NHL Free Agent Frenzy 2013 - Melnyk's Budget Edition

1) The NHL is mostly gate driven, there is no huge TV deal.  Teams get most of their money thru ticket sales. If the Sens need to increase revenues they need to increase prices or make the playoffs, but playoffs are no guarantee.
2) Revenue sharing was a big point during lockout negotiations and it should be much better now as it was a joke before.
3) Yes they do lie, especially when they are trying to get what they want from the city.  However Forbes numbers are still just estimates, they have no way of knowing the finances of NHL teams, they are not publicly disclosed.

We will see what happens.  Melnyk has said the team does not need to make the playoffs at the current levels of spending as of one year ago in order to profit.  Who knows how much they lost during the lockout though.

He did say we're not spending more anytime soon, so this budget thing is probably permanent for the near future at least.

Hoags wrote:1) The NHL is mostly gate driven, there is no huge TV deal.  Teams get most of their money thru ticket sales.  If the Sens need to increase revenues they need to increase prices or make the playoffs, but playoffs are no guarantee.
2) Revenue sharing was a big point during lockout negotiations and it should be much better now as it was a joke before.
3) Yes they do lie, especially when they are trying to get what they want from the city.  However Forbes numbers are still just estimates, they have no way of knowing the finances of NHL teams, they are not publicly disclosed.

We will see what happens.  Melnyk has said the team does not need to make the playoffs at the current levels of spending as of one year ago in order to profit.  Who knows how much they lost during the lockout though.

He did say we're not spending more anytime soon, so this budget thing is probably permanent for the near future at least.

Whenever I spend $100 on some Metro Family night tickets, I end up spending another $12 in parking. That jersey I bought was $130. Concessions at the arena, not exactly cheap. And NBC is paying them $200M a year, which does not include revenues from local TV stations. Then there's radio, internet (streaming), NHL network, licensing from EA Sports and others, and lots and lots of advertising.

I don't know what the breakdown is, but "gate driven revenue" is probably not what most of us think.

wprager wrote:
Whenever I spend $100 on some Metro Family night tickets, I end up spending another $12 in parking.  That jersey I bought was $130.  Concessions at the arena, not exactly cheap.  And NBC is paying them $200M a year, which does not include revenues from local TV stations.  Then there's radio, internet (streaming), NHL network, licensing from EA Sports and others, and lots and lots of advertising.

I don't know what the breakdown is, but "gate driven revenue" is probably not what most of us think.

I mean that ticket sales are the biggest source of income to the team, the rest is peanuts in comparison.  They probably make $40-50M in ticket sales per season.
NBC pays the NHL $200M/year, divide that value among 30 teams you get about $6M per team per year.  In comparison the NFL gets billions per year from TV networks, the amount of money each team gets with revenue sharing is massive.  That's why some tiny NFL markets can keep up with the big teams. I don't know how much they get from the Canadian TV networks, that contract is up for renewal soon(this or next year).
The team is probably fine at the current level of spending.  The question is where are they supposed to get additional money to spend to the cap when they need to resign players?
Can or will Melnyk spend more and gamble that the team makes the playoffs, goes deep and makes up the shortfall? Will additional partners emerge? Will he sell the team? Will the city give him that casino?

Lots of questions but no answers.

This is turning into Bettman's Budget Edition

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Hoags wrote:

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Your wife.

Ev wrote:

Hoags wrote:

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Your wife.

Dung, sorry she didn't tell

Ev wrote:

Hoags wrote:

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Your wife.

Heh wrong ethnicity.

Hoags wrote:

Ev wrote:

Hoags wrote:

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Your wife.

Heh wrong ethnicity.

Your daughter

Hoags wrote:

Ev wrote:

Hoags wrote:

LeKing wrote:This is turning into Bettman's Budget Edition

Damn who's that in your avatar?  

Your wife.

Heh wrong ethnicity.

Huh, this just got interesting IMO. May I ask...wrong gender too?

Let's get this discussion back to the off-topic topic.

