3-for-30: How the NHL’s Top-3 Teams Keep the League Afloat

A look at the key economic indicators of all 30 NHL franchises (See table at document’s end for details)

Operating Income

The total operating income in 2010-2011 for the 30 NHL franchises was $160M (SEE TABLE BELOW). However, if you remove the top 3 teams – Toronto, New York R, and Montreal – operating losses totaled 17 million. In fact, if you remove the top 8 teams, (all extremely healthy franchises), operating losses were $83 million. The root of the problem lies with the unstable franchises in the bottom 9. Of the $83 million in operating losses, they account for $76 million, or about $8 million each. Even still, it’s disconcerting that the thirteen teams in the middle of the pack lost $7 million. And these are just operating losses (You can make an operating profit and still run a loss overall). The Phoenix Coyotes are known to have lost over $30 million last year, while many estimate the Atlanta Thrashers’ loss to exceed $40 million.

Franchise Values

Collectively, the franchises are worth $166 million more than in 2009-2010, for an average increase of $5.5M per team. However, once again the top 3 heavily skew those statistics. Toronto, New York, and Montreal collectively gained $151M in value, meaning the value of the other 28 franchises increased by only $15 million.

In fact, of the 30 franchises, 14 are actually worth less in 2011 than at the end of 2010. And as with operating income, the bottom 9 franchises substantially decreased in value –  $92 million – while the middle 13 increased by a paltry $9 million. So the NHL’s economic structure mirrors the rest of society – the poor are getting poorer and the rich are getting richer.

Ticket Price and Attendance

17 of 30 teams have an average ticket price not exceeding $50. (Not including season ticket holders). This is interesting given the projected ticket prices being discussed should the NHL return to Winnipeg. Many people believe that ticket prices will be well in excess of the $50 mark, though in large part this is due to the lack of corporate box seats available, which necessitates taking a bigger bite out of the average fan’s wallet.

Attendance figures are also interesting, as 8 teams regularly draw less (or in the range of) the MTS Centre’s current capacity of 15,015. There is also talk of expanding capacity to 17,000 seats, and establishing more corporate box seats.

Please note that these figures are increasingly unreliable as you go further down the list, as the bottom dwellers regularly discount, or even give away large numbers of tickets, which artificially inflates attendance. (The Florida figure is particularly curious – it’s unlikely that 15,600 fans pay $60 a seat in that climate to watch a team that hasn’t made the playoffs since 2000.)

Not Pulling their Weight

The bottom line is that the NHL is driven by the Original 6, the remaining Canadian teams, and the Pennsylvania-based teams. That’s 12 teams. The rise in the Canadian dollar has been a huge boon to teams north of the border, while Sidney Crosby all but saved the Penguins. (Mario Lemieux helped a bit too, as did Jim Balsillie’s strong arm tactics).

Other teams that have a history of success like Dallas and New Jersey have terrifying debt loads and poor attendance, probably due in part to the lack of playoff success those teams have seen of late, after years of Stanley Cup contention. (Neither team even made the playoffs this year). And while the NHL argues that success goes a long way in establishing a hockey market, Carolina and Tampa continue to struggle despite somewhat recent cup victories.

It’s hard to believe that the NHL ever envisioned hockey working in markets like Atlanta, Phoenix, Columbus, Fort Lauderdale (Florida), and Nashville, where grassroots interest in hockey is low or non-existent, and competing sources of sports and entertainment are prevalent. Sports like football, basketball, baseball, and Nascar rule the US sports landscape, and furthermore, college sports are equally if not more popular in the southern and mid-west regions. Hockey is only popular in a few states – Minnesota, Michigan, and the North-East (New York, Massachusetts, Connecticut, etc).

Furthermore, the economic recession of 2008 has had a far greater impact in the US than in Canada, with home foreclosures continuing at alarming rates. There is also undeniable evidence of decreased purchasing power in the long-term, as in the past 40 years, household incomes have been well outpaced by inflation. If the middle class continues to get squeezed, discretionary spending on entertainment goods and services will decrease, and professional hockey will see a larger drop as US consumers cling to their favourites (as mentioned above).

Double Standard?

