Anyone who reads the Larry Brooks gossip, may have read him roasting
Neil Smith today for his comments in a business journal report, I
wanted to know what Neil Smith said.
Let's ignore the Brooks gossip about Czerkawski and concentrate on
why he was so annoyed and playing the good corporate soldier today
Cablevision its own worst foe
The misfortunes of the NBA's New York Knicks and the NHL's New York
Rangers, both of which failed to make the playoffs last season and
had long sellout streaks ended or poised to end, might have come as a
surprise to their famously loyal fans.
But several executives who were fired by Cablevision, the
multitentacled corporation that has owned or co-owned both teams,
Madison Square Garden, the MSG television network and Radio City
Music Hall since 1994, said they saw it coming. Cablevision bought
out ITT in 1997 and in the minds of these executives, the company's
unique corporate culture â" though perhaps well suited for the cable
industry â" clashes inherently with the way winning sports franchises
are typically run.
"My very strong feeling is that big companies should not own teams,"
said David Checketts, who worked for Cablevision and ITT from 1994
until he was fired in 2000, and had worked for no other corporation
in sports previously. "It's a very different business than they're
used to, and there's no way they can appreciate the culture and the
chemistry that has to be part of a team to succeed."
Former Rangers general manager Neil Smith, who was fired in 2000, put
the blame squarely on Cablevision.
"I won a Stanley Cup in a corporate culture, with three or four first-
place finishes, and [the Knicks were] one good John Starks game away
from winning an NBA title, so I can't be that down on corporations in
general," said Smith, who started with the Rangers in 1989, when
Paramount owned the team. The Cup and the Knicks' near miss occurred
prior to Cablevision's ownership. "Clearly, since Cablevision took
over, the teams have been mismanaged," Smith said.
In the cable industry, competitors can be bought out and opposition
overrun. "Traditionally, you give your customers as little as you can
get away with and charge them as much as you can get away with," said
John Higgins, cable television editor for Broadcasting & Cable
Cablevision started with a single cable system and in little more
than a decade owned every franchise on New York's Long Island. "They
rolled up all the other operators, one by one," said Higgins. "Some
guy was always ready to sell, and [Cablevision] was always there to
That isn't the way sports works. Successful teams are most often
painstakingly constructed and take years to develop. Cablevision
president and CEO Jim Dolan didn't want to wait. That resulted in
high salaries but little results. The Rangers and Knicks have been at
the top or second in their leagues in player payroll since the
company took over sole ownership in 1997, without winning a title.
"'It's my [expletive] money,'" he'd say, and then order a spending
spree on free agents, said Smith, who helped guide the Rangers to a
Stanley Cup title in 1994. Smith said that under Dolan he was allowed
no time to build a contender. He was ordered to buy a contender.
Smith said Dolan put pressure on him to trade for Theo Fleury. When
the Calgary left winger was traded to Colorado toward the end of the
1998-99 season, Smith said Dolan flew into rage.
Smith, who wanted to rebuild, knew that with 20 games left, Fleury
wasn't going to help the Rangers make the playoffs. Besides, Fleury
was about to become a free agent. That summer, according to Smith,
Dolan directed Smith and Checketts to the corporate jet and ordered
them to sign Fleury at any cost. "I had to come back with him no
matter what," Smith said. "Fleury wasn't even there that day, but if
he had been, it wouldn't have mattered what he did ... If I came back
without him, I was out."
The Rangers paid Fleury, one of six free agents signed by Smith that
off-season, $21 million for the three years and were repaid for their
efforts with a subpar performance.
Cablevision also has failed to grasp the partnership aspect of being
in a sports league. While the goal is winning at the expense of the
competition, the idea isn't to put the competition out of business.
