Sabres project $7.4 million loss this season

[Buffaloed]

They're not too upset as they lost $8.2 million last season.

Figures supplied by top Sabres officials back up their previous claim that they would lose less money if HSBC Arena remained dark all season. While these numbers cover only one small-market franchise among 30 NHL teams, they help explain why many NHL owners seem so intent on playing hardball in the current labor negotiations.

See the article for a breadown of the numbers.
Less to lose in lockout?

Click to read more...

 

[thinkwild]

Well its a fairly balanced article, he does say:

It should be noted, though, that the numbers provided by the Sabres cannot be independently verified. In addition, since club owner B. Thomas Golisano also operates HSBC Arena, tracing the exact cash flow can be difficult.

For a group of businessmen with a long history of accounting fraud and unscrupulous behaviour, this trust us stuff seems to just slip right by.

Last season, for example, the Sabres spent $58.4 million on operating costs and took in $50.2 million.

Without hockey, expenses would plunge 79 percent to $12.3 million, while revenues would plummet by 90 percent to $4.9 million

$50mil in revenue? They need $70mil in revenue when winning to sustain a reasonable payroll. If they were winning in the playoffs, and doubling their season ticket sales, they would probably have that. Now they need revenue sharing to cover their RFAs until they develop a playoff winning team. Not a salary cap, but the choices available to draft develop and pay for when they are under 31 to build a winner. A few million raised by a nominal luxury tax and salary holdback could do it. As well as winning of course. He sure has good incentive to try and do that. I agree with supporting him through revenue sharing until then. And he doesnt need to spend that on the team. He can cover his losses with it.

Also he says without hockey, revenues drop from $50mil to $4.9mil. So 95% of that is hockey revenue then?

Last season, the Sabres sold the equivalent of 7,870 season tickets, including partial-season packages. About 93 percent of them renewed for this season. With more than 700 new ticket holders, as of Sept. 15, the base topped the 8,000 mark.

7870 season tickets? There comes a time, like with the expos, when you ask, is this a market or not? It seems there is a lot of room for revenue growth there. It would seem unfair to tap the players until that option has been explored.

 

[SuperUnknown]

7870 season tickets? There comes a time, like with the expos, when you ask, is this a market or not? It seems there is a lot of room for revenue growth there. It would seem unfair to tap the players until that option has been explored.

In a MLB where you don't buy championships, there's definately a place for the Expos. Baseball tickets would not sell in Montreal because no one believes in MLB anymore in Montreal.

 

[Brent Burns Beard]

7870 season tickets? There comes a time, like with the expos, when you ask, is this a market or not? It seems there is a lot of room for revenue growth there. It would seem unfair to tap the players until that option has been explored.

fair point .. if BUF was maximizing sales and still unable to compete, thats completly differnt then the market not supporting the team.

lets see BUF fans step up like VAN fans did. VAN was losing much more than BUF is and seems to have found a formula to raise revenues.

dr

 

[nomorekids]

fair point .. if BUF was maximizing sales and still unable to compete, thats completly differnt then the market not supporting the team.

lets see BUF fans step up like VAN fans did. VAN was losing much more than BUF is and seems to have found a formula to raise revenues.

dr

they started winning. that seems to take care of all problems; attendance, money...win....and you're in good shape.

 

[Brent Burns Beard]

they started winning. that seems to take care of all problems; attendance, money...win....and you're in good shape.

so you agree .....

its pretty simple, isnt it ?

dr

 

[thinkwild]

And since only half the teams can be winning, or making the playoffs, we need an uneven playing field. One for teams who are winning and making money, and one for teams who are rebuilding and not sharing in big attendance and playoff revenue.

So not a system where all 30 teams are equal and trying for the cup. This is how it can work it fair. As long all 30 teams have a fair chance to build a winner and be one of the top teams if their build works.

I can remember when Ottawa was the most pathetic team in the league. Year after year. All I wanted was to not end up in last place.

Then we made it out of last place. Now my goal was start getting close to a playoff spot.

