On the Forecheck
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Preds ownership focused on revenue sharing
by Forechecker on 01/22/09 at 11:46 AM ET
Comments (10)
I’m sure this story will get the Nashville haters howling! The Tennessean this morning reports that the local ownership group is considering putting their own money to work to purchase enough tickets to make sure the Predators reach the NHL’s revenue sharing targets:
David Freeman stressed that he and the other owners haven’t made that decision, but with millions of dollars on the line, they’ve been discussing the possibility and they can’t wait too long to pull the trigger.
“We’ve consistently said that we’re here to give everything we’ve got to make this work,” Freeman said.
The first point to address here is that it this is allowed within NHL guidelines, as the owners are talking about using their own personal funds to hit the magic mark of 14,000 average paid attendance (the figure normally reported for NHL attendance includes giveaways and doesn’t impact revenue sharing). While many are sure to focus on this as a gimmick that only delays the demise of the NHL in Middle Tennessee, there is an unexpected bit of good news in here that is likely to get overlooked…
Through 22 home games, the Predators’ average paid attendance stands at 13,744, said Ed Lang, president of business operations. That’s 256 tickets short of the 14,000 average required for a full share of the NHL revenue-sharing pool.
This, my friends, is cause for optimism. Through the same point last season, average paid attendance stood at 12,975, finishing the year at 13,429. That is because, as I’ve written here several times before, attendance typically climbs after football season is over, and sure enough, last Saturday’s game against Atlanta was a sellout (making that awful 7-2 loss all the more frustrating). Year-on-year, then, we’re looking at a jump of 769 in paid attendance per game, a 5.9% increase. If they can maintain something close to that pace, they’ll be right around that 14,000 mark by the end of the season. In my mind, this only adds to the urgency for Barry Trotz and David Poile to take bold action to turn around the recent on-ice performance of the team.
One undercurrent that some cynics like to focus on is the window for the ownership group to break the Sommet Center lease after a couple more seasons. That opportunity is tied to two items; missing the 14K paid attendance mark, and the team losing a collective $20 million over the course of the first three seasons under the new lease (in Year 1, they basically broke even). By expressing their willingness to spend personal funds to hit the 14K mark and obtain revenue sharing funds, it is clear that this group is doing everything they can to make the NHL a long-term success here in Nashville. Some folks may not like it, but this team isn’t leaving anytime soon.
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Comments
Just because they get revenue sharing money, doesnt mean they are making a profit. If they are buying up their own tickets, which means spending money, doesnt that defeat the purpose of getting the revenue sharing? Which in case you dont know, means the other teams are helping you pay the bills.... It also says their ticket sales are so bad that they are having to do this… Its amazing how many people say OUR TEAM and all that nonsense, but yet THEY DONT GO TO THE GAMES...... AJ, when will you figure out that Freeman isnt going to come out and be honest, if they did say ‘WERE GOING UNDER” do you think anyone would go to the games? Im happy the team is here, so I dont have to drive 5 hours to St Louis or Atlanta, or 8 hours to the Joe in order to see NHL Hockey. Eventually the NHL owners are going to tell Bettman enough is enough on supporting these 6 teams that are in trouble, which is already starting to happen (Sharks owner not long ago had an outburst at Bettman ,Stars owner had comments last season, Wings owner refusing to comment about it during the Winter Classic) I know many fans around Nashville who will come out and tell you this is a sinking ship. Im sure someone will get on here and blah blah blah im just a hater blah blah blah, but whatever....... its the truth that this team is in a world of hurt, and the performance on the ice isnt helping… If they decide to turn it over to the prospects, watch and see how low the attendance goes, Freeman will be buying many tickets…
Posted by yzerman19 from Nashville on 01/22/09 at 01:27 PM ET
Revenue sharing is a part of most major pro sports leagues, so the Predators shouldn’t be ashamed to accept it. The bottom line is that while they’re certainly not out of the woods, significant progress is being made (note the increase in paid attendance).
Posted by Forechecker from Nolensville, TN on 01/22/09 at 01:56 PM ET
Listen, if the team fails, they fail. I’ve supported them as both a season ticket holder and hockey evangelist for nine years. I’ve done all I can do. My beef is not with fans of other teams (such as Yzerman19) who purchase season seats ostensibly ‘just’ because they’re hockey fans; I get that, and I have no problem with them (one sits behind me in Section 329 as a matter of fact and we get along great).
People who live here and still want the team to fail is another matter entirely, and my zeal for the team staying is almost secondary to my contempt for those who ARE simply ‘haters.’
I didn’t fall off the turnip truck yesterday; I know Freeman is going to say all the right things in an interview, but as Forechecker noted, paid attendance is up DESPITE the fact that the team is underachieving. I’m just tired of hearing from everyone who really don’t have any kind of vested interest in the team’s success how much ‘trouble’ they’re in. If you don’t care then howz about we just wait and see before you forecast your gloom and doom.
That’s all I’m saying. Don’t tell me ‘it’s over’ until the fat lady sings.
Posted by AJ in Nashville from Nashville, TN on 01/22/09 at 02:25 PM ET
I believe the point is not that ‘revenue sharing’ is the problem so much as buying your own tickets (as an owner) to achieve revenue sharing. I sincerely hope the Preds make it as a franchise but only if they do it the right way. Sooner or later the populace in Nashville will have to decide. Getting businesses to buy season tickets is certainly a way to go. However be prepared to hear about empty seats and not selling out games if you go that route. That’s all we hear about in Detroit. The fact that our building at 75% full is more seats filled than in half the arenas of the league doesn’t matter, we still are accused of not supporting our team. Good luck with your club. Just don’t cheat the system to get there.
