TBJ Report - Hurricanes Revenue Drops $4 Million in 2009-10
by Bob Wage on Aug 24, 2010 1:01 PM EDT
Email
PrintThe Triangle Business Journal recently published a report indicating that the Carolina Hurricanes lost over $4 million in revenue from 2008-09 to 2009-10. The biggest revenue hit came from a drop off in attendance, which cost the team about $2.3 million.
We ran an article earlier this off season showing that attendance had dropped from an average of 16,572 fans per game in 2008-09 to an average of 15,240 last season. That's a total reduction of 54,612, a large enough number to hit the bottom line hard.
But the team also had reductions in league revenue sharing, merchandising, suite sales, concessions, and Ticketmaster fees. In all, revenue dropped from $69 million to $65 million.
The report also showed that the Canes received a total of $23 million in NHL revenue sharing last season, down from $25.3 million the previous year.
Have you ever wondered how much the team makes on jersey sales and other team related products? The Canes made $821,000 on merchandising in 2008-09, but only made $667,000 last season. With the All Star Classic coming to Raleigh in January, that number should certainly go up for next season. Proceeds from All Star related merchandise sold locally go to the Canes up until a month before the event.
The franchise has plenty of room for revenue growth and may need to capitalize on that growth in order to keep young stars like Brandon Sutter with the club in the future.
While some would like to place the blame on the team's low budget this season solely on the fact that owner Peter Karmanos is attempting to sell a portion of the franchise, it would only seem logical that if the club could come close to selling out every game, (18,680), that would bring in enough extra revenue for the team to increase the budget and it would also make the team much more attractive to potential local investors.
37 comments
|
0 recs |
Do you like this story?
Comments
hey Bob
I thank you for this info…and like chrisj i too would like to see just how the "canes’ stack up against many of the other teams especially the estern conference and see just how bad or beter off the Canes are as a team over all…thanks again…Be safe !!
And if it Aint Hockey,It Aint Nothin !!
That Checkers 3rd Sweater ROCKS !!!
Revenue Sharing
I was tempted to start a Fan Post this weekend based on this Triangle Business Journal article, but since I could only see it through my subscription log-in, I was hesitant to “quote” information that I could not display.
The ratio of revenue sharing revenue to admission revenue is what blew me away, but as I looked into it more over the weekend, it began to make sense as to why it was that way.
There’s lots to talk about from that angle alone, discounting the drops (and advertising gains, to be fair) in revenue angle.
Here we are now...entertain us.
Graphics
Here’s the handy dandy chart embedded within that article in a bit larger format.
Note that “NHL Revenue Sharing” is $23M for June-Mar 2010, whereas “Admissions” is $21.8M for the same period of time.
Here we are now...entertain us.
i saw the chart Elsker
and i was surprised to see "some’ of the numbers…but over all compare to others…i still think over all the Canes are better off in many areas & things compared to ther teams in the NHL…gee if i only had 35 mill to invest…hehehe…thanks again…Be Safe
And if it Aint Hockey,It Aint Nothin !!
That Checkers 3rd Sweater ROCKS !!!
by CaniacSteve on Aug 25, 2010 10:15 AM EDT up reply actions
The takeaway I had from seeing that “Revenue Sharing” = “Admissions” is that ticket prices would have to practically double to make up the loss of that league revenue source, should it not exist.
That’s what happens when your team is regularly fielding sellouts, however, so careful what you wish for fans. :-D
Here we are now...entertain us.
The Hurricanes Franchise and the Recession
I appreciate your posting the link to that article. It is clearly in the hands of the Hurricanes fans as to the revenues available to the team owners for team salary. Winning, of course, is the fastest path to increased attendance; but over all fan support is also a critical element. For some time, we’ve had discussions about the role of Season Ticket Holders, whether full or partial. The Hurricanes, I believe, have had a sea change as far as the talent pool available in the system. It’s a chance that doesn’t come along often in the life of a hockey franchise. Fans, as much as anybody, can determine what kind of team they will watch for the next decade. I am optimistic all the stakeholders will seize the day and we can all be a part of something skeptics said was impossible: a Southern hockey team that consistently is a playoff team.
Unfortunately in today’s NHL, you need to spend money to make money. It isn’t a coincidence that all the teams that have huge budgets have zero Cap space while the teams with huge amounts of Cap-space have zero money to spend. The Canes can coast by this year on the youth being cheap and the ASG bringing in plenty of revenue… But facts are Cup teams = Capped teams. Nashville and Phoenix are nice stories being salary floor teams to do well, but their quick exits from the Playoffs are likely not coincidence. Obviously this entails making good decisions as well (see last year’s salary capped Canes team), but the reality is still that it is very unlikely a Salary floor team will come close to winning a Cup.
The recession and bad economy may be an issue… But it doesn’t take a rocket scientist to see that during our losing streak early on we were drawing 12,00-14,000 fans while later in the year the numbers were much higher. The Canes need to win to make money, bottom line.
