Predators or Prey?

It's March 29, 2005, and Craig Leipold is angry. The famously approachable owner of Nashville's professional ice hockey franchise, the Predators, is on the radio, and he's defending his organization's financial viability against a pair of articles published in Toronto's Globe and Mail newspaper. Those articles—one titled "Several Clubs on Verge of Penury," the other "Predators, Panthers Could Feel the Pinch"—were published in a city considered to be the Mecca of hockey. But it's their potential impact 800 miles farther south that has Leipold doing damage control on a local sports talk show, 104.5 FM's afternoon "Sports Zone."

The Globe and Mail reporter's contentions are many: lowest revenue among the National Hockey League's 30 teams; forced to refinance $40 million of debt when Leipold was unable to satisfy a Bank of America request for additional security for its portion; using the deposits of suite holders, club seat holders and season-ticket holders as operating capital, potentially leaving those customers as unsecured creditors should the team go bankrupt. The list goes on. Leipold minimizes some, corrects others and flatly denies the rest. From the tone of his protestations, it's apparent that he's been personally insulted—as if someone has uttered a cross word about his wife in his presence. Factual or not, the slings and arrows clearly struck a tender nerve.

One would think he'd be used to it by now. For years, the Nashville Predators have been the subject of occasional news items that point to evidence of economic struggles. Those stories have ranged from the objective (documents in 2003 stating that the team was repeatedly late with required payments to the city) to the incredible (a Winnipeg Free Pressreport from January 2004 that not only said Leipold wanted to sell the Predators, but also that an anonymous NHL chief financial officer claimed the asking price was a measly $40 million, far less than the $80 million ownership paid for the franchise in 1997, or the $111 million Forbes magazine said the team was worth in 2004). Over the past eight months, the pessimism has increased. Even Leipold and his fellow team owners argue that the league's franchises are failing under its current economic system. Escalating player salaries simply consume too much of total revenue, they say.

Remember hockey? The sport with the ice and the sticks and the little rubber puck? No one would blame you if you didn't. That's because the need to restructure the flawed economic system has ignited a battle between the NHL and the Players Association (NHLPA). In an effort to force a deal, the league locked out the players last September, before the start of the hockey season. There is still no deal, and a cancelled 2004-2005 season lies in the dispute's choppy wake. The start of next season is in jeopardy, too.

Some claim small-market teams in nontraditional hockey cities—Nashville chief among them—won't be able to weather such a significant stoppage. Others counter that a new economic structure will put these same teams in stronger financial positions than ever, while also making them more competitive on the ice. Any short-term pain will be worthwhile if the league can secure changes that provide long-term benefits, the argument goes. That argument has been Craig Leipold's mantra for years now, and his rose-colored message has Nashvillians believing.

But should they be? Certainly the theory that the Predators will emerge from these darkest days of NHL history in a better overall position has merit. Ideally that theory will become fact, since few, if any, Middle Tennesseans would like to see the franchise fold or move away. Yet, unlike Canadian news outlets' daily reporting and analysis of the dispute's unfolding events, Nashville's flow of hockey news has slowed to a trickle. Do people really grasp the significance of this critical stage in Predators history? Playing devil's advocate and building a case against the optimistic scenario proposed by the Predators is not difficult. There are at least 10 reasonable points of concern that could ultimately bring an end to professional hockey in Nashville.

1. The National Hockey League has over-expanded.

When the National Hockey League officially welcomed the Nashville Predators in May 1998, the league was in full-fledged expansion mode. As the first new franchise in five years, the Predators opened the door for three other entrants—Atlanta, Minneapolis-St. Paul and Columbus, Ohio—over the next three years. The NHL's master plan: build upon previously established outposts in such nontraditional hockey markets as Anaheim, Dallas, Raleigh and two Florida cities; present itself as a truly nationwide sport in the U.S.; and secure a lucrative national television contract.

"[The NHL] made a strategic decision to try to go from a regional to a national league," says Stanford professor of economics Roger Noll, "and thereby go from 20 to 25 percent of your revenues accounted for by broadcasting to 60 or 70 percent accounted for by broadcasting. That decision, whether it was good or bad, turned out to be unsuccessful [since no significant TV deal materialized]. So they're stuck with a league that is probably twice as big as it ought to be."

Also fueling expansion was the $80 million franchise fee that each new team paid to join the league. That revenue was distributed among existing owners. "There was a significant expansion going on that saw the league expand up to 30 teams, and in my opinion it was an economic incentive," explains Los Angeles-based player agent Allan Walsh. "The whole expansion push was a push from the owners to grab cash. Now, once the owners have grabbed the cash, they're coming back to the players several years later and saying, 'We owners have made a mistake. We expanded into markets that are not working economically, because the franchises are losing money.' "