In that light, the exorbitant salaries the company has offered have
served to drive up prices unreasonably for competitors with fewer
Some former executives believe that Dolan was simply pandering to a
market that doesn't allow teams to fail. "Given that New York demands
a winner, to say 'We're going to bring someone in and let them
develop for two or three years' is a tough proposition," said Mark
Pannes, the former director of marketing for the Knicks and now a
partner in Skilo Brand, a marketing agency. With Cablevision
subscriptions to sell, Dolan might have felt that the presence of a
superstar or two might at least mitigate a losing season, Higgins
But liberal spending doesn't always translate into positive results,
even at the box office. The Knicks' certainty of sellouts at the
Garden has ended, though a streak of 432 remains technically alive.
The Rangers, who previously had not played before an unsold seat in
five years, sold out only half of their home dates last season.
Despite five weeks of entreaties, Cablevision declined to comment for
this story. The company did attempt to influence its publication with
a series of back-channel communications, including numerous off-the-
record spin sessions to SportsBusiness Journal editors and phone
calls to influence people it believed to be sources.
Other teams, whether corporate-owned or not, make bad decisions when
it comes to signing players. Disney's Anaheim Angels, playing in
their first World Series, left off their postseason roster the only
major free agent they have signed in years, Aaron Sele, whom they are
paying an average of $8 million a year.
And some teams have managed to buy their way to a title. The Florida
Marlins signed several high-profile free agents and won the 1997
World Series. The New York Yankees' nine-figure player payroll has
kept them at or near the top of baseball for the last three years.
But more often than not, spending for talent is only part of a
strategy that leads to winning. The Los Angeles Lakers, who have won
the last three NBA titles, have been in the middle of the league in
spending. The Detroit Red Wings, who have won three Stanley Cups in
six years, are near the top of the payroll rankings but also have a
highly regarded farm system and have made judicious trades.
The Rangers have failed so much as to qualify for the NHL playoffs
despite having the highest player salaries in the sport for each of
the five seasons Cablevision has been their sole owner. Last year,
Rangers players were paid a record $71 million, the fifth year in a
row the team had the NHL's highest payroll. The Knicks missed the NBA
playoffs last season despite a league-high $85 million payroll.
"The Garden was very well positioned in 1994 when ITT and Cablevision
came in, and [it hasn't] had nearly the same success since," said Bob
Gutkowski, who was president of the Garden until he was fired by
Cablevision in 1994. "A lot of it comes from the direction of the
ownership; how the management filters down to the direction on the
court. I'm sure they tried to make moves they thought made sense. But
the question is, do they have the right people saying and doing the
right things? Based on the record they've had, I think you have to
The most important of those people is Dolan. Now 46, Dolan started
his career in Cablevision's Chicago warehouse and ascended to the
presidency when his father, Charles, segued into semi-retirement in
1995. Less than two years later, Cablevision bought out ITT to become
sole owners. It was just about then that the wheels started to come
"[Jim Dolan] claims publicly he's not involved, but he's very, very,
very, very, very involved," said Smith. He recalls being chastised by
Dolan over not knowing the exact rules of a between-periods
promotional shoot-out. "He's more involved than any of the previous
owners I had, and that goes back a long time."
Dolan certainly would not be the first or only owner who has meddled
in player and other team matters, but his conduct comes in stark
contrast to another cable giant with sports interests, Comcast-
Spectacor, which has left its sports holding to run its own affairs
and has prospered as a result.
Other holdings have suffered under Dolan. Cablevision's decision to
play hardball in rights-fee negotiations with baseball's New York
Yankees chased the team from Cablevision to start its own network.
That has greatly diminished the value of MSG's programming,
especially with the Knicks and Rangers losing, and the resulting bad
publicity and consumer dissatisfaction. Cablevision systems still
refuse to carry the Yankees Entertainment and Sports Network, leaving
subscribers without access to Yankees games.
Outside of sports, Cablevision made a $500 million investment in the
40-store Wiz consumer electronics chain that has soured, according to
published reports, helping deflate corporate earnings. Other dubious
investments include $250 million spent on the 59-theater Clearview
Cinemas, which one analyst close to the situation guesses might not
be worth $50 million now. At one point this year, the company's stock
price had fallen by more than 80 percent.
