Interesting post by Tyler Dellow in which he speaks about the disproportionate percentage of league revenue that comes from Canadian hockey teams. This in itself is nothing new, though it contrasts rather inconveniently with local writers and business interests who paint a picture of Canadian clubs on the edge of profitability in order to ensure 1) monopolies in their markets, and 2) some degree of fear-driven support from fans.
Melnyk’s resorted to as much, playing up how much money the team has lost in recent years and making repeated reference to a break-even point of the second round of the playoffs. In the spreadsheet Dellow links to you’ll see that Ottawa actually does fall around the middle of the pack in per game ticket revenue in 2010-2011, during which they made $45.10MM. This is just over $1MM in revenue per home game, or roughly half what Montreal, Toronto, and Vancouver make. Last season Ottawa spent to the cap and had a horrible year, so you can see why Melnyk feels justified in making his annual entreaty to fans, strategically just days before tickets go on sale, to support the team. On a superficial level–you buy tickets to see the team, and they spent more on salary and operating expenses than they made on tickets–the team did lose money.
But this doesn’t tell the whole story. The spreadsheet doesn’t contain revenue from television sales, merchandising, from other events at ScotiaBank Place from which Melnyk derives pure profit (assuming fixed costs are paid out of hockey revenues), or revenues shared by all teams from the sales of NHL memorabilia. That remains under wraps. This spreadsheet–leaked to Toronto Star, as it is every year–is unhelpful because it enables those with an interest in the status quo to make the case that NHL clubs lose money on a strictly ticket-for-services basis. It also allows the owners to plead poverty in the upcoming CBA negotiations, despite Bettman’s perpetual reports of rising profits. The in-out dynamic of most profit calculation is politically motiviated, and ignores many of the residual profits associated with team ownership.
But the spreadsheet does allow us to speculate about this year’s profitability. The team is spending roughly $14MM less on salary this year than last, and is vastly more competitive. The 20th Anniversary Season and All Star Game (which you can only attend by buying ticket packages) are also pushing the brand, and revenues. Revenue per ticket may not be up, but attendance is. (Ottawa is seventh in league attendance this season, up from 11th last season.) Television revenue, heritage jersey sales, and more may contribute to a larger take. Ottawa is going to have a big, though not huge, year.
I’m not trying to portray Melnyk negatively here. He spends to the cap on salaries when appropriate, and wants to bring a Cup to Ottawa. Sometimes he seems like the most delusional Sens homer of all. He just spent $5MM on a new scoreboard, albeit one he had little choice in acquiring as the new one was literally only quasi-operational. And the team continues to include a number of money saving ticket deals for fans, from throwing in two tickets with the purchase of a jersey, to food voucher specials, to family packs of tickets for a hundred bucks. I appreciate these things, knowing they would never, ever happen in a market like Toronto. It’s just as important to consider these things part of the big picture as it is to remember that billionaire franchise owners aren’t prone to running money losing ventures.