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.