SBJ/September 30 - October 6, 2002/Special Report

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  • Arena will lift Phoenix out of revenue desert

    The Phoenix Coyotes’ new owners have overcome numerous obstacles and will move into a new arena in Glendale in December 2003.

    Phoenix Coyotes owner Steve Ellman has avoided a few metaphorical hip checks since he began pursuing a plan to build a giant mall near a new hockey arena in Arizona.

    First, former Coyotes owner Richard Burke failed to find a suitable local buyer for the team, forcing Ellman to step in and buy the franchise himself simply to save the real estate development.

    Then the sale was held up for months when Ellman had trouble coming up with enough money. The city of Scottsdale, where the landmark project was to be situated, subsequently backed out and took millions in subsidies with it.

    Everything is back on track, but the Coyotes still face numerous challenges, including league-low revenue and a current home that was built for basketball.

    Ellman and local businessman Jerry Moyes have put $177 million into the club since 2000, including losses of $20 million to $25 million last season. By the time the arena opens in December 2003, their total investment should top $225 million.

    But Ellman said the franchise is on course to have its financial house in order once the team moves into a new arena in suburban Glendale, Ariz.

    "I think there's clearly a misconception out there," he said. "We just went out and paid $24 million for [Tony] Amonte," referring to the three-year free-agent contract signed by the former Chicago Blackhawks star. "We wouldn't have done that if we were going out of business tomorrow"

    If the team is now on solid financial footing, it has Moyes to thank. The owner of a local trucking company put up $20 million to help Ellman close on the sale of the team, and has covered the club's recent operating losses.

    Perhaps most important, Moyes paid off the team's $60 million debt to lenders Sumitomo and Société Générale in February. The club now owes Moyes the money, but will not have to begin paying principal or interest until a later date. When Ellman purchased the team, about half its $14 million annual loss came from debt service, a source close to the team said.

    What has Ellman believing in the team's future is the same thing that motivated him to get involved in the first place — real estate. His corporation, Ellman Cos., has the right to develop more than 6 million square feet in Glendale and will create a retail, office and residential complex that outside consultants said will attract 12 million visitors per year.

    The Coyotes’ new arena was to be built in Scottsdale, but the city backed out.

    The centerpiece of the $850 million project, and of the Coyotes' future, is the arena. Ellman said he expects to realize $100 million from naming rights, offsetting nearly half the total investment in the franchise.

    The Coyotes will keep all revenue from the arena and will pay $500,000 per year in rent for the next 20 years, and $1 million per year for 10 years after that. The team now plays in America West Arena, which was built for basketball and has 4,000 seats with an obstructed view for hockey.

    Team President Jim Lites, who joined the Coyotes this year after leaving the same position with the Dallas Stars, said he's shooting to increase team revenue by $30 million a year at the new arena. Forbes magazine pegged the Coyotes' 2000-01 revenue at $39 million, the lowest in the NHL.

    "We need to increase our advertising at the building by about $10 million [including naming-rights revenue]," he said. "We've got to find $8 million to $10 million worth of [new] ticket [sales], and $10 million from other things," which includes suite sales, restaurants and concessions. "It's daunting," Lites said, "but it can be done."

    Currently, the Coyotes have only about 6,000 season-ticket holders, barely half the league average. But ticket sales are up 20 percent and sponsorship revenue is up another 25 percent this year, Ellman said.

    The Coyotes kept payroll at $31.2 million last season, ranking 19th out of 30 teams, according to The Hockey News.

    Where the club does spend lavishly is on front-office talent. Wayne Gretzky heads the hockey department and is a part-owner of the team. His former agent, Mike Barnett, is the general manager and reportedly earns $1 million per year, among the highest salaries for the position. Cliff Fletcher, an accomplished former NHL general manager himself, is an assistant GM.

    "Wayne does earn a salary of several million, Jimmy Lites earns a big salary [and] Mike Barnett earns a big salary," Ellman said. "But I don't think anyone would debate those guys know how to win. Now if I give them a world-class regional development, it becomes a win-win for the city, the team and our development company."

    Print | Tags: Dallas Stars, Hockey, NHL, Arizona Coyotes, Special Report
  • Canucks singing ‘loonie’ tune despite progress

    The Vancouver Canucks seem to be doing everything right. The team owns its arena, has solid season-ticket and walk-up sales, and sports widespread local media carriage. The franchise has managed to put a competitive team on the ice for a knowledgeable and rabid fan base while keeping a lid on its player payroll.

    So why is Vancouver hockey on shaky ground?

    "Taking in loonies and paying out U.S. greenbacks has gone from a challenge to a near impossible task," said Canucks President Brian Burke.

    Loonies are what the locals call the Canadian dollar, and it is worth less than two-thirds of an American singleton, an equation that plagues all but one of the NHL's six Canadian franchises.

    The league has tried to address the currency disparity through the Canadian Assistance Program (CAP), which since the mid-1990s has funneled around $3 million a year to cash-strapped teams north of the border, but it hasn't been enough. Only Toronto has avoided the losses that have plagued the Canucks, Calgary, Ottawa, Edmonton and even the Montreal Canadians during the last decade.

    The Canucks have lost about $70 million U.S. since 1996 but broke even or made a slight profit in 2001-02, the team said. Canucks COO David Cobb estimates the low Canadian dollar costs the team about $15 million U.S. a year.

    "While our margin for error is small, we can compete reasonably well with a 80- to 85-cent loonie," Burke said. "At 60 to 65 cents, we need help to survive, pure and simple."

    There is little public support for direct government assistance, so Vancouver and other Canadian clubs have begun to apply their own heat for a series of subsidies.

    The team is seeking a percentage of lottery revenues currently generated from public wagering on NHL games, municipal property tax relief on the club-owned GM Place arena, and some form of tax on visiting team players similar to what exists in many other major pro league jurisdictions.