Then we got close and we wanted to make the playoffs. Now the goal was to be sure of a playoff spot and maybe get home ice for the playoffs.

Now our goal is for being in the presidents trophy race for regular season as one of the top teams, and have some playoff success. OK and slay Leafs too. Now we see the Cup as in reach. And with our young team, it seems its going to be there for about 5 years. This is as guaranteed as you can get. Even when we were favourites, the odds said it was 6-8 times more likely we would lose.

5 years from now, Redden, Chara, Hossa, Alfie, all UFA age, if we go 5 years, dont make it out of the first round, and all our star players are now UFAs, we have failed. We wont have the money for them. We wont be successful. It will be amazing if anyone still actually wants to keep any of the bums. But we dont get to swap them for a new playoff ready core. Thats going to take hard work and starting from scratch.

If 5 years from now, we have made the 3rd round 4 times. the playoffs every time, and have won a cup or two, we will probably be able to keep most of them.

That seems fair to me. We dont have to be going for the cup every year. I want us to be able to take the time to build a great team for awhile. I'm going to be buying tickets for awhile, why not plan ahead for greatness.

 

[Benji Frank]

Here's another team like Carolina, Anaheim, etc. A 31 mill cap setup as 53% of revenues means even with the cap, Buffalo will still lose 7 or 8 mill!!! Here again, if the owners can't find a way to generate over the revenues, they shouldn't be in the league! If the other owners want 30 teams, then it's up to them to come up with a way to top up Buffalo's revenues.... until they've done that and shown it to the players, why should the players do their share by accepting a low cap?? Otherwise, 5 years from now the same 6 or 8 teams will still be losing money & the owners will be going to Bob telling him the guys gotta settle for 44% as almost a 1/3 of the legue is still losing money, even though by then, the guy who owns the Leafs will also now be wealthy enough to buy the rest of Canada, while the two Mats Sundin and Stajan are wondering why they got to take another cut to their 3 mill & 200,000 salaries........

 

[DuklaNation]

so you agree .....

its pretty simple, isnt it ?

dr

Are you guys really this dense? You have to have good fan support when you're not winning. 30 teams can't have a winning record. Vancouver improved ticket sales is directly related to their winning record.

 

[Buffaloed]

Here's another team like Carolina, Anaheim, etc. A 31 mill cap setup as 53% of revenues means even with the cap, Buffalo will still lose 7 or 8 mill!!!

Obviously the owners have worked out a revenue sharing plan behind the scenes that's satisfactory to the small market teams. The large market teams will be cutting $15-35 million in payroll under a $31 million cap and I highly doubt that will be followed by a like decrease in ticket prices. That creates a lot of revenue to be shared while still allowing the big market teams to be as profitable as ever.

 

[Buffaloed]

Well its a fairly balanced article, he does say:

It should be noted, though, that the numbers provided by the Sabres cannot be independently verified. In addition, since club owner B. Thomas Golisano also operates HSBC Arena, tracing the exact cash flow can be difficult.

For a group of businessmen with a long history of accounting fraud and unscrupulous behaviour, this trust us stuff seems to just slip right by.

I'd assume Golisano's making a nice profit on his overall entertainment operation when the 54 non-NHL event revenues are added in. The NCAA Division I basketball tournament must bring in at least $5 million. But I don't support the notion that owners should be expected to use profitable operations to subsidize unprofitable ones.

 

[Benji Frank]

I'd assume Golisano's making a nice profit on his overall entertainment operation when the 54 non-NHL event revenues are added in. The NCAA Division I basketball tournament must bring in at least $5 million. But I don't support the notion that owners should be expected to use profitable operations to subsidize unprofitable ones.

If this is the case, why should a profitable Leafs franchise be forced to toss a good portion of 35 million in payroll savings to a struggling Sabres or Hurricanes franchise?? I'm sure the fans in Toronto would be able to get over not seeing the silly red outfit of Danton Cole a couple of times a year and would accept seeing him in A Bruins jersey instead of being forced to watch Doug doull try to skate for 3 minutes a night!!!