Overall, being kept out of the NHL’s poorly run outfit is humbling even for Winnipeg – a city well known for its swagger, or lack thereof. It’s kind of like saying that you only need a C average to gain university admission, and then being told that you didn’t make the cut. I’m normally a believer that the student is in control of his destiny, but in this case, I think the professor may be a little biased. Phoenix turns in a paper worthy of a 3rd grader and Bettman puts on his rose tinted glasses; True North submits their Ph D level thesis, and he lines up the world’s foremost experts on NHL relocation to scrutinize their work.

The most bewildering thing about the NHL’s southern exploits is the fact that the NHL owners (and not Gary Bettman) continue to subsidize their unproductive efforts. Let’s hope that the madness ends soon – not just for Winnipeg’s benefit, or even Canada’s for that matter, but for the integrity of a great game that deserves to be played in the presence of those who actually give a damn.

NHL Franchise Values

Unit ——- > (M) (M) (M) (M) (M)
# Team Value 1 yr Change Rev Op Inc Debt ^Avg Ticket Pr (09-10) Avg Att City Pop
1 Toronto $505 8% $187 $83 $136 $114 19,354 5.7
2 New York R $461 11% $154 $41 $0 $59 18,108 12
3 Montreal $408 20% $163 $53 $286 $72 21,273 3.8
4 Detroit $315 -6% $119 $15 $0 $47 19,680 4.4
5 Boston $302 11% $110 $3 $121 $55 17,565 4.6
6 Philadelphia $301 10% $121 $13 $66 $60 19,715 6
7 Chicago $300 16% $120 $18 $0 $47 21,423 8
8 Vancouver $262 10% $119 $18 $110 $62 18,860 2.4
9 Pittsburgh $235 6% $91 -$2 $99 $56 18,240 2.4
10 Dallas $227 -8% $95 $6 $200 $36 15,073 4.3
11 New Jersey $218 -2% $104 $7 $251 $48 14,775 *2.1
12 Los Angeles $215 3% $98 $1 $163 $47 18,083 10
13 Calgary $206 3% $98 $5 $31 $60 19,289 1.2
14 Minnesota $202 -4% $92 -$2 $113 $61 18,012 3.2
15 Colorado $198 -4% $82 $2 $30 $41 14,820 2.5
16 Washington $197 7% $82 -$9 $79 $45 18,397 4.3
17 Ottawa $196 -1% $96 -$4 $129 $53 18,378 *1.2
18 San Jose $194 6% $88 -$6 $45 $43 17,562 1.8
19 Anaheim $188 -9% $85 -$5 $36 $44 14,738 3
20 Edmonton $183 10% $87 $8 $101 $60 16,839 1.2
21 Buffalo $169 0% $81 -$8 $51 $36 18,452 1.1
22 Florida $168 6% $76 -$10 $96 $59 15,685 *5.5
23 St. Louis $165 -6% $79 -$6 $120 $38 19,150 2.8
24 Carolina $162 -9% $75 -$7 $130 $38 16,415 1.1
25 Columbus $153 -7% $76 -$7 $44 $48 13,658 0.8
26 New York I $151 1% $63 -$5 $100 $51 11,059 2.1
27 Nashville $148 -5% $74 -$6 $81 $48 16,142 1.6
28 Tampa Bay $145 -24% $76 -$8 $45 $36 17,268 2.7
29 Atlanta $135 -5% $71 -$8 $65 $49 13,469 5.5
30 Phoenix $134 -3% $67 -$20 $35 $37 12,188 *4.3

^Average ticket price does not include season tickets

*Populations that include outlying areas

Sources

Team Valuation http://www.forbes.com/lists/2010/31/hockey-valuations-10_rank.html

Attendance http://espn.go.com/nhl/attendance

Ticket Prices – http://www.viewfrommyseats.com/2010/08/nhl-ticket-prices/

Population estimates – http://www.census.gov/popest/metro/tables/2009/CBSA-EST2009-01.xls

http://www40.statcan.gc.ca/l01/cst01/demo05a-eng.htm

3 thoughts on “3-for-30: How the NHL’s Top-3 Teams Keep the League Afloat

  1. Canadian Bunk. You can take Nashville off your list and get a clue. In a community of 1.6 million the attendance is healthy and growing. Averaging one thousand less than communities two to 5 times Nashville’s size. We are doing fine thank you.

    Our crowds are rockus in comparison to the sleepy Toronto atmosphere produced by corporate dollars. Our building is full of fans.

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