson decides he has a better shot at a Cup with another team, given that, you know, the owner just declared his lack of seriousness about the issue.

Posted by awould on 08/12/13 at 09:56 PM ET

J.J. from Kansas's avatar

If anybody is interested in reading somebody with a wide knowledge on Eugene Melnyk and his business dealings who doesn’t make up numbers, I recommend reading Travis Yost and his Gene Melnyk Money series over on Hockeybuzz.

http://www.hockeybuzz.com/blogger_archive.php?blogger_id=134

Thanks all.  Good post, Da lil Guy

Posted by J.J. from Kansas on 08/12/13 at 10:33 PM ET

Da lil Guy's avatar

HockeyinHD, your criticisms are well taken - as I say, it’s just one fans perspective.

I do acknowledge that there’s such a thing as a hometown discount. However, in my experience of negotiations such things need to be raised artfully and usually have to come from the side that is prepared to take the hit. The point made by awould is also a valid one - the hometown discount is an easier sell when everyone is making sacrifices.

Frankly, I think the team probably thought it was a safe play to make the offer and put it out there that they’d like Alfie to take less to give them more freedom. They probably thought the worse case scenario was that that Alfie would say no and they’d end up paying him what he wanted. I don’t think they considered the possibility that he would walk away entirely to be a serious one (and I don’t think I would have said it was a serious possibility either). Even if the offer was made in good faith, though, you have to consider how Alfie would react (and the fact that JP Barry, who not only has a history with the Sens management but also has a financial interest in making sure his client is paid the maximum he can get, is the one taking the offer back to the player). Most fans would probably say Alfie’s given enough to the team and to even consider asking him to give more at the twighlight of his career was an insult that shouldn’t have even been considered in the first place.

As for whether there’s a direct correlation between spending and improving the team (and increasing its value) I certainly didn’t mean to say there was. But frankly, if you want a safe investment you should be looking at GICs and not hockey clubs - and even if you want a risky investment with a high return, there’s probably better things you could invest in. With a few exceptions, a hockey club is a bit of a novelty investment. You don’t buy it because you want to maximize your investment, you buy it because you want to own a hockey club.

But the fact is when you spend money on your hockey club, and player salaries in particular, the goal is ultimately a better on ice product in the hopes of higher ticket sales, more playoff games, and increased revenue. I agree it doesn’t always turn out that way - but all I’m really trying to say is that any financial gain the team does experience will be Melnyk’s and Melnyk’s alone whereas any money Alfie leaves on the table is almost certainly money he’ll never see again.

All in all, I’m still convinced that Melnyk’s suggestion that fans would ‘get it’ if they only understood business is wrong on its face, and it’s patronizing because it not only implies fans are idiots (see bezukov’s point), but also devalues their legitimate anger at how this all went down - emotions (fans, players, owners) are part of hockey and they should be considered even when you’re making a business decision.

Where Alfie’s value is concerned, I’m genuinely shocked that there could be any hockey club who placed a higher value on Daniel Alfredsson than the Ottawa Senators did. He’s a lot more than 60 points in Ottawa, and though he does possess some intangibles not all of them translate easily to another club. That said, I think the Detroit Red Wings got a very good player who will never give less than everything he’s got.

Thanks to all those who commented (in particular those who said nice things, natch).

Posted by Da lil Guy from Guelph, Ontario on 08/13/13 at 08:56 AM ET

Bradley97's avatar

Posted by J.J. from Kansas on 08/12/13 at 11:33 PM ET

Thanks, J.J. I had to scroll back to July to find the first Melnyk article, and I intend to follow his series. Very interesting.

Most interesting is the following article:

Spending Money: Still [Mostly] a Good thing

Posted by Bradley97 on 08/13/13 at 09:14 AM ET

bezukov's avatar

Posted by Da lil Guy from Ottawa on 08/13/13 at 09:56 AM ET

By the by… this was a great post.  I could take or leave a lot of the member’s blog submissions, but I really enjoyed your writing.  It would be great to see more!

Posted by bezukov from the kids are alright. on 08/13/13 at 09:15 AM ET

Da lil Guy's avatar

Thanks for the kind words, bezukov - not really sure I have time to make this any kind of regular thing, but at least the members blog gives me an outlet when I need it!

