During any major league work stoppage, the primary focus is
on the economic losses suffered by the owners and players. But,
in reality, the financial losses do no stop there. Today, THE
SPORTS BUSINESS DAILY begins the first of a regular series on the
ripple effects of the baseball strike and hockey lockout with a
look at how NHL arenas are coping with -- to this point -- one
month of lost revenues. As Tim Murphy, general manager of
the Pittsburgh Civic Arena, puts it: "Any tenant in a building
is your partner, maybe it is not structured as such, but still
you depend a lot on what they do. And right now, they -- like us
-- have no income coming in from hockey games."
For a more in-depth look at the issues facing NHL arenas,
THE SPORTS BUSINESS DAILY spoke with Dr. Jack Vivian, the
Director of the Sports Facilities Research Laboratory at the
University of Michigan.
THE DAILY: Is there any way for the arenas, or the
communities in which they reside, to make up lost revenues?
VIVIAN: This is money that is gone forever, this isn't a
recoverable type of money. And, of course, the community loses
as well because every worker that earns money in the facility
spends it somewhere else in the community. So they have to
tighten their belt. The economic impact of the lockout will be
devastating if it continues much longer. ... Those dollars roll
over so many times in the community. Some people use 6 times,
some people use 3 times -- the multipliers are different in
different regions. So it has a significant impact.
THE DAILY: Is there any long-term effect on rates for in-
arena ad signage?
VIVIAN: All of the advertising is sold on the number of
looks it is going to receive, the number of views that is going
to be expected. So that is all based on attendance as well. The
value of advertising is depreciated because of the lack of games
and exposure. ... This is money that will impact what they can
sell "the board" for next time.
THE DAILY: Is there any effect of a hockey work stoppage on
the construction of new facilities?
VIVIAN: The new facilities that have been created in the
last 10 years, because of the expansion of hockey and the NBA and
all the other things, now these people are saying look at the
money we spent and look at the revenue that is falling off, and
we're going to have to go back to the taxpayers for some other
form of funding the debt service on these buildings. ... [But]
you'll note that a whole lot of the new facilities are being
built by the pro teams -- or the people that are in partnership
with the pro teams. Very few of the new arenas are citizen voted
facilities. Very few of them end up to be funded from the
general tax dollars.
THE DAILY: Is there a specific figure that you can attach
to the losses NHL arenas could encounter?
VIVIAN: I would hesitate to give a figure, but if I was
asked to guesstimate I would say a typical game would be worth $2
million or $3 million -- based on where the opponent is coming
from and other factors. Even if you say a game is worth only $1
million, look at the equation.