    All in all, the measures could add $4 million to $6 million a year to team coffers.

    Rick Thorpe, the provincial minister of competition, science and enterprise and the government's point man on hockey, said he is sympathetic to the team's plight but must balance its needs with public concerns.

    "We are committed to finding creative ways to better level the playing field so that we can keep a world-class, professional hockey team in British Columbia," Thorpe said. "But those solutions cannot be seen as subsidies to million-dollar hockey players."

    Michael Milke, a member of the Canadian Federation of Taxpayers, warns that the political consequences of any bailout would be difficult to swallow. "Any other business with average salaries of $1 million-plus going cap in hand asking for help would get the bum's rush out of the finance minister's office."

    With most public opinion running against a government bailout, Thorpe and others have gone increasingly quiet, leaving the Canucks to try to make ends meet on their own.

    To increase revenue, the team has created a premium-pricing plan that will jack up the cost of tickets for six high-demand games by between 10 percent and 20 percent. The package includes both visits to GM Place by Toronto and Detroit, a mid-February tilt against division rival Colorado, and the return of former Canucks superstar Pavel Bure with the Rangers.

    The Canucks are not alone in pursuing a variable pricing policy. Ottawa and Pittsburgh have created a tiered ticket pricing policy, with all three clubs taking their cues from similar plans in effect across Major League Baseball.

    While the market ultimately will determine the success of the new strategy, the demand for Canucks tickets is the strongest in years. Season-ticket sales are up 20 percent from last year to 10,000 and are expected to top the 12,000 mark.

    Combined with game-day sales, that should translate into more than 30 sellouts at GM Place, capacity 18,422, up from 25 a year ago.

    Cobb said that despite a tough economic climate, season-ticket renewals are at near record levels, and that "speaks volumes about Vancouver as a hockey town."

    The team also is aggressively trying to mine other added-value revenue streams, once again packaging a limited schedule of 10 regular-season games on pay-per-view, available in a package for $51 or for $6.50 a game. Cobb said he is confident the club will exceed last year's average of 12,500 buys per game.

    While the additional revenue is welcome, the team will probably still have to make the playoffs to turn a profit.

    In the meantime, Seattle billionaire and owner John McCaw has put both the club and GM Place for sale. Although the preference is to find local ownership that will keep the team in Vancouver, no buyers have surfaced yet.

    Brian Schecter is a writer in Vancouver.

    Print | Tags: Calgary Flames, Edmonton Oilers, Hockey, Montreal Canadiens, NHL, Ottawa Senators, Special Report, Vancouver Canucks
  • Deal with Sun promotes NHL and technology

    The NHL wanted to take care of its fans, which it believes are the most computer-literate among followers of the four major team sports. Sun Microsystems wanted to show off its ability to use technology to build a brand.

    Ten months into their relationship, Sun and the NHL said their marketing and technology partnership is blooming but still a work in progress. For its part, Sun has spent the off-season rebuilding nhl.com's infrastructure to better serve fans who want video highlights and other real-time features.

    "I think we're past the dot.com age where it was, 'Hey, let's go create a Web site and try to create a brand,'" said Hal Stern, a chief architect with Sun. "These guys have a 100-year-old brand. They want to extend it via technology."

    Sun also has been designing a section to the site called Inside the Net, where prospective clients of the Silicon Valley company can check out its technological prowess.

    "We invite our customers to come see what we're doing," Stern said. "It's very much living proof of what we can do with the technology and what hockey is doing with the technology."

    The NHL chose Sun to power the league's Web site in January, not long after ending an association with IBM. The league said it was seeking both a marketing and technological ally to replace IBM, which held an equity stake and shared control of the site. Sun is a league sponsor and pays for marketing rights while the NHL purchases technology from Sun.

    "We made a decision to take control over that, to have our own destiny where we were going with nhl.com," said Ed Horne, president of NHL Enterprises LP.

    Financial terms of the three-year deal have not been disclosed, though Horne said each company is a customer of the other. The NHL takes full advantage of Sun's vast technology with Sun paying for marketing rights that it uses to entice prospective customers.

    This summer, Sun technology was prevalent on the floor of the league's entry draft in Toronto. General managers and scouting staffs fed their selections into a computer rather than just writing a name on a card and taking it to league officials.

    The league needs the Web site in its effort to increase awareness, in part because Horne said the NHL does not get nearly the same media coverage as the other major team sports.

    "We don't think traditional media has served hockey as well as it should be served," Horne said. "This [nhl.com] is the place for passionate as well as casual fans to have unfiltered access to all information on the NHL and professional hockey that you need."

    The NHL's record in newer Southern and Western markets has been spotty, but there is little question the league has a committed core following. During last spring's Stanley Cup Finals, Sun worked with the Carolina Hurricanes to create a wireless network that allowed fans to order food and merchandise or access information from their cell phone.

    Horne points to the 3 million-plus visitors each month to nhl.com, up some 50 percent in one year and good for No. 8 among sports Web sites in the world, according to research by netScore, an Internet traffic measurement service. And, much like the composition of NHL rosters, about one-third of those Web users are from outside this continent.

    The league touts its fans as the most computer literate and first in PC ownership among followers of major team sports. Aligning with Sun, then, gives the NHL the necessary platform when it comes to filling the fan's demand for real-time and video accessories.

    "There has always been a demand," Horne said. "Now there is the ability to be able to further entrench fans through stats and bring new fans in. It's an important component in trying to market the game on a long-term basis."

    Rick Maloney writes for Business First of Buffalo.

    Print | Tags: Hockey, NHL, Special Report, Sun Microsystems Inc.
  • NHL franchise directory

    Editor's note: This story is revised from the print edition.

    Anaheim Mighty Ducks

    Owner: The Walt Disney Co. paid a $50 million expansion fee in 1992.

