Edmonton & Ottawa profitability

[macavoy]

Everyone keeps going on and on about how the 6 Canadian franchises make up 31% of the leagues profits. I'm sure if you took Montreal, Toronto, NYR, Detroit, Bruins and Flyers, you'd probably have 50% of the league's profits.

We keep hearing people say that if we add another Canadian team that it will drive up revenues. I'm not sure I buy it. I don't think smaller market Canadian teams contribute that much to the profits. Does anyone know how much money teams like Ottawa and Edmonton are making?

Forbes has them valued at 17 and 20. Adding a team in an even smaller Canadian market would be worth even less and make even less of a profit.

The fact is TV revenues won't increase with another team. TSN & Rogers are probably already maxed out in regional cable deals, so adding a team in Winnipeg will only take money away from Calgary and Edmonton.

Same thing with Quebec, RDS would probably give the Habs less if they had to pay money for Quebec.

Does anyone know how much teams like Edmonton and Ottawa are making?

Click to read more...

 

[CantHaveTkachev]

Everyone keeps going on and on about how the 6 Canadian franchises make up 31% of the leagues profits. I'm sure if you took Montreal, Toronto, NYR, Detroit, Bruins and Flyers, you'd probably have 50% of the league's profits.

We keep hearing people say that if we add another Canadian team that it will drive up revenues. I'm not sure I buy it. I don't think smaller market Canadian teams contribute that much to the profits. Does anyone know how much money teams like Ottawa and Edmonton are making?

Forbes has them valued at 17 and 20. Adding a team in an even smaller Canadian market would be worth even less and make even less of a profit.

The fact is TV revenues won't increase with another team. TSN & Rogers are probably already maxed out in regional cable deals, so adding a team in Winnipeg will only take money away from Calgary and Edmonton.
Same thing with Quebec, RDS would probably give the Habs less if they had to pay money for Quebec.

Does anyone know how much teams like Edmonton and Ottawa are making?

no adding a team in Winnipeg will affect ALL Canadian team

btw...both Edmonton and Ottawa were top 7 in ticket revenue in '08 (all 6 canadian team were top 7)

http://www.rodneyfort.com/PHSportsE...omeExpense/NHLTicketRevTorStar.com5-30-08.pdf

 

[danishh]

look at revenue rather than profit.

melnyk has an interesting accounting setup in ottawa as well. He owns and manages the arena, and he basically kicked ticketmaster out of all of ottawa, founding capitaltickets.ca. All those ticket surcharges go to melnyk, not ticketmaster, and that's from almost all ottawa events, not just those at the SBP (so stuff like bluesfest and events at the civic center). He also pays himself from the sens to the arena, which makes the senators profit look lower. The "Ottawa Senators" may be basically a break-even operation, but Senators Sports and Entertainment makes tons of profit.

take a look at this list of venues:
http://www.capitaltickets.ca/en/default.asp?capitaltickets=14

+ bluesfest. Melnyk makes a killing off all entertainment tickets in Ottawa. When he came in he talked to local businesses, specifically Hunt and the 67s/the civic center and the former Ottawa Renegades/Landsdowne, and found that it made more sense for everyone in ottawa to do away with ticketmaster, and the community hasnt looked back. The managing jobs are in ottawa now, the fees to the teams/venues/customers are less than they were before. Win-win for everyone in ottawa, but especially for melnyk.


Ottawa is a very healthy franchise. Edmonton less so, which is a big reason they are trying to build a privately owned arena now, so that they can take advantage of the same factors that have made the sens successful, but they have a rich owner, and once that gets done, i'm sure they'll be just as healthy.


When you look at winnipeg, a lot of the stuff that ottawa does is already in place. They own their arena. They have a lot of concert traffic that generates extra money for them. One problem is that they are still slaves to ticketmaster, but i'm sure that they will move away from that at some point. The big question about winnipeg is corporate support, but I think it should be there, especially with the multitude of national sponsors that are involved with all the teams (Rogers/Bell/Telus, Beer, Scotiabank, etc...)

 

[bacon25]

I want more Canadian teams because of the cultural aspect of the game, I feel that money is driving the game down a really bad road. It is good for the game to have more Canadian teams, though not necessarily at an American teams expense.

