Leavitt interview transcript

[jpsharkfan]

From the Interview:
Levitt: I've asked the leadership of the Players' Association that if they have questions about the report if they'd want to meet with me and talk about it. They wrote back and indicated that they did not think that that would be productive. And that surprised me.

The NHLPA constantly states that they do not believe the numbers from the report and that the NHL is lying and padding the losses. This claim has been the NHLPA's best (and IMO only)PR tool/slogan and yet when they are offered the opportunity to question the report and in effect prove their claim they refuse the offer.
After reading the above quote I lost any respect I had for the NHLPA. The only reason I can fathom for turning down Mr. Levitt's offer is that the NHLPA NEEDS to be able to continue to discredit the report. At this point it is the only leg they have to stand on. By continuing to call the league liars and make their infintile "its not our fault" comments the union makes it clear that they refuse to face the reality that exists in pro hockey.
The players have benifited tremendously these last ten years and more power to them. The time of excessive contracts is over and instead of being grateful for the "golden years" the players are unwilling to share in the responsibility of fixing the sport they profess to play for the love of the game.

 

[X0ssbar]

I think its also important to point out the fact that Forbes also reported on revenues and expenses of the 30 NHL franchises.

Net Operating Income: Forbes -124 mil, Levitt -273

Comparing these two reports its still painfully obvious that the NHL is a failing company and something drastic needs to be done to get this league back up on its feet again. A loss of 124 mil is still very, very significant.

And like a lot of you have pointed out, the NHLPA has given me nothing of substance to defend their case that the Levitt or Forbes reports are false and to me they have run out of ground to stand on.

http://www.andrewsstarspage.com/8-1-04cba.htm

 

[Jack Canuck]

Furthermore, answer this question.

If it's true that the NHL will lose less money by not playing this year, why did they see the need to build a $300 million war chest?

The answer is in your question. The will lose LESS not nothing.

 

[Leaf Army]

The answer is in your question. The will lose LESS not nothing.

Well if they are going to lose LESS, then wouldn't that war chest have been put to better use last year?

 

[ceber]

Well if they are going to lose LESS, then wouldn't that war chest have been put to better use last year?

They built that up over several years, and it's not like each owner has a bucket of cash under his desk. We're talking about lines of credit and other loans. It's simply a means to ensure that the teams won't have to completely vanish while they are in lockout mode. It's not some vast conspiracy about hiding money, and it's not an indication of things not being as the report states. It's just smart business when you know you're going into a labor dispute to be prepared to pay the electricity bill while you're working out a new deal.

 

[Leaf Army]

They built that up over several years, and it's not like each owner has a bucket of cash under his desk. We're talking about lines of credit and other loans. It's simply a means to ensure that the teams won't have to completely vanish while they are in lockout mode. It's not some vast conspiracy about hiding money, and it's not an indication of things not being as the report states.

I didn't suggest they're hiding money or pulling a Scrooge McDuck and swimming in piles of cash in a vault somewhere.

It's just smart business when you know you're going into a labor dispute to be prepared to pay the electricity bill while you're working out a new deal.

Why should they have any problem paying their electricity bill?

They're losing LESS money this year remember?

 

[ceber]

Why should they have any problem paying their electricity bill?

They're losing LESS money this year remember?

It doesn't turn into positive revenue, though. You can't lose money year after year and still pay the bills, even if the amount you lose diminishes. Plus, it's really hard to get any kind of loan when you have $0 revenue. It's ok to lose money as long as you're bringing some in; banks will still talk to you for a while, because they understand how things work.

 

[Leaf Army]

It doesn't turn into positive revenue, though. You can't lose money year after year and still pay the bills, even if the amount you lose diminishes. Plus, it's really hard to get any kind of loan when you have $0 revenue. It's ok to lose money as long as you're bringing some in; banks will still talk to you for a while, because they understand how things work.

Well this statement would seem to go against the grain of the NHL saying they're better off financially by not playing this year.

 

[thinkwild]

I think its also important to point out the fact that Forbes also reported on revenues and expenses of the 30 NHL franchises.

Net Operating Income: Forbes -124 mil, Levitt -273

Comparing these two reports its still painfully obvious that the NHL is a failing company and something drastic needs to be done to get this league back up on its feet again. A loss of 124 mil is still very, very significant.

And like a lot of you have pointed out, the NHLPA has given me nothing of substance to defend their case that the Levitt or Forbes reports are false and to me they have run out of ground to stand on.

Doesnt it strike at the very heart of the credibility the players are raising that Forbes and Levitt came up with such wildly disparate numbers?

$124mil is like $4mil a team. One overpaid 5th defensman and swap a Savage for a Kolanos and a pay cut for the GM should solve it. Of course many teams are actually making money. The losses are probably divided amongst fewer teams. And you need to make the case that these are salary related losses all of them. Because I dont think they all are. Some are paper losses, amortization losses, accounting losses, bad market poor ticket sales losses. Which losses are the salaries need to be lower ones?

The players have acknowledged through deed that there are losses to account for. Its not as simple as pointing to a muber like $124mil and assuming its all because of salaries in general.