    Arena/capacity (year opened): Arrowhead Pond of Anaheim/17,174 (1993)

    Arena owner: City of Anaheim

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 84/$100,000-$150,000

    No. of club seats/price range: 1,800/$6,900-$9,500

    Naming rights/terms: Arrowhead Mountain Spring Water/$19.5 million, 13-year deal through 2006

    2001-02 attendance (% change): 492,089 (-11.2%)

    2001-02 avg. attendance (% capacity): 12,002 (69.9%)


    Atlanta Thrashers

    Owner: Time Warner paid an $80 million expansion fee in 1997. America Online acquired Time Warner, including the team, for $165 billion in 2000.

    Arena/capacity (year opened): Philips Arena/18,545 (1999)

    Arena owner: Atlanta-Fulton County Recreation Authority

    Concessionaire/premium seat caterer: In-house/Levy Restaurants and Buckhead Life Restaurant Group

    No. of suites/price range: 92/$135,000-$225,000

    No. of club seats/price range: 1,866/$3,400-$17,000

    Naming rights/terms: Royal Philips Electronics/$185 million, 20-year deal through 2019

    2001-02 attendance (% change): 560,404 (-10.4%)

    2001-02 avg. attendance (% capacity): 13,668 (73.7%)


    Boston Bruins

    Owner: Jeremy M. Jacobs bought the team and Boston Garden from Storer Broadcasting for $10 million in 1975.

    Arena/capacity (year opened): FleetCenter/17,565 (1995)

    Arena owner: NBG Corp., a subsidiary of Delaware North Cos.

    Concessionaire/premium seat caterer: Sportservice (both)

    No. of suites/price range: 108/NA

    No. of club seats/price range: 2,442/NA

    Naming rights/terms: Fleet Financial Group Inc./$30 million, 15-year deal through 2010

    2001-02 attendance (% change): 631,546 (-0.2%)

    2001-02 avg. attendance (% capacity): 15,404 (87.7%)


    Buffalo Sabres

    Owner: The NHL has taken over the club and is seeking a buyer after Adelphia Communications filed for bankruptcy protection earlier this year and John Rigas was arrested on July 24 on charges of fraud and criminal self-dealing. Rigas is the founder and former chairman and CEO of Adelphia. The Rigas family held 100 percent ownership of the team. NHL officials are coordinating the search for new ownership.

    Arena/capacity (year opened): HSBC Arena/18,690 (1996)

    Arena owner: Niagara Frontier Holdings LP

    Concessionaire/premium seat caterer: Sportservice (both)

    No. of suites/price range: 80/$89,000-$160,000

    No. of club seats/price: 2,500/$3,321

    Naming rights/terms: HSBC Bank USA/$24 million, 30-year deal through 2026

    2001-02 attendance (% change): 705,828 (-3.5%)

    2001-02 avg. attendance (% capacity): 17,215 (92.1%)


    Calgary Flames

    Owner: A group of investors bought the Atlanta Flames for $16 million in 1980 and moved the team to Calgary.

    Arena/capacity (year opened): Pengrowth Saddledome/17,158 (1983)

    Arena owner: Calgary Flames Partnership

    Concessionaire/premium seat caterer: In-house (both)

    No. of suites/price range: 74/NA

    No. of club seats/price range: 1,640/$3,600

    Naming rights/terms: Pengrowth Management Ltd./$20 million, 20-year deal through 2016

    2001-02 attendance (% change): 644,466 (-5.4%)

    2001-02 avg. attendance (% capacity): 15,719 (91.6%)


    Carolina Hurricanes

    Owner: Peter Karmanos Jr., Thomas Thewes and Jim Rutherford bought the Hartford (Conn.) Whalers from Richard Gordon and a group of corporations for $47.5 million in 1994. They moved the team to North Carolina in 1997.

    Arena/capacity (year opened): RBC Center/19,000 (1999)

    Arena owner: Centennial Authority

    Concessionaire/premium seat caterer: In-house (both)

    No. of suites/price range: 75/$85,000-$160,000

    No. of club seats/price range: 2,000/$2,420-$4,180

    Naming rights/terms: RBC Centura Bank/$80 million, 20-year deal through 2022

    2001-02 attendance (% change): 635,868 (+16.2%)

    2001-02 avg. attendance (% capacity): 15,509 (82.8%)


    Chicago Blackhawks

    Owner: James Norris, James D. Norris and Arthur M. Wirtz bought controlling interest in the team from Bill Tobin in 1952. The team now is solely owned by the Wirtz family.

    Arena/capacity (year opened): United Center/20,500 (1994)

    Arena owner: United Center Joint Venture

    Concessionaire/premium seat caterer: Bismarck Food Service (both)

    No. of suites/price range: 212/$70,000-$300,000

    No. of club seats/price range: 3,000/$50-$60 per game, plus a $1,000 premium

    Naming rights/terms: UAL Corp./$36 million, 20-year deal through 2014

    2001-02 attendance (% change): 638,324 (+3.8%)

    2001-02 avg. attendance (% capacity): 15,569 (75.9%)


    Colorado Avalanche

    Owner: Stan Kroenke bought the team, the Denver Nuggets and the Pepsi Center from Liberty Media for $450 million in 2000.

    Arena/capacity (year opened): Pepsi Center/18,007 (1999)

    Arena owner: Team owner

    Concessionaire/premium seat caterer: Aramark/Levy Restaurants

    No. of suites/price range: 95/$125,000-$250,000

    No. of club seats/price range: 1,900/$6,450-$10,320

    Naming rights/terms: PepsiCo/$68 million, 20-year deal through 2019

    2001-02 attendance (% change): 738,287 (0.0%)

    2001-02 avg. attendance (% capacity): 18,007 (100.0%)


    Columbus Blue Jackets

    Owner: John H. McConnell, Wolfe Enterprises Inc. and Ron Pizzuti paid an $80 million expansion fee in 1997.

