Graphic Comments: Change Management

20161209-03

To turn an old phrase around, the less things change the more they get drastically different.

If you’ve been paying attention, the signs are there. Much in the same way Westworld sprinkled little things here and there that looked really obvious once the suspense played out, the dots are there to be connected.

There was talk that the Aquilini family was getting more involved with the team.

There were musings linking Dale Tallon to the Canucks.

There were heated trade talks that came to a sudden halt.

Now there’s a report that the Canucks won’t ask anyone to waive a No Trade or No Move Clause.

And even more telling, outright reports that the Canucks front office, who were busy shopping for 20-goal scorers just a couple of weeks ago, no longer have trade-making authority.

Let that sink in.

Not only can’t the General Manager make a trade, even the team President doesn’t have that authority. It has to go back to ownership for approval.

And in a hilarious development, it appears that the front office are trying to spin the sudden freeze on trade talks as a sign that the rebuild is finished. That they’ve made all the changes that need to be made to get this franchise back on the right track.

To take another crack at that old phrase, the less things change, the more they stay insane:

20161209-05

But they can’t spin everything away.

There are even whispers that ownership has consulted with a former NHL GM, who happens to still be under contract with his former team. Not about taking on a GM role with the team, but for advice.

The jig. It is up.

You know that when ownership gets this involved, it’s no longer the on-ice product that’s the issue. The team continues to bleed money.

And while their actually cash payroll (as opposed to AAV used to comply with the salary cap) is on the order of $75 million for this season, ticket sales are the worst they’ve been in almost 20 years. Attendance has is creeping downward, from 98.9% in 2014/15 (10th in the league) to 96.4% to start this season (16th). Season ticket renewals dropped down to 80% this past year, and when renewal notices go out after another disastrous season next spring, it’s going to be much, much worse.

In fact, if the stats Matt Sekeres dropped last night are to be believed, the situation may be even more drastic already:

20161209-01

Even the secondary market, which actually supports the season ticket base as many season ticket holders don’t have the time or can’t afford to attend 41 home games, has taken a tumble. Average prices on the secondary market have plummeted by more than 55% over the last three years, from just under $300 in 2014 to $130 to start this season.

But hey, nobody saw this coming:

20161209-02

The organization as a whole is still making money because they own the arena and control the concessions, but gate receipts are stagnating and Forbes estimates that the value of the franchise has plunged 12.5% from US$800 million in 2014 to US$700 million this year. Now, you might think the drop in the Canada-US exchange rate makes that a wash, but that’s only if you ignore that the exchange rate is outside your control and that the franchise would have been worth that much more in C$ today if it had held it’s US$800 million value.

And yes, the value of the franchise has appreciated considerably since they bought it. But you don’t get that rich by just shrugging off paper losses. In the absence of any other valuation, they’ve taken a US$100 million hit over the last three years. But it’s still a US$700 million asset, and although it is profitable on the whole, Forbes estimates last year’s operating income was just under US$30 million. That’s a 4.2% return on asset value and if the debt ratio is correct at 11%, a 4.8% return on equity.

Those might look like good returns to you and I, but I can guarantee you high net worth individuals would not be willing to tie up that much capital in an asset with such low returns.

So where does this leave us, and what does it have to do with the vague rumours and innuendo I started with?

Well, it comes down to this.

The business is suffering, and the Aquilinis are first and foremost businessmen.

One other rumour that has been circulating for at least a year is that the family is looking for a buyer. In many ways, this has always been a real estate play for the Aquilinis. The second of three existing building sites around the arena is close to completion and the third has planning approval. Pending city approval, there’s potentially a fourth site on the Roger Neilson Plaza at the northeast corner once the Dunsmuir viaduct comes down. Once that approval is given and a develoment permit is issued, the Aquilinis would have one less reason to want to hang on to a declining asset.

But until that point, they need to protect the value of that asset. That means taking a step back and assessing the state of the organization (Weisbrod should have a good idea of what this is like; just picture him sitting across the table from Brian Burke in that clip). Maybe even asking the advice of a former NHL GM for their advice. It means stepping in and taking control of key decisions that might have implications beyond day-to-day operations. Like say, trading players. Maybe even signing contract extensions.

That’s not to say that those things can’t happen, it’s just that they can’t happen without ownership oversight.

