Small market teams and staying above water

[frisky]

I'm not sure if this topic has already been discussed on another thread, but the article in the News about the small market teams and what the new collective bargaining structure means for teams like us is a bummer of a read. IT makes it sound like the Sabres still could have a limited future in Buffalo :( . What do you all think?

[Stoner]

As the article points out, the tremendous increase in the value of the team (140 some millions according to Forbes, vs. the 90 million TG paid for it) sort of negates any modest losses year to year. You have to look at the whole financial picture. I really think the Sabres need to keep the quality of the product high and raise ticket prices, vs. other options for improving the bottom line. People have had a taste of winning, and there's no going back now.

[Done]

That's BS

 

I just ran a valuation for the team the other day. With every game being sold out at the average ticket price....the ticket sales almost make the payroll a wash when you include all the luxury boxes and club seats.

 

Not only are the games sold out, but the Sabres will be making a killing by scalping their own tickets. They charge a 20% fee on the resale website, and those tickets are marked up an average of 2.5X season ticket price. I value that at $500,000.

 

They have sold out the parking ramp and get a cut of other lots. Another 500K.

 

I do not know their profit plan as far as food service goes, but they get the merchandise. I'd say the average person spends $15 combined....and probably more considering the game is becoming an event. At a margin of 30%, that gets you close to another $4 million.

 

The Sabres are the hottest seller at NHL.com. I don't know what that means, but I can get to that later.

 

Advertising is through the roof at the arena, on Radio, etc. They are probably locked in on the TV side, but may get bumps for national games. This is another misc. profit which is more than previous years.

 

After all costs I see the Sabres making a good $4 to 8 million profit BEFORE PLAYOFFS. Add to that almost $1 million net per home game in the playoffs.

 

If we win the whole thing this year....Tommy G is going to have $15 million positive cash. The organization may find a way to make the final number look lower, but that is where they will be.

If the team can stay at the top of the league over the next 3-5 years, which looks possible, The Sabres are worth close to $200 million at a max-out. Right now Galisano could probably sell the team for twice what he paid.

 

 

Good for them.......we are lucky he took a chance, and then let it roll this year. That's how you get to be a billionaire. You need to put your stones on the table and close your eyes. I'm sure he's taken a few bullets before, but it is all roses this time.

[sabregoats]

People have had a taste of winning, and there's no going back now.

why not that is exactly what the Bills did after the superbowl years.

[Knightrider]

As the article points out, the tremendous increase in the value of the team (140 some millions according to Forbes, vs. the 90 million TG paid for it) sort of negates any modest losses year to year. You have to look at the whole financial picture. I really think the Sabres need to keep the quality of the product high and raise ticket prices, vs. other options for improving the bottom line. People have had a taste of winning, and there's no going back now.

 

If they can sell out the season before December 1, laws of supply and demand really force a ticket price increase.

[X. Benedict]

The actual payroll may not amount to 43 million.

Gate sales are down league-wide. There is the prospect

that player escrow money may be coming back.

[Eleven]

I'll say it yet again: the value in owning a franchise has nothing to do with the year-to-year profit/loss. It has everything to do with the appreciation over time. Look no further than Ralph Wilson for an extreme example (he bought into the AFL for $10K--yes, that's a "K"), or look to Golisano for a less extreme example (return of nearly 50% after several years isn't too bad).

 

Cost certainty made franchise values rise for small-market teams, and those small-market teams who spend to win will realize that their values rise further. Golisano is too smart to miss that.

 

Lastly, the lawyer quoted in the News article is a friend of mine; he has it right. If the salary were eating away near-term, there would be trouble. What the article DOESN'T say is that the salary isn't doing that.

 

The Sabres will be just fine.

[Knightrider]

I'll say it yet again: the value in owning a franchise has nothing to do with the year-to-year profit/loss. It has everything to do with the appreciation over time. Look no further than Ralph Wilson for an extreme example (he bought into the AFL for $10K--yes, that's a "K"), or look to Golisano for a less extreme example (return of nearly 50% after several years isn't too bad).

 

Cost certainty made franchise values rise for small-market teams, and those small-market teams who spend to win will realize that their values rise further. Golisano is too smart to miss that.

 

Lastly, the lawyer quoted in the News article is a friend of mine; he has it right. If the salary were eating away near-term, there would be trouble. What the article DOESN'T say is that the salary isn't doing that.

 

The Sabres will be just fine.

 

The first two paragraphs assume Golisano or Wilson will reap the gains from the sale of a team. I guarantee Wilson will not sell the team before he dies. Hopefully the same will be true of Golisano and the Sabres. Therefore capital appreciation is not as important as the dividends the investment pays...

[Stoner]

I doubt a multi billionaire is worried about short term dividends. Then again, when he goes to a Sabres game, he never buys a program -- he looks for one under a seat on his way out.

