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Caps gaining value, but losing money

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Caps gaining value, but losing money

Not that this will make you feel any better, but the Capitals were one of the NHL’s 13 teams that lost money last season, at least according to Forbes’ annual report on The Business of Hockey.

But before you shed a tear for the Caps as the NHL lockout drags into its third month, it is worth noting that at $250 million, they are the 11th most valuable franchise in the NHL, up 11 percent from a year ago.

Moreover, when Ted Leonsis purchased the Capitals in 1999 he paid $85 million. That’s a profit margin of $165 million.

But there is more to this story and it underscores the reason the NHL is in its second work stoppage in eight years.

While the Caps’ value has risen every year since Leonsis purchased the team, the costs of operating an NHL team has escalated at an alarming rate.

Thanks in part to $54 million in gate receipts, the Caps brought in an estimated $106 million in annual revenue last season, but still operated $1 million in the red, according to the report.

In fact, the Caps have failed to make a profit in each of the past five seasons, losing a total of $29.8 million.

The last time the Caps recorded a profit was immediately after the last lockout in 2005. They reportedly made $4.6 million in 2006 and $1 million in 2007. In the two years prior to the 2005 lockout the Caps reportedly lost a total of $35.7 million.

The Caps are not alone in their struggle to make ends meet. The list of NHL teams that lost money last year includes:

  • Phoenix Coyotes [$20.6 million]
  • Columbus Blue Jackets [$18.7M]
  • New York Islanders [$16M]
  • Tampa Bay Lightning [$13.1M]
  • Florida Panthers [$12M]
  • Anaheim Ducks [$10.8M]
  • Buffalo Sabres [$10.4M]
  • St. Louis Blues [$10M]
  • Carolina Hurricanes [$9.4M]
  • Minnesota Wild [$3.9 M]
  • Nashville Predators [3.4M]
  • San Jose Sharks [$900,000]

The biggest reason? Player salaries.

The Caps’ payroll has gone from $31 million in 2006 to $71 million last season. By comparison, their annual revenue has gone from $63 million in 2006 to $106 million last season.

Under the NHL’s most recent proposal the league’s salary cap would fall to just under $60 million, but the owners and players cannot decide on how the players would be paid the difference owed on their current contracts.

If and when that is decided, the NHL will be back in business. And if the owners get their way, back in the black.

 

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Capitals Draft Tracker

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USA TODAY Sports

Capitals Draft Tracker

The 2018 NHL Draft starts on Friday with the first round and runs through Saturday. Here's a running tracker of the Caps' picks.

1st round, 31st overall: D Alexander Alexeyev, WHL, 6'4", 196 pounds

The Caps' first first-round pick sine 2016, Alexeyev is a smart two-way defenseman with good size.

Read more on him here.

2nd round, 46th overall (from Florida, via New Jersey): D Martin Fehervary, Allsvenskan (Sweden), 6'2", 194 pounds

A physical style defenseman who is very strong in his own end, but does not have much offensive upside. Sort of a throwback style of play which makes him a surprise pick this high.

2nd round, 47th overall (From Colorado): F Kody Clark, OHL, 6'1", 179 pounds

Kody Clark boasts an NHL pedigree as the son of Wendel Clark, a first-round pick of the Toronto Maple Leafs who recorded 330 goals and 564 career points in 763 NHL games.

3rd round, 93rd overall: F Riley Sutter, WHL, 6'3", 203 pounds

Riley Sutter also boasts a strong NHL pedigree as the son of Run Sutter and nephew of Darryl Sutter.

Riley is a power forward who played alongside Caps prospect Garrett Pilon on the Everett Silvertips in the WHL and recorded 53 points in 68 games last season.

4th round, 124th overall: G Mitchell Gibson, NAHL, 6'1", 187 pounds

A Harvard commit, Gibson posted a 1.59 GAA and .935 save percentage in the NAHL last season.

6th round, 161st overall (from Vancouver): D Alex Kannok-Leipert, WHL, 5'11", 194 pouds

The Caps certainly saw something they liked in Kannok-Leipert as they traded up from 186 to get him. That pick, along with a sixth-round pick in 2019, went to Vancouver.

7th round, 217th overall: 

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GM Brian MacLellan: Capitals are close to re-signing John Carlson

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USA TODAY Sports

GM Brian MacLellan: Capitals are close to re-signing John Carlson

DALLAS—The Caps are “really close” to signing star defenseman John Carlson to a long-term extension, GM Brian MacLellan said Friday night.

“We’re getting closer,” MacLellan said following the first round of the NHL Draft. “Hopefully we can get it done here over the next few days. We’re really close.”

Earlier in the day, the Caps cleared significant space under the salary cap ceiling by trading Philipp Grubauer and Brooks Orpik to Colorado for a second round draft pick (47th overall). 

That space will now be used to lock up Carlson, who could become the best defenseman on the open market if he were to reach it.

MacLellan met with Carlson’s agent, Rick Curran, here on Thursday night.

MacLellan did not divulge any figures, but it’s expected that Carlson’s new contract could come in at eight years and $8 million per—or perhaps a bit more. 

He earned $4 million last season.

Carlson had a career year in 2017-18 and was critical during the Caps' run to the Stanley Cup. He led all defensemen in the regular season with 68 points (15 goals, 53 assists). The 28-year-old also skated a career-high 24:47 per game.

MacLellan has long said that re-signing Carlson was the Caps’ top priority this offseason. And now it looks like that could happen within days, assuming the talks do not hit any snags.

“We’re going to do our best to sign John,” MacLellan said. “We’ve said it all along. We waited until the end of the year. We’ve had discussions. We’re close and hopefully we can close the deal here over the next 24 hours.”

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