 

[macavoy]

no adding a team in Winnipeg will affect ALL Canadian team

btw...both Edmonton and Ottawa were top 7 in ticket revenue in '08 (all 6 canadian team were top 7)

http://www.rodneyfort.com/PHSportsE...omeExpense/NHLTicketRevTorStar.com5-30-08.pdf

That data is pretty old. I'm curious to see where they rank now. I'm sure its probably near there still. But it takes more than just gate revenue to make a profit.

 

[David_99]

Well no one is saying "Move the Flyers to Hamilton cause Canadian teams $$ > American teams $$". However if you had to move the biggest money losers, where would you move them to? How many people watch the NHL on tv in Phoenix and Atlanta? I'm not familiar with their tv deals, but what tv money they bring in can not be equal to what one more Canadian team will bring in. We're talking about comparing audiences of less then 9,000 to ones of at least 40,000 or more. Will the struggling teams dramatically increase tv viewer ship any time soon? What are the chances they'd be any better in Houston or Vegas? Who knows? With some uncertainty growing in several cities, maybe it'd be best for the NHL to take a safe bet in Winnipeg, then taking a risk in another big american non-hockey market. Winnipeg will not rival Montreal in profits, but they will pay their own way. If the Yotes can stay put and make a profit, great. If it had to move right now, I think the NHL would rather not take a big risk and move to a stable situation so it can concentrate on it's other franchises.

 

[Fugu]

That data is pretty old. I'm curious to see where they rank now. I'm sure its probably near there still. But it takes more than just gate revenue to make a profit.

They're probably still in the top tier of the league-- especially with the Canadian dollar (CAD) roughly equally to the USD.

Profit is a weird metric. Forbes only guesses at costs and revenues to get operating income, but the real profit line will depend on how each owner accounts for these within their portfolio. It will vary by lease terms vs ownership of arena, and what else they can integrate into the mix.

Also, the NHL office is a not-for-profit entity, basically an administrative function for the individual 30 teams. They do work on collectively generated revenues, like national TV contracts and merchandising or league sponsorships. About 2 years ago, Dolan (NYR owner) accused the central office of only contributing 10% of the league's total HRR [when you added up everything each team made + the NHL central revenues]. Even if that figure has improved, I'd guess that 15% is a safe number, you can see that the majority of NHL teams depend on gate revenues (tickets, in-arena sales, parking, concessions, merchandise sales in the venue, etc.).

Perhaps it might take more than gate revenues to make a profit, but for most NHL teams, that's really all they have. The Canadian teams likely get a lot more money for local media deals than some of their US counterparts. With a CAD on par with the USD, I'd say all the Canadian teams do better than any US team-- excluding the big guys like Detroit, NYR, Boston, Philly, LA and Chicago. Dallas was in that mix before Hicks blew up. Minnesota and NJD are fairly solid too. Pittsburgh and Washington have leap-frogged a few US franchise too (I wonder why?).


If you're interested in specific Oilers and Sens revenue/cost discussions, take a look at these threads:
Oilers-
http://hfboards.com/showthread.php?t=817928
Scroll to the end for some updated figures/links.

Sens-
http://hfboards.com/showthread.php?t=777193&highlight=Senators+revenues

I thought there was a more recent one, but I can't find it.

 

[Pitlick*]

I always think of how Melnyk bought Scotiabank Place for $20-30 million, when it cost $300 million to build.

He started $175 million ahead when he bought the team and arena.

 

[wjhl2009fan]

Everyone keeps going on and on about how the 6 Canadian franchises make up 31% of the leagues profits. I'm sure if you took Montreal, Toronto, NYR, Detroit, Bruins and Flyers, you'd probably have 50% of the league's profits.

We keep hearing people say that if we add another Canadian team that it will drive up revenues. I'm not sure I buy it. I don't think smaller market Canadian teams contribute that much to the profits. Does anyone know how much money teams like Ottawa and Edmonton are making?

Forbes has them valued at 17 and 20. Adding a team in an even smaller Canadian market would be worth even less and make even less of a profit.

The fact is TV revenues won't increase with another team. TSN & Rogers are probably already maxed out in regional cable deals, so adding a team in Winnipeg will only take money away from Calgary and Edmonton.

Same thing with Quebec, RDS would probably give the Habs less if they had to pay money for Quebec.

Does anyone know how much teams like Edmonton and Ottawa are making?