    Arena/capacity (year opened): Nationwide Arena/18,136 (2000)

    Arena owner: Nationwide Realty Investors

    Concessionaire/premium seat caterer: Sportservice (both)

    No. of suites/price range: 52/$120,000-$150,000

    No. of club seats/price range: 1,500/$3,420-$3,870

    Naming rights/terms: Nationwide Insurance/$135 million, indefinite deal (a)

    2001-02 attendance (% change): 743,578 (3.9%)

    2001-02 avg. attendance (% capacity): 18,136 (100.0%)


    Dallas Stars

    Owner: Thomas O. Hicks bought the team from Norman Green for $84 million in 1995. Earlier this month, Hicks announced his interest in selling the team and his stake in American Airlines Center.

    Arena/capacity (year opened): American Airlines Center/18,532 (2001)

    Arena owner: City of Dallas

    Concessionaire/premium seat caterer: Sportservice/Well Bread (b)

    No. of suites/price range: 143/$3,750-$5,000 per game

    No. of club seats/price range: 2000/$90-$135 per game

    Naming rights/terms: American Airlines Inc./$196 million, 30-year deal through 2031

    2001-02 attendance (% change): 759,812 (+9.0%)

    2001-02 avg. attendance (% capacity): 18,532 (100.0%)


    Detroit Red Wings

    Owner: Michael and Marian Ilitch bought the team from the Norris family for $8 million in 1982.

    Arena/capacity (year opened): Joe Louis Arena/20,056 (1979)

    Arena owner: City of Detroit

    Concessionaire/premium seat caterer: Olympia Entertainment (both)

    No. of suites/price range: 83/$35,000-$115,000 (c)

    No. of club seats: 0

    Naming rights: None

    2001-02 attendance (% change): 822,373 (+0.3%)

    2001-02 avg. attendance (% capacity): 20,058 (100.0%)


    Edmonton Oilers

    Owner: A group headed by Cal Nichols bought the team from Peter Pocklington for $68.8 million in 1998. The Alberta Treasury Branches had assumed management of Pocklington's assets in November 1997 and oversaw the selling of the team in order to recover an $84 million loan.

    Arena/capacity (year opened): Skyreach Centre/16,839 (1974)

    Arena owner: City of Edmonton

    Concessionaire/premium seat caterer: Sportservice (both)

    No. of suites/price range: 66/NA

    No. of club seats/price range: 3,323/$4,355-$4,967

    Naming rights/terms: Skyreach Equipment Ltd./$3.4 million, 5-year deal through 2003

    2001-02 attendance (% change): 680,307 (+6.3%)

    2001-02 avg. attendance (% capacity): 16,593 (98.5%)


    Florida Panthers

    Owner: In June 2001, a group headed by Florida-based Andrx Co. founder Alan Cohen paid $104.7 million to purchase the team from publicly held Boca Resorts Inc. The ownership group includes former NFL quarterback Bernie Kosar.

    Arena/capacity (year opened): Office Depot Center/19,250 (1998)

    Arena owner: Broward County

    Concessionaire/premium seat caterer: Boston Concessions (both)

    No. of suites/price range: 74/NA

    No. of club seats/price range: 2,300/NA

    Naming rights/terms: Office Depot/$14 million, 10-year deal through 2012

    2001-02 attendance (% change): 659,440 (+9.6%)

    2001-02 avg. attendance (% capacity): 16,084 (83.6%)


    Los Angeles Kings

    Owner: Philip Anschutz and Edward P. Roski Jr. bought the team from Jeffrey Sudikoff and Joseph Cohen for $113.25 million in 1995.

    Arena/capacity (year opened): Staples Center/18,118 (1999)

    Arena owner: Anschutz Entertainment Group

    Concessionaire/premium seat caterer: Aramark/Levy Restaurants

    No. of suites/price range: 160/$200,000-$300,000

    No. of club seats/price range: 2,400/$12,500-$17,775

    Naming rights/terms: Staples Inc./$116 million, 20-year deal through 2019

    2001-02 attendance (% change): 687,002 (+4.4%)

    2001-02 avg. attendance (% capacity): 16,756 (92.5%)


    Minnesota Wild

    Owner: A group headed by Robert Naegele Jr. paid an $80 million expansion fee in 1997.

    Arena/capacity (year opened): Xcel Energy Center/18,064 (2000)

    Arena owner: City of St. Paul

    Concessionaire/premium seat caterers: Volume Services America/Volume Services America and Wildside Caterers (d)

    No. of suites/price range: 74/$88,000-$150,000

    No. of club seats/price range: 2,800/$2,860-$3,300

    Naming rights/terms: Xcel Energy Inc./$75 million, 25-year deal through 2024

    2001-02 attendance (% change): 756,686 (+0.7%)

    2001-02 avg. attendance (% capacity): 18,456 (102.2%)


    Montreal Canadiens

    Owner: Booth Creek Ski Holdings Chairman George Gillett purchased 80.1 percent of the team and Bell Centre for $183 million in 2001. Molson Cos. Ltd. retained a 19.9 percent stake in the franchise.

    Arena/capacity (year opened): Bell Centre/21,242 (1996)

    Arena owner: Booth Creek Ski Holdings

    Concessionaire/premium seat caterer: In-house/Levy Restaurants

    No. of suites/price range: 135/$47,641-$95,283

    No. of club seats/price range: NA

    Naming rights/terms: Bell Canada/$63.2 million, 20-year deal through 2022

    2001-02 attendance (% change): 821,140 (-0.4%)

    2001-02 avg. attendance (% capacity): 20,028 (94.1%)


    Nashville Predators

    Owner: Craig Leipold and Gaylord Entertainment paid an $80 million expansion fee in 1997. Leipold owns 80 percent and Gaylord owns 20 percent.

