Blue Jackets reveal substantial losses
by James Mirtle on May 29, 2009 11:46 AM CDT
35 comments
Blue Jackets President Mike Priest said the club made a modest profit in its first two seasons, but in the past seven years lost $80 million, including more than $10 million this past year, despite the team making the playoffs for the first time.
Asked if failure to approve the plan would force the team to leave Columbus, Priest said:
"The reason we're being proactive and working and talking is to find a solution so that we don't have to go down that road or have those types of discussions. The whole purpose of this is to avoid that. Other teams have been through this and have found solutions."
The next time someone tries to make the NHL's problems into solely sunbelt ones, you can point to this story.
"Solutions" unfortunately mean taking money from somewhere else, and there's understandably some backlash against the Blue Jackets for making this new "tax" part of an effort to subsidize the team.
The NHL told Priest that the reason the team wasn't making money was the lack of income from the building, which certainly may be a factor. I, however, can't help but to point out that, when Columbus entered the NHL in 2000, their payroll was just $17-million.
Eight seasons later, it was up to $50-million.
Revenue sharing has helped the Blue Jackets a little, but they're far from the league's biggest basketcase, and as a result, don't get as much of a handout as Phoenix or Nashville.
Cost certainty has not helped hockey in Columbus.
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Doc- do you think this could lead to an even more radical CBA proposal by the owners the next time the CBA expires or needs to be renewed? It seems that the economics really aren’t working at all (especially with the “floor”) with at least 20% of the franchises. This could be a short term problem that we are seeing but with so many teams in so much trouble, maybe they need to dramatically alter the situation.
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by Blackcapricorn on May 29, 2009 12:23 PM CDT reply actions 0 recs
Alright, so we’re back to the 90s situation of small-market clubs being unable to compete. Can we sound the alarms about contraction?
The problem with “cost certainty” is that it aggregates league revenues, which means that clubs like the Leafs, Rangers, and Canadiens will continue to bring in the big money and not have to spend it, while the Columbi, Nashvilles, etc. have to spend more than they bring in.
A solution would be to cut into the amount of money that the larger franchises can bring in, perhaps by splintering their markets… Perhaps we could add some teams in Southern Ontario and Quebec City…
"Without good hard work, it is impossible to reach the pinnacle of success." - Anatoli Tarasov
by PRC on May 29, 2009 12:33 PM CDT reply actions 0 recs
James, is there a place that “Cost-Certainty” has helped? And for those it may be helping, is it really the revenue sharing that’s hiding their true losses?
Glen Sather is a Hockey Genius.
http://glensathersucks.com/
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by poploser on May 29, 2009 12:36 PM CDT reply actions 0 recs
I suppose Doug MacLean wants to take credit for this too?
Hyphens cause writers more trouble than any other form of punctuation, except perhaps commas.
by David Driscoll-Carignan on May 29, 2009 12:40 PM CDT reply actions 0 recs
Here is an absurd idea. Trading Cap space.
If the floor is 40 mil, let a team like Columbus trade 10 mil to the rangers for picks, futures etc… I know it sounds crazy but short of redoing the CBA ( which I think would kill the NHL in the US) I don’t see how teams can be forced to get to the floor and continue to lose money. It does not make good business sense.
Another thought which the players will not approve is to lower the floor for bottom 10 teams revenue wise.
Leafs selling hope to the hopeless since 1967
by Toe Blake Hockey on May 29, 2009 12:55 PM CDT reply actions 0 recs
The floor’s got to be lower. It should have a maximum of $30-million or something to allow for rebuilding teams to cut salaries. This $16-million payroll range just isn’t working.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 1:05 PM CDT up reply actions 0 recs
It all works together
I agree that the $16 million range is a bit tight, but if you lower the floor, the ceiling would need to be raised appropriately. One point about the cap, floor, and revenue sharing is to ensure that teams that could still spend way above the cap (Toronto, New York, Detroit, et al) still contribute proportionally to overall player salaries through the revenue sharing system.
