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Shake Your Moneymaker - Canadian Teams Make the Cash

There has been a lot of talk around the hockey blogosphere recently about this article put out by Toronto Star reporter, Rick Westhead, who somehow got his hands on a top secret NHL report which shows how much ticket revenue each team earned. If you believe this report, the 6 teams based in Canada bring in over 30% of the ticket revenue for the league.

Each of the Canadian teams showed substantial increases in revenue from the previous season, from a 20% increase by Edmonton, to 31% by Toronto.

Of course the columnist, along with most other Canadian writers, are using this information as proof positive that the league should immediately move or add more teams in Canada.

Again, if the report is true, (and at this point it is an assumption because the NHL has not validated it), there are a lot of other factors involved that need to be analyzed before you can just assume that another Canadian market will generate just as much revenue as the current ones.

First of all since the report is based on US dollars, the rise of the Canadian dollar must be taken into consideration for comparisons like this. I did a little research, and I would estimate that 15% of any increases shown for the year can be attributed to currency fluctuation.

Are you going to move franchises around the globe based upon a temporary glitch in currency rates?

If you subtract 15% from each of the Canadian team's increases, the highest would be Toronto's 16%, which would be 2% lower than the legitimate 18% increase by the New York Rangers.

Suddenly, the huge increases begin to fall more in line with some of the American franchises which had good years.

Let's look at expansion.....

The city of Hamilton is often mentioned as a target franchise, but I have a couple of questions about a team being moved there.

Would Toronto ownership object? Right now, they bring in more revenue than any other franchise, would they be willing to risk losing a small portion of that to Hamilton?

What about Buffalo? It's hard for me to believe that having a new team and venue in Hamilton would not affect Buffalo attendance and revenue. The Sabres are in bad enough revenue shape as it is. Even though they sold out all of their regular season games and averaged over 100% capacity for the year, they were still too low when it came to revenue generation.

Owner Tom Golisano says he is losing money.

If an owner can't make money even though they sell out every game, something is not right with his business model. Regardless, I sincerely doubt that said owner would be very receptive to having new competition for revenue, move in right next door.

Another market being bantered about is Winnipeg. The city is obviously hungry for NHL hockey again, but is it feasible? They have a brand new rink that holds about 16,000 seats. They could probably sell out every game, but would the mostly blue-collar crowd be willing to pay big city prices to watch hockey?

In order to generate 1 million per game in revenue which would equal the lowest team revenue in Canada, (the Oilers), they would need to have an average ticket price of $62.50, which is higher than what the current average is in Ottawa.

I haven't got time to post it tonight, but I created a spreadsheet showing each team's revenue, attendance, and average seat price for 2007-08, and there is some pretty startling information. For instance, even though Buffalo sold out every event and seems to be doing well, Carolina has a higher per ticket price than they do, and almost matched their per game revenue even though the Sabres outdrew the Canes by 3,000 fans per game.

The average ticket price for Carolina is $42.09 while the average for Buffalo is $37.59. Here are some of the numbers.

  • Team___per game revenue___per game attendance___per game average ticket

  • Carolina ____$700,000_________16,633____________$42.09

  • Buffalo_____$750,000_________19,950____________$37.59

  • Tampa Bay__$800,000_________18,692____________$42.80

  • Ottawa_____$1,200,000________19,821___________$60.54

Same story for Tampa Bay. While they averaged 18,600 per game, they only averaged revenue of 800K per game. That came to an average ticket price of $42.80.

I am going out of town tomorrow, but when I get back on Sunday I'll post my entire report and delve more into this.

The Black Crowes