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San Jose Sharks

The Cost of Doing Business

sharksfanLast year there was a lot of talk about the Sharks low payroll (20th in the league, around $34 million with a cap of around $50M), the argument being could the Sharks have gone deeper into the playoffs if they had spent more on players. We’ll never know what could have been but what I do know is the Yankees are a classic example of payroll not equating championships.

This year the Sharks are currently 3rd in the NHL with an effective cap payroll of $56.9M actually putting them over the cap by more than $200+K (according to hockeybuzz.com as of 10/5/2008).

There are two things in the business of professional sports that drive me crazy: revenue sharing and salary caps. I know that they’re supposed to do - they’re designed to help every team compete, keep player salaries in check and create parity in the league.

Fine - that’s great if it works. The problem is that interpreting the Collective Bargaining Agreement and the salary cap apparently requires more than a Harvard education (Brian Burke of the Ducks said even he, with his JD from Harvard, can’t interpret it correctly). If you don’t understand the cap rules correctly you end up with a team that can’t compete because you’re paying salaries for players that may not be on the team anymore. A player’s impact against a team’s cap can extend for years even after that player has moved on. What makes a team competitive from year to year may not necessarily be your goalie, your head coach or your star center. What determines your team’s success is the guy in the office who interprets the CBA and manages your team’s cap, keeping both current and future needs in mind at all times.

According to Sharks President and CEO Greg Jamison the team actually lost between $2-$3M last year. For planning your budget, teams can generally expect to add around $1M to a team’s revenue for each home playoff game (via insidebayarea.com).

So last year, if the Sharks had an effective payroll of only $34M and they still lost money, by my calculations they would need to win 22 more home playoff games to break even this year. I’m no genius, but I don’t think you can squeeze 22 more home playoff games into the 3rd and final rounds of the Stanley Cup playoffs.

The San Francisco Giants had horrible teams the last few years. In the early 2000’s the 49ers we’re consistently unable to compete. Both teams have admitted that not managing the salary cap properly limited their ability to spend and seriously crippled their payrolls. If you look at the Detroit Red Wings their effective payroll (which includes salary carryovers) is only $700,000 more than their actual payroll, whereas teams like the Kings and the Lightning are actually taking cap hits around $5M in carryover money.

I want to see the Sharks win it all just as much as anybody, but I’m also just as interested in seeing them be competitive season to season. I really don’t know if I can stomach the Sharks becoming a team that can’t compete down the road because we wanted to win it all right now. I hope Doug Wilson’s CBA guy knows what he’s doing.

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