Team by team, the NHL’s private property club has never been as high-heeled and stable as it is today, a longtime NHL manager who has worked with a variety of organizations in the league said Thursday.
Teams like Carolina or Phoenix, which may have been destroyed in the past by discontinued operations, have new owners with deep pockets.
Outside the Ottawa senators, this experienced manager said that there is no team that should be affected by a short-term loss in game revenue.
Another top team manager said that beyond financial considerations, it is important that everyone does their part to slow the spread of the virus and bring it under control.
“Our sport was and is a great place,” he said.
However, he warned that, as in all areas of the economy, if the spread of the coronavirus continues into summer and beyond, Labor Day will say, “We will all be in a deep doo-doo.”
“It is a collective pain because everyone is going through it,” said the executive. “The duration will determine how painful it is.”
If the league goes down for a month or so, “everyone will be fine,” he said. “If we lose the season as a whole and don’t have a Stanley Cup playoff, it will be even more painful.”
Michael Rapkoch, President of Sports Value Consulting, a company that evaluates professional sports franchises and advises investors who deal with professional sports companies, believes The NHL is well positioned to appear relatively intact.
“No team will fall as if it were the stock market,” said Rapkoch.
The fact that this takes place so late in the regular season is an advantage for the league compared to MLB, which is less than three weeks away from the season openings.
Assuming the league will be able to play again sometime this season, “the setback will be temporary,” said Rapkoch. “I don’t think it will be a big obstacle.”
The NHL has planned television deals that will improve the robust economic picture, and they have done a lot to improve the growth and engagement of fans, he added.
That doesn’t mean that switching off the league won’t hurt.
Depending on the size of the market and the structure of revenue sources (i.e. get all the money from parking, concessions, etc.), teams generate between $ 1.5 and $ 3 million per home date.
This number can increase exponentially during playoffs as ticket prices and other related costs increase.
This is why it is so important for the team’s bottom line to play playoffs during the normal course of a season.
An NHL GM wondered how the interruption of the game would affect the salary cap, although the league and the players’ association can massage it. Still, this GM, whose team has post-season ambitions this season, admitted that canceling the season would be a big blow to his organization’s bottom line.
“You need the money,” he said.
A team like Pittsburgh, which has played the playoffs every year since 2007 and won three Stanley Cups since 2009, may not feel the pinch of lost earnings that would go hand in hand with a lost playoff season compared to teams like Edmonton who are currently in the playoffs have occurred once since 2006 or Arizona, which has not been in the postseason since 2012. Edmonton looks like in a playoff spot this year and the coyotes are in the bubble.
“You want to win competitively, but you also need this money to work with fewer restrictions,” said the GM.
So how much money are we talking about? It’s complicated.
The sales picture in Arizona is not the same as in Toronto, but it is possible to at least make an estimate of the baseball stadium, how much it costs an NHL team to cancel or postpone a game.
Average attendance at the NHL this season is 17,316, and the average ticket price for 2019-20 is $ 75.76 (all numbers in the U.S.), according to the Chicago-based sports consultancy Team Marketing Report.
Thus, the typical team earns ticket revenue of $ 1,311,860.16 per regular season game.
These tickets must be refunded. Given that the base of the typical NHL season tickets makes up a large part of the seats, you may be able to credit them to next season’s package. Season tickets are of course prepaid (although some teams allow their buyers to pay in installments).
No luck for individual playgrounds, and since the games were canceled at short notice, the teams lose their day-to-day business.
As a source from the hockey industry said: “This is not a loss in itself, but rather a missed opportunity.”
Luxury boxes show a slightly different situation. Most ice rinks rent them in advance and are generally available for all events, including concerts. A team official who was spoken to The athlete In the background, it is said that most of his club’s suite owners have clauses that provide credits or refunds when something like this occurs.
Estimating concessions and selling goods can be difficult.
A former business NHL manager said that per capita spending on food and beverages, including beer sales, is usually between $ 5 and $ 20 (again, numbers will be higher in places like Montreal and Chicago). So that’s another $ 85,000 to $ 350,000 per game. The average team probably ends up somewhere in the middle. Let’s call it $ 215,000.
The per capita number for purchases of team goods is around $ 1 at the lower end. According to our source, “$ 5 is probably a fairly competitive number, and for special events like anniversaries or jersey retirement, it can be up to $ 25.” So if we go with the competition There are $ 86,850 per home date.
