How to kill a franchise in 535 days
by James Mirtle on Dec 11, 2009 7:00 AM CST
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I've written about this topic often enough that regular readers will know exactly what the above graphic indicates. But, for the uninitiated, we've got a nice report from Mr. Cristodero down in sunny Tampa:
Attendance figures provided by Hillsborough County — an average turnstile count of 10,576 through the first 12 games at the 22,000 capacity St. Pete Times Forum — indicate a difficult environment, especially considering ticket and concession sales are the lifeblood of NHL franchises.
Officially, Tampa Bay entered Wednesday with an average announced crowd of 14,470, 24th in the 30-team league, and it drew an announced 13,477 against the Oilers. But as is customary in the NHL, those numbers include tickets sold and distributed. The county's number is fans in the building.
As for the chart at the top there, well that's the month-by-month attendance from 2006-07 to now, based on those inflated, announced figures. If you look closely, you'll see the trend.
Back in 2005-06, the first year out of the lockout, the Lightning had the second-best attendance in the NHL, averaging more than 20,000 fans per game. Tampa Bay was the sunbelt success story in the league, the exception to the rule that Gary Bettman and friends could very well point to to refute their doubters.
Two years later, they finished last overall in the standings. And, more importantly when it comes to said trend, a few months after that, Oren Koules and Len Barrie bought a small chunk of the team and borrowed the rest.
A little more than 500 days later, it's dying on the vine.
This team is for sale on the cheap, but there have been few potential buyers. Barrie could be in legal trouble, and he's definitely in financial ruin. Koules has kept quiet, but at this rate may be headed for bankruptcy barring a few more Saw sequels.
I hear from fans in Tampa on this topic more than I'd like to, and you have to pity them. Sure, they got their Cup five years ago, but ugly doesn't begin to describe the current situation. How do you cheer for this? Many are throwing in the towel on this franchise, walking away until things change in ownership and the toxic stew that surrounds Vinny Lecavalier as a holdover from last year either goes away or their star is traded.
To me, it looks like things are going to get worse before they get better in Tampa, which will make for some very trying times in the near future. They've got to be losing an incredible amount of money, cash they don't have, given they've discounted tickets that still aren't selling, but when does it all finally fall apart?
And what happens then?
Questions for the governors next week in Pebble Beach, to be sure.
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Contraction/Relocation is the only answer for a lot of teams.
They don’t call it a depression (Or more accurately a correction) for nothing, you know.
Great post James. Thanks.
Ta,
Would you seriously contract or relocate a recent Stanley Cup winner whose only fault is that it basically got run into the ground by a couple of incompetent idiots? Talk about throwing the baby out with the bathwater.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Tampa is a city that is contracting due to the complete disaster that is the Florida housing market, just like Miami. They expanded due to the bubble and they’re contracting due to the unsustainable bust. Ignoring the realities of these two cities is just stupidity. I live in Florida, have for over 20 years and been to games in both places. I’m not some bitter Winnipeggeur. Truth is, even after the Cup, walking up and buying tickets outside the Ice Palace was never more than a short walk away…. good seats at stupid discounts.
Contraction/Relocation is coming to the NHL no matter how much Bettman tries to spin it around. Unless and until there is a functional change in the way things work at the top end of the U.S. political and financial system we’re just at the beginning of this depression not nearing the end of it.
Do I want to see this happen? No. Tampa is the closest NHL arena to my home. But, like James reported about Nashville, do you really think the NHL’s current business model will allow a team drawing even 14k a night (which the Bolts are now not doing and the numbers are trending downwards) will survive in a market with other major sports?
The last time the US went through a major economic downturn (the 70’s) it resulted in a lot of team movement. Why should now be so much different?
Ta,
I’ve lived in Tampa and watched hockey regularly there. It’s definitely a hockey market, but no one wants to pay money to go see a losing team. See: Chicago Blackhawks. No one ever thought of contracting them when they were barely bringing in 10K into their building. And why’s that? Because they’re an Original Six team, and not some 90’s Southern expansion team. Same problem, but different “solution.” Nice double-standard there, huh?
Raw Charge, an SBN Tampa Bay Lightning community. Calling shotgun in the clown car.
by Cassie McClellan on Dec 11, 2009 8:53 AM CST up reply actions 2 recs
Pay money?
