Owners, players bleeding green as NHL lockout drags on
By Stu Hackel
The meter keeps running on monetary losses as the NHL lockout enters its second month and chews into the regular season. With both sides at an impasse on how to divide the revenue of this thriving business -- or at least it was a thriving business; perhaps soon we'll be writing "once-thriving business" -- there's nothing coming in from the games not being played and players' salaries aren't being paid.
The players' first paychecks were to be issued on Monday, Oct. 15 although they'll be getting money from the escrow fund before the month is over. Players who got big signing bonuses this summer are doing just fine financially. The 125 or so who are playing in Europe are getting something as well, if only to cover their insurance costs, but at least they're working and glad about it. The 70 or so in the AHL are getting paid, too. As for the rest, probably about 500 guys, here's hoping that they've socked away some money.
Much has been made about the amount that players are losing by not agreeing to whatever offer from ownership is on the table, regardless of whether it is fair. Early in the lockout, Gary Bettman and Bill Daly began pointing out that, after a while, the players would be better off financially if they accept the pay cuts the league is offering rather than than lose even more by not being paid as games continue to be cancelled.
Some have taken up that line of thinking, including the website for Sportsnet, the Canadian regional cable TV sports conglomerate owned by the Rogers media empire, which is also an ownership partner in the Maple Leafs. The NHL Lockout Clock on Sportsnet.ca keeps a running tally of dollars forfeited by the players as the lockout rolls on. (Interestingly, Rogers' partner in the Leafs, Bell Media, is not engaging in anything like that on its TSN.ca website).
Whatever Sportsnet's and Rogers' intent in publicizing those lost salaries might be, it's really only one side of the story because, after all, the owners aren't making money without games, either. How much are they losing? That's much, much harder to figure out. Only they know for sure. Players' individual salaries are public knowledge. Franchise bottom lines are not. Deputy Commissioner Bill Daly has estimated that the league took a $100 million bath from the loss of the preseason and waved goodbye to another $100-$150 million when the first two weeks of the regular schedule went up in smoke.
The best we can do trying to figure out the specifics of lost revenue to date, five days into the season, is make an educated guess by cobbling together information that is available, such as potential gate receipts. What teams take in at the box office is not the entire picture, of course, not by a long shot. Owners also get revenue from radio and TV deals, local corporate sponsors, in-arena concessions, parking fees, local merchandise licensing agreements and a host of other things. Plus, they get a share of the deals the league makes by selling national media rights, sponsorships and retail licenses. There's lots that goes into that $3.3 billion business.
It's often said, however, that hockey is a gate receipts business, and that's because among all those revenue streams, the most lucrative for a club is what it takes in at the door. So as long as Sportsnet has started calculating what players have lost game by game, let's also take as good a look as possible at what teams may have missed in gate receipts during the first five days of the lockout.
The information on this list below is very imprecise. The figures are based on last season's average ticket price per team as compiled by Team Marketing Report and reprinted by Igor Burdetskiy on his Hooked On Hockey blog. Big thanks go out to him. (It's a pretty revealing list just by itself and you might want to look at the wide disparity between what the average ticket price for a Maple Leafs game is compared to the Dallas Stars, but I digress.) Because the figures on the TMR table are not this season's average ticket prices, that's a flaw in my calculations, although considering that they generally rise, you can assume that the actual figures will be a bit higher. The math is pretty simple -- probably the most I'm capable of -- and you can play along at home and do it yourself: average ticket price times seating capacity (I got that figure from the 2012-13 NHL Guide and Record Book, a great volume that everyone should own) gives me the estimated gate receipts for a single sold out game, times the number of home games that a team has played.
So here's a ballpark figure of what the owners have lost at the gate for the first 22 games not played through Sunday. (In parenthesis is an estimate of how much each club could potentially bring in for a single regular season game.)