    Arena/capacity (year opened): Gaylord Entertainment Center/17,113 (1996)

    Arena owner: Sports Authority, Metropolitan Government of Nashville and Davidson County

    Concessionaire/premium seat caterer: Sportservice/Levy Restaurants

    No. of suites/price range: 72/$95,000-$130,000

    No. of club seats/price range: 1,800/$3,075-$3,485

    Naming rights/terms: Gaylord Entertainment/$80 million, 20-year deal through 2018

    2001-02 attendance (% change): 606,347 (-4.6%)

    2001-02 avg. attendance (% capacity): 14,789 (86.4%)


    New Jersey Devils

    Owner: Puck Holdings LLC, an affiliate of YankeeNets, bought the team from John McMullen for $175 million in 2000.

    Arena/capacity (year opened): Continental Airlines Arena/19,040 (1981)

    Arena owner: New Jersey Sports & Exposition Authority

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: NA

    No. of club seats: 0

    Naming rights/terms: Continental Airlines/$21 million, 15-year deal through 2011

    2001-02 attendance (% change): 652,957 (+6.3%)

    2001-02 avg. attendance (% capacity): 15,926 (83.6%)


    New York Islanders

    Owner: Charles Wang and Sanjay Kumar bought the team from Howard and Edward Milstein and Steven Gluckstern for $190 million in 2000.

    Arena/capacity (year opened): Nassau Veteran Memorial Coliseum/16,297 (1972)

    Arena owner: Nassau County

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: NA

    No. of club seats/price range: NA/$4,326-$4,452

    Naming rights: None

    2001-02 attendance (% change): 596,498 (+28.4%)

    2001-02 avg. attendance (% capacity): 14,549 (89.3%)


    New York Rangers

    Owner: The team and the arena are owned by Madison Square Garden LP, which is owned by Rainbow Media Holdings, which in turn is 40 percent owned by Fox Entertainment Group and 60 percent owned by Cablevision Systems Corp.

    Arena/capacity (year opened): Madison Square Garden/18,200 (1968)

    Arena owner: Madison Square Garden LP

    Concessionaire/premium seat caterer: In-house (both)

    No. of suites/price range: NA

    No. of club seats/price range: NA

    Naming rights: None

    2001-02 attendance (% change): 739,582 (-0.9%)

    2001-02 avg. attendance (% capacity): 18,039 (99.1%)


    Ottawa Senators

    Owner: Rod Bryden bought 50 percent of the team from Bruce Firestone in 1993, giving him 80 percent interest.

    Arena/capacity (year opened): Corel Centre/18,500 (1996)

    Arena owner: Palladium Corp.

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 147/$44,465-$95,283

    No. of club seats/price range: 2,376/$3,667

    Naming rights/terms: Corel Corp./$17.6 million, 20-year deal through 2016

    2001-02 attendance (% change): 693,684 (-4.9%)

    2001-02 avg. attendance (% capacity): 16,919 (91.5%)


    Philadelphia Flyers

    Owner: The team was part of a $250 million joint venture created in 1996 by Comcast and Spectacor. Comcast owns 66 percent of the team, Spectacor owns 32 percent and Pat Croce owns 2 percent.

    Arena/capacity (year opened): First Union Center/19,523 (1996)

    Arena owner: Comcast-Spectacor

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 126/$91,000-$205,000

    No. of club seats/price range: 1,810/$6,600-$15,000

    Naming rights/terms: First Union Corp./$40 million, 29-year deal through 2023 (e)

    2001-02 attendance (% change): 802,337 (0.0%)

    2001-02 avg. attendance (% capacity): 19,569 (100.2%)


    Phoenix Coyotes

    Owner: Steve Ellman bought the team from Richard Burke for $125 million in 2000. The ownership group includes NHL legend Wayne Gretzky.

    Arena/capacity (year opened): America West Arena/15,330 (1992)

    Arena owner: City of Phoenix

    Concessionaire/premium seat caterer: Levy Restaurants (both)

    No. of suites/price range: NA

    No. of club seats/price range: NA

    Naming rights/terms: America West Airlines/$26 million, 30-year deal through 2019

    2001-02 attendance (% change): 539,770 (-7.4%)

    2001-02 avg. attendance (% capacity): 13,165 (85.9%)


    Pittsburgh Penguins

    Owner: A group headed by Mario Lemieux bought the team for $70 million from Howard Baldwin and Roger Marino in 1999.

    Arena/capacity (year opened): Mellon Arena/16,958 (1961)

    Arena owner: City of Pittsburgh and Allegheny County

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 54/NA

    No. of club seats/price range: 1,600/NA

    Naming rights/terms: Mellon Financial Corp./$18 million, 10-year deal through 2009

    2001-02 attendance (% change): 641,615 (-2.2%)

    2001-02 avg. attendance (% capacity): 15,649 (92.3%)


    San Jose Sharks

    Owner: A group of 11 investors led by Silicon Valley technology executives and team management bought the team in May from George and Gordon Gund for $80 million in cash and the assumption of between $40 million and $45 million in debt. George Gund retained 15 percent of the club.

    Arena/capacity (year opened): HP Pavilion at San Jose/17,496 (1993)

    Arena owner: City of San Jose

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 65/$100,000-$200,000

    No. of club seats/price range: 3,000/$3,652-$4,752

    Naming rights/terms: Hewlett-Packard Co./$47 million, 15-year deal through 2016 (f)

    2001-02 attendance (% change): 714,337 (-0.3%)

    2001-02 avg. attendance (% capacity): 17,423 (99.6%)


    St. Louis Blues

    Owner: Bill and Nancy Laurie bought the team and arena from Clark Enterprises for $100 million in 1999.