Ottawa is in very good shape as others have said they own the arena they run the biggest ticket seller in the city they co-won both sensplexs in the city which brings money in as well.They do add to the profits and yes they do make a fair amount of money be it from hockey tickets sales to everything else.

 

[OG6ix]

I want more Canadian teams because of the cultural aspect of the game, I feel that money is driving the game down a really bad road. It is good for the game to have more Canadian teams, though not necessarily at an American teams expense.

Mod: deleted.

How about starting up a profitable local team and see if you catch the NHL's eye.

 

[bacon25]

How about starting up a profitable local team and see if you catch the NHL's eye.

As long as the city that I start the team in pays me for the Parking rights then ya I might.

 

[Buck Aki Berg]

I always think of how Melnyk bought Scotiabank Place for $20-30 million, when it cost $300 million to build.

He started $175 million ahead when he bought the team and arena.

Construction for SBP was $170 million, not $300 million.

Can't confirm or deny the purchase price you quoted, but I bet that's wrong too

 

[DeathToAllButMetal]

That data is pretty old. I'm curious to see where they rank now. I'm sure its probably near there still. But it takes more than just gate revenue to make a profit.

Not where the NHL is concerned. It's a gate-driven league, by and large, because it doesn't have a huge TV deal in the US like the big three bigger brothers.

 

[DeathToAllButMetal]

Construction for SBP was $170 million, not $300 million.

Can't confirm or deny the purchase price you quoted, but I bet that's wrong too

Plus the $35-50 million cost of the highway ramps.

 

[danishh]

Plus the $35-50 million cost of the highway ramps.

$25M


but it was still ridiculous.

MLSE gets free land in DT toronto. Sens have to pay for an interchange.


**** you bob rae.

 

[MAROONSRoad]

That data is pretty old. I'm curious to see where they rank now. I'm sure its probably near there still. But it takes more than just gate revenue to make a profit.

Don't forget the strength of the CAD. That old data was in USD. Check the exchange rate at that time.

In addition, people always mention Montreal and Toronto and the handful of USA teams you mentioned in your initial post as the most successful franchises financially. However, don't forget about Vancouver. They have some ridiculous TV ratings. The best in the league outside of Toronto and Montreal on their RSN. They have among the highest ticket prices in the league and sell out all of their games. Calgary I would image is also not exactly in the poor house either. At worse, Edmonton and Ottawa are in the top half of the league in terms of hockey revenues I would guestimate. Edmonton has over 150,000 TV viewers on average for their regular season games, which is equal to the very best figures of any American team. It's not just Toronto and Montreal anymore.

GHOST

 

[danishh]

Don't forget the strength of the CAD. That old data was in USD. Check the exchange rate at that time.

In addition, people always mention Montreal and Toronto and the handful of USA teams you mentioned in your initial post as the most successful franchises financially. However, don't forget about Vancouver. They have some ridiculous TV ratings. The best in the league outside of Toronto and Montreal on their RSN. They have among the highest ticket prices in the league and sell out all of their games. Calgary I would image is also not exactly in the poor house either. At worse, Edmonton and Ottawa are in the top half of the league in terms of hockey revenues I would guestimate. Edmonton has over 150,000 TV viewers on average for their regular season games, which is equal to the very best figures of any American team. It's not just Toronto and Montreal anymore.

GHOST

My only qualm with vancouver is that they havnt had the opportunity to test the effects of a bad team on the market yet. Montreal survived that through much of the 2000's. Toronto's been surviving it for the past 5 years. Ottawa hit some bad years and we've seen that it has effected attendance and viewership. I'd imagine vancouver's reaction wouldnt be as bad as ottawa's, but i think they'd still feel it.

the last time vancouver was bad was 98-99, and that was before the CAP, before the salary cap, before the dollar rose, and before Vancouver attendance started looking good.

 

[Killion]

We keep hearing people say that if we add another Canadian team that it will drive up revenues. I'm not sure I buy it. I don't think smaller market Canadian teams contribute that much to the profits. Does anyone know how much money teams like Ottawa and Edmonton are making. ....The fact is TV revenues won't increase with another team. TSN & Rogers are probably already maxed out in regional cable deals, so adding a team in Winnipeg will only take money away from Calgary and Edmonton......Same thing with Quebec, RDS would probably give the Habs less if they had to pay money for Quebec.

