Luke DeCock

State of the Canes Q&A

Carolina Hurricanes not moving says Ron Francis

Video: The Carolina Hurricanes general manager Ron Francis stated that he knows of no plans to move the team from the Triangle during a press conference held to discuss the upcoming NHL draft at PNC Arena on Thursday. Yesterday NHL commissioner G
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Video: The Carolina Hurricanes general manager Ron Francis stated that he knows of no plans to move the team from the Triangle during a press conference held to discuss the upcoming NHL draft at PNC Arena on Thursday. Yesterday NHL commissioner G

In the wake of Wednesday's column about the lawsuit filed against Hurricanes owner Peter Karmanos by his three adult sons, there appear to be many common and lingering questions about not only the lawsuit but our coverage of it (and by extension the team). Some of the questions were submitted today; others have popped up persistently via email or Twitter. I'll try to answer them with this Q&A-turned-manifesto, my brain frazzled by too many college baseball rain delays.

Q. What impact does this lawsuit have on the Hurricanes?

A. Imminently, none. Karmanos allegedly missed interest payments on the loan from the trust in 2014 and 2015, so whatever financial issues are involved are not new. Even if there were acute issues, the Hurricanes have invested considerable money into ticket-sales efforts over the past year (with promising results in terms of renewals and new buyers; ticket revenue is up 40 percent from this point a year ago) and will have to spend about $12 million just to get to the cap floor.

Nor should it defray from the optimism generated last season by the young defensemen and the team's play under Bill Peters. As I've written, as long as those kids on the blue line can maintain and avoid a sophomore slump and Ron Francis finds an answer in goal, there's no reason the Hurricanes shouldn't be in the playoffs next year. They're going to have to add a few forwards just to get to the floor, so it's just a matter of finding the right ones. More on that later.

In a longer-term view, the lawsuit does raise questions about cash flow, since it alleges Karmanos has been using the assets in the trust fund as collateral to support the Hurricanes which implies that Karmanos is running out or has run out of other sources of wealth. The NHL has not confirmed that Karmanos has taken advances on league television and revenue-sharing payments, only that many owners do that. (The lawsuit implies that he has.) The overall impression created by the lawsuit and Karmanos' desire since 2014 to divest himself of his majority share in the franchise is that Karmanos is stretched increasingly thin financially and has been for at least two years.

But the Hurricanes spent $250,000 to be the primary sponsor of Karmanos' wife's charity golf tournament in Michigan last August, so there must be at least that much lying around petty cash. (The law firm defending Karmanos in the lawsuit was the secondary sponsor at $100,000, which suggests representing Karmanos is a franchise worth protecting.) By comparison, the Hurricanes' own charity golf tournament raised $40,000 for the team's Kids 'N Community foundation last year.

Q. So Karmanos couldn't pay the $4 million in interest on the loan?

A. Well that's hard to say. For one thing, that's only what's alleged in the lawsuit, and while I was admitted to law school, I don't have the expertise to evaluate the partnership documents to see if there's some loophole there. Taking the lawsuit at face value, there's also the question of whether Karmanos CAN'T pay or WON'T pay. There's obviously some deep-running bad blood between Karmanos and the three adult sons (he also has four young children from his current marriage) and it's entirely reasonable to imagine someone in his position saying “Sue me.” We just don't know at this point.

We do know his post-retirement consulting contract with Compuware, worth $600,000 a year plus stock options, was summarily terminated and he had to sue the company to get $16.5 million in severance pay. He also had an unknown portion of his wealth tied to Compuware stock, which was once worth almost $40 a share and was valued at $10.92 when the company was sold to a private-equity firm in 2014 over his vocal objections.