    Arena/capacity (year opened): Savvis Center/19,022 (1994)

    Arena owner: Paige Sports Entertainment

    Concessionaire/premium seat caterer: In-house (both)

    No. of suites/price range: 91/$60,000-$80,000 (g)

    No. of club seats/price: 1,750/$3,818

    Naming rights/terms: Savvis Communications Corp./$70 million, 20-year deal through 2020

    2001-02 attendance (% change): 777,695 (-2.8%)

    2001-02 avg. attendance (% capacity): 18,968 (99.7%)


    Tampa Bay Lightning

    Owner: Palace Sports and Entertainment bought the team and the lease for the St. Pete Times Forum from Arthur Williams for $115 million in 1999.

    Arena/capacity (year opened): St. Pete Times Forum/19,758 (1996)

    Arena owner: Tampa Sports Authority

    Concessionaire/premium seat caterer: Sportservice (both)

    No. of suites/prices: 81/$37,000 for 25 percent share, $75,000 for 50 percent share (h)

    No. of club seats/price range: 3,717/$2,795-$5,000

    Naming rights/terms: St. Petersburg Times/$30 million, 12-year deal through 2014 (i)

    2001-02 attendance (% change): 644,610 (+5.5%)

    2001-02 avg. attendance (% capacity): 15,722 (79.6%)


    Toronto Maple Leafs

    Owner: Steve Stavro formed MLG Ventures to acquire 19.9 percent of Maple Leaf Gardens Ltd., the group that owned the team, for $54.9 million from the estate of Harold Ballard in 1994. Stavro took Maple Leaf Gardens Ltd. private and paid minority shareholders $49.50 per share to increase his stake in 1996.

    Arena/capacity (year opened): Air Canada Centre/18,819 (1999)

    Arena owner: Maple Leaf Sports & Entertainment Ltd.

    Concessionaire/premium seat caterer: In-house/JJ Muggs Gourmet Catering

    No. of suites/price range: 112/$38,113-$190,566

    No. of club seats/price range: 1,020/NA

    Naming rights/terms: Air Canada Inc./$30.4 million, 20-year deal through 2019

    2001-02 attendance (% change): 790,457 (+0.1%)

    2001-02 avg. attendance (% capacity): 19,279 (102.4%)


    Vancouver Canucks

    Owner: John McCaw bought controlling interest in Orca Bay Sports and Entertainment, which owned 87 percent of the team, from Arthur Griffiths for $80.2 million in 1995. McCaw Bought out Griffiths' remaining interest in 1996.

    Arena/capacity (year opened): General Motors Place/18,422 (1995)

    Arena owner: Team owner

    Concessionaire/premium seat caterer: Aramark (both)

    No. of suites/price range: 88/$36,207-$99,729

    No. of club seats/price range: 2,195/$3,430

    Naming rights/terms: General Motors Corp./$16.9 million, 20-year deal through 2015

    2001-02 attendance (% change): 726,226 (+4.0%)

    2001-02 avg. attendance (% capacity): 17,713 (96.2%)


    Washington Capitals

    Owner: A group headed by Ted Leonsis bought the team from Washington Sports and Entertainment LP for $85 million in 1999.

    Arena/capacity (year opened): MCI Center/18,678 (1997)

    Arena owner: Washington Sports and Entertainment LP

    Concessionaire/premium seat caterer: Aramark/Levy Restaurants

    No. of suites/price range: 110/$150,000-$325,000

    No. of club seats/price: 2,500/$10,518

    Naming rights/terms: MCI/$44 million, 20-year deal through 2017

    2001-02 attendance (% change): 710,990 (+11.6%)

    2001-02 avg. attendance (% capacity): 17,341 (92.9%)


    Note: Teams can exceed 100 percent capacity because of standing-room-only ticket sales.

    NA: Not available

    Canadian prices converted to U.S. dollars at a rate of $1 U.S.=$1.57426 Canadian.

    (a) Nationwide Insurance assumed naming rights for the arena as part of its deal to build and own the facility.

    (b) Well Bread is a division of Sportservice.

    (c) Suites are available as quarter-suites, half-suites and full suites. Quarter-suites cost $35,000, half-suites cost $70,000 and full suites cost $115,000

    (d) Wildside Caterers is a joint venture between Morrissey Hospitality Cos. and Minnesota Hockey Ventures Group and was created to operate premium food services.

    (e) First Union Corp. acquired naming right to the Philadelphia Flyers' home through a merger with CoreStates Financial Corp. in 1997.

    (f) Hewlett-Packard acquired naming rights to the San Jose Sharks' home through a merger with Compaq Computer Corp. in May.

    (g) Excludes pricing information for designated Club suites, which team officials said are sold out and for which pricing information on existing leases was not available at press time. Listed information is for designated Penthouse suites only.

    (h) No full-share suites are currently available, according to team officials, and pricing information for existing leases was not available at press time.

    (i) The St. Petersburg Times has the option at the end of 12 years to renew for 12 more years.

    Sources: Street & Smith's SportsBusiness Journal research, the teams

    Print | Tags: Adelphia Communications Corp., America West Airlines, Anaheim Ducks, AEG, Aramark Corp., Atlanta Thrashers, Boston Bruins, Buffalo Sabres, Calgary Flames, Carolina Hurricanes, Centerplate, Chicago Blackhawks, Colorado Avalanche, Columbus Blue Jackets, Dallas Stars, Detroit Red Wings, Edmonton Oilers, Florida Panthers, Gaylord Entertainment Co., Hockey, HSBC Private Equity, Levy Restaurants, Los Angeles Kings, MCI Group, Minnesota Wild, Montreal Canadiens, Nashville Predators, Nationwide Realty Investors, New Jersey Devils, New York Islanders, New York Rangers, NHL, Office Depot, Ottawa Senators, Palace Sports and Entertainment, PepsiCo, Philadelphia Flyers, Arizona Coyotes, Pittsburgh Penguins, Philips, San Jose Sharks, Special Report, Sportservice-Fan Zone, St. Louis Blues, Tampa Bay Lightning, Time Warner, Toronto Maple Leafs, Vancouver Canucks, Walt Disney Co., Washington Capitals, Washington Sports & Entertainment, Xcel Energy
  • Players and league face off over role of salaries

    To other owners, New York Rangers’ signing
    of Bobby Holik (left) symbolizes the league’s
    unbridled salary growth.