They'd likely drive up revenues on the merchandising & sponsorship/advertising side of the equation, and you also have to consider PPV & new media streams as sources for the Jets' & QC, Quebecor actually promising fairly substantial reward for the league in going head to head with RDS with its new french language cable channel entry. They'd broadcast the 'Diques, RDS the Habs' obviously within PQ but so too to subscribers from Newfoundland to Vancouver Island. Local broadcast revenues for the Jets' wont be huge, and your right, the existing teams will see their revenues decrease from the national deals as the pie gets cut into 2 or possibly even (Hamilton ) 3 additional teams.

Will the contributions made by Quebecor, PPV & webcasting etc supercede the losses?. Vancouver was turned down in 1967 as that was a concern; CBC's payments cut into 3 instead of 2; and when the NHL amalgamated the WHA Teams in 79, Edmonton, Wpg & QC were "punished" (for having the temerity for having big league ambitions & joining the WHA, driving up player costs & scaring the Beegeejus out of the NHL with threats of anti-trust) , not being given a share of broadcasting revenues for 5yrs. Just recently, 27 or 28 teams voted against not allowing Balsillie but more key another Canadian franchise into the club, much of it based on the "hit" they feel they'll take in broadcasting revs', with Vcr/Edm/Cal/Tor/Ott & possibly the Habs marching in lock-step to keep their shares intact.

You raise a very interesting question macavoy, as many on other threads repeatedly point to Gary Bettman as being somehow "anti-Canadian" in going through the wall down south for too many to mention troubled franchises. Never mind league footprint, anyone who has watched the mechanizations behind expansion & relo 1967-2011 will conclude that their is most definitely a Canadian Mafia of the existing teams at work here-in protecting their rights, their territories & their revenues. More attention should be paid to that fact & absolutely discussed & acknowledged publicly, because its really a dirty little secret.

 

[MAROONSRoad]

They'd likely drive up revenues on the merchandising & sponsorship/advertising side of the equation, and you also have to consider PPV & new media streams as sources for the Jets' & QC, Quebecor actually promising fairly substantial reward for the league in going head to head with RDS with its new french language cable channel entry. They'd broadcast the 'Diques, RDS the Habs' obviously within PQ but so too to subscribers from Newfoundland to Vancouver Island. Local broadcast revenues for the Jets' wont be huge, and your right, the existing teams will see their revenues decrease from the national deals as the pie gets cut into 2 or possibly even (Hamilton ) 3 additional teams.

Will the contributions made by Quebecor, PPV & webcasting etc supercede the losses?. Vancouver was turned down in 1967 as that was a concern; CBC's payments cut into 3 instead of 2; and when the NHL amalgamated the WHA Teams in 79, Edmonton, Wpg & QC were "punished" (for having the temerity for having big league ambitions & joining the WHA, driving up player costs & scaring the Beegeejus out of the NHL with threats of anti-trust) , not being given a share of broadcasting revenues for 5yrs. Just recently, 27 or 28 teams voted against not allowing Balsillie but more key another Canadian franchise into the club, much of it based on the "hit" they feel they'll take in broadcasting revs', with Vcr/Edm/Cal/Tor/Ott & possibly the Habs marching in lock-step to keep their shares intact.

You raise a very interesting question macavoy, as many on other threads repeatedly point to Gary Bettman as being somehow "anti-Canadian" in going through the wall down south for too many to mention troubled franchises. Never mind league footprint, anyone who has watched the mechanizations behind expansion & relo 1967-2011 will conclude that their is most definitely a Canadian Mafia of the existing teams at work here-in protecting their rights, their territories & their revenues. More attention should be paid to that fact & absolutely discussed & acknowledged publicly, because its really a dirty little secret.

Of the Canadian teams, the BOGs from Edmonton, Calgary and Ottawa have all spoken out publicly in favour of the NHL taking a close look again at the Winnipeg market within the past few years. That's interesting because the Alberta teams currently hold the rights to the Manitoba TV market. In fact, the Oilers opened their books to Chipman several years ago when TNSE was doing its due diligence on whether Winnipeg could support an NHL team. Oilers executives have toured MTS Centre also and made favourable comments on the building. TNSE has a close relationship with the Canucks through the Moose and I have to believe Chipman has spoken with them and that they are also on board. In addition, executives at the Leafs have spoken in favour of Winnipeg. There are advantages to additional NHL teams in Canada even for these competitors. The CBC, the largest TV partner of the NHL in terms of revenue, would like additional Canadian teams, particularly come playoff time.

