The Buffalo Sabres and Ottawa Senators are back rowing in the same creaky boat as a heap of other small-market NHL teams. While it's hardly a dry, sunny place to be heading into what could be the final season before an extended labor shutdown, it's a far better spot than where they were six months ago.
In a five-day span in early January, the Sabres and Senators each sought bankruptcy protection from creditors, the former crumbling under the weight of the Adelphia Communications fraud allegations, the latter from a crushing debt load largely associated with the move to the Corel Centre seven years ago.
NHL Commissioner Gary Bettman used the dual bankruptcies to bolster his campaign for "cost certainty" in the next collective-bargaining agreement, but nobody on either club was blaming the labor agreement for their respective failures.
In reality, the causes and the remedies for Buffalo and Ottawa are as different as their on-ice fortunes of late. The Sabres sunk to 26th place in a 30-team league and missed the postseason for the second straight year; Ottawa finished first in the regular season and enjoyed a healthy gate take from a long playoff run.
Former Sabres owner John Rigas faces federal charges in the financial collapse of Adelphia; former Senators owner Rod Bryden is respected in Ottawa for his efforts to save the team and actually received a standing ovation when he was shown on the scoreboard during the final playoff game. Senators President Roy Mlakar said no one could have made things work with the debts the team faced.
The Sabres were bleeding money long before Rigas and his two sons were charged with bank fraud a year ago. With a fan base that fell off the map and the fallout from the bankruptcy scandal, the team and HSBC Arena reportedly lost more than $65 million over the past two seasons.
New Sabres owner Tom Golisano, the billionaire founder of Rochester-based Paychex Inc., paid a reported $80 million for the Sabres. He has by far the tougher rebuilding job to win back the community. Prime among those is moving ticket prices back to where they were in 2001-02, a cut of about 7 percent from last year. Upper-bowl seats will be available for as low as $10 and the team has introduced new multi-pack ticket plans. A push is also on to strengthen ties with fans in nearby Rochester, longtime home of the Sabres' farm team. Buffalo will play one preseason game and one regular-season game in Rochester next season.
The Sabres also pared costs this spring by laying off more than two dozen employees, including several senior executives. They since have hired a new vice president of sales and marketing and directors in sponsorship and suite sales.
"We've tried to put a lot of credibility into the situation," said Chief Operating Officer Dan DiPofi. "We want to be true to our word. It can't always be the best of news, but we want to be up front about things, and for the most part that's what fans and people that support the team are looking for."
Corporate support for the Sabres never fell as low in the down times as might have been expected. The Sabres filled 61 of a possible 76 suites at their arena last year and hope to boost that number with price reductions.
"Between tickets and open sponsorship positions, they probably left about $10 million of inventory on the table [last season]," DiPofi said. "If we can even capture 75 or 80 percent of that, we're probably pretty close to breakeven if we're still within the $30 million payroll range which we've tagged for next season."
Bankruptcy proceedings will allow the Senators to pick and choose which team and arena contracts they wish to retain, if any, during their current 30-day vesting period. If a court-appointed monitor approves the restructuring plan as expected, Eugene Melnyk will officially take over as owner on July 30. Melnyk is the billionaire founder of Toronto-based pharmaceutical giant Biovail Inc. and won't have the debt-servicing problems that have dogged the team since its inception.
Many observers question the wisdom of the heavy financing that led to Bryden's downfall. Some even question the NHL's wisdom in granting Ottawa a franchise in the first place. That said, there's little doubt the Senators have been a well-run franchise on an operating basis for some time. They boast a terrific, young team with a still relatively modest payroll in the $40 million range for 2003-04 and now have plenty of community excitement going forward.
Mlakar said season tickets are up 1,300 from this time a year ago, suite sales and corporate dollars committed are both up, and the season-ticket renewal rate is 84 percent. High Canadian taxes and the dollar continue to be a concern. As the 28th-sized NHL market, Ottawa still won't know exactly where it stands until the new collective-bargaining agreement, but at least short-term survival is no longer an issue.
Mark Brender is a senior writer with The Hockey News, based in Toronto.