I went to opening night last year. I got two tickets for $16. That’s less than the cost of going to a movie. If you’re not willing to pay that then you’re not willing to watch hockey. I sat in a section with 10 people. I looked across the arena and saw 2 sections with maybe 5 people in them. On opening night. When they weren’t a winning or losing team. In Seen Stamkos debut.
by twoeightnine on Dec 11, 2009 10:57 AM CST up reply actions
I’m not convinced that the NHL will be able to support 30 markets with their current business model which is predicated on very high attendance numbers/corporate sponsorship. I’d hazard a guess of around 17,000 tickets per game at full price. Money for such things is contracting at a very alarming rate….like a 3rd rate goalie’s sphincter staring down an Ovechkin breakaway. The graph James has in the post is frightening…. it looks like the YOY change in consumer credit charts I’ve been looking at. Actually, those are worse.
The fundamentals of the US Economy are worsening not improving, no matter what the talking heads on financial TV are telling us. Markets like Tampa that were built on the back of the Housing Bubble will be hoeing a tough row for the foreseeable future. They might not get contracted/relocated… but, in my analysis, I don’t see the NHL surviving the next decade with these 30 markets. Now, you look around and figure out which 4-6 have the highest probability of not making the cut.
Ta,
I did hear some talk about moving the Blackhawks, although highly speculative – but it wouldn’t ever happen because Chicago is an Original Six team, but because the ownership wasn’t losing more money than it could afford and was fine with low attendance. If it doesn’t bother ownership, and doesn’t threaten the team’s viability financially, then there isn’t a danger of moving or contraction.
It isn’t where the team is situated, or even how bad the attendance is – but the tolerance of ownership for low attendance. If it doesn’t matter to the owners, a team won’t be in trouble.
"While there's life, there's hope." --Cicero
For those playing at home:
There’s Tampa
There’s trouble brewing in Columbus due to rising costs
Nashville is losing money and surviving on revenue sharing
Phoenix is…well…Phoenix
At least Atlanta now has some stability with their ownership, even if it isn’t the happiest marriage.
None of these teams existed prior to 1992.
-Kevin Forbes
Hockey's Future
The lesson here seems to be that the NHL maybe should’ve waited another decade for their initial (1991-94) expansion markets to stabilize before setting up a new round, especially given that three of those four markets you mentioned were added in the 1997-2000 expansion. Hell, when the last batch of expansions were approved, we were in the midst of seeing all four ex-WHA teams sold to southern US markets, with only one (Edmonton) receiving an eleventh-hour reprieve. And they added to the situation?
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
Yep, expanding back to Minnesota was such a mistake. God knows MN doesn’t deserve a hockey team.
Hopefully the league will similarly correct a couple more mistakes in a few years.
There's no use being pessimistic, it won't work anyway.
Oh, for Christ’s sake. Where did I say that? I knew I should’ve kept that clause at the end where I said, “look, I don’t begrudge Minny their team or anything, because they’ve done just fine; I just think the NHL should’ve waited to make sure their original Sun Belt experiments didn’t go tits-up before adding even more.” Also, to quote myself:
three of those four markets you mentioned were added in the 1997-2000 expansion
Minnesota’s not the problem. Everyone else is.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
What has happened to Tampa since the lockout has been awful…
by Bosc Ulrich on Dec 11, 2009 9:27 AM CST reply actions 1 recs
Contraction
Not relocation.
Wipe out 6-8 teams and put a couple hundred grinders back in the AHL where they belong.
The sunbelt is no place for hockey. Never was. And the New York lawyer’s promised national TV deal never came about. End the farce now.
by garth the hoser on Dec 11, 2009 9:28 AM CST reply actions
So I take it the Leafs will be on that contraction list right?
Isn’t it the popular memo to include bottom dwellers? yeah, wipe out Toronto… Then we can get Montreal in there because they suck this season too. Then we’ll deal with your sunbelt hate… er, serious concern for the league and nip the rest of the teams in the bud.
Mirtle has a point, but the knee-jerk reaction from some is beyond ridiculous. A hockey market with a history of attendance success should be contracted because of a mismanaged team at current that no one wants to suffer through? Right…
To strive, to seek, to find, and to forever keep it Raw. Raw Charge.
by John Fontana on Dec 11, 2009 9:59 AM CST up reply actions
No, the popular memo is to include teams that aren't drawing, aren't making money.
ie. teams that are not drawing 100% and 103% capacity.
by twoeightnine on Dec 11, 2009 11:06 AM CST up reply actions
What’s the correlation between on-ice success over the previous couple of seasons and attendance? Outside specific outlier markets (i.e. Canada, Minnesota), I bet it’s pretty strong.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
it is, absolutely, and attendance lags behind wins. Just look at Washington. A barely half-full building for two-plus years, and that’s with Ovechkin. They stemrolled over everyone the second half of 2007-2008, but it wasn’t until the last half of March that DC took notice and the sellouts started. Even last season, attendance was strong overall, but noticeably fewer butts in seats until January or so (in part due to football season).