Anaheim (2 games @ $634,407.56 per) -- $1,268,815.12
Boston (0 games @ $1,035,281.10) -- $0
Buffalo (1 game @ $728,241.75) -- $728,241.75
Calgary (1 game @ $1,315.316.91) -- $1,315.316.91
Carolina (1 game @ $776,714.40) -- $776,714.40
Chicago (1 game @ $1.098,631.24) -- $1.098,631.24
Colorado (2 games @ $731.444.34) -- $1,462,888.68
Columbus (0 games @ $870.004.80) -- $0
Dallas (0 games @ $555,033.40) -- $0
Detroit (1 game @ $1,069,116.48) -- $1,o69,116.48
Edmonton (0 games @ $1,180,919.07) -- $0
Florida (1 game @ $948,616.80) -- $948,616.80
Los Angeles (1 game @ $940,686.56) -- $940,686.56
Minnesota (1 game @ $1,131,348.32) -- $1,131,348.32
Montreal (1 game @ $1,886,276.91) -- $1,886,276.91
Nashville (1 game @ $873,447.52) -- $873,447.52
New Jersey (1 game @ $808,282.50) -- $808,282.50
New York Islanders (1 game @ $796,440.04) -- $796,440.04
New York Rangers (0 games @ $1,204,840) -- $0
Ottawa (1 game @ $1,063,183.03) -- $1,063,183.03
Philadelphia (1 game @ $1,306,896.82) -- $1,306,896.82
Phoenix (1 game @ $619,068.75) -- $619,068.75
Pittsburgh (1 game @ $1,159,484.22) -- $1,159,484.22
St. Louis (0 games @ $796,065.50) -- $0
San Jose (0 games @ $873,358.26) -- $0
Tampa Bay (0 games @ $745,469.34) -- $0
Toronto (1 game @ $2,329,227.63) -- $2,329,227.63
Vancouver (1 game @ $1,293,065.80) -- $1,293,065.80
Washington (1 game @ $1,155,144.52) -- $1,155,144.52
Winnipeg (1 game @ $1,474,443.08) -- $1,474,443.08
That comes to around $25.5 million. It's a lot of money, and we're only 22 games into the season. Washington, Calgary, San Jose and Vancouver were scheduled to play at home on Monday and, after that, there are still 1,189 games and hundreds of millions of dollars to go.
I know, I know. I'm assuming that all these games would be sold out. Well, for one thing, home openers often are, but regardless, if a game is played at a building that's, say, only 90 percent full, the owner still would have lost 10 percent of his potential gate receipts on that night. Now he's losing 100 percent. Perhaps that's shaky methodology; I suppose I could have factored in an additional stat to compensate for that, like last year's percentage capacity attendance, which ESPN compiles. But one reason I didn't is that those figures are based on turnstile numbers, the total people in the building. They don't factor in giveaway and discounted tickets (and that can be a big number in some arenas), so ESPN.com's numbers don't reflect the real box office gate receipts number. That's proprietary information and something that teams and the NHL guard very closely.
But even if you want to assume 90 percent capacity for these first games, which is less than the NHL average, the losses would be around 23 million -- still a huge amount. Quadruple that for the 82 games already canceled and it could roughly fit into Bill Daly's estimate of $100 million to $125 million in total revenue lost.
No, this is not a perfect picture of the damage the owners have done to themselves -- and when you factor in all their other revenue streams, it's far from complete. But if you can derive a better method for getting a sense of what is being lost, I'm happy to hear about it.
The point of this little exercise, however, is to show that both sides are getting hurt here, not just the players. The absurdity of what the owners are doing to their own business reminds me of the infamous and sad statement made in 1968 by a misguided U.S. Army officer in South Vietnam who, speaking about a city called Bến Tre, told AP correspondent Peter Arnett that "it became necessary to destroy the town to save it."
The owners may be counting on the players feeling the financial pinch of missed paychecks as well as concern for the time lost on their careers, expecting them to eventually give in. The players may believe that lost revenue is going to cause some owners, maybe a lot of them, to assess the damage to their business and say, "It's just not worth it." Which will come first and when? Who knows? Negotiations continue in Toronto on Tuesday as the wreckage piles up.
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