SBD/April 30, 2012/Franchises

Predators Are Not A Profitable Business Despite Public Subsidies, On-Ice Success

Predators owners have put in $60M of their own money to cover losses
Millions of dollars in public funds and "unsurpassed on-ice success have not been able to turn the Nashville Predators into a profitable business," according to a front-page piece by Nate Rau of the Nashville TENNESSEAN. Predators Chair Tom Cigarran said that members of the ownership group "have been forced to put $60 million of their own money into the operation over the past five years, largely to cover losses." The city has given the Predators $38.6M "in the same period." Cigarran said that his group is "hunting for additional investors willing to kick in" $15-25M. Citing improved attendance and other business accomplishments, Cigarran "predicted the Predators will turn the corner soon on profitability." The team received $11.62M last year "in state and city money." Nashville Mayor Karl Dean’s office said that it is "confident in the Predators’ stability," but other Metro officials "expressed concern that the owners say the team is still not profitable." Predators CEO Jeff Cogen said that revenue from "private sponsorships at the arena -- another important benchmark of success for sports franchises -- is up about" 25% since he and team President & COO Sean Henry were hired in '10. Cogen "would not disclose the number of sponsors or how much revenue they generate." Another important source of money for the team "is subsidies and fees from the city and state." Dean has said that the city intends, in a "new deal being negotiated, to offer the Predators more incentive-based dollars and less guaranteed money." Cigarran said that the team "must receive city support near its current $7.8 million figure." In addition to that money, the Predators "receive money generated through state sales and privilege taxes, which vary based on volume but totaled $3.82 million last year." Cigarran said, "So we can’t not have the ability to get approximately what we have been getting and still be viable in the long run" (Nashville TENNESSEAN, 4/29).

TAX COLLECTOR: Rau in a separate piece noted city tax revenue paid to the Predators "was the focus of a labor dispute last year" between the NHL and the players union. The dispute was "ultimately settled with the league and the union agreeing to increase the hockey-related revenue pot by a total of $40 million." Predators management last month said that the "small segments" of some of the revenue streams that make up the city's $7.8M subsidy "do count as hockey-related revenue." But Cogen said that it would be a "mistake to conclude that Metro tax dollars end up in the pockets of NHL players." Cogen said, "If you’re saying Nashville tax dollars go to pay (Predators goalie) Pekka Rinne, that would be wrong" (Nashville TENNESSEAN, 4/29).
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