If you're implying that I hate greasy lawyers
Guilty as charged.
by garth the hoser on Dec 13, 2009 7:31 AM CST up reply actions
It’s not a matter of sucking, it’s a matter of the market. Sure Tampa was a terrific hockey market when the team was elite. Now the team is pretty good (not awful or great) and no one’s going to games. Same thing happened in Carolina. Worse, perhaps. When the team was elite, they filled the place. When the team wasn’t so great, they drew well under 10,000 per game. Atlanta has a pretty good team, up-tempo, fun-to-watch, and the place is empty — even to play elite or marquee teams.
I agree you can’t fold or move a team that won a Cup just a few years ago, but it’s also probably true that the Sun Belt wasn’t a very good idea. If a community can’t put more than 10,000 into a building for a team that isn’t contending for a Cup, it’s probably not a great hockey market. Toronto still fills the joint.
Same thing happened in Chicago. Same thing happened in Anaheim. Same thing happened in St. Louis. Same thing happened in Long Island. Same thing happened in Buffalo. Same thing happened in Pittsburgh. Same thing happened in Washington. Same thing happened in Los Angeles.
If the NHL should get out of any market that goes soft when the team is lousy, is the goal to have only a 10 or 12 team league?
Hockey blogging can't get any flatter.
How soft is soft?
If a team loses significant amounts of money in years when it’s average competitively and only makes money when it’s one of the top five or six teams, then yeah, that market is too soft.
I don’t think that happened here, though. My impression (at least from James’s posts) is that fans aren’t staying away because the team is lousy; they’re staying away because the team is lousy and the franchise is screwed up. I don’t remember Tampa Bay being a basket case in the multiple lousy years before the Cup.
I've been looking at the sky
by Back In Black on Dec 11, 2009 11:14 AM CST up reply actions
I think the fans would be there if those teams were simply Rangers level successful on the ice the past few years: make the playoffs consistently, even though they never really flirt with top 5 or 6 in the NHL. But that’s the case with all the markets I listed above. Nashville may be the exception since they’ve generally had that level of success over that time period, but I wouldn’t lump all these guys in that category.
Frankly, the team success in the markets that we’re complaining about has been complete boom or bust. There has been no stability in the on ice product just as there hasn’t been any in the off ice issues.
Who has been average competitively that we are talking about losing tons of money right now? It’s Nashville and no one else. Colombus was at that level last year, but it was YEARS of continued losses built up that put them in trouble.
All the franchises I listed above looked bad financially when the team was lousy. It’s not a southern phenomenon. It’s very commonplace in the NHL as a whole.
Hockey blogging can't get any flatter.
I’m not trying to pass judgment on any franchise in this; I was speaking hypothetically (although one franchise’s apparent cycle between Stanley Cups and bankruptcy has had me muttering).
My point, though, is that if an otherwise large market wasn’t viable for hockey, this is what it would likely look like: mildly successful off-ice during years with long playoff runs, and a return to red ink as soon as the level of competitiveness slacked off. I don’t think this fits Tampa, and as you pointed out several other franchises haven’t even had the opportunity to test this.
I've been looking at the sky
by Back In Black on Dec 11, 2009 1:55 PM CST up reply actions
File that under “things that’ll never happen”
This is PPP's work account until further notice. Damn Internet.
by David Danforth on Dec 11, 2009 12:44 PM CST up reply actions
I think people are overlooking the damage the ownership has done to this team. It isn’t that people won’t support a bad team (they finished last in 08 and were still drawing well according to the chart above). It is that people won’t support ownership perceived as clowns and are tearing apart the franchise. That is exactly what Koules and Barrie were.
Let’s review the moves of the two when they took over the team.
-Signed of on re-signing Dan Boyle to a long term deal with a no-trade clause only to then turn around in that summer and force him to accept a trade before he played 1 game under that contract. A move that left the team with basically no defense going into the next season.
-They hired Barry Melrose as coach. This is a guy who had been out of the game for 13 years and was generally seen as a clown on tv. This move was laughed at by the hockey community and by the fans. It help serve to turn them off.
-They then sign Lecavalier to an 11 year extension telling the fanbase he would be a Lightning for life. They then follow that up by basically immediately discussing trade talks with other teams about him. That was the final straw the fans couldn’t trust them.