 

[Buffaloed]

If this is the case, why should a profitable Leafs franchise be forced to toss a good portion of 35 million in payroll savings to a struggling Sabres or Hurricanes franchise??

1) Their net profit will remain the same. It's not taking any money out of the owners pockets if only revenues created by cutting payroll are shared.

2) They'll be just as competitive: spending a lot of money hasn't won them a Cup.

3) A financially stable NHL is in their best interests.

It's a forgone conclusion that an agreement has been made within the NHL on a revenue sharing plan. Otherwise they would not have submitted a $31 cap proposal under which a lot of teams would still be losing money. The question isn't "why" would the Leafs agree to it, it's how much they've agreed to share.

 

[Tom_Benjamin]

I'd assume Golisano's making a nice profit on his overall entertainment operation when the 54 non-NHL event revenues are added in. The NCAA Division I basketball tournament must bring in at least $5 million. But I don't support the notion that owners should be expected to use profitable operations to subsidize unprofitable ones.

His overall entertainment division? What did he pay for the rink and the rest of his "entertainment operation?" If Erie County is giving him all the rink revenues because he owns the hockey team, shouldn't all those revenues count as hockey revenues? If the county is prepared to give Golisano a massive subsidy to keep hockey in Buffalo it shouldn't count as a benefit to Golisano?

If Golisano folds or relocates the Sabres, does he get to keep the rink and the rest of his entertainment operation or is the arena deal contingent on keeping the Sabres in Buffalo? Golisano gets to cry about losing money on the Sabres even if he makes a big profit on a rink he doesn't own?

Nice. Typical NHL economics.

Tom

 

[copperandblue]

If Erie County is giving him all the rink revenues because he owns the hockey team, shouldn't all those revenues count as hockey revenues?

No

 

[Tom_Benjamin]

No

Why not? Those profits would not exist for Golisano if the Sabres don't exist. He can split the revenues any way he wants. The County is giving him the rink revenues because he bought the Sabres. They shouldn't count as part of his return on investment? Why not? He certainly counts them. Does a dollar generated by the rink spend different for Golisano?

Tom

 

[MacDaddy TLC*]

Losing money by not playing? This is the best argument yet for letting teams die when they declare bankruptcy.

 

[Benji Frank]

1) Their net profit will remain the same. It's not taking any money out of the owners pockets if only revenues created by cutting payroll are shared.

2) They'll be just as competitive: spending a lot of money hasn't won them a Cup.

3) A financially stable NHL is in their best interests.

It's a forgone conclusion that an agreement has been made within the NHL on a revenue sharing plan. Otherwise they would not have submitted a $31 cap proposal under which a lot of teams would still be losing money. The question isn't "why" would the Leafs agree to it, it's how much they've agreed to share.

If the Leafs have agreed to share anything, I'd think that would be a major part of the owners proposal and thus well documented. Simularly, how would you as a fan feel knowing you're paying a couple of hundred bucks to take your wife to a Leafs game knowing a good chunk of what you just paid is being used to subsidize Johny Smith's 2 for 1 ticket to a Canes game?? I agree the money won't go back to the fan ... it'll just end up in some scalpers hands if that were the case, but I also doubt the top 5 or 6 franchises have agreed to piggyback any amount of significance to the weak franchises. This definitely wouldn't give off an aura of financial stability either!!

I do agree with you in that some form of revenue sharing needs to be put in place if the NHL wants to continue in 30 markets. But to what extent?? I don't know! For example, solely from memory, the CDN teams currently get a few million dollars provided they sell a certain amount of season tickets & luxury boxes ... 12,000 or something like that ... someone from Alberta would know more about this scenario... before they even figure out the revenue sharing though, I just really think the NHL should figure out who the pretenders are and give those owners an opportunity to market the team, move the team or sell/contract the team. If the city wants to keep the team, they might even make some major concessions to help subsidize the team. But the rest of the NHL shouldn't have to prop up a struggling franchiseThere's no sense trying to stick a square peg in a round hole........

