Luke DeCock, Staff Writer
RALEIGH - Ask Peter Karmanos what his team's payroll will look like next season, and he's quick to say what the Carolina Hurricanes spend on players will be determined by what the franchise makes on advertising and tickets.
And in that respect, the Canes' owner is putting his mouth where his money is.
Having completed a hands-on restructuring of the sales force of Compuware, the software company he helped found, Karmanos said he's going to try to do the same with his hockey team.
"I plan to come in and actually help work on both those areas myself two or three days a week starting in July," Karmanos said this week in a telephone interview from his Detroit office. "We're going to do just fine."
The Hurricanes could lose as much as $10 million this season because of the absence of playoff revenue, a larger-than-budgeted payroll, reduced NHL revenue-sharing payments and decreased attendance.
As the NHL's salary cap increases -- from $50.3 million this season to an expected $56.3 million in 2008-09 -- the Hurricanes need to bring in more money to keep pace.
Beset by injuries last season, they ended up spending about $49 million on salaries -- 11th among the NHL's 30 teams and at least $5 million more than expected.
"We need to put more people in the building," Karmanos said. "We need to do a better job of selling advertising. It's not so much a cap that we put on [general manager] Jimmy [Rutherford]. It's the cap we put on ourselves. We're just not maximizing our revenue streams."
Karmanos' increased involvement in the Hurricanes' operations comes at a time when he is beginning to reduce his role as chairman and chief executive officer of Compuware, which he founded with two friends in 1973. One of those friends, Thomas Thewes, is a minority owner of the Hurricanes.
In July, Karmanos took personal control of Compuware's sales force, firing more than a quarter of the company's 400-person sales staff, including its head, who had been considered a potential Karmanos successor atop the company.
That quarter, Compuware posted a 51 percent increase in profits as its stock surged to $12.56, its highest price since April 2002. Compuware closed at $7.68 on Tuesday after going as high as $7.85 earlier this month when fourth-quarter revenue forecasts exceeded Wall Street estimates.
In February, Karmanos appointed Bob Paul president and chief operating officer, with the intention of turning the day-to-day operations of Compuware over to him in the near future.
"He's going to be my successor," said Karmanos, who turned 65 in March. "We work very well together. I'll work a few more years with him and then retire full-time from this business."
Because of his Compuware commitments, Karmanos has been somewhat removed from the day-to-day operations of the Hurricanes during their decade in North Carolina. He has often voiced his preference to become more involved and now thinks he has that chance.
It comes at a critical time for the franchise. Because of the fall-off in revenue from the post-Stanley Cup honeymoon season in 2006-07 to last season, the Hurricanes lost a quarter of their NHL revenue-sharing money when they failed to meet the league's growth benchmarks.
The league's collective bargaining agreement expects smaller-market revenue teams to keep pace with the league average. Those standards were set higher by the weak dollar, which has allowed Canadian franchises to claim massive profits without lifting a finger.
"That certainly doesn't mean we got any increased revenue, but all the targets are different because of that paper transaction," Karmanos said. "From our point of view, that affects us. But I think the CBA is pretty straightforward, and we do our best to make sure we get our fair share of stuff.
"We quite frankly need to sell more tickets regardless of the CBA or not. I want our building full because I think it adds to the atmosphere and it's great entertainment. We're going to work really hard on trying to increase our revenue."