Outside of Toronto and Montreal is their a franchise that could survive all of that? Let’s not forget when the teams were bad and the economy was poor (like in Tampa now) Vancouver, Calgary, and Edmonton couldn’t draw flies. Hell Edmonton almost moved because of fans got fed up with Pocklington. This is nothing to do with being a sunbelt team, it has to do with mismanagement. No matter what the market one has to manage the franchise well for it to be a success.
Look is Tampa going to be a high revenue market like Toronto, no it won’t. It is an older less wealthy market and thus ticket prices in general have to be lower. But having lived in Tampa for a year (and have family that lives down there) there is interest in hockey. Enough I think that it can become a sustainable team. That said one has to manage the franchise well, just like in every other market.
Why should the fact that they won a Cup in the last decade mean anything at all? The fact that they (and Carolina) won Cups and have basically nothing to show for it a few years later makes the situation worse in my mind, not better. It tells me the fanbase is not adequate to support a team. You can make the argument that any team is going to suffer if the on-ice results are bad (and those teams are sucking big time)…but if the your entire business plan depends on having a Cup-winner every season (maybe an overstatement, but I’d bet a good chunk of the teams in the league depend on at least making a round or two of the playoffs to stay out of the red), it simply isn’t sustainable across a 30-team league. Anyway, both of those Cups (over Canadian teams, no less) still feel to me like unjust mistakes that the sooner they are forgotten, the better. Anaheim’s, too.
As for Chicago, even though they stunk out the joint due to a bad owner, were they ever actually in financial trouble? I believe they remained one of the league’s top earning teams. This is not the case in Nashville, Phoenix, etc.
Anyway, both of those Cups (over Canadian teams, no less) still feel to me like unjust mistakes that the sooner they are forgotten, the better. Anaheim’s, too.
Are you being sarcastic here, or are you just trolling?
I've been looking at the sky
by Back In Black on Dec 11, 2009 2:04 PM CST up reply actions
Fun fact: A popular opinion can still be stupid.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
by Doogie2K on Dec 11, 2009 11:04 PM CST up reply actions 4 recs
this deserves to be turned green.
So, what, southern US teams that win over Canadian teams are illegitimate, because they should have just rolled over and let the Canadian team win?
No, the wins were legit. The complaint is the match-ups never should have happened in the first place. :)
Canadians just loved it when Gretzky moved to LA, and when the Nordiques moved away and then won the Cup, and when the Jets moved to a disastrous market in the middle of a frigging desert that the league continues to pretend is a success, and every time an expansion team was awarded to some minor US city while Hamilton was passed over, and that up to 40% of the revenues and probably at least that many players come from Canada while the league headquartered in New York appears to stop at nothing to prevent Canada from getting another team while propping up and bending over backwards for failing southern franchises…
Like SNN Sports said, it’s irrational, but it’s just how it is. A lot of Canadian self-identity centres around two things: hockey, and not being American. The result is a Make-It-Seven nation with a chip on its shoulder.
Out of curiousity, what was the general feeling of American hockey fans when Hartford moved to Carolina and the North Stars moved to Dallas?
From what I recall, Minnesota going to Dallas was a bigger deal – people saw Dallas and thought “100 degrees” and didn’t see how a team would ever survive there. As we’ve seen, the market has solidly embraced hockey – and, it has developed a pretty good developmental hockey system in the area in the process.
Hartford had a crappy team for years and had poor fan support as a result; while going to Raleigh wasn’t seen as a logical choice, I think most people accepted that the Whalers were inevitably doomed in Hartford. Having lived near Hartford and visited the Civic Center several times, I can safely say there’s no way the NHL could have survived in Hartford at the Civic Center – and 11-12 years later, talk of a new arena is still just that: a lot of talk with no action. Further, Peter Karmanos is perfectly happy with his team in Raleigh and has no plans to sell the team – so any talk of moving the Hurricanes is just wasted energy better put toward something else.
Last year, 52 per cent of the NHL was Canadian.
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 12, 2009 1:37 PM CST up reply actions
It might have helped Hamilton in ’97 if they actually had a decent bid. Instead, it was so poorly put together and so woefully inadequate, the NHL refunded the $100,000 non-refundable deposit fee.
It also might have helped in ’90 if Hamilton had been willing to pony up the full $50 million up front instead of asking to make payments over 7 years. You can thank the owners [specifically Jeremy Jacobs] for grabbing the cash up front and not looking at the long-term.
