Oct 22


Q&A: Larry Quinn

Larry Quinn, once a boy wonder, turned 60 earlier this year. He’s a couple of years removed by his tenure as managing partner of the Buffalo Sabres and membership on the Erie Canal Harbor Development Corp.

During his carrer, he served as development commissioner under Mayor Jimmy Griffin and later oversaw the construction of what is now First Niagara Center. His tenure with the Sabres won him both praise for helping to rescue the franchise out of bankruptcy and implementing a number of innovations, and criticism for the loss of popular stars including Pat Lafontaine and Chris Drury.

He’s now got the time and money to focus on projects that he finds “personally fulfilling,” as he said at the outset of his interview with Investigative Post. While he’s no longer in the public eye, he is still a player behind the scenes in the hockey and development world.

Investigative Post Editor Jim Heaney interviewed Quinn last Thursday, Oct. 18, the day after he played hockey for the first time since undergoing open heart surgery in 2010. A 5 minute, 8 second video clip including interview highlights is posted above. The full 24 minute, 32 second interview is posted deeper in the post.

If you want to read more, check out a couple of previous interviews here and here.

The transcript below has been edited lightly for clarity.

Heaney: We’re in the middle of a standoff between the NHL and the players’ association over a contract. The owners are prohibited from talking at this point, so you’re probably as close as we’re going to get to an owner’s perspective. There’s a lot of talk back and forth about the economic state of the game. You were with the Sabres twice for how long a period of time?

Quinn: I was with the Sabres twice and the Penguins for a two-year period, so overall, about 18 years.

Heaney: So you’ve been in the league a long time. What is the state of league economics right now? Clearly revenue is growing. Are there still a lot of haves and have nots – teams making money and teams losing money?

Quinn: No question. There’s a real disparity in the distribution of that revenue. I think we all know, and I don’t have to say which ones, who are experiencing faster growth and growth from a much bigger base. Ten percent of a million dollars a game is a lot more than 10 percent of $300,000 a game. So those teams are growing at a fast rate and growing from a large base. We’ve had an acceleration of the value of the Canadian currency, which has caused the greater distribution of the income to Canadian teams versus American. So you have those factors weighing in.

People say, “If you’ve made $3.3 billion, how can the league be suffering?” Well there’s a disparity. I would say probably of the 30 teams – I don’t know this exactly – but it used to shake out that the top 10 made money, the top six or seven made a lot of money. The ones in the middle ten, like the Buffalo Sabres, when we were running it, we would make money, but we wouldn’t make money on the hockey operations. But if you combine that with all other arena activities we were net cash flow positive. I think we’d have trouble in today’s environment to be that way with the higher salaries.

The other ten teams, they lose money – some of them lots of money – so therein lies the problem. I think that this conflict – if you’ll call it that – has all of those elements to it.

The league will say “We can’t afford to pay 57 percent of our income to our hockey players,” and I think they’re right about that. I think that it’s too high a percentage.

On the flip side, the players will say, “Ten of your teams can easily and 10 of them can’t so why don’t we set up a system where the assistance to the lower ten is shared by the owners and the players.”

Heaney: Do they have a point?

Quinn:  I think they do have a point and I think the league has recognized it. I don’t know what the players’ reaction today (Thursday) is going to be to the proposal that was made on Monday. In that proposal, the league just about doubled the revenue sharing from the larger clubs. I think it will probably go up higher than that because when you take 10 teams, if they go down to 50 percent they’re giving back a couple hundred million dollars and probably 10 of those teams are going to get most of that $200 million, so in theory they can afford to put a lot of that back into a revenue sharing pool  that lifts the bottom third.

What you want as a fan – you want teams that are stable and can compete with each other. The spread in the wealth to the poor after seven years in the current CBA became too great. I think you start to see a problem in the competitiveness.

Heaney: What went wrong from the owner’s perspective with the last deal? Because it was a deal they drove a hard bargain and got.

Quinn: I’d say if I was going to be critical of it, they won the battle over having a cap and a percentage of revenue in escrow, which are very good things for the stability of the league and the teams. They lost the war over those things that tend to escalate contracts.

What I mean by that, for instance, Group II compensation, where we saw with Thomas Vanek’s deal and a number of others. The compensation for a team that lost a player to the Group II offer sheet became so low the teams started raiding teams. You saw Vanek’s number, Dustin Penner, who went from Anaheim to Edmonton, the offer sheet that was made this year to Shea Webber – so it’s just an enormous escalation of salaries.

Did the owners focus on it well enough in the last negotiation? My personal opinion: no. I think they didn’t focus on that.

I think the Canadian currency issue, which nobody really paid much attention to seven years ago – because the Canadian currency had historically been so low relative to the dollar – really threw a monkey wrench into the economics of the smaller teams, most of which are in the U.S. So those things weren’t focused on. There’s no point in putting blame on it, but they have to be fixed.