In all, cash flow for the publicly traded company has declined from
some $170 million to $90 million in just two years. "Some of that is
the teams not going to the playoffs, and the company losing all that
revenue on both the team side and the television side," said analyst
Andy Rittenberry of Gabelli Asset Management.
Checketts said he once valued Cablevision's Garden package, including
Radio City, as worth "between $3 billion and $4 billion." As the 2002-
03 hockey and basketball seasons begin â" and with the economy still
in a rut â" one recent Wall Street assessment published in Newsday
estimated the potential sale value of the assets as low as $1.26
billion. Cablevision and ITT purchased the properties for $1 billion.
The Knicks and Rangers, two of the most desirable equities in all of
sports, are the most visible failures. At the time of Cablevision's
initial investment, they were experiencing some of their best seasons
ever in terms of competitive performance. The Rangers won the Stanley
Cup in 1994 for the first time since 1940, while the Knicks extended
the Houston Rockets to Game 7 of the NBA Finals. At no time in
history had the two teams been so good simultaneously.
Last year's Rangers squandered a playoff berth down the stretch
despite its NHL-record payroll in what might be the worst value-for-
money performance in the history of sports. The Knicks had the NBA's
highest player payroll in two of the past five seasons, and the
second-highest in the other three.
The NBA's salary cap, soft as it might be, prevents franchises from
wanton spending, requiring that some attention be paid to the amateur
player draft and trades. The NHL has no such restrictions. In his
tenure as Rangers general manager, Smith spent more money on salaries
than any NHL executive, but he contends the fiscal carnage could have
been far worse.
Smith was regarded as a hero in New York for building the Rangers
into the franchise's first Cup winner in 54 years. He acknowledges
spending previous owner Paramount's, and later ITT's, money freely to
keep the team contending. But by the time Dolan took control, the
Rangers' glory days had ended.
Following a 1998-99 season in which the team missed the playoffs for
a second year in succession, Dolan announced to the Rangers locker
room that he was willing to spend as much money as he had to in order
to make the team a Stanley Cup contender the following year. Smith
spent the money by signing six free agents, undermining what he
describes as his own carefully fashioned plan to rebuild over several
seasons with young players.
"The Cablevision philosophy is like saying, 'I want my company to be
the best in the world, so if everybody has one CEO, I'll have 10.
Imagine 10 CEOs together. We'll be great!' " Smith said. "But it
doesn't work that way in the boardroom, and it doesn't work that way
in the locker room."
Despite salary restrictions, the Knicks have also made some dubious
moves. While Dolan's involvement is less apparent, the off-season
trade of a first-round draft pick and other considerations to Denver
for the brittle Antonio McDyess smacked of the same sort of
desperation that has marked the Rangers' ongoing search for instant
credibility. McDyess has broken a kneecap and will miss most, if not
all, of the season.
Signs do exist that the emphasis on spending might be changing, at
least on the Knicks' side. "I think this year was probably the first
year that [president and general manager Scott Layden] wasn't
pressured to go out and buy any marginal free agent he could," said
an executive familiar with both leagues. "He could have overspent on
Keon Clark and Chris Gatling, and he didn't. He dumped Mark Jackson's
salary, which was a big, big plus. There was more thought given to
the long term on the basketball side this year than in a long, long
It might be too late, however. Pressed for cash, Cablevision has been
selling off pieces of its empire and has been forced to return to the
banks to ask for additional funds, in part because of a reported $49
million in contract-buyout payments to former Knicks Larry Johnson
and Luc Longley. And Wall Street is clamoring for the return of Chuck
Dolan, now 75, who painstakingly built a television empire over three
decades and proved he knew how to run a complicated corporation along
In a Newsday interview in 1997, when both teams were still
contenders, Charles Dolan was asked what he did when he disagreed
with Jim, whom he'd made the company's CEO. "I let him run up and
down the room until he gets tired," the elder Dolan replied.
If it's any solace for Wall Street and for Knicks and Rangers fans
alike, it's that Jim Dolan must at least be breathing hard by now