Finally, the fact that [insert location here] provides [insert random percentage] of the players doesn’t mean that said location should have any sort of a guarantee as to how many teams it gets for that league. Team locations are determined by the owners of those teams based on their various concerns – and not every owner has “profit” as the #1 concern. Some don’t mind incurring losses for various reasons.
As I’ve said numerous times: fans don’t move teams – owners do.
Taking the money up front from Ottawa and Tampa certainly didn’t look like a great decision in the early going.
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 14, 2009 1:36 AM CST up reply actions
to be scrupulously accurate...
Hamilton’s superior bid was passed over in favor of a minor Canadian city – Ottawa.
by garth the hoser on Dec 13, 2009 7:29 AM CST up reply actions 1 recs
Not looking to start a fight, but voicing the opinion of 90+% ofCanadianhockey fans in my basement.
Fixed. Stop speaking for the rest of us.
I've been looking at the sky
by Back In Black on Dec 12, 2009 4:04 PM CST up reply actions
I chose not to dispute that statement simply because I’ve listened to Overtime Open Line. You will never find a more wretched hive of scum and villainy.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
by Doogie2K on Dec 12, 2009 5:28 PM CST up reply actions 2 recs
Listening to either the Calgary or Edmonton version makes me want to stab myself in the ears. Seriously, keep a timer sometime to find out when the first time is that someone suggests trading Kipruoff/Iginla/Horcoff/Hemsky. If it’s been more than two losses in a row, I’m betting it’s less than ten minutes.
SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there). Link now 100% less broken.
As for Chicago, even though they stunk out the joint due to a bad owner, were they ever actually in financial trouble? I believe they remained one of the league’s top earning teams. This is not the case in Nashville, Phoenix, etc.
I don’t know about the earnings, but I know the ownership had enough money that they weren’t going to miss any losses as much as some of the owners buying teams with smoke, mirrors, and borrowed money. If the team was losing money, they could still hang one because they were making enough elsewhere.
"While there's life, there's hope." --Cicero
Bill Wirtz made a truck-load of money off his booze and real estate businesses on top of other things. When Rocky took over he said the Hawks were the only business in the red. This was really a byproduct of some backward business practices that led to lack of both exposure and revenue in Chicago, while alienating the older generation of fans and ignoring the younger generation. I think once Bill died attendance started moving up, but after so many years of terrible ownership and poor performance (thanks to the ownership) fans were looking for serious results before coming back.
twitter.com/BlackhawksDL
by Original Six on Dec 11, 2009 8:28 PM CST up reply actions
As I’ve said before, clown car ownership is a symptom, not the problem. Sure, we can look at all of these struggling franchises and point to the fact that ownership has been incompetent and/or (frequently “and”) on shaky financial footing, but that’s only the first step. The fact that the NHL is plagued with weak ownership is a sign of a much deeper problem.
MLB, for example, has the McClatcheys, and David Glass as examples of bad ownership, but those groups aren’t in the same category. Besides, they are only bad from the perspective of putting winning teams on the field; they actually make money. The only comparable owner to what plagues the NHL is Jeff Loria in Miami, and the MLB front office did that to themselves deliberately as a part of destroying the Expos.
If there were any indication that the NHL was going to be able to sell the Coyotes to a decent owner, or that the Bolts would find a good buyer, or if someone could be found to run the Predators who isn’t having financial issues, or the Blue Jackets, or Hurricanes, or the Thrashers (not sure if the Stars belong on this list yet) could do the same, then the problem wouldn’t be so pressing.
Those new ownership groups aren’t there. If being able to point to Tampa’s freak show as the real problem were true, then there would be a solution. There isn’t.
It’s a combination of factors, most of which Tom Luongo hits on. It isn’t a coincidence that most of the teams in really bad shape are in places particularly hard hit by the economy (Florida, Arizona, and Ohio in particular). That has not only reduced teams’ revenues, it’s thinned out the population of people with the means and desire to buy a team. I’d argue that it’s only the last straw, and a lot of the structural problems were already there, but we’re getting a good, long look at who was swimming naked.
The NHL’s business model has been entirely premised upon the idea that it is the smallest of the big sports, rather than the biggest of the second tier ones. This has been exposed. They can’t find enough markets that can attract top tier ownership to be as large as the other three (substitute “sponsors” for “ownership” if you want to talk about NASCAR or the PGA), and they don’t have the fan interest to get themselves the kind of TV contract that one of the top tier sports can get, at least in the US. A big dog should never be reduced to relying on Versus.