Teams that have their arenas that make up most of the league will also generate parking revenue, the cost of which can vary widely. The Canadiens, for example, charge $ 28 for the approximately 600 parking spaces in the Bell Center. Let’s say the average team earns another $ 16,800 per game.
Most clubs also generate sponsorship and board revenue, which can range from a few thousand dollars to the high six-figure figure. For the purposes of this exercise, we can estimate the average to be $ 50,000, with the caveat that the number for the teams with the highest earnings is much higher.
As with any other advertising-based business, the terms of the contract are different, but according to one manager, most major local sponsors pay either a monthly or quarterly amount to the teams. Some have clauses in their contracts that provide credit or refunds in the event of cancellations.
All in all, you get nearly $ 1.7 million per game for an average team before you give the arena naming rights, local and national broadcasting fees, revenue sharing, and the like. And again, the teams with the highest sales easily collect double this amount.
But it also costs money to play a hockey game.
There is an electricity bill, property taxes (in some cases), and interest and amortization when the building is financed. Running an NHL game requires nearly 1,000 ushers, ticket takers, security personnel, maintenance personnel, concession workers, and production staff to present in the game. The majority of these people are hourly workers, only a small number are team workers. In any case, a team can cost between $ 100,000 and $ 200,000 per game when everyone is there.
If the games are canceled, most of these people will not work, which means that they will not be paid (team members and those who obviously work for Mark Cuban).
At this point in the season, the teams have played between 32 and 37 home games, which means they will forego $ 8 to $ 17 million by canceling the rest of their home dates.
The bigger success comes in the playoffs. The ticket and concession prices are higher, the teams no longer pay their players and there is growing interest in additional things such as T-shirts and ball caps.
“In the playoffs, you can generally estimate a premium of between 20 and 100 percent,” said our former team leader, who is still an industry advisor and asked for anonymity.
When considering the impact of the league’s decision to suspend the game, it’s important to understand the ripple effect of door closure in 31 NHL arenas.
It’s not just that fans of their favorite team can no longer follow or that the final stages of your hockey pool are now in the balance.
There are many people whose quality of life is negatively affected by the interruption of the game.
The GM we spoke to on Thursday said he knew a man whose source of income was hurling beer at local NHL, NBA, and MLB venues.
None of these teams will play for the foreseeable future.
“It’s a big kick in the nuts,” he said.
Jimmy Parey has owned Shale’s Cafe, a downtown bar in Pittsburgh, since 2003.
He had to overcome the lockout in 2004-05 and then the lockout by autumn 2012. But the uncertainty about what will happen to the balance of this NHL season, not to mention the ongoing show and event cancellations at the PPG Paints Arena. is “devastating”.
Guests come to events at Shale and the other restaurants and bars near the arena. “It is not a final destination,” said Parey. “It all depends on what’s going on in the arena. And it’s a trickle-down effect, ”he added. “It’s the sales people, it’s the parking lot people. Everyone is betting on the events.”
Every NHL market has vendors and business owners in similar situations. The worst scenario for these people is that the NHL season ends with no Stanley Cup winner announced.
But if the spread of the virus slows down and / or stops at some point and the doctors agree, it’s okay for people to gather in large numbers againCould the NHL try to postpone the remaining 3½ weeks of the regular season and then stick to a traditional playoff schedule?
A longtime NHL manager said he wondered if the league and players’ association would consider a playoff format that would expand the pool of participants. Options he suggested: a playoff grid with the 12 best teams at each conference, an AHL-style schedule with consecutive games and shorter series (as opposed to the current best-of-seven format), or a system that allows it all 31 teams take part.
Local broadcasters could potentially broadcast the first two rounds of a special playoff tournament to generate revenue.
And in a situation where every team is involved, fans’ interest would go through the roof, he said, and would allow teams to win back most, if not all, of the games they lost at the end of the regular season would have.
“It could be a gathering point for people coming out of this terrible time, right?” he said.
Another team president supported a kind of modified playoff grid when the NHL could resume the game later in spring or summer.
“There is an opportunity to come out of it with something really great, really cool and convincing,” he said. “Do it differently and get people to pay attention to this new playoff format or something like that that would get a lot of attention. I totally agree.”
– Sean Gordon of Athletic contributed to this report.