Clearly, Columbus has no business spending as much as they do. They may have some revenue disparities (i.e.arena naming rights) compared to other teams, but if you’re losing $10 million a year, you should spend so much on payroll. Does Mike Commodore really help fill the seats?
As for trading cap space, I think the mechanism through which you’ll see that start to happen is with players on front-loaded contracts. Trade a guy whose cap hit is actually much higher than his current salary, and it can be a win-win for a wealthy team pushing the cap and a small-market team looking for talent.
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by Dirk Hoag on May 29, 2009 3:21 PM CDT up reply actions 0 recs
Commodore played on their top d pairing and was a big factor in them making the playoffs, so he was worth the investment that way.
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by James Mirtle on May 29, 2009 6:22 PM CDT up reply actions 0 recs
Lowering the floor would have no impact on how much money the players earn under the CBA, though. Players are paid a percentage of league revenue, no matter how must their contracts are worth. Mostly the floor is there to keep the nominal values of contracts roughly close to the actual dollars paid and to try and increase parity through the league.
by RyanV on May 29, 2009 1:59 PM CDT up reply actions 0 recs
The next time someone tries to make the NHL’s problems into solely sunbelt ones, you can point to this story.
Bottom 10 teams by attendance capacity:
21. New Jersey Devils
22. Carolina Hurricanes
23. Nashville Predators
24. Columbus Blue Jackets
25. Colorado Avalanche
26. New York Islanders
27. Phoenix Coyotes
28. Tampa Bay Lightning
29. Florida Panthers
30. Atlanta Thrashers
Bottom 8 teams by local television broadcast rating (local households viewing per game average in parentheses)
23. Phoenix Coyotes ( 9,280 )
24. Tampa Bay Lightning ( 8,929 )
25. Los Angeles Kings ( 21,486 )
26. New Jersey Devils ( 28,249 )
27. Anaheim Ducks ( 16,397 )
28. Atlanta Thrashers ( 5,450 )
29. New York Islanders ( 12,637 )
30. Florida Panthers ( 3,490 )
Nashville and Carolina did not release their local ratings, but are widely believed to be in the bottom 10.
Six sun-belters in each category. It’s a sun-belt problem.
by Derek Zona on May 29, 2009 2:46 PM CDT reply actions 0 recs
8 Sun belters in the TV ratings category if you allow for Nashville and Carolina.
by Derek Zona on May 29, 2009 2:48 PM CDT up reply actions 0 recs
The quote was that it’s not “solely” a sunbelt one.
And how many of those warm weather teams are in the top 10 worst-run NHL franchises? Tampa Bay was an attendance leader for years and deservedly crashed this season. All of the California teams do fine at the gate, as do the Stars. And Phoenix, Florida and Atlanta have been pathetic on the ice for a decade.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 2:52 PM CDT up reply actions 0 recs
I will repeat that cause/effect between bad market and bad ownership is a two way street. It’s certainly not 100%, but bad markets will tend to attract bad owners.
by J. Michael Neal on May 29, 2009 2:59 PM CDT up reply actions 0 recs
Absolutely agree. But we also have no clue if somewhere like Florida would be on part with a franchise like Carolina had they had similar on-ice success.
The NHL overexpanded, it’s in too many markets it shouldn’t be, and yes a lot of sunbelt teams are the offending ones. But clubs like Columbus and the Islanders and Devils are also struggling with some of the same issues.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 3:19 PM CDT up reply actions 0 recs
The Devils are struggling? How? Back in December, it was revealed through Chere that the Devils made a profit in their first year in the Prudential Center and they had even better attendance this past season, their second.
Given that Columbus’ ownership is talking about losing money; I don’t think the Devils should be lumped into the same issue.
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by John Fischer on May 30, 2009 8:26 AM CDT up reply actions 0 recs
if the Devils cant make money with the deal they have on the Rock, they will never make money.