The kind of freeze on senior management activities and consolidation of control and authority that is apparently under way in the Canucks organization is exactly what you would if you were considering making a change in direction. But unlike a regular business, where you might have a deeper organization with experieced lower level managers or where ownership might have some experience in the industry and be able to step into a caretaker role, it’s not often you have that situation in an NHL franchise.

So while we may be entering the final act in this play that has been part comedy, part tragedy, it’s likely we won’t see the climax and denouement for a few months yet. Most likely following the end of the season.

But no matter the timing, if you’re paying attention, the portents of change are there. And if you’ve ever experienced this in a business setting, you’ll know that change management is an important part of setting a new direction. Or in this case, a management change.

20161209-04

I just hope when this is all over, they let Jim Benning keep his stapler.

  • Not Dressed For Tonight's Game

    I call shenanigans.

    No one else is reporting that Benning or Linden cannot do any further transactions. Like Petbugs has sources deeper in the Canucks than Bob McKenzie or Elliot Friedman…

    • Rob Robertson

      Botchford noted the sudden change in philosophy in last night’s Provies. He didn’t outright say the mgmt has been halted from making a deal by the ownership but he has noted that ownership has been involved in major decisions several times.

  • andyg

    Management does not do what the media and analytics crowd say is the right way to go. So they hope and pray that they will be able to wag their fingers and say we told you so.

    I hope our ownership is watching what is happening in Florida. That is what all out analytics will get you. What a disaster that is!

    Our management are doing exactly what this club needs. Draft well and develop. Create a stable atmosphere for your youth to develop in.

    I think the owners are smart enough to see that their is no quick fix and flipping management every few years just adds to instability.

    Maybe the seemingly change in direction is because the owners are starting to realize that the team is on the right path.

    • J.D. Burke

      The team is trying to compete for the playoffs. They have five picks in this draft. They’re capped out. They’re 27th in the league. They’re on pace for 79 points.

      They just keep on proving us on wrong?

      • chinook

        The 2015-2016 Canucks were 28th in the league. They got 75 points. They had a goal differential of -52. This year they project to be -42. Looks like they are passed the bottom.

        Last year Canucks were abysmal in many games, this year they are competitive in most games, even entertaining. The on-ice product is better. Spending to the cap shows ownership supports management direction and belief the team is on track.

        Last year the lament was there is no secondary scoring, no centre to replace H Sedin and, aside from Subban, Boeser and Demko, no prospects of note in the system. Now they have Stetcher. And they have 5 picks in this draft.

        • Andy

          5 draft picks sounds impressive… until you realize every team starts with 7.

          Stetcher is a great story, and about as expected as a 5-1 Canucks victory with Skille and Megna scoring 2 goals each. Which is to say, it’s a nice outcome, but it shouldn’t be the Canucks’ plan A.

      • andyg

        Half way through the third year of Benning.

        First year 101 points. Drafted Virtanen, McCann ,Demko and Tryamkin. Turned McCann into Guddy.

        Second year 75 points and played a ton of youth.
        Drafted Boeser, Brisebois and Gaudette.

        This year we are far more competitive then people prophesied and are still in the playoff hunt.
        Drafted Juolevi, Lookwood and Candella.
        We will have at least 5 picks and still have our 1,2,and 3rd.

        Toronto is no farther ahead and will also not make the playoffs this year. It is a different process for a different market.

        How is Florida doing!!!

        Just because something is not done your way doesn’t mean it is wrong.

  • Saundero

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  • “And even more telling, outright reports that the Canucks front office, who were busy shopping for 20-goal scorers just a couple of weeks ago, no longer have trade-making authority.”

    If there were outright reports, how about the links to those reports or someone who can corroborate your statement?

    • Whackanuck

      Excellent question. Since the beginning of the regular season there have been just 6 trades, the most notable name being Michael Condon for a 5th rounder. If lack of trading was a reason to fire management there would be 30 GMs out of work right now.

      Owners will do as they will. I’m sure the AQ’s would like to see a higher return but they aren’t losing money -not enough to sell low unless they have a much more lucrative deal elsewhere. If they do sell so what; the new owners see that the way to increase the value of their investment is to return the Canucks to winning ways, coincident with the desire of the fans. So what’s with the scare tactics?