Q. Is this why Jason Karmanos was suddenly and unexpectedly fired four days before training camp in 2013?

A. Probably not. Peter Karmanos took out the loan in June 2013 but it was the third such loan over almost 15 years noted in the lawsuit, so there doesn't appear to be anything irregular about the loan itself. He didn't miss a payment until June 2014, nine months after the firing. Jason Karmanos left the franchise once of his own accord, then returned a year later. His firing appears related to the lawsuit only to the extent that it may reveal some of the fissures within the family. And Jason Karmanos quickly rejoined Jim Rutherford in the Penguins' front office, which supports the statements by both father and son that the firing was not related to job performance.

Q. So what does all of this have to do with expansion? Aren't they completely unrelated?

A. Well, no. They're deeply linked. The NHL is expected to decide on expansion in the next three weeks, with Las Vegas and Quebec City the contenders. The league could award franchises to one or both, delay a decision for a year or pass entirely. Once that decision is made, the Hurricanes' picture should become clearer to the extent that an expansion group that doesn't get a team will be looking to purchase one, and the Hurricanes are openly for sale.

So as long as expansion is still on the agenda, the Hurricanes aren't going anywhere. The NHL isn't going to let a franchise move to a market that could be worth $500 million. But once this is resolved, especially if only one team (or no team) is awarded, things get a little more precarious.

Q. But Peter Karmanos says he won't move the team, right?

A. True, and to be fair, no one really thinks Karmanos himself would move it. That's a bit of a straw man on his part. He also says he won't sell to anyone who will move the team, but it's hard to imagine he'd be able to insert that clause into a sale without compromising his own bottom line. And I haven't seen anything in the lease stopping anyone from paying out the minimum rent for the final few years and walking away. It'd be somewhere around $20 million, which is chump change for someone prepared to pay $500 million for an expansion team.

Q. Why would someone move the Hurricanes anyway?

A. Well, they shouldn't. The Triangle has proven it can be a model Sun Belt franchise if the team is competitive on the ice, which it hasn't been for years. It also needs ownership that is committed to the market in a way Karmanos never has been whether that ownership is local or not. How many rinks has he built? How much support has he personally offered youth hockey? How much economic development has he fostered around the arena? None, none, none. He deserves credit for bringing the team here and believing in the market, but his home, his heart and his wallet have always remained in Detroit.

Jeff Vinik, who bought the Tampa Bay Lightning (and has deep Duke ties), has invested heavily in the team and that market in a way Karmanos never has here, despite having only limited connections to the area, and the Lightning are thriving.

The arena lease is great and offers the potential to make substantial income operating the arena (assuming HB2 exits the books at some point – it has cost the Hurricanes 10 different shows this summer, including Pearl Jam and seven Cirque de Soleil performances, and the arena calendar is empty going forward) especially now that scheduling issues with N.C. State have been resolved and the Centennial Authority, the quasi-governmental body that oversees the arena, appears willing to invest in significant capital improvements.

The only reason someone would move the team is because they bought it expressly to move it. So if Bill Foley (Vegas) or Quebecor buy the Hurricanes, they're not buying the team because they think the Triangle is a great market. And if they do, it's because the NHL will have offered its tacit blessing, grudgingly perhaps, to move the team. The league's statements that the team won't move are entirely genuine at this moment, but if Karmanos runs out of money and no one steps up to buy it other than Foley or Quebecor, there aren't many options left.

Q. Why hasn't someone bought the team already?

A. Karmanos hasn't made it easy. When he couldn't find a minority partner, he started asking for around $400 million and to remain in control of the franchise. He might get either, but not both. (The latter sounds like a great deal: If anyone wants to buy and maintain my car, but let me drive it, let me know.) There have been local groups with interest in the team, but they aren't interested in Karmanos' asking price or being in business with him. Despite his unquestioned faith in the market, he hasn't spent a lot of time here and hasn't made a lot of friends outside the Centennial Authority.

The Hurricanes put down their deepest roots when local lawyer Jim Cain acted as Karmanos' proxy in the market. Don Waddell is trying to fill that role now, but he doesn't have the advantage of an ITB pedigree. Karmanos himself has never gotten any traction with the locals, so to speak – and they've tried. Anyone remember “Friends of the Canes?”