Heaney: If they made Larry Quinn arbitrator tomorrow, binding arbitration, what would be the rough framework of the deal you would put in place?

Quinn: Well first of all, I’m very in line with what Gary Bettman is trying to do.

I’d do a long-term deal because what the sport can’t have is this constant reevaluating in relationships between labor and management. It’s not healthy for the fans or the sport.

I would put salaries at 50 percent but I would phase it in. I might say, “Let’s start at 54 percent this year and grow to 50 over maybe three years.”

Heaney: Grow or shrink, depending on your point of view (laughs).

Quinn: See the thing – and you and I talked about this off camera – the player makes his money not just based on a percentage, but the number and the gross. So the league revenue has grown. When we first started the new CBA, roughly $2.1 billion, I believe, to $3.3 billion, nobody thought it would grow that much. Their 57 percent of $3.3 billion is worth a lot more than if we’d given him 60 percent of $2 billion – a lot more. So it’s not just the percentage, it’s how much you grow the game to constitute what a player makes.

I think the thing that I find frustrating in all of these discussions is that there’s no real focus on the growing the game part and the negotiation – Donald Fehr’s, anyways – seems to be all about what percentage I’m going to get. And he’s comparing everything to the existing numbers and saying “we’re giving back this.” Well, in actuality, if you cooperated a little bit more and helped grow the game, your players might make a lot more, as witnessed by this last CBA. With a salary cap — the great bugaboo, the horrible thing that’s going to happen to players — during this CBA the average salary went from $1.7 million, $1.6 million, to $2.4 million. It turned out to be a wonderful thing for players. Why? Because of the enormous revenue.

Heaney: So you would do a long-term deal. You wouldn’t get the 50 percent immediately, but would phase it in. I take it you would do revenue sharing, as well?

Quinn: Oh yeah. I think the players are right about that and I think the players are right about the roll back.

The last CBA we did a major roll back because we were going from a system that had no checks and balances to a cap system. And without a roll back there were just a number of teams that couldn’t meet the cap because they had high salary obligations. This time going in every team knew there was a cap. Every team knew that it was going to be certainly less than the current cap. So all those guys that signed contracts this summer, it wasn’t like there was an unknown. And I think it’s unfair for them to ask them to roll back on obligations they made. So I’m not sympathetic to that argument.

I also believe that revenue sharing has to be increased, but so does the league. A lot of people don’t realize that the league has made a proposal to the players which almost doubles the amount of revenue sharing. Probably still not enough yet, and when you calculate the windfall that seven or eight teams get, the windfall is more than their additional contribution to revenue sharing. So I suspect that that issue of revenue sharing ought to be put into it. I don’t think it’s going to be ultimately as contentious as the players make it out to be. I just don’t think they’ve gotten to that issue yet.

And then the other thing, and I say this because we didn’t complete it. I think that the issue of freedom of movement of players – I like the league’s proposal of two years of Group I instead of three. So it gets the player – because there’s younger players contributing to the league now – so it gets the player into the more senior process and gives them further rights. The problem is that you can’t have arbitration and Group II  offer sheets at the same time.

Heaney: Explain Group II offer sheets to the viewers.

Quinn: What it means is that when a player becomes a Group II, which means he’s been in the league for three years, he gets more rights to move. It means that another team can sign him. When you’re a Group I player another team cannot sign you. The team that drafted you has these rights. But then there’s caps and so forth so the guys do alright. But once you get to be – depending on when you entered the league – three years into it, you still want to restrict unfettered movement because the fans will lose all identification with the player and the teams. And yet, if you give no tools for the player to accelerate his contract – a player like Tyler Myers for example, who’s a standout player at a very young age –he has no way to get any financial gain. There’s no leverage.

What the teams and league give players now is two things: They give them the right to arbitration after their second year of Group II, so four years into the league, five years in they have the right of arbitration. The other thing they give them is a restricted free agency, which means that any team can make an offer to any other player who’s a Group II player. So Tyler Myers, if he had not signed a contract with the Sabres last year, could have been available to any team in the league, but the Sabres would have the right to match that offer or get compensation. So it’s a leveler on that rapid growth.

The problem is that the players have it both ways. So if you don’t give me a new contract, then I have arbitration. And so what happens, a good example is Thomas Vanek gets a group two offer sheet from Edmonton. God love Thomas, he’s a fantastic player who earns everything he gets. But he now goes from being a Group I to a Group II player who got a raise. I might be wrong in this, so forgive me Thomas if you’re watching, but he went from approximately $1.5 million to $2 million to $7.5 million with a $10 million signing bonus.

Heaney: That must have killed Tom Golisano (laughs). And you.