 

[Tom_Benjamin]

If the Leafs have agreed to share anything, I'd think that would be a major part of the owners proposal and thus well documented. Simularly, how would you as a fan feel knowing you're paying a couple of hundred bucks to take your wife to a Leafs game knowing a good chunk of what you just paid is being used to subsidize Johny Smith's 2 for 1 ticket to a Canes game??

Exactly. This is a league that is gate driven with the vast majority of revenues generated in the local market. Splitting a national TV contract is easy. Having the fans in one city subsidise fans in another simply isn't fair.

I do agree with you in that some form of revenue sharing needs to be put in place if the NHL wants to continue in 30 markets.

I think it is better to get rid of the markets that require subsidization.

But to what extent?? I don't know! For example, solely from memory, the CDN teams currently get a few million dollars provided they sell a certain amount of season tickets & luxury boxes ... 12,000 or something like that ... someone from Alberta would know more about this scenario...

This reflects the currency equalization plan something that should not exist. I hink it amounted to about $12 million split among five Canadian teams. If the NHL really cared about small Canadian markets, they would do away with the pooling of TV revenues. Let the six Canadian teams split the Canadian TV money and let the 24 American teams split the American TV money.

Money generated by the Edmonton Oilers is going to the New York Rangers.

I don't believe the NHL when they talk about "significant revenue sharing" either. If they were serious they would explain it and take credit for it. It would be excellent public relations. When Goodenow was asked about it in the CBC interview, he sneered and said, "NHL teams don't share revenues."

Tom

 

[MacDaddy TLC*]

It's like asking a McDonalds franchise owner in one location to give money to another in a poor location to keep them in business. If a team cannot generate enough revenue on it's own---Goodbye!

 

[dawgbone]

And since only half the teams can be winning, or making the playoffs, we need an uneven playing field. One for teams who are winning and making money, and one for teams who are rebuilding and not sharing in big attendance and playoff revenue.

So not a system where all 30 teams are equal and trying for the cup. This is how it can work it fair. As long all 30 teams have a fair chance to build a winner and be one of the top teams if their build works.

I don't think anyone is saying any differently. You need your elite teams, your top teams, your competetive teams, your inconsistant teams, and your cellar dwellers.

The idea is, as a cellar dweller you get good draft picks, and can develop them so your team can get out of the basement and be more competetive.

That can't happen right now because teams are signing the players they are developing to large contracts, which effects every team with an up and coming star. You can't get any better when the team you are building is losing it's core guys.

I can remember when Ottawa was the most pathetic team in the league. Year after year. All I wanted was to not end up in last place.

Then we made it out of last place. Now my goal was start getting close to a playoff spot.

Then we got close and we wanted to make the playoffs. Now the goal was to be sure of a playoff spot and maybe get home ice for the playoffs.

Now our goal is for being in the presidents trophy race for regular season as one of the top teams, and have some playoff success. OK and slay Leafs too. Now we see the Cup as in reach. And with our young team, it seems its going to be there for about 5 years. This is as guaranteed as you can get. Even when we were favourites, the odds said it was 6-8 times more likely we would lose.

5 years from now, Redden, Chara, Hossa, Alfie, all UFA age, if we go 5 years, dont make it out of the first round, and all our star players are now UFAs, we have failed. We wont have the money for them. We wont be successful. It will be amazing if anyone still actually wants to keep any of the bums. But we dont get to swap them for a new playoff ready core. Thats going to take hard work and starting from scratch.

If 5 years from now, we have made the 3rd round 4 times. the playoffs every time, and have won a cup or two, we will probably be able to keep most of them.

A team averages about $1-1.5 mil in gate revenue every home playoff game. So, we are talking about at most 12 home playoff dates every playoffs if the team makes the 3rd round.

The way Salaries are going, Chara and Redden will be $10mil players, Hossa will easily get more than that (based on signings like Guerin and that for $9mil), Alfie will probably be a $6-7mil player (he seems to like being in Ottawa, so he'd probably stick around for less). Then add Spezza, who will be a $4mil player (based on contracts like the one Richards got), Havlat's probably another guy who makes about $4mil. And your starting goalie, NHL average is about $2.5 or so per year.

