Speculation: Small Market NHL Teams Could Fold, Sabres are one of them

[Theana745]

Hi everyone,

 

Came across an interesting piece of analysis the other day. Obviously, this is not scientific (and for the most part a lay opinion) but an interesting conversation here. Apparently, there are several small market teams that are operating at a loss or little profit. For example, Florida is operating at -21 million dollar loss. Interestingly, Buffalo is operating at a worrisome 2 million dollar profit. The argument is essentially that if there's no alterations in the salary cap, in conjunction with lack of overall interest upon COVID return,  teams including the Sabres could ultimately see their demise. What are your thoughts on this? Do you think this is overblown or something that could be a reality?

 

 

Edited April 17, 2020 by Theana745

[LGR4GM]

I think we are approaching a sports bubble. It is becoming far too expensive to go to a sporting event in the pro's. The NHL is the most vulnerable because they rely so heavily on gate sales. I don't know if this will happen soon or not but, eventually people won't be able to afford this stuff. I only go to a couple of games a year because tickets are expensive and then there is 12-14 dollars for a beer, 8-10 dollars for any food item if not more, parking, and other stuff. It costs about 300 dollars a game and that is hard to afford with everything else. 

In the NFL there are seat licenses now and that costs even more on top of your ticket. Buffalo will be doing that at the new stadium if it gets built. There is just this instilled belief that revenue has to go up every year in sports and it rises faster than wage growth for normal people by far. You might get a 2% raise each year but sometimes leagues jump up 3-5% and they are pricing themselves out of markets like Buffalo. I think at some point we will see teams move. They will move to the growing cities with the money, your Houston and Charlottes of the US.

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

[freester]

12 minutes ago, LGR4GM said:

I think we are approaching a sports bubble. It is becoming far too expensive to go to a sporting event in the pro's. The NHL is the most vulnerable because they rely so heavily on gate sales. I don't know if this will happen soon or not but, eventually people won't be able to afford this stuff. I only go to a couple of games a year because tickets are expensive and then there is 12-14 dollars for a beer, 8-10 dollars for any food item if not more, parking, and other stuff. It costs about 300 dollars a game and that is hard to afford with everything else. 

In the NFL there are seat licenses now and that costs even more on top of your ticket. Buffalo will be doing that at the new stadium if it gets built. There is just this instilled belief that revenue has to go up every year in sports and it rises faster than wage growth for normal people by far. You might get a 2% raise each year but sometimes leagues jump up 3-5% and they are pricing themselves out of markets like Buffalo. I think at some point we will see teams move. They will move to the growing cities with the money, your Houston and Charlottes of the US.

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

Agree completely  with NHL sports bubble.  I think NHL is now in serious financial trouble and its previous business model is non sutainable.    I expect revenues to fall 75-80%.    Attendance will not return to previous levels at previous ticket prices for at least 3-4 years if ever..  There will be major labor strife in the NHL very soon as players will be unable to accept the  new reality.  Its going to get ugly  with franchises relocating or folding.

[WildCard]

25 minutes ago, LGR4GM said:

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

COVID has taught me I do need sports. I'm bored as ***** over here. Been working out, putting in way more overtime, reading...I need sports back

[Randall Flagg]

1 minute ago, WildCard said:

COVID has taught me I do need sports. I'm bored as ***** over here. Been working out, putting in way more overtime, reading...I need sports back

Same.

i would lose a disturbingly large chunk of me if the bills or Sabres no longer existed 

[Theana745]

21 minutes ago, freester said:

Agree completely  with NHL sports bubble.  I think NHL is now in serious financial trouble and its previous business model is non sutainable.    I expect revenues to fall 75-80%.    Attendance will not return to previous levels at previous ticket prices for at least 3-4 years if ever..  There will be major labor strife in the NHL very soon as players will be unable to accept the  new reality.  Its going to get ugly  with franchises relocating or folding.

Ultimately I think it's going to be highly dependent on how the Buffalo (and other at risk teams) fans rally around the team when they play next, regardless of how good the on-ice product is

[Eleven]

Buffalo is not a small market when it comes to hockey (just two days ago, Pergament in TBN noted that Buffalo led the US in ratings for local hockey this year, and Buffalo fights Pittsburgh for that every year-and even THAT doesn't consider Southern Ontario).  And the Sabres are not going to fold.

[Stoner]

I'd like to see the thread title changed to reflect that this isn't a news story, or a story at all.

[Eleven]

1 minute ago, PASabreFan said:

I'd like to see the thread title changed to reflect that this isn't a news story, or a story at all.

Seriously.  It may as well be titled, "Doctors Say Do This to Keep Your Hockey Team (Do This Every Day)" or something.

[Zamboni]

Meh .... speculation… Nothing more… I’ll believe it when I see it.

[Palm Trees And Taxes]

1 hour ago, LGR4GM said:

I think we are approaching a sports bubble. It is becoming far too expensive to go to a sporting event in the pro's. The NHL is the most vulnerable because they rely so heavily on gate sales. I don't know if this will happen soon or not but, eventually people won't be able to afford this stuff. I only go to a couple of games a year because tickets are expensive and then there is 12-14 dollars for a beer, 8-10 dollars for any food item if not more, parking, and other stuff. It costs about 300 dollars a game and that is hard to afford with everything else. 