Pointing to teams like Chicago or Toronto misses the point. Bill Wirtz could be hilariously inept at every aspect of running the show, and it never threatened the viability of the franchise. He continued to make enough money to keep at it, and, if he had found a way to be forced to sell, it probably wouldn’t have been hard to find another owner who would have been willing to buy a hockey team, so long as he got to have it in Chicago. That means that the situation was, in no way, similar to that in Tampa. The availability of someone else who could step in in the event of a catastrophe is key. Until I see someone who is willing to do that for these other teams, I’m dubious that the quality of current ownership is the real problem.
The NHL is faced with the very difficult task of figuring out what to do given that its self-image turned out to be overinflated. There aren’t any easy answers. I suspect that they realize that they have this problem, but can’t come up with an acceptable way out. Relocation won’t do it, because there aren’t enough markets where they can find ownership of the caliber needed. I think they could probably put two of them somewhere in Ontario, and that’s pretty much it. I don’t think Kansas City or Las Vegas can cut it, and I think that that’s something else they know. So, there options are:
1) Tough it out, and hope that the economy recovers enough to where they can find new ownership that is minimally acceptable and keep what they have going even though it won’t really solve the underlying problem.
2) Allow franchises to relocate in the hopes of finding better owners. This runs into the problem that, after one quick rush to the exits for a couple of teams, it leaves the others sinking, either where they are or in some new inadequate market. That would probably serve only to hasten the collapse of the remainder, and make trying #1 even more difficult.
3) Contraction. The legal, practical, and PR problems of this route are immense. I think that it’s something they would (or even should) do only if there hand is forced by the complete inability of a franchise to continue existing any longer. I would hope that they are coming up with a plan for dealing with it if it happens, so that the crisis could maintain some semblance of order, but I wouldn’t do it voluntarily.
4) Pray for a miracle.
5) Have the league purchase the franchises as things become untenable, as they did with Phoenix. In my view, this is the worst possible choice. Having the league trying to run one team raises enough conflict of interest problems. Having it try to run several is a nightmare that would gut any competitive credibility that it has. The only way I could countenance this is if it’s a part of the process of implementing contraction. Having the league operating teams as a form of run-off is pretty hideous, but better than them not running a liquidation.
I don’t have a better opinion of Gary Bettman, or the puppet masters pulling his strings, than anyone else. Sure, I think the problems they’re facing are their own fault for implementing a business plan that I always thought was destined for failure, but there isn’t any good path for them to go at this point.
by J. Michael Neal on Dec 11, 2009 3:50 PM CST reply actions 8 recs
Very well said
Bleak, dire and all the other adjectives, but it’s a good commentary on where these teams stand right now.
A rock and a hard place doesn’t begin to describe the position they’re in, at this point.
Bloody excellent comment (sry, been watching a ton of Top Gear), JMN. The situation is deteriorating at an alarming rate outside of the NHL. To think that that deterioration is not having an effect on the teams operating at the margin is being willfully obtuse.
To underscore the point about how bad things are (and going to worsen b/c nothing has functionally changed in D.C. to undo the damage they’ve already done) check out this Unemployment chart time series:
http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html
What is the NHL doing to combat that?
Ta,
Koules has kept quiet, but at this rate may be headed for bankruptcy barring a few more Saw sequels.
Care to share with us the source for this unattributed assertion, James? In the (expected) absence of this, I might even settle for some calcs. That would, of course, require your knowledge of the personal finances of Mr. Koules.
They’ve got to be losing an incredible amount of money, cash they don’t have, given they’ve discounted tickets that still aren’t selling
Same thing here, if you don’t mind. then we can review your assumptions and supporting data.
The sale price I’ve heard for the Lightning is incredibly low — so low that it might just cover the debt they’ve got on the team. Koules stands to lose a lot here if they can’t give tickets away (some games have had less than 8,000 fans in the building this season and I’ve highlighted the trend).
They are losing money.
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 11, 2009 6:15 PM CST up reply actions
What number have you heard? What is the nature of your source (without naming it)?
Losing money – sure, why not? You said “losing an incredible amount of money”, and cash that “they don’t have”.
as an aside, what’s with this deal these days on the hockey community about “turnstile count”, the latest buzzword among the Jetties and similar folks? Who cares? What matters is tickets sold. Concessions are pocket change for teams (unless you own your own concession company like Jacobs/Wirtz).
From the article, there is the frequently reported point that the Lightning received a full revenue share. My reading of the CBA pretty clearly indicates that, if the Lightning are plummeting in revenue as Cristodero and others assert, they are not getting a full revenue share. the CBA does not permit it.
