Golden Knights stun and ... cash in
The improbable, historic run of the Vegas Golden Knights to the Stanley Cup Final in their inaugural season has helped make them one of the NHL’s highest-grossing revenue teams, and executives say they believe there is even more room to grow.
“We look at next year as an opportunity to go deeper and wider with everything,” said President Kerry Bubolz.
“We’re already looking at what Vegas Born 2.0 is and how we can continue this momentum in our second year.”
The Golden Knights’ first year isn’t even over, but it’s already been an enormous success. Last Wednesday, they won Sports Team of the Year honors at the 2018 Sports Business Awards, the same night they learned that they will face the Washington Capitals in the championship series, which starts this week. The award helped reaffirm one of the most unexpected success stories in sports, both on the business and competition side, and the team’s success has certainly surprised most industry insiders.
“We felt great about the things we could control [going into the season], but what happened on the ice and in the community has just been incredible,” Bubolz added. “Everything has just continued to be a surprise.”
The Golden Knights rank among the top 10 teams in the league in total revenue, thanks in part to more than $90 million in contractually obligated sponsorship income, according to industry sources. That success means that, under the league’s revenue-sharing agreement, Vegas will contribute funds to the pool. To put that accomplishment into perspective, industry sources said that when the franchise was approved for expansion in the fall of 2016, the NHLPA asked the league to bar Vegas from collecting revenue sharing for its first several seasons over fears that it would be a drag on the league.
Much of the foundation for the Golden Knights’ business success was laid even before the team existed. Bubolz noted that the initial ticket drive — which began before the team’s launch was official — drew more than 16,000 paid deposits. This season the Golden Knights ranked in the top five among the league’s U.S.-based teams in gate revenue, with an average single-game ticket price of over $160. The team has more than 14,000 season-ticket holders — its self-imposed cap — and currently has more than 6,000 people on a waitlist, a number that continues to grow, according to Todd Pollock, vice president of ticketing and suites. In addition, all of the team’s premium inventory, including its 47 suites, were sold out for the season.
The majority of the Golden Knights’ season-ticket holder accounts are on multiyear agreements that have price freezes, according to Pollock, but he added that the combination of those on one-year deals, new sales and other single-game ticket sales means the team expects that it will have a 5 to 7 percent increase in ticket revenue for next season.
The team’s sponsorship revenue, which came in more than 20 percent higher than its forecast goal before the season, will also see growth next year as it held out inventory for subsequent seasons, according to Jim Frevola, senior vice president and chief sales officer. Frevola noted that while the bulk of the team’s existing deals are already locked into multiyear contracts, open categories include airline, financial services, quick-service restaurant and spirits.
The Golden Knights already rank among the highest sponsorship-revenue-generating U.S. teams in the NHL, a remarkable figure for an expansion franchise. With the league granting each team the ability to sell four more in-ice ad positions next season in addition to new deals, the Golden Knights could see an increase of more than $10 million to $15 million in sponsorship revenue.
Bubolz said he sees further national and international opportunities for the sponsorship business given the level of exposure the team has garnered in the postseason. “People understood the national visibility that the city of Las Vegas had, but not the team itself, so we’re focusing on the opportunity to speak to more national brands,” he said.
The Golden Knights smashed expectations in merchandising as well, beating initial budget projections by more than 200 percent and finishing first in the league in average gameday per-cap revenue. CMO Brian Killingsworth said the team will look to leverage a burgeoning international audience it is calling “VGK Worldwide,” and data from Fanatics said that people from more than 90 countries have bought Golden Knights merchandise.
Bubolz said the retail business was “completely unlike anything that has happened,” noting that perhaps the other areas of the team’s business might have higher level of growth opportunities.
One such area is on social media. Currently, the Golden Knights have more than 386,000 Twitter followers, which places them in the bottom quarter of the league. At 2.55 million, the Chicago Blackhawks have the most in the league.
Of course, the Golden Knights have an opportunity only one other team still does: to grow its fan base by winning the Stanley Cup.