I’d say that brings up a very good question… Is the main goal of an NHL franchise to win a Stanley Cup or make money? I’m sure there are many owners who would gladly lose money to win a Cup while other owners might give up the Playoffs or Cup to make a few extra million. I’d guess Chicago would prefer to keep the Cup.
But as far as making money goes… Winning games draws people. The Canes attendance was way up last year when we were winning. There aren’t a lot of teams making money, but the teams that aren’t losing as much money are generally the Playoff teams. I think Raleigh and the surrounding NC area has the fan-base to draw enough fans to fill the arena if the Canes can win at home.
There are a lot of reasons there aren’t many teams making money… I’m guessing the Cap may actually start decreasing in future years and with the very likely possibility that the NFL is going on strike after this next season, I think the NHL has a huge chance to increase revenue.
I shouldn’t even post about this because it constitutes a further beating of the same dead horse that I complained about continuously for the first month of the summer.
Whatever, considering that I lost almost all credibility because my constant ownership attacks, this post cannot possibly cause anymore damage.
While I believe that some wealthy individuals purchase NHL teams to win cups, others continuously focus on the bottom line, much like an addiction. Many wealthy owners earned their money through hard work, and I believe that it is very difficult for them to switch from "wealth accumulation mode" to "hobby mode."
You don’t purchase an NHL team to make money, there are many better investments, you do so for personal enjoyment, the latter always seems to be quickly forgotten.
by PittsburghCaniac on Aug 25, 2010 12:36 AM EDT up reply actions
That’s a slippery subject, Iggy. Chicago says they lost money, but we can’t see revenues from parking, TV, or anything like that. When I look at my personal income, I can say that I lose money every month if I don’t include my wife’s earnings.
You’re hitting the nail right on the head there with your analogy Gillimus. The Hawks are part owners in the United Center and involved with Comcast sports Chicago if I’m not mistaken. The team may have lost money, but that’s only because it’s being made in other areas that are partly or wholly owned subsidiaries.
Is it possible to be addicted to hockey?
Additional Admissions Revenue
June-March 2009: $24.1M (16,572 average attendance)
June-March 2010: $21.8M (15,240 average attendance)
So, the math says about $1,725/seat for the differential between the two.
Therefore, projecting a distant future average sellout experience of 18,680 in attendance (and holding ticket prices unrealistically steady, for the moment), the theoretical upper limit of additional revenue that could be gained for selling those extra 3,440 seats over the 2010 experience would yield:
(3,440 seats) ($1,725/seat) = $5.9M
Of course, in reality, we see an across-the-board seat price hike when sellout averages are a way of life, but this should at least supply some perspective.
Of course there’s a corresponding increase in parking and concession revenue, as well, from these extra 3,440 fans.
Here we are now...entertain us.
I’m not aware of a monthly breakdown. No need for the league to do so.
However, raw attendance information can be found at several sources, including the NHL.com stat section.
Just set the third-from-the-left drop-down menu to “Carolina Hurricanes” and press “Search”. Make sure the rightmost drop down menu says “Summary”.
The right-most column of the resulting table is Attendance.
Attendance probably did increase during the “winning period” of time, but it always does as football ends and especially after basketball does so…especially when local ACC teams are not contenders.
Here we are now...entertain us.
That surprised me a lot as well.
I suspect, though, that the Canes do not sell much gear to people who do not regularly attend games. That goes right along with the TV numbers (which the team does not release, but everyone suspects are poor, particularly outside the Triangle) in measuring the breadth of the fanbase. Making real coin on merchandising boils down to people who won’t ever darken the door of the RBC Center being willing to pick a Canes sweatshirt up at Wal-Mart in preference to one from the Panthers, UNC, or State — and similar decisions being made on all different rungs of the economic ladder.
My hope is that the Charlotte affiliation will help some here. There’s been little reason for folks from Charlotte — even hockey diehards — to pay attention to the Canes other than being the default TV choice (and my Virginia-bred dislike for the Capitals says that doesn’t mean much). That all changes this season.
That 17-year-old Hokie sitting in the Greensboro Coliseum rafters in 1997 didn't see any of this coming.
After reading all weekend, I think I finally have a pretty good understanding of the subject, but boy is it complex.
Although I read a lot of sources, the best single “crib sheet” for the complex math involved is here, although it admittedly borrowing heavily from groundbreaking work done on this HockeyFutures thread from August 2005.
Bob and Cory may both surpass my understanding, or perhaps there are others here that have delved into the subject.
Have a particular question?
Here we are now...entertain us.
Thanks Elsker
Looks like a problem from my Calculus class in College…I assume it is a formula that allows smaller market teams to remain salary and revenue competitive against larger market teams. The specifics are beyond the discussion of this thread….
I can keep the discussion in general terms.
