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Blackhawks Continue To See Red Ink
by Paul on 07/30/10 at 07:41 AM ET
Comments (4)
from Mellissa Harris of the Chicago Tribune,
Season ticket prices will increase by an average of 20 percent this fall, which is projected to rocket them from the second-cheapest in the National Hockey League three seasons ago to among the 10 most expensive, according to the team. And fans should expect “more modest” increases in the future, team owner Rocky Wirtz said.
Wirtz first revealed that the team was not profitable in private. “It’s going to take four (or) five years before we can actually get back in the black,” Wirtz said at an April 19 forum at the Economic Club of Chicago, according to a transcript. “And right now we’re still supporting the Blackhawks with our other Wirtz organizations.”
In a follow-up interview this week, Wirtz said that the Blackhawks ran out of cash several times last season. Each time, he received a memo, known as an internal capital call, in which the team requested money from Wirtz Corp., the Blackhawks’ parent company, to cover operating expenses. And at the end of the season, Wirtz said he double-checked that the playoffs did not cover those losses; the franchise remained in the red, the team’s accountant told him.
thanks to a KK reader for the pointer
Filed in: NHL Teams, Chicago Blackhawks | KK Hockey | Permalink
Comments
This sounds like a smokescreen to me. While I don’t begrudge the Blackhawks raising ticket prices, I don’t buy that their prices being too low is the primary contributing factor to them losing money.
First, here is the Forbes data from 2009 which showed the Blackhawks with a positive operating income of $20 million. Granted, this year they spent a very large chunk of the $20 million on increased players’ salaries from the 2008-09 season, but I also believe they pulled in significantly more this year.
The article does talk about how they greatly improved facilities both at the UC and their practice facility. Since they’re private and refuse to share their books, this could mean anything. If they spent $20 million doing this, they could take that entire hit in one year or they could choose to amortize it as a $1M cost every year for 20 years.
There’s also pieces there that make me think that possibly, they’re running loans against themselves to further hide profits. Movie companies do this constantly. David Prowse, the guy who was in the Darth Vader suit, has never made a dime from his work in ‘The Empire Strikes Back’ because Lucas promised him a portion of the net profits and, through creative accounting has shown that in 30 years, that movie has yet to make a profit.
At the very best, what the Hawks are doing is trying to soften the blow of raising ticket prices, at the very worst, they’re hiding revenues from the league and stealing dollars from the players. I lean more towards the softening the blow, but I hope they’re not doing the latter.
Posted by J.J. from Kansas on 07/30/10 at 08:07 AM ET
Maybe they should lower their payroll a bit…
Posted by Hippy Dave from Portland by way of Detroit on 07/30/10 at 11:42 AM ET
Lets all sit down on the couch, watch the movie Beaches and have a cry for Rocky. Does anyone actually believe the Hawks are a negative financial asset for his consolidated operation? Businesses lose money on an accounting basis all the time and for different reasons. Rocky is increasing ticket prices because he’s got a hot commodity right now and a smart man would take advantage. Besides, sports franchises are always going to earn less money than other businesses. Why? Because the people who buy and run sports teams aren’t doing it just for investment purposes; they’re doing it to appease their huge egos and enlarge their status and for fun. Think about it. If you were a billionaire and it only cost you a few million a year to run a actual franchise, would you do it? I’d buy a sports team in a second. Hell, the explosion of the multi-million dollar fantasy sports market is based on this very concept.
Posted by UMFan from Denver, Colorado on 07/30/10 at 02:01 PM ET
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20%???? Good lord…think of all the beer money that will cost the fans of Chicago.
Posted by Animal Drew from A Nightmare on Helm Street on 07/30/10 at 07:53 AM ET