Audited Information on Columbus Blue Jacket Finances

Discussion in 'Fugu's Business of Hockey Forum' started by GSC2k2*, May 4, 2011.

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  1. GSC2k2*

    GSC2k2* Guest

    A few months ago, on Tyler Dellow's very worthwhile blog at http://www.mc79hockey.com/ (well, worthwhile when he's not talking soccer these days ;)), I came across an article he cited regarding the Columbus Blue Jackets and their finances.

    http://www.forwardtogethercolumbus.org/img/BuserReport-Complete.pdf

    Tyler's angle was (naturally) in relation to the ongoing Oiler arena saga, but i found it interesting for other reasons.

    Here is what the professor who wrote the study had to say about COL revenues and expenses (apparently he was given access to the team's audited financial statements):

    Pre-lockout revenues: $57.6M (2001), $60.3M (2003), $62.3M (2004).

    2006: ticket/sponsorship/broadcast revs $57.6M
    Revenue sharing $3.0M

    Expenses (excluding arena exp): $54.8M

    2007: ticket/sponsorship/broadcast revs $55.6M

    Revenue sharing $8.0M

    Expenses (excluding arena exp): $47.1M

    2008: ticket/sponsorship/broadcast revs $53.8M

    Revenue sharing $10.0M

    Expenses (excluding arena exp): $51.6M

    2009: ticket/sponsorship/broadcast revs $60.3M

    Revenue sharing $14.0M

    Expenses (excluding arena exp): $54.6M

    Now, firstly, these numbers are reported in a way quite different than the way we use them around here. The norm here is to include the revenue sharing as an additional revenue, but in this version, they are oddly enough used as a reduction in the costs side and not added to the revenues side. To convert them so as to compare apples to apples the way it is normally done for previous revenue analyses, we would add the revenue sharing number on both sides and come up with this:

    2006:

    ticket/sponsorship/broadcast revs $60.6M

    Expenses (excluding arena exp): $57.8M

    2007:

    ticket/sponsorship/broadcast revs $63.6M

    Expenses (excluding arena exp): $55.1M

    2008:

    ticket/sponsorship/broadcast revs $63.8M

    Expenses (excluding arena exp): $61.6M

    2009:

    ticket/sponsorship/broadcast revs $74.3M

    Expenses (excluding arena exp): $68.6M

    The professor then makes another salient point, noting that the above costs do not account for a component of overhead expenses such as sales, marketing, G&A or rent expenses.

    Rental payments to use the arena are approximately $5M per year. How would allocate that to hockey vs. non-hockey operations? I suppose number of events could be a useful measure.

    The other part (SG&A) is anyone's guess, and would depend on how fat or lean the Columbus organization is. It would also depend on how one would allocate that staff between hockey operations and non-hockey operations (since Columbus also runs the non-hockey events).

    A further salient point is that revenues do not include concessions/retail sales. It is also unclear whether revenues include central NHL revenue distributions (which is separate and apart from revenue sharing). It would appear that they do not, as one could not easily classify them as "ticket/sponsorship/broadcast revenues" (perhaps a portion for central "broadcasting" revenues, though).

    On the non-hockey side, it breaks down as this:

    2006 - $8.1M revs, $12.5M expenses ($4.4M loss)

    2007 - $7.8M revs, $12.3M expenses ($4.5M loss)

    2008 - $9.2M revs, $13.8M expenses ($4.6M loss)

    2009 - $4.1M revs, $10.1M expenses ($6.0M loss)
     
  2. King_Stannis

    King_Stannis Registered User

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    I would only add that one should be cautious about secondhand accounts of financial statements. There is no substitute for a real profit and loss statement.

    Having said that, it is a bit surprising they appear to be doing so well. Good for them - there's no reason the NHL shouldn't work in Columbus.
     
  3. Fugu

    Fugu Guest

    Also why do you make this assumption if these figures are from the CBJ's audited statements:
    I don't see how they could add the revenue transfer money, have that show up in the review, but not the CBJ share of centrally generated monies?
     
  4. Fugu

    Fugu Guest

    Okay, here is Mr. Dellow's work:

    http://www.mc79hockey.com/?p=3592


    (Side Note that MC79 put this up in Feb 2011.)
     
  5. GSC2k2*

    GSC2k2* Guest

    Mod: deleted.