Yes, it’s a market-leveler, to allow smaller market teams (have to be bottom 15 in revenue and be less than 2.5M TV market to participate) to retain more of their team’s roster and compete to a degree on the FA market.
Part A of the amount brings the team up to within $4M of the average salary budget needed to fund the guaranteed NHL player’s pool of 55 percent of all hockey-related revenue.
Part B brings them even closer, but the amount is calculated by those formulas, plus the org must hit some performance benchmarks with attendance growth in order to continue to qualify.
This keeps orgs from just sitting back and collecting the money without even trying to get better. I believe the Canes got caught up in such a revenue sharing reduction a season or so ago, much to PK’s displeasure.
Source of the money is from the player’s escrow accounts, which may seem strange at first glance, but actually makes sense.
Basically, it’s funded by the extra salary budget that larger market teams may choose to pay above the average salary budget amount needed to fund that total guaranteed player salary amount, distributed back to the smaller market teams that are struggling for revenue.
Here we are now...entertain us.
thanks Elsker
that does make more sence…and for this fan who has no real understanding of or about the “business/fiscal” model the NHL uses…i didn’y get lost in your explanation…yet !!! hehehe…a great post and I have to laugh everytime i hear or am told that NHL Hockey in Tobbacco road don’t fly…or the fans just don’t get it…never spent any real quality time around here have they ?? Be safe & thanks again…
And if it Aint Hockey,It Aint Nothin !!
That Checkers 3rd Sweater ROCKS !!!
ditto...thanks
Well done….Nice summary…..Of course my finance degree says Revenues are one thing…Profit is another…..You can bet though if ownership is looking for a cash infusion and revenues are down the income statement is not looking too sharp either.
Question?
Why is it that we always hear about revenues but never about operating costs or the bottom line? Do the owners try to hide from us how much money their investments make?
Wouldn’t you? :-D
Seriously, only publicly held orgs must disclose, by law, and they hire enough accounting talent to disguise what’s really going on even then.
You’d be lucky to see vague totals of all-inclusive line items like “arena expenses”.
Here we are now...entertain us.
Here Here to this comment. Public disclosures are much better than they used to be, but, a lot can be covered up.
by PittsburghCaniac on Aug 24, 2010 11:47 PM EDT up reply actions
I get that they don’t have to. It’s not like SEC or anything. They don’t have to tell us about losses in their revenue either. But they do. It almost seems as though they only release financial information when they have something negative to report.
by Sluv on Aug 25, 2010 9:13 PM EDT via mobile up reply actions
Actually, the Canes org didn’t “release” this information to the Triangle Business Journal.
TBJ dug it out of the required accounting of the total gross revenue generated that the Canes org has to supply to the Centennial Authority. But, they only have to report their revenue, not their expenses…so they don’t.
As to why they are reporting revenues, it’s because their lease sets their rent for the facility (which the Centennial Authority owns) at six percent of gross revenues up to $55M and three percent for revenue over that benchmark (last source I saw, anyway).
Here we are now...entertain us.
Moral of the article is – please buy your all star gear at least a month before the all star game – not sure how the proceeds are shared after that, but if there is revenue sharing, I would hate to see proceeds from Raleigh end up in Washington.
by PittsburghCaniac on Aug 25, 2010 12:45 AM EDT reply actions
I have already started buying All-Star gear.
I read the article above about revenues being down $4 mil last year. Seems like that should not be a problem this up-coming year since our salary out go for next year
will be $10-$12 mil less————- right? Isn’t that part of the reason we went super cheap?
Has anyone heard anything about the status on a buyer for part of the team ?
GO CANES! Go Heels!
Other teams?
So where can we look to see what other teams did as far as gain/loss?
Carolina Hurricanes! Your 2011 Stanley Cup Champions!
Comments For This Post Are Closed
Secondary Sidebar
User Tools
Related FanPosts on Canes Country
Related FanShots on Canes Country
![Have you seen the "Google search make your own 30-second video" [FIXED the link, sorry] at Youtube? I made my take on the Canes season this morning. Check it out and if you make one you like, post it over here. Lot of fun.](http://cdn2.sbnation.com/fan_shot_images/111208/2_small.jpg)
FanPosts
Community blog posts and discussion.
Recent FanPosts
In Association With
Latest Puck Daddy - NHL from Yahoo! Sports
- Can Jeremy Roenick save the Phoenix Coyotes?
- Should Dominic Moore be suspended for this hit on Rangers’ Fedotenko? (Video)
- Thursday’s Three Stars: Max Pac hat trick; Chris Phillips’ memorable 1,000th game
- It’s over: Montreal’s Scott Gomez finally ends goalless streak (Video)
- Scott Hartnell’s goal celebration now includes fighting Dion Phaneuf (Video)
Certain photos copyright © 2012 by Associated Press or Getty Images. Any commercial use or distribution without the express written consent of Associated Press and Getty Images is strictly prohibited.