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http://glensathersucks.com/
http://twitter.com/ThGeneralissimo
by poploser on May 30, 2009 11:39 AM CDT up reply actions 0 recs
The Devils, despite having one of the league’s top teams and a brand new building, are down in the basement in terms of attendance, right beside Columbus. They are struggling with “some” of the same issues, regardless of how favourable their lease is.
It’s great that they’re turning a profit, but the building really should be fuller than that.
Blogging on hockey at fromtherink.com
by James Mirtle on May 30, 2009 12:04 PM CDT up reply actions 0 recs
To be fair
If you included the number of people who get murdered betweem the parking lot and the turnstiles, they aren’t doing too poorly.
by TD O'Dell on May 30, 2009 6:24 PM CDT up reply actions 0 recs
And how many of those warm weather teams are in the top 10 worst-run NHL franchises?
Good businessmen will not buy a hockey team in an area with an average annual temperature of 61F.
by Derek Zona on May 29, 2009 4:13 PM CDT up reply actions 0 recs
Not fair
I wasn’t fair to my own argument there. There is no hockey tradition or culture in any of these places. If the NHL was serious about exploiting these markets, they would have bankrolled an arena and a college hockey team in partnership with Arizona State, Georgia Tech, Duke, Miami, and South Florida. They would have had these teams play division 1 hockey. They would have put money into youth hockey programs. They would have developed mites, bantams, pee wees and women’s hockey. They would have built a dozen rinks throughout these cities.
They would have done this 10-15 years before awarding these cities an expansion franchise. Instead, the league was interested only in the dollars behind expansion. The NHL put the cart before the horse in all of these cases and has paid for it. It’s not a “Sun Belt” problem per se, it’s a problem of culture and tradition, and neither exist in these cities.
There are still no college hockey teams in these cities and the youth programs are based on expected funding by the teams — teams that are bleeding money everywhere. The youth programs in these cities are for shit.
It’s abysmal leadership by abysmally stupid people.
by Derek Zona on May 29, 2009 4:28 PM CDT up reply actions 0 recs
There is no hockey tradition or culture in any of these places.
You can say the same for a lot of markets in the U.S. Ohio’s not a big hockey hub, neither is New Jersey, California or Texas, and it’s worked in some of those places to a certain extent.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 6:25 PM CDT up reply actions 0 recs
Just as an aside, it has always appeared to be a rock solid part of the Canon of Hockey Fan Conventional Wisdom that youth programs, local rinks, kids playing and growing up, etc. etc., are a prerequisite for NHL hockey success.
I find it interesting that this nugget is so assumed, when (to my knowledge) there is not a shred of evidence of a relationship between those people who have played a sport and those who are paying money to a professional league to consume their production of said sport. I don’t single out hockey in that respect.
by Gerald on May 29, 2009 6:58 PM CDT up reply actions 0 recs
Yeap, I agree with all of that. I mean, the Stars have sold out almost every single season since moving 15 years ago and there can’t be more than a few hundred people in the city who grew up playing the game.
In Nashville, I met a ton of people who had never seen a hockey game before the Preds arrived, and now they’re season’s ticket holders.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 9:55 PM CDT up reply actions 0 recs
the youth programs are based on expected funding by the teams — teams that are bleeding money everywhere. The youth programs in these cities are for shit.
Show your evidence. Arizona and California kids are popping up in the WHL now, which didn’t happen 20 years ago. Texans seem more likely to choose college hockey, but that’s because youth hockey in the Dallas area has developed an upper-class social cachet similar to lacrosse in the Northeast. As for “expected funding”, as far as I can tell, only in places where NHL teams have themselves constructed a practice rink (that kids programs then use) have teams’ contributions been any more than trivial marketing pushes and maybe licensing the name and jersey for a travel team.