Above all else these things take time. Prospective buyers, local and otherwise, have kicked the tires, to use a hockey phrase, but nothing concrete has happened yet. A sale may be closer than anyone knows. We should all hope it is. There's also the possibility that Karmanos is waiting for his share of the expansion money before he sells, because that's money he could pocket. If you take a worst-case scenario view of the lawsuit, he might really need it.

Q. What about the minority investors?

Since 2011, the Hurricanes have taken on 20 minority partners, who provided a short-term cash infusion in exchange for guaranteed return on their investment. With no say in the management of the franchise or liability to cover losses, they were essentially loaning Karmanos money – at first, anyway. After five years, the partners have the option of getting their money back with interest or converting their investment into a full ownership stake, which means covering losses.

The first tranche of investments matures this fall. If all nine of those investors pulled their money out, Karmanos would have to come up with at least $22 million.

So far, none of the investors have publicly expressed an interest in purchasing a majority share of the franchise but it figures that any local consortium that buys the franchise would include several of them.

Q. You'll be so happy if the team moves, won't you?

A. I get this question all the time (even from a professional athlete in another sport who really should know better). I'll be devastated if that happens, as anyone who cares about the Triangle should be. I keep writing about this because there are still a few important people who legitimately believe it can't or won't happen, and I fear they're either naive or stupid. I'm not trying to get rid of the team; I'm trying to save it. If one thing I write provokes someone to take action, it's worth it.

This market deserves a professional team; it deserves one that plays hard on the ice and fights like hell to do things right off of it, even if it isn't the biggest or richest team in North America. It deserves Chuck Kaiton (who's in the Hall of Fame) and John Forslund (who will be someday) and, yes, Tripp Tracy (who doesn't get enough credit for his dramatic improvement over the past decade, nor the role he initially played in bridging the gap between hockey fans and those new to the sport despite some of his goofball antics at the time).

When the Hurricanes are in the playoffs and the sun is out and the beer is flowing and UNC and State and Duke and ECU fans are standing arm-in-arm, there's nothing like it. I can't tell you how many Canadians who came down here in 2002 and 2006 said it was as much fun as they ever had at a hockey game, if not more. And sad as they were, I remember more than a few Oilers fans wandering down Glenwood in the wee hours after Game 7, partaking in the frivolity despite themselves.

A Hurricanes playoff run is, very possibly, the single greatest thing the Triangle can do together, the most powerful unifying force we have, across collegiate allegiances, between natives and transplants, among Democrats and Republicans, bridging Coke and Pepsi and Cheerwine. Nothing else does that. Nothing. Not the Panthers, with all the deep allegiances to other NFL teams. Certainly not the Hornets/Bobcats. (Arguably, after everything that's happened over the past six years, a Hurricanes playoff run is the only thing on God's green earth that could bring State and Carolina fans back together.) It's the inverse of a hurricane or ice storm: bringing neighbors together by choice, not necessity.

The rest of the league knows it, too. Montreal and New Jersey, two franchises that have played almost as many playoff games at PNC Arena as the Hurricanes themselves, or at least that's how it feels, know it. The Canadian fans know it. Anyone who attended the 2005 Draft or 2011 All-Star Game knows it – those events can be stultifyingly dull, and the Triangle and the Hurricanes did a phenomenal job hosting both, and people around the league noticed. It was only five years ago that national writers almost unanimously believed the All-Star Game cemented the Triangle's place among Sun Belt success stories. Surely even the people utterly convinced I'm out to get the franchise can't blame me for what's happened since?

And let's be perfectly cynical about this: When the Hurricanes are good, that's good for the N&O. The playoffs bring web hits and single-copy sales. A rising tide, whether it's the Hurricanes or the Final Four or even a BCS bowl, lifts all boats, especially ours. There's zero personal incentive on my part for the Hurricanes to miss the playoffs, let alone move. Quite the opposite. But that doesn't mean I would ever be a cheerleader for the franchise, either. I'm going to call it as I see it. Always. In hockey, basketball, football or academic fraud. I owe my readers that much, even if some of them would prefer otherwise.