    Thirty NHL teams speak with one somewhat-muffled voice when it comes to the economics of hockey. Although strictly prohibited from talking about the league's labor situation, team presidents and owners say payroll expenses have gotten out of control, and that they need a new system when the current collective-bargaining agreement expires in 2004.

    And they appear ready to fight for it. All teams have set aside $10 million as a contingency fund in the event of a strike or work stoppage, and they must deposit that money in a league-controlled account by April 15. Most hockey insiders think there will be a long work stoppage that cuts into the 2004-05 season.

    But as doomsday comes closer and each side begins to posture for the negotiating edge, player agents and the union are questioning the league's take on the economics of the game. While few dispute that a good number of teams are losing money, they say that payroll expenses often are not the primary cause.

    Issues specific to individual teams — such as local revenue and attendance, arena leases and, for six teams, Canadian taxes and currency — are as much a cause of red ink as player costs, said several members of the players camp.

    A Street & Smith's SportsBusiness Journal analysis found that of 18 NHL teams that are widely believed to have lost money last season, a dozen had local revenue well below the league average, played in a badly outdated arena or were located in Canada. And of the six exceptions, three had payrolls that were more than 40 percent above the league average. Only three teams that said they lost money, the Buffalo Sabres, Los Angeles Kings and San Jose Sharks, did so without being tripped up by a massive payroll or one of the other factors.

    In other words, of the teams that play in new arenas in the United States and are near the league average in paid attendance and payroll, almost all make money.

    "There's a template for how a franchise should be put together and constructed," said NHL Players' Association executive director Bob Goodenow. When a franchise doesn't conform to that template, either by not having an adequate facility or struggling with attendance, no one should be surprised when that team loses money, he said. "None of those issues is related to payroll," Goodenow said.

    Mounting debt and interest payments are another cause of some teams' shaky economics. Forbes estimates that NHL teams collectively have a debt-to-equity ratio of 46 percent. That's compared with 38 percent for Major League Baseball, 34 percent for the NBA and 26 percent for the NFL.

    The Ottawa Senators and their home arena owe about $260 million. In a recent securities filing, the team and arena's primary creditor, the Covanta Corp., said it expects to take a $140 million write-down on Senators-related debt when the team and arena are sold to the highest bidder, meaning the Senators and Corel Centre rang up debt $140 million greater than their total market value.

    "I think by attributing everyone's problems to payroll, it's an oversimplification of the true economics," said agent Mike Gillis. "You can't just look to one thing and say, 'Boy if we fix that, then we've fixed everything.' And it has to be determined if it needs to be fixed."

    It might not come as a surprise that Goodenow, Gillis and other agents like the status quo. Gillis negotiated a five-year, $45 million contract with the New York Rangers for unrestricted free agent Bobby Holik, who has been a second- to fourth-line player for most of his career. When Holik was signed, the chorus from teams calling for a new system was louder than ever before.

    Through last season, salaries have increased 124 percent since 1995, when the current agreement went into affect. League and team executives say the economic problems they face can almost all be traced back to that salary escalation, and poor attendance, as one example, is a direct result of teams not being able to keep up from a competitive standpoint with the big-spending clubs.

    "We firmly believe the game would sell in those markets that are having trouble drawing fans if fans believe those teams have a chance to win the Stanley Cup," said Bill Daly, the NHL's executive vice president and likely point man on future labor negotiations. "The biggest element comes back to the collective-bargaining agreement, and back to what your expenses are."

    Canadian franchises say they can't win any public support for tax breaks or help with the Canadian currency differential until the league takes up salary control and other inequities in its system.

    "I think our owners would say if we don't change the rules after 2004, they're not interested in going forward," said Patrick LaForge, the Edmonton Oilers' team president. "The current world is not a world our owners are interested in pursuing."

    Without a salary cap, or what NHL Commissioner Gary Bettman refers to as a system with "cost certainty," those pointing to payroll escalation say rising salaries will likely more than offset any new revenue sources.

    The Washington Capitals are one of the biggest money losers in the league, despite increasing attendance during the last two seasons and upping ticket prices for four straight years. One reason is debt on the MCI Center and the structure of the team's lease. Another is that ticket prices remain below the league average.

    But the main reason the Capitals lose money is because their payroll has grown from $32 million three years ago to $52 million last season. The Capitals say they have lost $20 million a year since 1999.

    "If we do this year's plan, we will have doubled revenue since I bought the team," said owner Ted Leonsis. "Essentially, every dollar [in increased revenue] we have given to the players."

    The Capitals are an extreme case because few teams have experienced the same sort of revenue and salary growth, and fewer are boxed out of club-seat and luxury-suite revenue, but in many ways the team's plight is emblematic of the league as a whole.

    From a revenue standpoint, NHL hockey is arguably one of the great business success stories in sports, generating about $1.9 billion last year, according to league officials and other sources. The NBA, which has double the national television ratings and nearly three times as many viewers for its championship series, brought in only about 30 percent more revenue.

    Times would be good, except teams get hit with an annual salary bill that, on average, eats up 70 percent of revenue, Daly said.

    The average salary last season was just under $1.65 million per roster player, which comes to $37.7 million per team. That would mean salaries represented 59.5 percent of revenue. But that does not include salaries paid to injured players, minor leaguers or players whose salaries have been bought out. League officials say the real average payroll is more like $45.5 million.