In the NFL there are seat licenses now and that costs even more on top of your ticket. Buffalo will be doing that at the new stadium if it gets built. There is just this instilled belief that revenue has to go up every year in sports and it rises faster than wage growth for normal people by far. You might get a 2% raise each year but sometimes leagues jump up 3-5% and they are pricing themselves out of markets like Buffalo. I think at some point we will see teams move. They will move to the growing cities with the money, your Houston and Charlottes of the US.

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

Agree completely, especially when it comes to going to the games. It might take me a long while to even consider it and given the economic devastation that has been forced on everyone by this, NHL Players better be ready for their new reality. It won't be as fruitful as before and for a long time.

 

 

[Taro T]

If the fans came back to the NHL after a self-induced nuking in larger numbers significantly greater than anticipated, don't see why this would be different*.  Doubt that the league will be contracting as that would significantly alter (in a negative way) the next TV contract which will be due in the next couple of years.

 

* if a significant portion of people don't go back to work soon, that WOULD be different.  The stock market seems to think life will get back to normal pretty soon; hoping that's right.  If it is, then doubt teams will fold.

[darksabre]

1 hour ago, LGR4GM said:

I think we are approaching a sports bubble. It is becoming far too expensive to go to a sporting event in the pro's. The NHL is the most vulnerable because they rely so heavily on gate sales. I don't know if this will happen soon or not but, eventually people won't be able to afford this stuff. I only go to a couple of games a year because tickets are expensive and then there is 12-14 dollars for a beer, 8-10 dollars for any food item if not more, parking, and other stuff. It costs about 300 dollars a game and that is hard to afford with everything else. 

In the NFL there are seat licenses now and that costs even more on top of your ticket. Buffalo will be doing that at the new stadium if it gets built. There is just this instilled belief that revenue has to go up every year in sports and it rises faster than wage growth for normal people by far. You might get a 2% raise each year but sometimes leagues jump up 3-5% and they are pricing themselves out of markets like Buffalo. I think at some point we will see teams move. They will move to the growing cities with the money, your Houston and Charlottes of the US.

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

Amen. I like pro sports, but I've also been following it for a long time. Taking a break isn't really killing me, which means I probably don't need it in my life that badly.

[Theana745]

1 hour ago, LGR4GM said:

I think we are approaching a sports bubble. It is becoming far too expensive to go to a sporting event in the pro's. The NHL is the most vulnerable because they rely so heavily on gate sales. I don't know if this will happen soon or not but, eventually people won't be able to afford this stuff. I only go to a couple of games a year because tickets are expensive and then there is 12-14 dollars for a beer, 8-10 dollars for any food item if not more, parking, and other stuff. It costs about 300 dollars a game and that is hard to afford with everything else. 

In the NFL there are seat licenses now and that costs even more on top of your ticket. Buffalo will be doing that at the new stadium if it gets built. There is just this instilled belief that revenue has to go up every year in sports and it rises faster than wage growth for normal people by far. You might get a 2% raise each year but sometimes leagues jump up 3-5% and they are pricing themselves out of markets like Buffalo. I think at some point we will see teams move. They will move to the growing cities with the money, your Houston and Charlottes of the US.

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

To what level of income are you referring to that might potentially be locked out from attending sports who currently are?

[spndnchz]

Hey NY2. How’s that tin foil hat coming along?

[nfreeman]

23 minutes ago, Theana745 said:

To what level of income are you referring to that might potentially be locked out from attending sports who currently are?

I think the point is that most people's incomes are likely to drop due to the current economic dislocation, which will make $300+ outings to hockey games less affordable.

[Theana745]

1 hour ago, nfreeman said:

I think the point is that most people's incomes are likely to drop due to the current economic dislocation, which will make $300+ outings to hockey games less affordable.

Understood. I guess the question is whether the people impacted more are the one's who couldn't attend the games to begin with, or people who are actually attending the games. 

[DarthEbriate]

If 30% of the league's revenue is ticket sales, then it absolutely won't be sustainable going through an extended no fans timeline. I think the NHL could use a reset (all major sports could) because it's obscene how expensive a single ticket, hot dog, and beer are when compared to... say...  a Star Wars-branded Lego set. Licensing is mean.

I'd like to see the NHL keep operating fully at the proposed 32 teams at half cost. Half the cap, half the ticket sales, half the corp execs in the stands because they haven't priced out the everyday blue-collar worker, and... if I'm fast-forwarding years out, then maybe we start losing our top-end talent to the KHL. I'm still going to follow the Sabres and not Metallurg Magnitogorsk --- even if Eichel signs there for $7M/season instead of with Buffalo for $3M.

3 hours ago, LGR4GM said:

It is a sad reality but if COVID has taught me anything, I don't need sports. There's lots of other things to do and spend my money on. 