    That said, exactly what "work" of Tyler's was in the portion you quoted, other than put it into a table? The numbers are not his, but Dr. Buser's (as Tyler himself points out). He reported them from the report itself, as did I. As I stated, Tyler's focus was solely in connection with the views of Dr. Buser for an Edmonton arena project. He did not delve into the further calculations to correct for revenue sharing or review the amounts excluded from revenues/expenses as identified in the report.
     
    Last edited by moderator : May 4, 2011
  6. GSC2k2*

    GSC2k2* Guest

    I completely agree. It's better than nothing, though, and provides some more data points.

    I suggest that you reconsider what constitutes an "assumption". Sentences that start with "It is unclear whether ..." are not assumptions. They are questions that are raised for consideration. As to why I raised it as a question, I did so because, as I stated in the post, central revenue would not easily fit into "ticket/sponsorship/broadcast" revenue (although it might for the NHL TV contracts). I clearly left it as a question.

    My posts are pretty clear, if read without an interpretive filter.
     
  7. Fugu

    Fugu Guest

    Everything read here is through an interpretative filter, yours and mine.

    Would you be happier if I restated my question to say, "Are you making that assumption, or why is the point salient because leaving out the central HRR in an audited report but allowing the transfer money doesn't make sense."

    I really am just trying to understand the reasoning that led you to consider that central HRR wasn't included. That is all.
     
  8. GSC2k2*

    GSC2k2* Guest

    I think making me happy is not a priority on this Board.

    If that is your question, the answer is "No, i am not making that assumption. We just don't have the information to conclude one way or the other. I have feelers out to try to get more information.

    Regarding the second point above, the revenue sharing is only referenced at all because, as i noted in the OP, for some reason revenue sharing is recorded as a reduction in expenses rather than an increase in revenues. Strange, I think, but it is what it is. That fact would however provide an explanation if in fact it is the case that central revenue is not included (I can't see how central revenue distributions could possibly be treated as a negative expense, or an expense reduction).
     
  9. Metzen

    Metzen Registered User

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    Doesn't the NHL require increases in revenue/attendance to qualify for revenue sharing year after year? This would be a nice way to show their actual increases and still record the RS money on their books...?
     
  10. GSC2k2*

    GSC2k2* Guest

    No. Revenue sharing candidates will still qualify for revenue sharing, except that they are penalize if their paid attendance is below 14k and/or their revenue % increases are less than the league-wide revenue % increases. They cannot go below 50% of a "full share".

    The CBA defines the calculation of revenues. THe financial statements must still comply with GAAP. I don't see how a revenue sharing distribution is a negative expense. It is certainly not recorded that way on the Coyote financials.

    That mystery continues.
     
  11. TaketheCannoli

    TaketheCannoli RIP

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    gsc, thanks for bringing this up again. IIRC, it was linked to a thread here a few years ago. When this was released, I studied it pretty carefully. I didn't have the time or even the inclination, but I talk hockey with some of the ownership now and again. Usually, the conversations are more about actual hockey operations nuggets rather than actual business operations. The subjects have been more the interviews of head coaching candidates and their impressions of them, the job offer made to Guy Boucher last summer and such. I was extremely interested in the Kevin Dineen portion of the episode.

    I didn't ask about that report because the more I looked into it, the less credible I think it looks. As an example the ticket averages look very familiar- TMR??

    This report was used by the Chamber of Commerce to spearhead a campaign to get the local governments to purchase the Arena. I felt the economic impact study was flawed as well.

    I did have some reasonably interesting discussions about the Arena, the Arena lease and how the original lease was computed. After I understood the transaction from a perspective that is less public, I actually understood the study a bit better. Frankly, it's just a campaign. The Arena lease is fair from a business ROE perspective. It isn't competitive with the subsidies widely enjoyed in other markets. The study quotes Nashville, but it could quote Toronto, Winnipeg, Hamilton, Phoenix, Detroit and many other cities. No public monies were involved in building the arena. No land was sold for $1.00 nor were there any other subsidies. People often ignore contributions as "small" as $40 million by the public, but a contribution of that type can easily reduce rent on a facility such as this one by $1-2 million annually.

    The franchise has some significant challenges, many of which are holdovers from previous management. Just one example: there has been a long term (12 year) media rights agreement in place that was woefully underpriced. The original team president sold the rights for $2 million annually. There are a number of other similar transactions.
     

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