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Before I get into the thing I really wanted to avoid (and was hoping I could) Monday morning another bank was quietly absorbed. For those counting, that is 3 so far with the first being the famous Silicon Valley Bank. If you want to know a very basic (fictitious) way that this happens, rewatch, “it’s a wonderful life…. As a newly married George and Mary get ready to head out of town for their honey moon, a line of people is banging on the gated door of the family credit union. Essentially, a deposit wasn’t made ( was stolen by Mr. Potter) and the institution couldn’t guarantee all the deposits. People found out ( I wonder how) and a “run on the banks… started with people taking out all their money and creating a crisis based on a problem. Never doubt the power of the WIIFM.
As we wade these rocky waters, keep in mind that the NHLPA hired a new president with ties to Washington D.C. and no real sports experience. That was a head scratcher at the time, but D.C. is where you go to find out about money. So here we are, months away from Silicon Valley and early Monday morning another fairly major institution was taken over (this time by a firm, not the FDIC). Keep this in mind. If you go into your bank you’ll see a placard on the counter. It will say that funds are insured by the FDIC up to 250k per depositor. Well, if you have more than that (congrats) it isn’t insured. The FDIC tried to help the SVB and guaranteed 50% of deposits before the sale of assets and would try to get people the rest of their money. Keep in mind, they are not bound to any obligation. 10 banks were also given 30billion to increase consumer confidence.
Unfortunately, Monday’s seizure was one of those banks. There is a rift in what many see as the inevitable. Physical assets replaced by virtual holdings. Even the writer’s strike specifically addresses Artificial Intelligence and is asking for certain restrictions/bans to be put in place as late night shows have gone off the air and anyone who didn’t “pre write… for filming is in trouble. One show my wife watches writes 6 months in advance due to the fallout of the last strike.
Here’s where hockey comes in. Last January we were told that the players had raised around 900 million of the billion in revenue owed to owners who paid salaries throughout the shutdown and capped escrow so the take home wouldn’t get too low. Just around the start of the season it was announced that the final 70 million probably couldn’t be raised and that the cap could face another stagnant year. Well, how do you raise 900 million the year before (just under 80 million per month) but you can’t raise 70 million in 6 months?
All I have are theories because unless a franchise is up for sale, the books seem to stay closed. We found out Ottawa has a half billion dollar in debt right before it looked like the franchise would sell. Now there’s a new group (which includes Snoop Dog) added to the mix. When you sit at the table of a property with debt, you make demands. “Ok, we want 900 million for the property and you also pay off the debt…. That adds an extra 50% to the actual price. If a group won’t play ball, they can agree to split the debt or find some other arrangement.
We saw a very important Crypto crash last year. It was one that was pushed by legislators in D.C. and seemed a guarantee win. If any group related to the NHL or P.A. Had money in there, it’s gone. If any group related to the NHL or P.A. Has money in the 3 institutions (plus 2 more failed crypto) it’s anywhere from half gone to down to 250k if in an institution. This is where you sit down the reps and board of governors. Your broadcast partners are laying off staff or in bankruptcy, a major sponsor or two may be in the middle of a highly toxic environment causing a drop in stock and sales. All of a sudden, someone who owes you money tells you they don’t have it. Not good.
Unless everything goes fully public, these need to be closed door meetings with everything on the table. The players may well be spending the summer trying to figure out where to put the player’s aid fund and retirement accounts. The league may have to go team to team to make sure they have a handle on where their finances are and if there’s been a drop in assets.
On a personal level, please try to keep a level head. Knee jerk reactions have been at the center of a lot of the past year of issues. Regardless of what happens, there is a new horizon heading this way. I’m not saying keep the band playing and ignore the life boats, I’m saying that Consumer Confidence is a very real component in the value of anything.
Some of you have lived through this. Possibly even multiple times. Things changed and we learned to exist in the new “normal…. I just watched someone write a TV episode in less than 5 minutes using a free AI plug in. It was actually pretty good, just needed some polishing from the actors. Walking away from the table raises the risk that there may not be a chair waiting for you when you get back.
I hope the very best for each and every one of you. I hope the best for our world, our economy and our families. Information is like any tool. It can be used constructively or destructively. That doesn’t mean you shouldn’t go to the hardware store. Just be aware that words can’t be taken back after they’re said, and some actions can’t be undone. The question is, how and where do we go from here? And to face that with optimism is the common denominator of success.