Posted by calquake on 01/22/09 at 02:26 PM ET
Just shoot this dead horse already! This is sad and pathetic. Nashville is NOT a major league city..and don’t tell me because the Titans sell out it is. So does Green Bay. Eight games a year is diddly squat.......The Preds have had how many owners? Their best player ran to Russia. They had to unload their best Dman to Minn. They dumped a bunch of top players to Philly for the useless Forsberg and it failed. Anybody that’s good on the team they can’t pay.Time to get the heck out of Tennessee! Columbus....you are next!
Posted by kevin from boston on 01/22/09 at 03:10 PM ET
Kevin… your ignorance speaks volumes:
The Predators are on their 2nd ownership.
Radulov was hardly the team’s best player. Good and developing, yes, but hardly their best.
Zidlicky wasn’t the teams’ best D; see Suter & Weber.
What went to Philly for Forsberg: Scotty Upshall, Ryan Parent, and 2 picks. “Top players”?
Lots of good players just got new contracts: Legwand, Suter, Weber, Dumont, & Erat.
Posted by Forechecker from Nolensville, TN on 01/22/09 at 03:21 PM ET
The real question that needs to be asked is ‘Are the Predators making more money (or losing less) this year than last?’
“Paid” attendance being up or down needs to be indexed with average price per ticket sold. If, for instance, the lower bowl seats are selling at a lower rate but the upper bowl seats are selling at a higher rate, while paid attendance may be flat (or even up) gross revenue from ticket sales can still drop. Obviously we don’t have that information, and likely will never get it.
Unless the team-purchased tickets are actually being disbursed, each of those empty seats, while being paid attendance, is just one fewer person in the building who paid for parking, concessions, and other arena-specific items which also generate revenue for the club.
Finally, I don’t know exactly what the Preds paid in payroll last year, but they are paying over 45 million now. That’s seems to be rather more than what they were paying a season ago. I’m not 100% sure of the accuracy of the numbers here:
http://content.usatoday.com/sports/hockey/nhl/salaries/teamresults.aspx?team=17
...but if they are correct the Preds are spending over 15 million more on salaries this year than last, and they are closing in on spending 30 million more than they were during each of the teams first two seasons.
Do you think the economics of the Predators have shifted to the point that the club can spend nearly 46 million a year when 6 seasons ago they were spending 18.7?
I don’t know. My gut feeling is that the Preds are losing between 10-15 million a year, at least. I have no idea how much the Revenue Sharing check is for (if the Preds are going to buy 300 tickets a game, we know it’s at least more than 300 x the cheapest ticket x the number of games they buy the tickets for), but I have a hard time thinking it eats up that whole shortfall.
Posted by HockeyinHD on 01/22/09 at 04:04 PM ET
HockeyinHD: Good questions. David Freeman publicly stated that the team had a very small positive net cash flow last season, so that’s one reference point we have.
In terms of salary this season and last, NHL Numbers shows the team at $43.8 million this year, $35.4 million last, for a difference of $8.4 million. Attendance appears to be up slightly, and like you mention, the pricing mix is really unknown. What is known is that corporate sponsorships appear to have increased, but in terms of $$$, the impact is also unknown.
Comparing against 6 seasons ago is hard, because you didn’t have revenue sharing in place, which can be worth something approaching $10-12 million annually. That means if the team misses its targets and only receives 75% of the share, it costs them ~$3 million.
Posted by Forechecker from Nolensville, TN on 01/22/09 at 04:12 PM ET
I don’t want to be the negative guy, because I don’t hold any personal animus towards the Preds (I did in 2006-7, but that’s when they were, you know, kicking the crap out of the Wings in the Central there for a while 
), but the economics of the situation just scream out ‘huge, huge trouble’.
I see attendance being flat at a point barely above the league-mandated 14,000. I see a cap floor which sits somewhere approximately 30% above what the Preds spent just a year prior. I see a club which has gotten a grand total of 6 or 7 playoff gates in the franchise history.
I have absolutely no idea how the team could possibly be functioning at anything but a significant loss.
For a long time I thought a cap floor would be a good idea. I still think it is, but having it be a set dollar amount less than the ceiling is obviously madness. It’s killing teams like Phoenix and Nashville, to name two at random. Back when the cap came out the floor was only 59% of it. Now the floor is something like 72% of the cap.
Posted by HockeyinHD on 01/22/09 at 04:25 PM ET
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About On the Forecheck
Dirk Hoag is the Forechecker, churner of NHL stats and analysis. Having started over 10 years ago writing for websites like In the Crease and e-Sports, Dirk launched On The Forecheck in 2005 to cover the Nashville Predators as well as apply statistical analysis to NHL hockey.
To all the Preds-haters of the world, hate it for ya, but you’re gonna have to find something other than the Preds leaving town to give your life meaning. This team isn’t moving anywhere.
After hearing David Freeman interviewed on the radio the other night, I’m even more convinced of that. This isn’t a passing fancy to the new ownership group, it’s a passion to win; a desire to extend the professional reputation and respectability of our great city. There is absolutely nothing positive that could come from the Preds leaving Nashville; branding the city as a failed Pro Sports market.
Posted by AJ in Nashville from nashville, TN on 01/22/09 at 01:15 PM ET