Additionally, this idea that sports teams get this huge number of dollars from concessions is rubbish. Purveyors of this meme apparently assume that the concessions revenue is owned by the team. Of course, anyone who knows even the slightest thing about concessions knows that teams only get a portion of that revenue. It is a barely material portion, at best.
Could the Lightning have not received full revenue sharing last season but be ineligible after this one?
Blogging on hockey at fromtherink.com
by James Mirtle on Dec 11, 2009 5:37 PM CST up reply actions
Anything is, of course, theoretically possible, but it is difficult to envision the team having plummeted in ticket sales (as they did last year, dropping by ~2,200 fans per game) and still have satisfied the requirement to maintain league-wide average revenue growth levels. People always focus on the 14,000-paid-attendance requirement, but the requirements are twofold, as you know.
A team is only ineligible for revenue sharing if:
- it’s in the top 15 in gross preseason and regular season revenues, or its DMA is 2.5 million or larger [as determined by Nielsen], or
-
— it has Available Team Player Compensation that exceeds the Targeted Team Player Compensation for the applicable League Year.
Tampa’s DMA isn’t 2.5 million, I doubt the team was in the top-15 in revenues last year, and it’s unlikely [assuming what’s been reported is true] that they had Available Team Player Compensation that exceeded the Targeted Team Player Compensation. Thus, the Lightning would be eligible for revenue sharing.
The penalty for failing to hit the required targets is:
- a 25% reduction in the amount of revenue sharing alloted in the first year, a 40% reduction in the second consecutive year, and
-
— a 50% reduction in the third [or more] consecutive years.
So, even if Tampa in 2008-09 didn’t hit (A) year-over-year growth in excess of the League average, and (B) an average paid attendance of 14,000, the maximum penalty they would have had last year is a 25% reduction in the payout of revenue sharing dollars to get them to the Targeted Team Player Compensation level – and the maximum penalty they’d have for 2009-10 is a 40% reduction on such payments. [The penalty doesn’t apply to disbursements after making the required payments to get teams to the Targeted Team Player Compensation level.] If revenues fell 79% this year and the team averaged 2,000 paid tickets, it would still get revenue sharing – it would just lose 40% of what it was supposed to get.
the issue of contraction/attendance seems to somehow always devolve into an “us vs. them” argument. those “deserving” of hockey and those who are not. I’m not much of a follower of any other sport but hockey, so I can’t say with any degree of certainty just how contentious an issue this would be in other sports. To me, it appears to be far more unique to hockey than it is to baseball, basketball or football.
This post got my brain running, and out of curiosity I threw this spreadsheet together, and shared it on Google docs. I find it interesting that when the attendance arguments creep up, contraction is always the first answer. I’m not saying it’s wrong, but it generally focuses on the idea that “the sun belt teams” (ie – those not deserving of watching hockey) are the first to be listed. I’ve heard arguments about how 20+24 teams would be perfect.
If we were to look at the average attendance since the 01-02 season (an arbitrarily chosen starting point by me) and decide that to get to 24 teams, we’ll cut the bottom 6 in avg percentage of capacity since the 01-02 season. Phoenix, Carolina, Atlanta and Florida would be in that list, along with the Blackhawks and Devils. To get to 20 teams we’d lose the Ducks, Capitals, Islanders and Predators. All in addition to the previous teams mentioned. One original 6 franchise lost.
However, no one would agree to that, so the Blackhawks would get a pass I’d assume. The reasoning behind it would surely center on a former owners backwards marketing ideas and alienation of the team’s fans. I’d agree with that reasoning, but I’m curious: Why is it only the Blackhawks who get a pass? How is it that only the Blackhawks can claim ownership troubles as a source of their attendance woes?
The idea of geography obviously can play a part in any teams success. However, that’s the shortsighted view. What can’t be forgotten in any discussion is the effectiveness and abilities of the team’s management and ownership group(s.) When run correctly, an NHL team can be successful anywhere. Even the “sun belt.”
Teams like San Jose, Dallas and even Los Angeles can draw a crowd and build interest in not just their team, but the game itself. To me, in the interest of hockey, proven business owners and executives should and could take any of the bottom six teams on my spreadsheet, and make them a success. Not just short term, but long term.
So, long story short (I guess I could have started with that and saved you the reading,) there is much more in play when it comes to a teams overall health, besides where they are located. The impact of ineffective and/or inept ownership (which, to me, the more I read shows “inept” to be cause #1 in Phoenix) and management plays a far greater role. The NHL is not at fault for expansion. Growth is good for hockey. I’d love to see it continue to grow, as new fans get exposed to this great game. However, the NHL needs to have it’s feet held to the fire for the “Boots” fiasco in Nashville. The NHL needs to do a far more thorough process of validating it’s owners, and the owners need to accept more responsibility for the people they hire to run these teams.
