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Penguins

Analysis: Kovalev trade is only good business

| Wednesday, Jan. 22, 2003

The Alexei Kovalev situation essentially boils down to a single question: Do you want an NHL team in Pittsburgh?

If so, then you need to be patient with the Penguins while they navigate through stormy waters for the next year-and-a-half. After that, the NHL's collective bargaining agreement expires. That's when the Penguins might finally find some clear skies.

Either that, or a certain death.

In the meantime, their only move is to throw Kovalev overboard. Nothing against him, mind you. He's a terrific player. He's still young. He's a solid citizen and a warrior on the ice.

And the Penguins have to trade him. They must, because they can't afford him after this season.

The NHL has gone mad. Some of the owners in this league make the men who run Major League Baseball look sane. This is all you need to know: The NHL's average salary last season ($1.64 million) was higher than the NFL's ($1.1 million).

Yes, the NFL, the league that generated enough TV revenue to pay every team $77.34 million this season, has a lower average salary than a league that pays out $5.7 million in TV money — plus free gumballs — to each of its teams. NFL clubs cover their player payrolls before they sell a single ticket. NHL teams rely on ticket sales as their major source of revenue — and ticket prices have skyrocketed. Attendance is down. Two teams filed for bankruptcy this month.

But everything's fine, and the Penguins should give Alexei Kovalev $45 million over five years?

Kovalev, who makes $4.6 million this season, likely will be awarded around $8 million if he goes to arbitration next summer. He'll be an unrestricted free agent the summer after that. The only way the Penguins can pay him — and still pay others and have a competitive team — is to break out a credit card and basically say, “We'll give you X million dollars based on revenues we think a new arena will generate in, say, 2008.”

As team president Tom Rooney likes to say, this franchise uses debit cards, not credit cards, these days.

Surely, you know that the Penguins have no cash to burn. They have just enough to pay the bills. No splurging. Lemieux hasn't been able to keep all his promises since he took control, but he has kept the most important one: “We're going to run this franchise like a business.”

It's actually quite remarkable what the Penguins have accomplished on the business side since they filed for Chapter 11 Bankruptcy four years ago. In a league where more than half the teams lost money last season, the Penguins, of all people, broke even. They made money the year before that.

Sure, they are struggling at the gate. So are most teams.

And most teams, like the Penguins, have a short shelf-life under the terms of the current collective bargaining agreement. For those who need the reminder, here's a remedial lesson in Penguins Economics 101:

  • Signing several players to huge contracts, based on projected revenues that never materialized, is what sent the team into bankruptcy.

  • Attendance and TV ratings are down — with Kovalev on the ice.

  • The season-ticket base is down. With Kovalev on the ice.

  • The Penguins recently traded the fifth most-productive point producer in NHL history — before his 30th birthday — because he soon would be unaffordable.

  • Ron Francis, Bob Boughner, Ron Tugnutt, Robert Lang, Jagr and Darius Kasparaitis were jettisoned for financial reasons.

    Without a salary cap, revenue sharing and a new arena, the Penguins are as good as gone. The good news is that all of those things still are quite possible. NHL commissioner Gary Bettman will fight for a salary cap, perhaps as low as $35 million per team. The players will vehemently oppose it.

    The best news for Penguins fans is that their team could be as well situated as any coming out of a possible work stoppage. They wouldn't be saddled with any huge contracts. They'd have several promising prospects, including defenseman Ryan Whitney, the fifth pick in last year's draft. They'd have talent on hand and perhaps room to maneuver under a cap.

    The key to the whole thing is to get some good, young NHL players in return for Kovalev. It is general manager Craig Patrick's responsibility to take care of that side of the equation. Hopefully, he can create some competition in the bidding for Kovalev. That didn't happen with Jaromir Jagr.

    Nobody wants to see a great player leave town. But it's better than waving goodbye to the whole darn team.

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