And your college hockey suggestion makes no sense. Why in the world would the universities do that? What’s in it for them, especially when the unholy combination of Title IX (you’d better be starting a women’s team along with that men’s team), football roster sizes and the looming numerical dominance of women in higher education has already forced many schools to kill traditional sports with history at the school left and right? And how do you think the coaches of the established major sports at the university would react to the NHL installing competition for attention and booster money (when the NHL subsidy goes away, which it inevitably will)? Something tells me Mike Krzyzewski wouldn’t be too friendly to the new Duke hockey coach — hell, it’s hard enough to get him to tolerate football, which is a prerequisite for ACC membership.
That 17-year-old Hokie sitting in the rafters in Greensboro didn't see any of this coming.
by JoshCVT on May 29, 2009 7:40 PM CDT up reply actions 0 recs
But some of these markets are likely still growing. There is a lot of youth hockey in Raleigh, an area swelling with transplanted folks from the Northeast and beyond. Give it a few more years and I think you’ll see the hockey culture in NC cementing somewhat.
by hip_check on May 29, 2009 9:34 PM CDT up reply actions 0 recs
What does “attendance capacity” mean – actual attendance or attendance as a % of capacity? I’m shocked that Colorado is that bad in attendance. I know they would have likely dropped off in attendance over the last few seasons, but its surprising they fell that far
Glen Sather is a Hockey Genius.
http://glensathersucks.com/
http://twitter.com/ThGeneralissimo
by poploser on May 29, 2009 3:11 PM CDT up reply actions 0 recs
Colorado
Just a note: Colorado has what’s generally considered the second or third highest ticket prices in the game. (I know the Average cost index doesn’t show that, however, not a single lower deck ticket is included in that cost figure because the Avs list every 1st deck ticket as “premium” which doesn’t factor into the average cost index formula. )
by Jibblescribbits on May 30, 2009 11:24 PM CDT up reply actions 0 recs
With such a poor team the tickets are still so expensive? Ouch. :(
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by Baroque on May 31, 2009 5:49 AM CDT up reply actions 0 recs
Those stats for avg attendences are a bit misleading. Just by looking at some attendance stats it seems some arena capacities are built way too big. Realistically a team like Atlanta should have only been built for 15 000 and not 18 750, at any rate there ticket giveaways construes fan interest in hockey. Still having 15 000 paid in attendance makes it seem alot healthier than an unfilled 18000 arena.
Columbus dilemma is not something I would worry too much about since they have a healthy small market fan base unlike phoenix who has almost none. It makes me wonder though why don’t the blue jackets have own the arena in the first place. Lease agreements throughout sports don’t seem to make franchises healthy as a whole.
by Ray Champagne on May 29, 2009 7:03 PM CDT reply actions 0 recs
They couldn’t afford to build the rink and had to rely on Nationwide to do it.
Blogging on hockey at fromtherink.com
by James Mirtle on May 29, 2009 9:56 PM CDT up reply actions 0 recs
One wonders why Nationwide doesn’t want to be part ownership of the team?
by Ray Champagne on May 30, 2009 11:43 AM CDT reply actions 0 recs
Nationwide lost $342 million in the past year and is laying off employees. They also suffered a downgrade in their credit rating which requires them to raise cash reserves. That’s a big factor in this deal and they are in no position to buy into this team even if they wanted to.
by Big Picture Guy on May 30, 2009 1:27 PM CDT up reply actions 0 recs
For sure one would presume no business would be in position to throw money around in this global economic melt-down. I was just wondering why they didn’t acquire the team when they built the arena in the first place. Anyway …
Obviously its too late to say the shoulda, coulda scenario but I will say it anyway, they should of not bothered building a new arena instead lease out from the Ohio Buckeyes Jerome Schottenstein Center (Value City Arena) of course they would probably have to add private suites. But what do I know they probably explored that option, one would of hope anyway.
by Ray Champagne on May 31, 2009 12:37 AM CDT reply actions 0 recs
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