I invested eight years of my life in this team covering it on a day-to-day basis for the N&O, building the beat into something I'd put up against the coverage in any American market. I've seen what it's like when it's great here. I've also seen this team, its management and its ownership, let this market down badly over the years, too often through small-minded petty foolishness or short-sighted penny-pinching. I have given credit when it is due – to Karmanos, to Rutherford, even to Paul Maurice – and I have criticized when I thought it necessary. Which, quite frankly, is pretty damn often when a team misses the playoffs seven years in a row in a league where more than half the teams make the playoffs each year. How low are your standards if that's acceptable? I don't think that's “negative,” as some people like to say about any critical opinion that doesn't jibe with theirs. I think it's honest. That's what I expect from other journalists, especially columnists. My readers should expect the same from me.

(Deep breath. Let's continue.)

Q. Do you think it's important Francis make a splash this offseason with a trade or free agent, considering current press clippings?

A. As noted above, they're going to have to spend some money, so I wouldn't say it's important, necessarily, but it's probably going to happen anyway. I wouldn't be surprised if there's a big name that arrives via trade – someone at the level of, if not specifically, Rick Nash – since the Hurricanes can absorb a big contract from a cap-strapped team. And people who have seen Sebastian Aho play in person rave about him, to the point where I fear expectations may be a little unrealistic already. Regardless, he projects as a top-six forward for a long time.

While Francis has done a good job skewing the roster younger – a process Rutherford wouldn't or couldn't fully undertake – it's time to add some veterans who can add some much-needed experience and personality to the room. With all the openings at forward and money to spend, there have to be some Kevyn Adams/Scott Walker types out there who can bring stability to what is a very young and at times vanilla group.

Q. The Canes desperately need more goals. Would you trade away a Justin Faulk, Noah Hanifin or Jaccob Slavin for a legit 30-goal scorer?

A. I wouldn't trade Hanifin or Slavin, unless P.K. Subban is coming back the other way. Those are two young defensemen to build around for years, Hanifin on the first pair, Slavin on the second. Same goes for Brett Pesce, who's going to be a second-/third-pair fixture.

Faulk is someone to build around too, but he's a slightly different story. He's 24 and is probably close to maxing out his game – which is very good. If he continues playing like this, he's going to be a perennial Norris Trophy candidate, and if he does continue to improve, he may win the thing before his career is over. He's likely to end up somewhere between a No. 1 defenseman for a bad team and a No. 2-3 defenseman for a good team, and he may still have untapped reservoirs of leadership we haven't seen from him yet.

Meanwhile, the Hurricanes have Slavin and Pesce with Haydn Fleury and Trevor Carrick not far behind.

All of which is a long way around to this point: If you had to give up Faulk as part of a deal for an impact, All-Star caliber forward, you could do it as long as you got a 20-minute defenseman coming back the other way.

Could you, say, package Faulk and Elias Lindholm, whose development has stalled, and Ryan Murphy and a first-round pick for an elite center and a workhorse defenseman? Like, and I'm just spitballing here, Evgeni Malkin and Olli Maatta? Sign me up. (And Murphy's just a throw-in there; his only trade value is so some GM can say “he's a former first-round pick.”)

Maybe you could even make it a bigger deal with Matt Murray, which doesn't make sense for the Penguins but Marc-Andre Fleury has a no-trade clause and Rutherford has never been able to control himself when he has two No. 1 goalies. His trade finger gets too itchy.

Anyway, I wouldn't trade Faulk unless there was some serious talent coming this way. Nor has that been Francis' style so far. But I wouldn't rule it out automatically.

Q. Trading Faulk would be bad enough – why have you advocated for a Jeff Skinner trade? Isn't he the young face of the franchise?

