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Would Hamilton Kill Buffalo?

When I sent Jim Balsillie’s spokesman the question about how a Hamilton team might affect the Buffalo market, they declined to directly answer. However, Jeff Klein of the New York Times gave it a good thorough look:

But the Sabres are always in a very precarious financial position, given Buffalo’s shrinking size and awful economy. The Sabres (company name Niagara Frontier Hockey, L.P.) depend on the roughly 15 percent of their business that comes from the Niagara Peninsula, all the way up the Golden Horseshoe to Hamilton. Never mind that after almost 40 years most of the Canadians who attend Sabres games do not root for Buffalo; the main thing is that they’re helping to fill the HSBC Arena.

It would take an enormous indemnification payment to the Sabres to make them give up as much as 15 percent of their annual business — an amount that Balsillie is trying to get out of paying by trying to strike down the N.H.L. territory rules in a Phoenix court. Unless the Sabres — who were themselves being operated by the league and at risk of folding before Golisano bought them in 2003 — get that kind of big money, they will never approve a Coyotes move to Hamilton that could easily drive them out of business.

Anyone interested in the situation—or if you’re a fan of the Buffalo Sabres—should read the entire thing here.

Filed in: | Mike Chen's Hockey Blog | Permalink
 Tags: Buffalo+Sabres, Jim+Balsillie,

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So as a Sabre fan and a WNYer, I’ve obviously given this matter a ton of thought. What follows isn’t a rigorous investigation, but rather my musings and reasoning:

The percentage of the Sabres’ revenue that comes from Canada has been quoted as being anywhere from 15-20%. Obviously that is a huge chunk, and without it the Sabres would be sunk. However it’s naive and shortsighted to say that that portion would be wiped out in its entirety if Southern Ontario were to get a second team. For one, regardless of how the league would be realigned in the event of a 2nd Ontario team, the Sabres would still be in the same division as anywhere from 2-4 Canadian teams. That means that anywhere from 6-12 of the 41 home games would be against a Canadian opponent (Not to mention the 1-3 games against the Western Canadian teams, there could at best be 15 games. And yes, Canadians from Ontario are happy to root for the Flames in Buffalo if it means seeing them in person.). So it’s a given that at those 6-12 games would still continue to draw a ton of Canadian revenue.

Simply saying that those games would still draw Canadian money is still an oversimplification because we have not yet adjusted for the variable pricing that the Sabres employ. Starting after the lockout the Sabres have been classifying each home game into a class ("value", “bronze”, “silver”, “gold”, and starting this past season, “platinum"). A Tuesday night game in November against the Coyotes would obviously be a “value”, whereas a Friday night against the Leafs is a “gold” (or “platinum” now). The box office prices vary IMMENSELY across the classes (check Sabres.com if you want to see yourself), and nearly every game against a Canadian opponent is at least a “silver” or better. What this means is that not only do you potentially gain dates against another Canadian team (again, barring realignment losses of Montreal/Ottawa), but those dates you gain command a much higher price than the few dates you’ve lost by no longer hosting the Coyotes and/or whatever EC team moves to the west (Atlanta perhaps?). So assuming that a Hamilton team siphons off every Canadian customer for American-opponent games, you’re still not losing anywhere close to the entire portion of that 15-20%.

Of course this is all based on the assumption that the team would be located in Hamilton itself. According to Google Maps, if you were to live in St. Catharines it is an identical distance to get to both Copps Coliseum in Hamilton and The Aud in Buffalo. Toss in the fact that you don’t have to cross the border to get to Hamilton (not to mention the nationalistic reasons to root for them), and obviously most of those fans would now root for the Blackberries. That to me is the worst-case scenario. However there has been a lot of noise made about putting a second team in Toronto itself, perhaps basing their arena near the airport/suburbs (sort of a Toronto version of the Islanders). If that is the case then even if that team was much more affordable and accessible than the Leafs, you’d still get a lot of people in the Hamilton-to-St Catharines region who would remain with the Sabres. Heck, regardless of location, on cost alone I’d bet there are still a ton of people who would still opt for the Sabres, where they could get a full season’s ticket for the same cost of a 10-game pack for the Blackberries.

One more thing, the WNY area continually puts up some of the highest television ratings in the US, regardless of whether the Sabres are playing or not. Don’t think that Bettman doesn’t know that and doesn’t want to protect that.

So that’s a rundown of the situation from someone who sees it up close and follows the team (and has applied a bit of logic to the situation). How the actual numbers would shake out is beyond me, and in no way am I trying to claim that all is well. A second S. Ontario team is a serious matter to the Sabres. If done one way it could in fact kill the Sabres. However if done in a different way it could actually benefit the Sabres (new rivalry, new home dates...). What I’m trying to say is that it’s way too simplistic to just say “15% of their revenue comes from Canada, Buffalo is shrinking, ergo a new team would kill the Sabres”.

Just my $0.02.

Posted by dave in Rocha on 05/18/09 at 10:30 AM ET

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Mike Chen prides himself in being the only hockey writer integrating puck discussion with both Morrissey quotes and Star Wars references. Since 2004, he’s blogged about all things hockey and currently contributes to FoxSports.com, the Battle of California, and RotoRob.

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