  • Interesting read. If Aquilini wants to manage his asset, let him. That is his right. If he reaches out for advice, good for him, that is what smart people do. This may not sit well with current management, but is a reality of doing business. Not saying he should “mingle’, but being hands on is something I would probably do.

    After all, he is the boss.

    Aquilini has spent to the cap ceiling every year. So, that is what a good owner does.

  • Charlie Allnut

    If a coho is not a fish, then what is? I think there is or was a marine vessel plying the coast waters by that name. So what is the big deal about the word coho that PB takes an issue? Maybe try an IPA, an upgrade from PA.

  • LTFan

    Graphic Comments has to be on of the worst commentators on this site. Some of the useless comments, and I quote – “The signs are there”, “there was talk”, “there were musings”, “Now there’s a report”, “And even more telling, outright reports”. Nothing backed up at all. Just rumour, gossip and outright nonsense. IMO it is just junk, pure and simple.

    There are some good commentators on this site. But this – crap!!

  • Fred-65

    Well it may be speculative but as has often been said there’s no smoke without fire. I believe there are a lot of sources available to the intrepid journalist who regularly rub shoulders with a host of people that “know something”

    The conversation that I’d like to hear is Aquaman opening a conversation with Mike Gillis … definitely pay for view material.

    Aquamn :-Hey remember me Mike the guy that booted your a$$ out the NHL ….well could I ask a favour, try and remember Mike I am still paying you globs of money. Be nice and I’ll buy you a Starbucks coffee and we can talk about …. what you think I’ve done wrong LOL

    (Man I’d like to be a fly on the wall)

    Mike:- I think it’ll be longer than the time to drink a coffee how about a flight to Monaco and a weekend at the Hermitage

    Now that would be fun

  • JuiceBox

    If you want part comedy, part tragedy all you have to do is read this post. You built this entire post on whispers, rumblings, musings, and talk. Not one piece of hard evidence to support any of this and you have somehow come up with this grande tale of how ownership has stepped in and essentially taken over and frozen the roster and stripped management of their powers. How ridiculous. Take off the tin foil hat buddy.

    • J.D. Burke

      I think I speak for most of us when I say we’re all Canucks fans. Just because we have philosophical differences with the way they’re running the show shouldn’t diminish that in the slightest.

      Primarily, though, we operate as objective, unbiased and analytics-driven writers, covering the day-to-day functions of the team. We’re not a fan site, we’re an alternative media entity, and we don’t owe it to the team to alter reality in their favour.

      Our primary goal is to cover the team in a fair, unbiased and admittedly analytics-driven manner. More than anything, we want to further our understanding of the game, and pass that experience on to you, the reader.

      If you want us to blindly congratulate the Canucks on every move and throw the blinders on through every mistake, that’s just not happening.

      • Canuck4Life20

        I’m sorry, but nothing about this article or any of pet bugs other ones are unbiased, no matter how many times you say. There is nothing about analytics either, unless you count stats on ticket sales and team value.

  • orcasfan

    I suspect that this so-called “rumour” is based on Benning’s stated reluctance to ask the vets holding NTC’s to waive for the sake of a trade at the deadline. For those who are inclined to think of conspiracy theories, or Machievellan machinations by suspect owners, that statement could be be wildly interpreted to mean that it’s those meddling owners who have put the kibosh on management making trades. Apart from those raving idiots on 1040 who love to create “news” by casting suspicion on the integrity of the organization, I doubt that any real hockey people would disagree with Benning’s attitude.

    Media twits are only interested in the next news cycle. Heaven forbid that they bother to look ahead to next season. That’s one of the obvious differences between real GM’s and sports pundits. I actually agree with Benning’s reluctance. Why would the club want to get rid of guys like Hansen, Burrows, Edler, Sbisa…let alone the twins. For draft picks? Hansen is just too valuable to this team – his attributes are obvious. Burrows not only is having a rejuvenation-season, but is exactly the role model you want for young roster guys. Edler is still our best overall D. Without him next year our D could be doubtful. And Sbisa is actually proving this year that he has the potential to be a top 4 D’man.

    Any draft picks outside of the 1st round would take several years to not only develop, but there would be no guarantee that they would become viable NHL’ers. I think the reality for the club at the moment is that Benning has already disposed of all the low-hanging fruit (non-useful vets with NTC’s). What we have left are more valuable, for the moment, to the team than more draft picks. It’s that simple.