Full disclosure. I am a Canadian who has been living in California for the past 15 years. I’m a Leafs fan. The issue of contraction would have zero impact on the team I root for.
I have nothing interesting to say.
by blurr1974 on Dec 11, 2009 4:41 PM CST reply actions
<i.However, no one would agree to that, so the Blackhawks would get a pass I’d assume. The reasoning behind it would surely center on a former owners backwards marketing ideas and alienation of the team’s fans. I’d agree with that reasoning, but I’m curious: Why is it only the Blackhawks who get a pass? How is it that only the Blackhawks can claim ownership troubles as a source of their attendance woes?
No. As I said above, the argument against contracting Chicago is that their attendance woes haven’t produced any indication that the franchise is not viable. All of these teams can, correctly, point to ownership problems as one source of their attendance woes. Chicago, unlike some of the others, can also claim that they aren’t in any financial difficulty. Show me some evidence that they are having difficulty, and can’t find a new owner, then we can put them into the same category.
<i.Teams like San Jose, Dallas and even Los Angeles can draw a crowd and build interest in not just their team, but the game itself. To me, in the interest of hockey, proven business owners and executives should and could take any of the bottom six teams on my spreadsheet, and make them a success. Not just short term, but long term.
That’s nice. Find me some proven business owners and executives that seem interested in doing so.
The NHL needs to do a far more thorough process of validating it’s owners, and the owners need to accept more responsibility for the people they hire to run these teams.
The evidence suggests that, if they did more thorough vetting of new owners, they would have a bunch of teams that can’t get sold.
by J. Michael Neal on Dec 11, 2009 7:55 PM CST up reply actions 1 recs
Reveue Share Scam
The difference in gate numbers, vs. continuously reported numbers (3-4000 ), is a simple matter of an NHL owner papering the house to qualify for NHl revenue share.
The club buys 3500 of its cheapest tickets and gives away as many as they can.
Tampa hardly ever surpasses 10K paid any more.
Revenue share has almost run out…who pays Vinny his 10 mill?
First off, are you accusing Tampa’s ownership of buying tickets? Source?
Second, why does everyone believe Cristodero’s saying that all they have is the money from revenue sharing (1st time they ever got any, tyvm) is ALL they have? Why? Has he backed that up with anything? He’s a good hockey writer, but his writings on the team’s business dealings tend to be doom & gloom with little to nothing to back them up.
First off, are you accusing Tampa’s ownership of buying tickets? Source?
Dante10 might have been speaking generally – as Phoenix was for a fact buying tickets and giving them away until the NHL told them to stop. It’s just a tactic that a team could use – including a possiblity for Tampa.
"While there's life, there's hope." --Cicero
I don’t know that they (PHO) were giving them away, Baroque.
What Moyes was doing was merely an accounting move. He was trying to take the position with the NHL that he could “buy” the tickets by simply offsetting the value of tickets against some of the debt that the Coyotes supposedly owed to him. It was not even a question of him “buying” the tickets through a separate outlaying of cash.
Portfolio.com...
Has updated their previous study, where they attempted to identify possible relocation markets for the 4 major sports + MLS by analysis of the available personal income—what markets have the $ available to support another team. Sorry, KC.
Anyway, I didn’t see it posted elsewhere here—it’s interesting stuff. Remember, it’s financial capacity to add a team by their criteria, not suggestions of realistic expansion/relocation sites.
http://www.portfolio.com/industry-news/sports/2009/12/07/methodology-market-capacity-for-pro-sports
http://www.portfolio.com/interactive-features/2009/12/stadium-seating
I know this might have been better in the Arena Readiness thread, but that one seems to have runs its course.
It was always a challenge
Jay Feaster had said, even in the immediate post-cup, post-lockout season, that the Tampa club needed to go two rounds into the playoffs to break even. Attendance was fairly good but ticket prices were low, so total revenue lagged. Now attendance has dropped like a stone, and ticket prices are still low, so the TBL financial picture can’t be looking good.
The “clowncar” ownership has to take a good bit of the blame, but to be fair, Tampa wasn’t going to be an easy market to thrive in. Add a real estate and tourism downturn, as previous posters have noted (condos built around the arena are priced at steep discounts, and still few takers), and you have a recipe for one troubled NHL franchise in Tampa.
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