Very true. I'm a bit jealous. I still come to this site more than I go to the news outlets because it brings more joy. I thought the NFL Draft was today and did frantic research so I could intelligently discuss the picks with my Dad... only to find... I guess it's later. Maybe someday I'll even be free of the Sabres. Now excuse me while I go look one more time at the center-spine conundrum we're currently faced with for next season.

[WildCard]

6 minutes ago, Let's Go B-Lo said:

Preach.  I watched a NASCAR race from 1988 the other day because I was bored out of my skull.

Did you watch the NASCAR virtual race with Kyle Larson getting fired?

[darksabre]

22 minutes ago, Let's Go B-Lo said:

Preach.  I watched a NASCAR race from 1988 the other day because I was bored out of my skull.

The Phoenix one? I watched it too. Man NASCAR used to be sketchy lol

[spndnchz]

36 minutes ago, DarthEbriate said:

If 30% of the league's revenue is ticket sales, then it absolutely won't be sustainable going through an extended no fans timeline. I think the NHL could use a reset (all major sports could) because it's obscene how expensive a single ticket, hot dog, and beer are when compared to... say...  a Star Wars-branded Lego set. Licensing is mean.

I'd like to see the NHL keep operating fully at the proposed 32 teams at half cost. Half the cap, half the ticket sales, half the corp execs in the stands because they haven't priced out the everyday blue-collar worker, and... if I'm fast-forwarding years out, then maybe we start losing our top-end talent to the KHL. I'm still going to follow the Sabres and not Metallurg Magnitogorsk --- even if Eichel signs there for $7M/season instead of with Buffalo for $3M.

Very true. I'm a bit jealous. I still come to this site more than I go to the news outlets because it brings more joy. I thought the NFL Draft was today and did frantic research so I could intelligently discuss the picks with my Dad... only to find... I guess it's later. Maybe someday I'll even be free of the Sabres. Now excuse me while I go look one more time at the center-spine conundrum we're currently faced with for next season.

You can always start a group ??

[freester]

1 hour ago, DarthEbriate said:

If 30% of the league's revenue is ticket sales, then it absolutely won't be sustainable going through an extended no fans timeline. I think the NHL could use a reset (all major sports could) because it's obscene how expensive a single ticket, hot dog, and beer are when compared to... say...  a Star Wars-branded Lego set. Licensing is mean.

I'd like to see the NHL keep operating fully at the proposed 32 teams at half cost. Half the cap, half the ticket sales, half the corp execs in the stands because they haven't priced out the everyday blue-collar worker, and... if I'm fast-forwarding years out, then maybe we start losing our top-end talent to the KHL. I'm still going to follow the Sabres and not Metallurg Magnitogorsk --- even if Eichel signs there for $7M/season instead of with Buffalo for $3M.

Very true. I'm a bit jealous. I still come to this site more than I go to the news outlets because it brings more joy. I thought the NFL Draft was today and did frantic research so I could intelligently discuss the picks with my Dad... only to find... I guess it's later. Maybe someday I'll even be free of the Sabres. Now excuse me while I go look one more time at the center-spine conundrum we're currently faced with for next season.

I’m shocked that only 30% of league’s revenues are from tickets sales. I would have guessed 70 %. Where are these figures coming from?

[nfreeman]

2 hours ago, Theana745 said:

Understood. I guess the question is whether the people impacted more are the one's who couldn't attend the games to begin with, or people who are actually attending the games. 

I think the percentage of NHL ticket-buyers who will not be adversely affected by the current economic convulsion is quite low, and that there is a significant percentage of people who ordinarily buy tickets and will not be able to do so next season. 

[DarthEbriate]

1 hour ago, spndnchz said:

You can always start a group ??

Like a support group for Lego Star Wars hockey? General, count me in. Although I do recall that Lego and the NHL once had a licensing agreement ala Lego and the NBA. But whereas the NBA got player minifigs and likenesses, the NHL got some team logo stickers.

18 minutes ago, freester said:

I’m shocked that only 30% of league’s revenues are from tickets sales. I would have guessed 70 %. Where are these figures coming from?

The video guy is just a guy who talks hockey with his cats, so your mileage may vary. But if he's quoting Forbes accurately, then the whiteboard has gate revenue as 35.6 or 36.6% of the total. The league needs much bigger TV contracts to stay afloat. Now, all this could totally be fudged by the teams to Forbes to show as woe-is-me, because only one team in the big four professional sports leagues discloses its finances (Green Bay).

[Marvin]

In the OP: the Sabres operated at an estimated $2M profit?  Wow.  I figured they operated at a large net loss.

Percentage revenue from the gate: At the start of The Big Lockout, estimates were that the league was that gate receipts were 50% of gross revenue.  The league took the long view of decreasing that percentage by proving it could draw with OLN and giving a sweetheart deal to NBC.  They hoped that it would lead to that mystic 4 word incantation, "American Network Television Contract" (not "Om Mane Padme Hum").  Unlike the 1980's deal with SportsChannel America, it worked this time.

According to several media sources, our own Larry Quinn pushed through a lot of changes in the marketing, including the Winter Classic, that just kept hitting gold. Much of what the NHL does well now came out of his head.

Edited April 17, 2020 by E4 ... Ke2
Credit to LQ.