Quinn: I won’t editorialize. But what it did do is it then took every single player who became Group II, who had statistics near Thomas or close to him, who didn’t get an offer sheet can say, “Well Vanek had 40 goals. I had 35, so if he gets $6 million I’m worth $5 million.” So you have this enormous acceleration of contracts.

Heaney: So that’s really the problem in the last CBA?

Quinn: I personally believe that you can’t have arbitration and Group II offer sheets. It’s one or the other, and I think the players ought to decide. I don’t know if the league agrees with my analysis, but you have to fix that.

The last thing is free agency. I think a lot of arguments have been that we need to raise the age of free agency. I think it’s seven years if you entered the league at age 18, so There are some 25-year-old free agents. Unrestricted. I think Jay Daniel Bouwmeester was one. I’m pretty sure Zach Parise was another this year, or 10 years of service. It used to be age 31. It’s now age 27.

And the problem with that is that again, teams are locking players in before they should – before the player deserves it – because they’re going to be free at such a young age. You spent all this time developing a player and then he walks away from you. I think the way you can solve that is have a graduated free agency. So at age 27 you’re a free agent. Maybe it’s age 28. But the losing team will get some compensation.

Look at New Jersey this year. Zach Parise’s a great player. I’m sure that most of his success has been through his own efforts, talent, and so forth. But the New Jersey system fostered and nurtured and developed him for seven years, as well, and he’s gone and they get nothing for all that effort, money, and energy and making him the captain and all that. So maybe from age 28 to 30 if a player does leave, maybe you get a first round pick. So that’s what I would do.

The misdirection that I think is going on right now is that too much of the inner harbor is being made into a seasonal recreational place.

Heaney: Alright let’s change gears. You spent a lot of your life in the development business, both on the government and private-sector side. Let’s talk about some of those issues relative to Buffalo. Right now there’s kind of a turf battle of who’s going to develop the Outer Harbor. The City of Buffalo, Mayor Byron Brown, wants the rights to develop that. The Erie Canal Harbor Development Corporation is being championed by Congressman Brian Higgins for  those rights. Who do you think ought to have the rights based on the track record?

Quinn: I think there’s no question it should be the Erie Canal Harbor Development Corporation for a lot of reasons.

First of all is that the interface between the private sector and government should have as little politics in it as possible. One of the reasons why that corporation was formed is that a.) it can develop a plan and then it can implement the plan over a number of political cycles. The problem with Buffalo is that so many of the plans and development strategies are tied to the political fortunes of one politician or another, that when that politician comes and goes the plans all change.

To do real development and to do it correctly – if you take Europe after the Second World War, it had to completely reconstruct itself. They did it over a period of 30 years. Some of the cities we think are wonderful were rebuilt in a very systematic way over a long period of time. The problem with the city administration is a.) they don’t have the capacity in house to foster a development plan and b.) you’re subject to the vagaries of the Common Council, the mayor, and their election cycle.

“Mickey Kerns is this big wonderful guy who’s going to redo the waterfront.” Well the reality is that I think he used it as a political drum to beat and after he beat that drum enough he left the Council and went to the New York State Assembly.

I think Brian’s absolutely right.I think that continuity of plan and continuity of implementation – and the last thing is that the Erie Canal Harbor Development Corporation is a subsidiary of the state. The state’s the one with the money. The city’ has put no money in the waterfront to speak of, literally none. And so if you want the state government to be an active partner and an entity that will provide large capital dollars, it’s very foolish to try and take away the implementation from it. It’s almost, I’d say, childish.

Heaney: In a nutshell, what do you think ought to be developed? If it gets done right and we’re looking at this 15 to 20 years from now, what’s out there?

I think that what the governor’s proposed makes a lot of sense.

Quinn: I’ve always felt that, on a smaller scale, the model for Buffalo should be Chicago. Chicago has taken their “Outer Harbor” and made it for, the most part recreational. It’s where all their major museums are located. It’s where all their seasonal recreational activity and their best park in the city is located. It’s phenomenal.

Michigan Avenue is the street that would be our inner harbor. It’s where the commercial side of the city is centered. It’s got the water views. It’s got the access to the water and I view that as the inner harbor.

The misdirection that I think is going on right now is that too much of the inner harbor is being made into a seasonal recreational place. I think there’s room for that, the canals and all that, but really what it ought to be is the place where you can invest commercially and build up the jobs and the center of gravity of downtown.

Heaney: So more commerce than retail.

Quinn: Much more so. And if you think about it, any business would love an address on the waterfront, provided it was part of the infrastructure downtown, and the inner harbor is where those two meet.

Heaney: So you’re not necessarily a big fan of the way things have developed since you left the board?

Quinn: I know it’s wonderful and you can go down and sit in a lounge chair, and I love that, too. But it’s very short sighted because it’s the place where you could have started to build tax base and jobs and investment.