 

[Jack Canuck]

Well this statement would seem to go against the grain of the NHL saying they're better off financially by not playing this year.

How do you figure? All he is saying is that if teams played they would lose a bunch of money, and if the don't play they still lose money just not quite as much. Thus, they are better of not playing.

What is so hard to understand?

 

[Jack Canuck]

Well if they are going to lose LESS, then wouldn't that war chest have been put to better use last year?

Sure they could have spent it last year to ease the blow, but I would imagine that they learned something in 94. So, they probably expected this to happen and wanted to be able to ease the pain when it is worse.

Therefore i would say it is better put to use now while they are trying to wait out the players rather than before.

 

[djhn579]

Doesnt it strike at the very heart of the credibility the players are raising that Forbes and Levitt came up with such wildly disparate numbers?

$124mil is like $4mil a team. One overpaid 5th defensman and swap a Savage for a Kolanos and a pay cut for the GM should solve it. Of course many teams are actually making money. The losses are probably divided amongst fewer teams. And you need to make the case that these are salary related losses all of them. Because I dont think they all are. Some are paper losses, amortization losses, accounting losses, bad market poor ticket sales losses. Which losses are the salaries need to be lower ones?

The players have acknowledged through deed that there are losses to account for. Its not as simple as pointing to a muber like $124mil and assuming its all because of salaries in general.

Just out of curiosity, where does Forbes get their numbers? Do they have access to the teams books or do they do some general analysis and make estimations on what they think each teams finances should be?

We know that Levitt saw the books from all the teams and took a very long look at them with "teams of forensic accountants", which took 10 months.

If Forbes can only estimate the state of each teams finances, they are not going to as accurate as Levitt.

 

[SuperUnknown]

Where's this best in the business stuff coming from? This political patronage appointee? Who ever heard of him before?

Levitt is a financial authority in the US. He was the president of the SEC (probably THE MOST WANTED accounting job in America). Also, do some research on what the SEC is, might lighten up why maybe he was a very good pick for an auditor.

Plus, he's been asked his opinion, so he's going to give it freely. Too bad you don't like it.

 

[Tom_Benjamin]

Just out of curiosity, where does Forbes get their numbers? Do they have access to the teams books or do they do some general analysis and make estimations on what they think each teams finances should be?

They make them up out of thin air. Or they are fed to them by the owners. They do not cite any sources.

We know that Levitt saw the books from all the teams and took a very long look at them with "teams of forensic accountants", which took 10 months.

No we don't. Did you read the Levitt report? Levitt did not audit any teams. He audited the process.

Can you explain why the players object to the Levitt report and the Levitt methodology? If not, why can't you explain it?

Tom

 

[djhn579]

They make them up out of thin air. Or they are fed to them by the owners. They do not cite any sources.

No we don't. Did you read the Levitt report? Levitt did not audit any teams. He audited the process.

Can you explain why the players object to the Levitt report and the Levitt methodology? If not, why can't you explain it?

Tom

It's not as if one person was doing it. He had a team of Forensic accountants.

From Levitt FEb 12, 2004: "The nature of this study was so comprehensive, so broad-reaching, so detailed and followed so closely on audits done over a period of years and additional audits required, that I know of no way of challenging these numbers -- and remember we are not talking about, if I say a margin of less than 1%, I am talking about 30 different clubs and if you took this in its totality, it would be down to a fraction of 1%. Certainly nothing material can be questioned in this; in my judgment. Nothing material. .....I think this is close to being unchallengeable as anything I have ever been associated with."

"Q. Mr. Levitt, does this surprise you at all that the numbers that seem to have turned out are exactly the numbers the League has been saying all along going into this; would you have expected this to be the case?

ARTHUR LEVITT: I guess I might have been surprised at the fact that we found a lower loss than the League had reported; that the League was quite conservative in their findings; that even with the somewhat lower loss, the results were as close to catastrophic as I have seen of a business of this size go. These are not giant enterprises nor are they terribly complicated. Businesses of this size cannot sustain losses of this magnitude and be viable."

"Q. The $273 million figure being bandied about, is that based on generally accepted accounted principles? I just need to know what exactly that represents?

LYNN TURNER:The URO is based upon trying to get all the collective revenues and all the collective expenses of the hockey operations regardless of where they are in the team or in the affiliated arena. So it is not a gap-based number.

For example, it doesn't include the debt costs that an owner will have to pay for in cash in terms of interest; doesn't include the cost of buildings and facilities, the depreciation, so this $273 million number in all likelihood, if it was on a pure-gap basis like a public company would have to report to its investors, would be significantly higher. "

The number including those other debts was determined to be $374 million.

The numbers are truthful as determined by the best in the business. A guy who is not going to just go along with what the NHL said but looked into every scrap of evidence and every piece of revenue.

And low and behold it has been nearly 8 months and the numbers STILL have not been challenged. That has got to tell you something.

Additional audits required... I could be wrong, but that sounds like he did some audits, or directed his team of forensic accountants to do some audits, or directed the teams to have some audits done.

Regardless, I think it is a fair question to ask where Forbes is getting their numbers...