    "Payrolls cause teams to operate with very little flexibility," said Sal Galatioto, head of the sports lending practice at Lehman Brothers. Echoing Daly's sentiments, he said: "Payroll is the central issue. Is it the only issue? No, but it is the core one."

    But not lost on players, their agents and the union is that teams at various ends of the payroll spectrum have found ways to make money, even without going to the playoffs, where hockey teams earn much of their annual profit.

    The Dallas Stars earned a profit last season, according to owner Tom Hicks, despite missing the playoffs and spending more than $57 million on salaries. That's because they had the highest revenue of any team at $120 million, according to the team.

    Looking a few pegs down in the revenue standings, the Pittsburgh Penguins, who play in the league's oldest building and were below the league attendance average by more than 1,000 fans per game last season, actually eked out a small profit, said team President Tom Rooney.

    That's partially thanks to player owner Mario Lemieux, who is paid just at $5 million per season. Lemieux missed most of the season with injuries and the team missed the playoffs, yet it still did not lose money. Rooney said revenue was about $62 million. Payroll was $31.2 million.

    Goodenow makes the point that it's owners, and no one else, who set the salary scale where it is today.

    "There are very smart businessmen who pay these dollars," he said. "One should think they're smart in how they hire talent for their hockey teams."

    Bettman has publicly called for negotiations to begin now. Goodenow said if the league has a proposal that would be worth the players' consideration, he'll bring it to them, but until then there's nothing to talk about.

    But the league and the players association are actually talking about the economics of the game on an official basis, several sources said. They're not actually addressing the next collective-bargaining agreement, but the NHL is conducting a study of its own finances and working in conjunction with the union to do so, with plans to share some of the results.

    "We've been very forthcoming to date, and continue to want to be forthcoming," said Daly. "We think the problems are apparent and have no interest in hiding anything. They [the players] are very aware of what the situation is."

    Neither the league nor the union would comment further.

    With such a large gap in how the league and the players association view NHL finances, perhaps a dialogue on that issue alone is a crucial first step.

    Print | Tags: Buffalo Sabres, Dallas Stars, Edmonton Oilers, Hockey, Los Angeles Kings, MCI Group, MLB, NBA, New York Rangers, NFL, NHL, Pittsburgh Penguins, San Jose Sharks, Special Report, Washington Capitals
  • Teams aim pitches at ‘special nature’ of fans

    The Predators’ Smashville campaign tries
    to create a “state of mind.”

    This is not your typical sleepy Southern town.

    In this magical, mystical place, the action is fast-paced, speeding is rewarded and there are positively no bans on loud noise. Offensive behavior is encouraged.

    Hunting is popular here. The hit list includes such prey as Penguins, Coyotes, Bruins and Panthers. Wings. Kings and Canadiens aren't safe, either. They get roughed up, shot at and shown the door.

    Welcome to Smashville, the imaginary place of 17,113 people brought to life this year through a marketing campaign by the creative minds of the Nashville Predators.

    "We wanted to get back to our country music and marry the smash hits of music row with the hard hits of hockey," said Tom Ward, the team's executive vice president of business operations. "What we're trying to portray is almost a state of mind."

    Teams have rolled out the welcome mat this season with a wide range of marketing pushes that range from homespun to slick. None would talk about their marketing budgets, but several clubs said they have done extensive surveys to see if their campaigns are taking hold. They look at TV and radio ratings or game attendance, depending on their goal, to judge whether they are working.

    They include offering fans a chance to join The Team of 18,000 in Minnesota, Bleed Blue with the St. Louis faithful or jump on the This is Hockey bandwagon in Carolina. Not to mention the Love This Team. Love This Game mantra in Vancouver.

    But whatever the catch phrase, hockey marketers know the stakes are high in a sport that relies primarily on game attendance for revenue. They say it's especially important in these soft economic times where competition is rough.

    "It's a much tougher business as a whole these days," said Scott Carmichael, NHL vice president of club marketing. "People need to be more creative and turn over every rock and look at every opportunity to be successful."

    Carmichael, a 20-year veteran of hockey marketing, said this year's focus by the league office and many of the clubs will be on the "special nature" of hockey fans and their passion, dedication and loyalty to the sport.

    In Minnesota Wild country, the concentration had been on creating alliances with the various hockey associations in the state, giving money and building support. But Matt Majka, the Wild's marketing vice president, said the emphasis this year will be on promoting the team and its players, and the fans who have come along for the ride.

    The St. Louis Blues are continuing their popular Bleed Blue campaign with new spots designed to celebrate the passion fans have for the team, said Jim Woodcock, senior marketing and communications vice president.

    There's the fan with the Blue Note logo carved into his hairy chest, the wedding cake featuring the bride in traditional white and the groom in a Blues jersey, and the Chris Pronger bobblehead displayed prominently with the rest of the china in the cabinet.

    "I'm a firm believer that when the going is good, you get going as well, because that will help you when times are tough and you're not winning," Woodcock said.

    In Vancouver, there are no quick cut, extreme commercials airing. Team officials said the approach this season is simple and subdued, just people talking about hockey in different places in the community.

    There's the barbershop that has been cutting players' hair for 20 years, the neighborhood where kids play street hockey, a pizza place and an antique shop.

    "These are heart-warming, genuine stories that at the same time are funny," said John Rizzardini, the Canucks' senior sales and marketing vice president.

    "I can't control the product on the ice," Rizzardini said. "But what I can try to do is bond a community to a team so no matter what happens, they'll feel great about us."

    David Schwartz is a writer in Phoenix.

    Print | Tags: Boston Bruins, Carolina Hurricanes, Detroit Red Wings, Florida Panthers, Hockey, Los Angeles Kings, Minnesota Wild, Montreal Canadiens, Nashville Predators, Arizona Coyotes, Pittsburgh Penguins, Special Report, St. Louis Blues
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