Sunday, January 24, 2010

Sale of Texas Rangers Puts Stars in Kovalchuk Sweepstakes

Over the weekend, an investment group including Texas Rangers great Nolan Ryan came to an agreement to purchase the Rangers baseball club from Texas businessman Tom Hicks. The sale was nearly ten months in the making after the Hicks Sports Group defaulted on a $525 million loan in late March 2009.

Hicks made billions in the 90's and early 2000's through leveraged buyouts, but was hit hard when the economy turned south last year, forcing him to prioritize his holdings which included the Rangers, Dallas Stars, Mesquite Championship Rodeo, and fifty percent of Liverpool FC, the English football club.

Mike Heika at the Dallas Morning News had an insightful theory on why Hicks chose to unload the Texas Rangers, as opposed to other assets like the Dallas Stars:

Tom Hicks got frustrated trying to chase the Yankees, Red Sox and Angels, because the Rangers would have had to increase their payroll by $50 million or more and still had little guarantee of being better than the other teams.

In hockey, the difference between the lowest spending teams and the highest is only about $12 million.

The salary spread in the NHL is a bit higher than Heika indicates, but his argument is rational. Dallas is the second-fastest growing TV market and despite the popularity of the NFL's Cowboys, success by the Rangers, Mavericks, and Stars captures the city's attention. The additional $50 million necessary to compete with the elite in Major League Baseball is more than the entire Dallas Stars payroll this season. It makes complete sense that Hicks would turn his attention to bringing a Stanley Cup back to Big D as quickly as possible. Heika speculated:
The sale is reported to be for "considerably more than $500 million,'' and it may not be completed until April, so my guess is any kind of help for the Stars would come after that...

.....Do you think the Stars could have ever swung the Brad Richards deal without the ability to take on Richards' $7.8 million contract? The Lightning was trying to dump salary, and the Stars were in position to take advantage of that.

As it stands now, they could not make that same deal at the trade deadline.

I have to disagree here. Not only are the Stars in position to make that same deal, they are now in serious contention for one of the NHL's elite young talents.

As the NHL approaches the February 12th Olympic roster freeze, media attention has circled around the future of Russian superstar Ilya Kovalchuk. He is slated to become an Unrestricted Free Agent on July 1 and the Atlanta Thrashers have yet to come to an agreement on an extension for their franchise player.

Since the summer, rumors have circulated that Kovalchuk would be seeking something in excess of $8 million. Under the current CBA, "No player may be eligible to contract for or receive in excess of 20% of the Club's upper limit in total annual compensation." This would put Kovalchuk's max range at just over $11 million. While this type of money would make it very difficult for most NHL teams to afford supplemental impact players, it's even more of a challenge for a Trashers organization that is struggling to fill their arena.

Atlanta is also no stranger to a situation like this. Two seasons ago, star forward Marian Hossa was approaching free agency and GM Don Waddell knew he couldn't afford to resign him. Hossa was dealt along with Pascal Dupuis in a last-minute deal to the Pittsburgh Penguins in exchange for Colby Armstrong, Eric Christensen, Angelo Esposito, and a 1st round pick. The trade amounted to merely a playoff rental for the Penguins when Hossa bolted to Detroit after the season. Given the similar dynamics, fans and journalists have naturally linked Kovalchuk with Cup contenders like Washington, Chicago, Calgary, Boston, and the New York Rangers.

Yet most of these teams don't fit the mold of a trading partner for the Atlanta Thrashers. Hossa is a great player, but Kovalchuk is the kind of player you can build a franchise around. He's a guy that will put fans in the seats and define a team. These are the reasons Waddell will do everything in his power to keep the superstar in Atlanta. On the open market, the suitors for his services will be many and the price will be high; too high for a rental. Would a team like Chicago really be willing to mortgage a bright future for one shot at a Cup this season? Not a chance. Two characteristics will likely define a team that is truly a long-term solution for Kovalchuk:

1. Team has cap room and financial ability to sign him to an extension: The contenders listed above are up against the cap ceiling and would need to ship high-priced contracts back to Atlanta in order to clear room to resign Kovalchuk. If Waddell isn't willing to pay Kovalchuk $10 million, does he want to pay three role players $10 million? This also eliminates teams like Tampa Bay who are struggling to pay the bills.

2. Trading NHL-ready talent and/or draft picks to Atlanta won't gut the team's roster: Brian Burke would love to bring in Kovalchuk to put his squad in Toronto back on the map, but after trading two first-rounders and a second-round pick for Phil Kessel, he doesn't have enough to make a deal happen.

Prior to this weekend, this made the Los Angeles Kings the sweepstakes favorite in my mind. LA is an organization stocked with expendable young talent, plenty of cap room, and on the verge of becoming a serious contender in the Western Conference. It's in a city with tons of marketing and endorsement potential for Kovalchuk should the Kings make a run at the Cup. This reason alone may be important enough to force Kovalchuk to accept a few million less than he's demanding from Atlanta. He'd also be teamed with center Anze Kopitar who is in the midst of a breakout season alongside veteran Ryan Smyth.

With the sale of the Texas Rangers, it's also time to add Tom Hicks' Dallas Stars into the mix as a serious possibility. Although the Rangers deal may not officially close until the summer, expect the purse strings to loosen immediately for Dallas GM Joe Nieuwendyk. Just because Hicks' defaulted on the March loan, it's tough to speculate that he doesn't have cash sitting around ready to deploy. The Wall St. Journal reported he refused to dip into his own funds to cover the missed payments.

The Stars will likely have a top 15 pick in next year's draft and free agent veterans Mike Modano, Jere Lehtinen, and Marty Turco probably won't be back. Dallas also has young difference makers in the likes of James Neal, Fabian Brunnstrom, and Jamie Benn that Atlanta would love to add to their roster in exchange for Kovalchuk. Come to think of it, a Turco for Kari Lehtonen goalie swap might make a lot of sense for both teams as well.

In the end, I still think Kovalchuk resigns in Atlanta. If not, maybe a championship-starved GM loses patience and guts the future of his franchise for a short-term rental. It wouldn't be the first time. But when it's all said and done, don't be shocked if Hicks and Nieuwendyk pull the trigger on Kovalchuk and push the Stars back into the NHL elite.

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