There is no grand conspiracy any more to keep additional Canadian teams out of the NHL, especially with all the revenue sharing money flowing south. The exception may be the Hamilton market, but I think that is more due to Buffalo. If another team were to be located in the southern Ontario market, I would guess the Leafs would rather have that team playing in far off Hamilton than somewhere in Toronto proper. Any new arena in Toronto would become competition for the Leafs in terms of concerts, etc. A Hamilton arena already exists and has minimal impact on the Leafs.

GHOST

 

[macavoy]

Of the Canadian teams, the BOGs from Edmonton, Calgary and Ottawa have all spoken out publicly in favour of the NHL taking a close look again at the Winnipeg market within the past few years. That's interesting because the Alberta teams currently hold the rights to the Manitoba TV market.

What people say and how people vote behind closed doors are two different things. Canadian NHL owners have a history of blocking new Canadian franchises. Ballard and the Habs were both vehemetily against allowing Vancouver to join the league because they didn't want to share HNIC revenues with them. American owners wanted them in the league and to have everyone share the TV contract.

They were successful at keeping them out for a few years but Canadians eventually boycotted Molson's products and the Habs changed their vote.

Canadian owners don't want more Canadian franchises despite what they say publicly.

 

[MAROONSRoad]

What people say and how people vote behind closed doors are two different things. Canadian NHL owners have a history of blocking new Canadian franchises. Ballard and the Habs were both vehemetily against allowing Vancouver to join the league because they didn't want to share HNIC revenues with them. American owners wanted them in the league and to have everyone share the TV contract.

They were successful at keeping them out for a few years but Canadians eventually boycotted Molson's products and the Habs changed their vote.

Canadian owners don't want more Canadian franchises despite what they say publicly.

You are talking ancient history with some of those things. And trust me, you are wrong about the Canadian owners. None of them are going to get bent out of shape about having an NHL franchise in Winnipeg or even QC for that matter. They had nothing to gain by making unsolicited, false statements about their views.

GHOST

 

[Moobles]

We did. 1997-'01 were some of the worst years in Canucks history, and probably if you were going to find any opposition to Messier in the HHOF you'd just have to go on the Canucks board. Calgary also endured a similar period between '94/'95-'02/'03(ish). Both teams strugged mightily at a time when the Canadian dollar was low and when both cities' populations were considerably lower and less homogeneous when they are now, and they survived.

The Canucks have done a very good job of building their brand here in the city and the Flames have as well there. Look at the Flames attendance this year, arguably their worst since the lockout. Even when the Canucks had that terrible season back in '07-'08 we still managed to keep fans coming, and interest in them is probably at an all time high. It's true we haven't been tested with Leafs-esque suckage, but as you say- a lot has changed in the city, and if and when we do suck like that I imagine it won't be apocalyptic . Barring an Islanders-esque collapse of the team of course (I think only maybe 2-3 teams in the league could possibly survive that).

My only qualm with vancouver is that they havnt had the opportunity to test the effects of a bad team on the market yet. Montreal survived that through much of the 2000's. Toronto's been surviving it for the past 5 years. Ottawa hit some bad years and we've seen that it has effected attendance and viewership. I'd imagine vancouver's reaction wouldnt be as bad as ottawa's, but i think they'd still feel it.

the last time vancouver was bad was 98-99, and that was before the CAP, before the salary cap, before the dollar rose, and before Vancouver attendance started looking good.

Not sure about this or where you get this idea. Certainly in the past some Canadian franchise owners have been reluctant to support more Canadian teams, but there's been nothing to suggest this is the same case now. The owners of all current Canadian NHL franchises are completely different from the ones that owned them in the '80s and '90s as well. It's a very different landscape.

Canadian owners don't want more Canadian franchises despite what they say publicly.

 

[Fugu]

There's only one Canadian territory that could easily accommodate a second NHL team-- and thus there is one NHL franchise that doesn't wish to have its turf divvied up.


Guess who?

 

[Acesolid]

There's only one Canadian territory that could easily accommodate a second NHL team-- and thus there is one NHL franchise that doesn't wish to have its turf divvied up.


Guess who?

Oh I know!

The Province of Quebec and the Montreal Canadiens!

 

[Fugu]

Oh I know!

The Province of Quebec and the Montreal Canadiens!

Oui, oui! Bien sur!