[fushetti]

I doubt a multi billionaire is worried about short term dividends. Then again, when he goes to a Sabres game, he never buys a program -- he looks for one under a seat on his way out.

 

HIYOOOOOOO

[Two or less]

I don't really believe this article at all to be honest.

 

However, i will say, i do think the NHL does need a better tv deal, if it's with NBC/Versus or back to ESPN, they need more revenue from tv deals because thats the money that's the real money maker in pro sports these days. They need more then 2 games on tv a week thus making more money. If each team recieved $3-4 million more each year from the tv deals, it would make life so much easier. I forgot how much the Sabres make off versus, i think i read something like $2 million. That IMO isn't nearly enough.

[Taro T]

There are far too many errors in that article to take the writer seriously.

 

Last year's payroll was over $31MM not $29MM. Even IF the players don't give escrow back and the Sabres face a serious injury bug their payroll will likely not exceed $41MM, it's currently under $40MM although the article states it's above $41MM. In reality, I'm expecting payroll to be ~$36-37MM. That is a $5-6MM increase, not a $12 friggin million increase.

 

He's got the average ST price of a seat nailed fairly closely, but doesn't seem to account for window prices of gold games now being more than double ST prices. He doesn't account at all for increased concession, merchandise, nor parking revenues. Nor as someone else mentioned in this thread, does he account for increased advertising revenues. Also, the Sabres have trimmed costs in their scouting and non-hockey departments. This is not included in the author's calcs either.

 

It is possible that in the future the Sabres may have issues with having every season end in the black. But this season will almost definitely be in the black. The author having such a poor handle on what the actual finances are currently makes it very difficult to pay any credence to anything else he might say.

[Bmwolf21]

Sounds like he is using different criteria for his numbers and not explaining where he gets those numbers from.

 

For example, when he says this:

 

"The team's player payroll - what it pays the players, not the salary-cap payroll - has jumped $12 million, from about $29 million last season."

It would make a lot more sense if he said "from about $29M last season, according to [source]."

 

Maybe the player payroll he references is something the Sabres gave him, possibly including some sort of player development costs, AHL-level salaries, etc? I don't know. My best advice would be for someone who has a good handle on what these numbers should be to email the writer and ask what his sources are for the apparently incorrect numbers. It might not be that the numbers are dead-on wrong, but rather coming from different sources who use different accounting methods/figures, or they could be dead-on wrong and he has no idea how the whole NHL salary cap/payroll/CBA issue works.

[Taro T]

Sounds like he is using different criteria for his numbers and not explaining where he gets those numbers from.

 

For example, when he says this:

 

"The team's player payroll - what it pays the players, not the salary-cap payroll - has jumped $12 million, from about $29 million last season."

It would make a lot more sense if he said "from about $29M last season, according to [source]."

 

Maybe the player payroll he references is something the Sabres gave him, possibly including some sort of player development costs, AHL-level salaries, etc? I don't know. My best advice would be for someone who has a good handle on what these numbers should be to email the writer and ask what his sources are for the apparently incorrect numbers. It might not be that the numbers are dead-on wrong, but rather coming from different sources who use different accounting methods/figures, or they could be dead-on wrong and he has no idea how the whole NHL salary cap/payroll/CBA issue works.

The $29 MM is what the Sabres payroll would have been if you only counted active players on the roster (not players on the IR). That number has circulated from several sources. The "true" number is $31 something MM. (It might even be higher than that, because the league had to pay the players additional money above the escrow that was withheld. I never saw what that total payment was. The Sabres would have had one of the lower payments in the league because the on-paper payroll was toward the bottom of the league and players would have divvied up the extra payment by salary (a $5MM player would have taken home 10x more of that extra payment than a $500k player would have).)

 

Apparently the guy didn't read all of the Forbes article he referenced, because the Forbes article used the (more correct) $31MM. OR the guy DID read the Forbes article but decided the $31MM didn't support the premise of his article so he ignored it.

[Hawerchuk]

do you think Las Vegas would get a team? LV has plenty of $$millions$$ to entice a owner to move. God forbid, the Sabres, but what about some other city? I'm not hoping for a team to leave, but if it did....

[MBD]

Professional leagues are conscientiously avoiding LV because of the mob/gambling. I've heard there are teams in the works (MLB I think), but I'll believe it when I see it.

[Hawerchuk]

Maybe Basketball then since its mob/gambling related. Just throw in that garbage, hip-hop thugary and, BINGO, you have your team.

 

The Maloof brothers want a team in Vegas bad. They own the Sacramento Kings, Palms Casino and now the Playboy Club Vegas. They have more money than anybody in this town. And what Georgie wants, Georgie gets.