Posted by Da lil Guy from Guelph, Ontario on 08/13/13 at 09:43 AM ET

J.J. from Kansas's avatar

Posted by Bradley97 on 08/13/13 at 10:14 AM ET

Thanks, I didn’t know nearly as much about the Senators before I started following him.  I want to bring out some things in the article you posted because I want to make sure they’re actually seen in this discussion.

From the post that Bradley97 linked: ‘Spending Money: Still [Mostly a Good thing]

The one thing that irritates me the most is the notion that spending doesn’t necessarily correlate with winning: it’s a dumb, completely unsubstantiated argument that doesn’t pass any recent smell test. And it’s easy to debunk.

I went ahead and pulled all team salaries from 0910 - 1213, then broke down the 120 results into six tiers of spending. Tier 1 is your Paul Holmgren style of rolling joints with $100 bills. Tier 6 is your camp of teams that basically spend to the cap floor, and nothing else.

How did spending correlate with success?

Drop a tier, watch your chances of reaching the post-season diminish by a bit. Spend at the floor, and you’re basically already looking towards next season. The correlation coefficient between the two was north of +0.30, which suggests a moderately-strong relationship.

For reference, Melnyk’s internally imposed team salary put the Senators in Group E.

The Senators fall in the group that’s 50/50 to make the playoffs, but work as something as an exception because they’re not only probably going to be a playoff team, but by quite a few metrics are expected to be in the mid-tier contender range.

Ottawa has a hockey-mad fanbase in an area which can afford higher ticket prices and they somehow have an owner who is running them like the Nashville Predators. As all of Yost’s digging suggests, this is because Melnyk is using the Senators as an income/fund-backing source for other businesses which are not doing as well.

What’s worse (as Da lil Guy points out) is that he’s selling it from an insultingly transparent platform about what the Senators can and can’t afford as though it’s the very nature of the Senators’ business itself which wouldn’t support these decisions.

Posted by J.J. from Kansas on 08/13/13 at 10:07 AM ET

awould's avatar

Posted by J.J. from Kansas on 08/13/13 at 11:07 AM ET

Thanks JJ. I was thinking of pulling data on salary/success as well, but probably would’ve just looked at the salaries of the Cup finalists, or maybe Conference finalists since the lockout. You took it a step further and proved what is basically obvious to most: spending money in sports = success. Like with anything, it isn’t ironclad and exceptions exist, but let’s not cherry-pick the exception (Columbus) and act like it proves much of anything.

Melnyk seems like a jerk and he’s desperately trying to keep in good favor w/ the fanbase. I think he’s about to fail spectacularly in that effort.

Posted by awould on 08/13/13 at 11:07 AM ET

Da lil Guy's avatar

As a follow up, I actually did write another blog post.

It failed to post because it apparently didn’t pass the security check (a little odd, since there doesn’t appear to be one on the posting page) and I didn’t have the good sense to copy it before trying to submit and it was lost to the ether.

Suffice it to say, it was an opus.

Posted by Da lil Guy from Guelph, Ontario on 08/13/13 at 12:19 PM ET

Paul's avatar

DLG, not sure what happened to your post, there is no security check involved.  What happens is I get a notice of a new post, review it then allow it to go live.

I never received that notice so something went wrong.  Sorry.

Posted by Paul from Motown Area on 08/13/13 at 12:25 PM ET

awould's avatar

Posted by Da lil Guy from Ottawa on 08/13/13 at 01:19 PM ET
Posted by Paul from Motown Area on 08/13/13 at 01:25 PM ET

It was probably zapped by the NSA over concerns about international relations between Canada and USA.  smile

Posted by awould on 08/13/13 at 12:46 PM ET

Da lil Guy's avatar

Just remember when I post a re-written version that the original was at least twice as good!

If you don’t believe me, take it up with the NSA.

Posted by Da lil Guy from Guelph, Ontario on 08/13/13 at 01:42 PM ET

w2j2's avatar

Excellent post, Da lil Guy!
  grin

Posted by w2j2 on 08/13/13 at 06:17 PM ET

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