Forbes vs the Leavitt report

Forbes released their annual “review” of the NHL teams. In this report, it says that the combined teams lost a total of $123 million during the 2002-03 season, and $96 million last season. Earlier this year, the league commissioned former SEC chairman Arthur Levitt to review each team’s financial reports as submitted to the league. He reported that the teams lost a combined $273 million for the same 2002-03 season.

The no. 2 at the NHLPA, Ted Saskin, immediately jumped on the Forbes report, saying, “Forbes is a highly respected publication by everyone in business, including NHL owners and their investment bankers who use Forbes’ analysis and valuations when they buy and sell teams. The independence and the integrity of Forbes is unquestionable.” Yeah, okay Ted. And Arthur Leavitt is a freshman commerce student at the local community college.

First, Forbes does these reports based on third-party figures, publicized news reports, and estimates from banking industry experts. But they don’t get actual do*****entation from the league or teams themselves. Jim Lites of the Dallas Stars told TSN, “Forbes has never once asked for one number concerning our business.”

Second, they make certain assumptions that may or may not be accurate or proper. For instance, they state that the Chicago Blackhawks did not include revenues from the luxury suites at the United Center. “While the United Center is a separate corporate entity from the Blackhawks, the building and team are part of one equation for Wirtz.” Well, any first-year accounting student will tell you, if it’s a separate entity from the Hawks, then the Hawks would not report it. I’m sure that Bill Wirtz has many other business ventures. Should all their revenues be reported on the Hawks financial statements? If Bill sells a real estate investment, should that be reported as a gain on investment on the Hawks’ income statement? Only if the Hawks owned the investment.

Forbes also goes on to report that the Islanders reported only half of revenue from their cable television deal. They don’t mention the fact that when Charles Wang and his former partner Sanjay Kumar bought the team in 2000, they also bought the New Jersey Nets, which they intended to move to Long Island initially. Did the cable TV deal include the right to televise Nets games? If so, then the reporting may be accurate. Remember that the Nets and Islanders were at one time involved in a partnership with the New York Yankees and George Steinbrenner as YankeeNets, until George left the group a couple of years ago.

So as much as the Levitt report may be inaccurate, it may be as accurate as this Forbes report. Leavitt got the access to the NHL’s figures that Forbes did not get, or apparently even ask for. Until the owners agree to a 30-team audit, both sides can issue as many “independent” reports as they wish. And the opposing sides can shoot holes in them ’til they run out of bullets. It’s really not going to matter.

Forbes report:

TSN story on Forbes’ report:

11 Responses to Forbes vs the Leavitt report

  1. leshabitants101 says:

    The innaccuracy of either Forbes or Leavitt is in my view not relevant. What I can see though in both reports, is that the league is losing money and it confirms the owners are telling the truth about losing money, now can the players see that and have some hockey soon.


  2. Rysto says:

    Forbes also didn’t count taxes and interest as expenses. Must be nice to live in a world where one doesn’t have to pay taxes.

  3. Aetherial says:

    There is NO DOUBT that the owners are not losing nearly what they say they are losing.

    There is no doubt that a lot of teams ARE losing money.

    There is no doubt (among rational people) that the NHL needs a salary cap or a heavy luxury tax.

    There is no doubt the players’ share of the pie is too big.

    There is no doubt that the players’ have benefitted tremendously from the previous CBA.

    What I find amusing is the NHLPA claiming that Forbes is an absolutely credible source… well, so is Arthur Leavitt?

    The point is, Leavitt disclosed *accounting* loss, which, in the real world, does not equal actual loss.

    Everybody knows that the real solution is a true partnership between the players and owners. Full disclosure of revenues is accompanied by a reasonable sliding cap tieing profit to salaries.

    But… the owners do not want to open their books (because they KNOW that their claimed losses are total BS) and the players refuse to settle for ANY system tieing revenues to salaries.

    … meaning, BOTH sides are greedy; both sides are working towards destroying hockey.