Heaney: The kind of businesses would be what, office? Give me a flavor.

Quinn: A lot of residential, a lot of small stores. You’re going to need an anchor to make it work and I think that they know it now. They don’t want to say it publicly, but they can’t get any restauranteurs or anything to invest down there because they don’t have that magnet to draw people down in the winter. Right now it’s a three-month operation and that’s sad. The outer harbor is where that three-month operation ought to be and that could be wonderful.

Heaney: What do you think about the Webster Block decision by the mayor to select Sabres as the developer to put in a hotel, ice rinks, a little bit of retail?

Quinn: I think it’s great. Terry Pegula has demonstrated that he’s prepared to invest a lot of money in Buffalo and that’s an extremely good thing. And I think the mayor had to make that choice. He had to. I guess I would’ve liked to have seen him see what Carl Paladino had to offer and maybe create a forced marriage. I would’ve liked to have seen that. But maybe they tried and it wasn’t possible. I don’t know. But Terry has made an enormous commitment. I don’t think that the investment really is economically viable as an independent entity. I think Terry’s going to subsidize it. At least it appears that way to me.

If you add up all the people on the payroll in economic development, I think it’s about $3 million or $4 million a year.

Heaney: Much like perhaps his hockey team the way he’s spending money (laughs).

Let me close with a couple questions stepping back economic development-wise. You’ve been critical in the past about the way economic development has been done in this town for a very long time. Too many agencies, competing agendas. Talk to me a little bit about what the problem has been and to what degree do you think the governor’s $1 billion initiative will change that dynamic, and if you think it makes sense.

Quinn: I think that what the governor’s proposed makes a lot of sense. Again, I’m not that close to it at all but what I understood he to say was, “Here’s $1 billion for you at the end of you developing a very thoughtful and realistic strategy for creating jobs.” So much of what happens in Buffalo and a lot of cities, you make plans with no end game – I don’t know if it’s going to get funded, I don’t know if there’s a place that will fund this plan. So as a result you don’t do good plans. That’s number one.

Number two, I don’t know that they put a lot of restrictions on the use of the money. It wasn’t like the old federal categorical programs where you’re doing the limbo to try and force what you need to do for your community and to the Washington guys’ vision of how money ought to be spent. My understanding of the governor’s proposal was that it had an inherent flexibility in it. So I think that his approach is absolutely right.

I think the only thing that I maybe don’t love about it, but maybe it works, is these regional councils seem a little unwieldy to me. But who am I to say because I’m not part of them and I don’t know.

The problem with economic development on the local side, which I don’t think we did with the Griffin administration. When I was in city government we had the UDAG program, the block grant program. People knew that they could come in, and quite frankly, they talked to me and we could either make a decision or not and we had capital dollars to implement programs and we had tremendous success – probably the greatest building boom Buffalo’s ever had.

The problem with the economic development program in Buffalo is there’s the Erie County IDA, the State Economic Development Corporation, the City of Buffalo Strategic Investments, BURA, that LOA– there’s just so many of them. The ECIDA, I don’t even know what they’re called anymore. They city has their own waterfront development agencies. All these different people.

Heaney: Too many different players?

Quinn: Way too many players,and the cost of it is extraordinary. If you add up all the people on the payroll in economic development, I think it’s about $3 million or $4 million a year. Imagine if you just took all that and said, “Look, we need a million dollars a year for overhead. We’re going to take $3 million of it and we’re going to do specific projects,”and when somebody comes in and has an idea you can actually implement stuff.

The other part of it is that because of the nature of that thing – multiple agencies, multiple missions – they end up fighting with each other for dollars. They end up spending most of their energy on kind of competing with each other for the public ear and attention of the media instead of doing economic development. Get on an airplane and go to China and see if we can reverse some of that flow.

Heaney: At the News we used to call it economic development by press release.

Quinn: Absolutely.

Heaney: They want the splash when they announce the project they want, the groundbreaking and then they want the ribbon cutting. At least if they get the initial splash well, that’s something.

Quinn: Somebody told me once that if Buffalo built everything they issued press releases on, it would be the biggest city in the world.

And this is sad but it’s true , the only city in the world  – in the world – of a population of over 100,000 people that’s lost population since 1900 is the City of Buffalo. In the world.

Heaney: Really? In the world?

Quinn: In the world… Think about it. What city was that big has less population?

The flip side of it, and I learned this recently and thought it was astounding, was that in the time of Christ, Rome had a population of about 1 million people. At the time that Michelangelo was painting the Sistine Chapel, it had a population of 60,000. It now has a population of, I think, 4 or 5 million. So cities do have that crazy cycle. I’m not suggesting any pessimism about Buffalo – in fact, the opposite. But what I am saying though too is that it shows our economic development efforts since I think Jimmy Griffin have been pathetic.

Investigative Post

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