• Forbes II: Two more datapoints

    by  • November 29, 2012 • Hockey • 3 Comments

    A few years ago, I wrote a post about the Carolina Hurricanes that kind of tweaked occasional commenter Gerald, who had recently made the following comment:

    Last time I checked, CAR is in the mushy middle of ticket revenue where a lot of teams reside. The other blogger cited disgraced data from the Team Marketing Report. You and i have now looked at their ticket prices directly. Higher prices for some, lower for others, many more suites in CAR, CAR controls their arena. There is this idea among the Oilogosphere (do i have that right?) that the Oil rake in the cash and are an elite revenue team. I believe you guys are sadly mistaken…

    That post had some Hurricanes revenue data in it but, unfortunately, it was based on 3/4 of a season. In the interests of not introducing weak evidence to my argument, I stayed away from it in yesterday’s post. Today though, I had the bright idea of checking the site that had written the story with reference to the Hurricanes’ revenue data to see if they’d ever followed up on it. It turns out that they did!

    Revenue for Hurricanes Hockey LP plummeted by 25 percent, to $68.9 million, for the fiscal year ended June 30, 2010, according to financial data the team provides to the RBC Center’s governing Centennial Authority. That was down from $91.8 million in the previous fiscal year – a season that saw the team go deep into the playoffs.

    Forbes, for the record, had the Hurricanes at $82MM in 2008-09 and $75MM in 2009-10. Those are misses of about 11% and 9% respectively; if they’re missing similarly on other teams, the errors in the data are compounded, which makes any comparison based on the data basically worthless, unless you’re able to convince yourself to ignore all of the evidence and go on a hunch that Forbes sits down with the NHL to ensure the data is correct, which is insane.

    Other interesting notes in the story:

    Not making the playoffs – and being a long shot to do so for much of the year – caused admissions revenue to decline by 38 percent, to $22.9 million. Declining attendance also caused drops in parking and concessions.

    The Hurricanes’ luxury suites line item sunk from $5 million two seasons ago to $3.9 million in the most recently completed season, according to the hockey revenue figures. Advertising, another corporate revenue source, dropped by about 8 percent, to $6.6 million.

    Asked about the overall revenue drop, Rutherford also points to a decline in revenue sharing. Because the team didn’t achieve certain benchmarks, the “NHL” line item on the team’s financials showed a 16 percent drop, to $23.5 million.

    The last line is the most interesting to me. A non-playoff Carolina Hurricanes team, coming off a run to the conference finals, was able to generate $45.4MM in locally generated hockey revenue. How many NHL teams could you put in Toronto before the next team would generate only $45.5MM in locally generated hockey revenue in a year? In Ontario? Quebec?

    Again, it’s worth mentioning: Cal Nichols said the Oilers were a CDN$85MM a year operation in 2003-04, a season in which they missed the playoffs. If you knock out $15MM for the Heritage Classic and money shared from the league – I think I’m being pretty conservative in doing that – you end up with about $25MM in locally generated revenue with the dollar at par – six years earlier.

    Email Tyler Dellow at tyler@mc79hockey.com

    About

    3 Responses to Forbes II: Two more datapoints

    1. Triumph
      November 29, 2012 at

      I’ll be curious to see how the Brooklyn Nets do, because they are an example of what you’re talking about here – the Nets, in moving to Brooklyn, effectively marooned their old fan base (which was not exactly immense), and are attempting to trade it in for a new one. However, they’re entering a market with an A: long-entrenched franchise B: high demand for basketball and C: where the entrenched NBA team has been mismanaged and bad for more than a decade. Switching fan loyalties is a harder task than you think – the Senators still haven’t come close to fully accomplishing that and they’re in a city fully autonomous from Toronto. I’m still not convinced that a second Toronto team would do all that well after the honeymoon wore off, though again I suppose it depends on how good they are – even the Clippers are managing to turn heads in Los Angeles and they were mismanaged for decades. I think they’d be a mid-revenue team. A third team would have revenues around the Hurricanes, IMO.

      It’s of course also worth noting that the 09-10 Hurricanes suffered through a colossal losing streak early in the season. That’s one thing I think Canadians miss about the smaller markets – there’s little incentive to purchase season tickets. They started 2-12-4, effectively ending any hopes of the playoffs before the season was 20 games old.

      • Varada
        December 5, 2012 at

        Not sure what barometer you’re using when you say Ottawa has not switched fan loyalties. Agreed that the building is full of Toronto and Montreal fans during those games, but the building is also full during all other games, and isn’t that all that matters? After 20 years in the market, I think there’s some overlap there.

    2. Doogie2K
      December 1, 2012 at

      Again, it’s worth mentioning: Cal Nichols said the Oilers were a CDN$85MM a year operation in 2003-04, a season in which they missed the playoffs. If you knock out $15MM for the Heritage Classic and money shared from the league – I think I’m being pretty conservative in doing that – you end up with about $25MM in locally generated revenue with the dollar at par – six years earlier.

      I’m confused by the math here. How do you get from C$70MM to US$25MM? Is some of this contained in a prior post? (And why does that compare to US$45.4MM six years later? 7% compounded annual growth gets you to US$37.5MM)

    Leave a Reply

    Your email address will not be published. Required fields are marked *