    Which is why I sincerely hope we do not see hockey for 3+ years… I want them ALL to lose, BIG!

  4. 19Yzerman says:


    “Forbes has never once asked for one number concerning our business.”

    What would make Forbes think the owners would be obligated to open their books to him?

    He may actually find something hidden that would validate the owners were lying.

    Until the owners agree to a 30-team audit I will remain suspect of their claims.

    The Levitt report was based on info from the teams Unified Report of operations and not from the owners books of finance. The URO is a voluntary team finance report that is not subject to AUDIT. Try to imagine if your income statements to the IRS were voluntary and wouldn’t be audited.Accuracy wouldn’t exactly be a concern.

    Either way 123mil or 273 mil is a display of financial responsibility that is atrocious.

    HEY Owners answer this:

    You lost how much?

    You had it and then lost it?

    Where did it go?

    OH!! The players took it?

    Was it an armed robbery?

    Was it embezzlement?

    19 teams loosing the amounts the owners are claiming is an indecipherable embarrassment and they need to be schooled by some financial genuineness such as FORBES. Maybe the NHL should set standards for ownership. Perhaps only guys like Bill Gates or Donald Trump should be allowed to own an NHL team.

  5. habsoverserver says:

    Entertainment properties are valued on EBITDA or free cash flow, not after tax income. All this is profit/loss stuff is totally meaningless.

  6. slugger says:

    All I know is that players are getting more of the pie than the owners, exceptions are tor phi ny and maybe det and col. all the other teams can’t succeed unless there is a cost certainty which the players don’t want. I don’t blame the players for being greedy who isn’t how ever they should accept the cap around 40 mill and move on because there is no way that owners can go with the status quo. Luxury tax is not good unless its really heavy. At the end if there is no hockey untill year 2020 so be it I just hope when it is done that players lose alot more than the owners.

  7. rojoke says:

    An accounting loss and an actual loss are not always different. If the loss occurs for depreciation and amortization, which are methods of spreading certain non-cash expenses over a long continuous period of time, then that’s also an actually loss of cash. Under the Canadian Income Tax Act, a business cannot use capital cost allowance to generate or increase a loss, actual or paper. I would also expect this to be the case in the United States as well.

    Which brings to mind another idea. Have either the IRS or Canada Revenue Agency ever conducted an audit of any of the NHL teams? As registered businesses, teams are required to file full financial statements. Both agencies would have the unilateral authority to conduct in-depth audits of the financial records of each and every team within their respective countries. And you can guaran-damn-tee that if the IRS found faulty bookeeping, the PA would be the last thing they would worry about.

  8. sabotage says:

    Forbes is based on nothing. It would be like having an auditor walk in Enron, not look at any hard data, and come to his own conclusion. You can’t make judgements based on what you think, its gotta be about what you know!

  9. TheCoach says:

    The NHL openly invited the PA to participate in the Levitt report, and Goodenow rejected the invitation.

    Therefore, the NHL made an attempt to have a joint audit with the players, so the players may be the ones who don’t want to face the truth.

  10. 19Yzerman says:

    I bet the NHLPA would have gladly joined knowing that the IRS was doing the audit one team at a time based on each teams books of finance instead of LeVitt doing it from those URO’s.

    Even if they let you and I do the audit and we found out together that the players had in fact earned 75% of all NHL revenue.

    The owners paid them that.

    The players didn’t embezzle or steal it.

    The owners should embarrassed about their financial judgement not the players.

    I am wondering why the NHL has not anounced that they have written a new CBA and that the NHLPA can take it or leave it? No the NHL is keeping things in a state of lockout and even if they NHLPA came forward now and offered to play the remainder of the season free. I still don’t see the NHL coming out of it state of lockout.

  11. WhamBamCam says:

    I Think they should do a Cup Winners Cup or some kind of tournament with all of the best teams like in soccer

Leave a Reply