A. I did, but I'm not as much now.

I thought for a long time that a one-dimensional forward with concussion issues was a luxury the Hurricanes couldn't afford during the rebuilding process and that the Hurricanes would be wise to hedge their bets on his health at some point. I've backed off a bit after his play and that of the team last season. He's still a fragile asset but it doesn't make as much sense as it once did to cash in. If the goaltending situation is settled and goal-scoring is this team's biggest weakness, then Skinner is no longer a luxury but a necessity.

For the record: The Skinnermania around the 2011 All-Star Game was something to behold, but marketing shouldn't – and can't – be a consideration. A Skinner deal should be evaluated strictly on its hockey merits. Getting too attached to players is a big reason this franchise ended up in the fix it's in.

Q. On that note, should the Hurricanes bring back Eric Staal?

A. No. I think he's a good player and a good person and he and his family have been more than accommodating over the years but quite frankly his tenure ran its course here and the Hurricanes need a different set of personalities in the dressing room to continue to progress. Maybe if the Hurricanes had made the playoffs more often in the 2007-13 period, things would have turned out differently for him here. But it was time for a change.

Q. What about Cam Ward?

A. Probably more wiggle room there. Wrote about it at the end of the season. The Hurricanes need a stopgap goalie to get them through to Alex Nedeljkovic, who looks like he could be a good one but isn't anywhere close to NHL-ready. That could be Ward, at a considerable discount from the $6.3 million he was making. But it's another area where it makes sense to go in a different direction. Ward hasn't been able to get the Hurricanes into the playoffs (not that it's his fault). Maybe another goalie can. If I were Francis, I'd see what's out there at the draft and July 1 before going back to the table with Ward.

Q. What about Jordan Staal?

A. He came here to play with his brother. You have to ask yourself, how motivated is he really going to be now? That's not questioning his character by any means; that's a natural dynamic that would apply to anyone in that particular situation. Purely from a hockey perspective, does four more years at $6 million make sense for a guy who hasn't scored as the Hurricanes projected and played his best hockey in a checking role? It's an open question. If the right trade came along, you'd have to consider it, especially if you can get multiple top-nine pieces back. But you can also make a strong case that he helps you get to the cap floor and eats minutes no one else can play for the Hurricanes, so you ignore the contract. That'd be a slam-dunk argument if he emerges as a vocal, driven leader in Eric's absence next season.

It's not inconceivable; I honestly thought Rod Brind'Amour was the kind of guy who was a great alternate captain but might not be vocal enough to be a great captain. Obviously, I was dead wrong about that. He just never had a chance to show what he could really do in Francis' shadow or in deference to Francis. Maybe Jordan Staal is the same way, and as hard as it would have been for Brind'Amour to step on Francis' toes, it would be even harder to step on your brother's toes.

Q. Given the success of the Penguins, maybe Rutherford wasn't the problem after all?

A. I couldn't be less surprised at the success Rutherford has had in Pittsburgh. I'm more surprised it took this long (and maybe it wouldn't have if the Canes hadn't beaten him to Peters in 2014). That's always been his strong suit: nipping and tucking to make a good team better. But he also didn't have the stomach or energy to begin a full-scale rebuilding process in Raleigh, and it was time for a different voice at the top anyway. The Penguins were a perfect two- to three-year project for Rutherford and it's bearing fruit now.

Rutherford was hamstrung by the Hurricanes' finances, but he made a few mistakes the franchise couldn't overcome – the Zach Boychuk-Phillippe Paradis-Skinner-Murphy-traded for Jordan Staal string of first-rounders was crippling for a budget team despite Skinner's immediate success – and the Alexander Semin extension was the final straw. Rutherford said Semin would have gone back to Russia if he didn't get that bloated five-year, $35 million deal; as good as Semin looked at times in that first season, no one would have balked if he demanded that deal and left.

That said, Rutherford deserves enormous credit for building the foundation of sustained success in the 1999-2006 period – the Glen Wesley era, if you will – and for his in-season maneuvering with the 2006 team. His faith in Maurice probably held the Hurricanes back a couple times, but he proved everyone wrong when Maurice turned out to be the perfect person to hone that 2009 team to a fine edge.

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