That in total is almost a $40mil payroll for 7 players... if you think the Ottawa Senators can afford that kind of money, even with making the 3rd round 3 or 4 times, you are seriously mistaken.

So even if all things go well, the market the teams like the Leafs and Rangers dictate will prevent the Senators from keeping all their good players... unless Mr. Melnyk decides he wants to lose money every year. And that's the Problem... Ottawa has a core of players than can have a tonne of success for years to come, but the price of that success grows faster than the rewards.

At best hope, you can increase your payroll $20mil the next season (based on winning the cup the year before), but you are in trouble if something happens and you lose in the first round the next season.

That seems fair to me. We dont have to be going for the cup every year. I want us to be able to take the time to build a great team for awhile. I'm going to be buying tickets for awhile, why not plan ahead for greatness.

And based on the current economic structure of the NHL, it won't happen... at least not in a town like Ottawa.

 

[Buffaloed]

His overall entertainment division? What did he pay for the rink and the rest of his "entertainment operation?" If Erie County is giving him all the rink revenues because he owns the hockey team, shouldn't all those revenues count as hockey revenues? If the county is prepared to give Golisano a massive subsidy to keep hockey in Buffalo it shouldn't count as a benefit to Golisano?

The bulk of the financing for constuction of the arena was provided by the Sabres. The arena cost $127.5 million to build. The City of Buffalo contributed $10 million, $20 million came from Erie County, and $25 million from the State. The remaining $72.5 million was privately financed by the Sabres. Golisano assumed that financing when he purchased the team, including paying off a $22.9 million construction loan that would have landed in the county's lap. It's not as if the county built an arena and handed over the keys to the Sabres. The Sabres degree of financing should, and does confer operating control of the building. According to a NY State Comptroller's report issued in February 2003 the Sabres direct and indirect contibution to the local economy is $65 million per year. The county, city, and state will recover their investment many times over. http://www.osc.state.ny.us/press/releases/feb03/22503report.htm

If Golisano folds or relocates the Sabres, does he get to keep the rink and the rest of his entertainment operation or is the arena deal contingent on keeping the Sabres in Buffalo? Golisano gets to cry about losing money on the Sabres even if he makes a big profit on a rink he doesn't own?

The arena deal is contingent on the Sabres remaining. If the team folds, arena control reverts to the county. That was made abundantly clear when that was a possibilty due to bankruptcy and the county wanted no part of it. There was talk of mothballing the arena if that happened. Golisano is bound to the terms of a 27 year lease that was tied to the public financing portion of the arena. Should he chose to relocate when the lease expires in 2022, control of the arena would revert to Erie County.

Nice. Typical NHL economics.
Tom

You still think so?

 

[dawgbone]

It's like asking a McDonalds franchise owner in one location to give money to another in a poor location to keep them in business. If a team cannot generate enough revenue on it's own---Goodbye!

How much is enough revenue?

I mean by your logic, it's a 7 team NHL.

 

[MacDaddy TLC*]

Enough revenue is we don't hear teams *****ing about losing money anymore. If they can't afford the players they have a couple of options: spend less on salaries or give up! i don't care which they take as long as they don't expect handouts.

I'm sure more than 7 can survive either by using some intelligence when signing contracts, or they make money hand over fist.

 

[dawgbone]

Enough revenue is we don't hear teams *****ing about losing money anymore. If they can't afford the players they have a couple of options: spend less on salaries or give up! i don't care which they take as long as they don't expect handouts.

Throw out an exact number...

Would these revenues be enough if they didn't have to try and compete with the Leafs who are shelling out $50+mil in payrolls?

I'm sure more than 7 can survive either by using some intelligence when signing contracts, or they make money hand over fist.

It all starts at the top man. If the Leafs and Rags and Stars and whoever are going to sign guys to big contracts, it trickles down. If they don't do it, other teams don't do it.