 

[Tom_Benjamin]

Where would all us chumps be without you!

Still chumps. To be fair, I believed the NHL in the 1970's. It took me at least 20 years before I decided I wasn't going to be manipulated by them. Fool me once...

You did not answer the question. Why does the NHLPA object to the Levitt report? Show us that you understand their position or admit that you don't have a clue.

Tom

 

[djhn579]

Still chumps. To be fair, I believed the NHL in the 1970's. It took me at least 20 years before I decided I wasn't going to be manipulated by them. Fool me once...

You did not answer the question. Why does the NHLPA object to the Levitt report? Show us that you understand their position or admit that you don't have a clue.

Tom

Are you looking for

"the players just want to play hockey and could care less what the teams make..."

or

"The owners are all theives and crooks and evil. They can never be trusted..."

or

"The owners paid Levitt so he is just giving out what the owners paid him to give out"

or

"The owners didn't show Levitt the other books..."

or

"The owners didn't include income from the Ice Capades..."

Oh, hell. Your right. I'm just completely ignorant...


I almost forgot, "The owners didn't consult with the NHLPA before having the audit done..."

 

[mr gib]

Are you looking for

"the players just want to play hockey and could care less what the teams make..."

or

"The owners are all theives and crooks and evil. They can never be trusted..."

or

"The owners paid Levitt so he is just giving out what the owners paid him to give out"

or

"The owners didn't show Levitt the other books..."

or

"The owners didn't include income from the Ice Capades..."

Oh, hell. Your right. I'm just completely ignorant...


I almost forgot, "The owners didn't consult with the NHLPA before having the audit done..."

all the above - they didn't have to consult the nhlpa though -

 

[Seachd]

You did not answer the question. Why does the NHLPA object to the Levitt report? Show us that you understand their position or admit that you don't have a clue.

The NHLPA's position is simple: "We don't belive the Levitt Report." Goodenow's said as much himself. The NHL would have an easier time negociating with a telephone pole.

 

[mr gib]

The NHLPA's position is simple: "We don't belive the Levitt Report." Goodenow's said as much himself. The NHL would have an easier time negociating with a telephone pole.

the nhl won't negotiate! - duh - cap or nothing

 

[Tom_Benjamin]

Oh, hell. Your right. I'm just completely ignorant...

None of the above. Doesn't that bother you? It would bother me.

The players read the URO and reviewed the individual reports that make up the URO so they do not entirely reject the numbers. They've made an offer that hands at least $100 million (and probably $150 million) back to the owners so they also recognize that the owners foolishly believed revenues would skyrocket forever and committed money they should not have committed. If they trust the numbers that far, why won't they buy into a system based on those numbers?

Pretend they are reasonable people and see if you can figure it out.

Tom

 

[SuperUnknown]

None of the above. Doesn't that bother you? It would bother me.

The players read the URO and reviewed the individual reports that make up the URO so they do not entirely reject the numbers. They've made an offer that hands at least $100 million (and probably $150 million) back to the owners so they also recognize that the owners foolishly believed revenues would skyrocket forever and committed money they should not have committed. If they trust the numbers that far, why won't they buy into a system based on those numbers?

Pretend they are reasonable people and see if you can figure it out.

Tom

The problem is that the players are only offering a short term solution. I think both parties should look for a long term solution. Also, it has been shown again in again in history that when two parties have the same financial interest, they make a better job at increasing that financial interest. Sounds to me like a partnership of some kind where the players have just as much incentive as the owners in increasing the revenues would profit both in the future. (and to some point, that's what the CBA in 199x achieved, however at this point it has reached a bottleneck and needs to be reviewed to further develop the revenue streams).

 

[Seachd]

the nhl won't negotiate! - duh - cap or nothing

We're not even sure of that. Maybe the league would be willing to negociate if the NHLPA would offer up anything that even a little resembles a decent offer. I doubt that will happen.

This whole "NHLPA wants to negociate, League doesn't" mentality floors me.

 

[djhn579]

None of the above. Doesn't that bother you? It would bother me.

The players read the URO and reviewed the individual reports that make up the URO so they do not entirely reject the numbers. They've made an offer that hands at least $100 million (and probably $150 million) back to the owners so they also recognize that the owners foolishly believed revenues would skyrocket forever and committed money they should not have committed. If they trust the numbers that far, why won't they buy into a system based on those numbers?

Pretend they are reasonable people and see if you can figure it out.

Tom

Probably because they don't think the NHLPA's offer will fix the problems. In the last lockout, they agreed to some things that they thought may have worked, but as we have seen, those changes didn't. I think the owners learned from that and will stick together for something they feel will work much better than the last CBA.

And, as you mentioned, it's all about money... Being reasonable doesn't always work when your trying to make money, especially when you are working from a position of percieved weakness...

 

[mr gib]

We're not even sure of that. Maybe the league would be willing to negociate if the NHLPA would offer up anything that even a little resembles a decent offer. I doubt that will happen.

This whole "NHLPA wants to negociate, League doesn't" mentality floors me.

bettman on cbc - we want to give them - the nhlpa -" time to reflect " -