I spend $100 on my 4 tickets, then pay $12 for parking. Then I spend $20 on food/drinks, of which $10 is net income (being very generous here). I've bought 3 jerseys over 15 or so years, and probably pay for tickets twice a year -- so $130 / 5 / 2 is $13 bucks. Add some other crap (teeshirts, hats, etc.) and that's probably $20, of which at least $5 must be licensing fees that go to the NHL. So all of a sudden my $100 "gate receipt" is actually $127 -- and that does not include TV contract, radio, internet, advertising revenues.

Sens had revenues of $113M in 2012, when they sold out (19,350) 41 home dates at an average ticket price of $58. Gate receipts were roughly (19,350 * 41 * $58), so $46M. They had 3 home playoff dates, so add another $6M? So gate receipts were $52, which is less than half of the total revenue.

Speaking of budget, here's the way the Senators intend to do business from now on, straight from the Gene:

"We're trying to compensate that lack of capital by changing the way we conduct our hockey operations, that is, develop young players," Melnyk said. "We now have the youngest hockey team in the NHL and we try to be competitive that way. Everybody likes an underdog and I guess that's what we're going to be."

The front office has been consulting a thesaurus to find as many synonyms for "pesky" to use in the coming years.

wprager wrote:
Sens had revenues of $113M in 2012, when they sold out (19,350) 41 home dates at an average ticket price of $58.  Gate receipts were roughly (19,350 * 41 * $58), so $46M.  They had 3 home playoff dates, so add another $6M?    So gate receipts were $52, which is less than half of the total revenue.

Gate receipts are the single biggest revenue generator. The team lives and dies by them. If ticket sales collapse, so does the team. Everything else is peanuts in comparison.

SeawaySensFan wrote:Speaking of budget, here's the way the Senators intend to do business from now on, straight from the Gene:

"We're trying to compensate that lack of capital by changing the way we conduct our hockey operations, that is, develop young players," Melnyk said. "We now have the youngest hockey team in the NHL and we try to be competitive that way. Everybody likes an underdog and I guess that's what we're going to be."

The front office has been consulting a thesaurus to find as many synonyms for "pesky" to use in the coming years.

Now those are some nice and reassuring words right there

wprager wrote:Let's get this discussion back to the off-topic topic.

I spend $100 on my 4 tickets, then pay $12 for parking.  Then I spend $20 on food/drinks, of which $10 is net income (being very generous here).  I've bought 3 jerseys over 15 or so years, and probably pay for tickets twice a year -- so $130 / 5 / 2 is $13 bucks.  Add some other crap (teeshirts, hats, etc.) and that's probably $20, of which at least $5 must be licensing fees that go to the NHL.  So all of a sudden my $100 "gate receipt" is actually $127 -- and that does not include TV contract, radio, internet, advertising revenues.

Sens had revenues of $113M in 2012, when they sold out (19,350) 41 home dates at an average ticket price of $58.  Gate receipts were roughly (19,350 * 41 * $58), so $46M.  They had 3 home playoff dates, so add another $6M?    So gate receipts were $52, which is less than half of the total revenue.

First off, playoff gates are not all gravy, 35% goes to revenue sharing regardless of team. Second, the 14.5M operating income is prior to taxes, depreciation and interest. The big one is interest, since the Gene has obviously refinanced the team, the team debt is about 130M according to the Forbes report, so between interest and taxes I can see how he loses money. Having said that he also makes other revenue through the building and capital tickets so overall I would estimate he does not lose money on these holdings.

Hoags wrote:

wprager wrote:
Sens had revenues of $113M in 2012, when they sold out (19,350) 41 home dates at an average ticket price of $58.  Gate receipts were roughly (19,350 * 41 * $58), so $46M.  They had 3 home playoff dates, so add another $6M?    So gate receipts were $52, which is less than half of the total revenue.

Gate receipts are the single biggest revenue generator.  The team lives and dies by them.  If ticket sales collapse, so does the team.  Everything else is peanuts in comparison.

SeawaySensFan wrote:Speaking of budget, here's the way the Senators intend to do business from now on, straight from the Gene:

"We're trying to compensate that lack of capital by changing the way we conduct our hockey operations, that is, develop young players," Melnyk said. "We now have the youngest hockey team in the NHL and we try to be competitive that way. Everybody likes an underdog and I guess that's what we're going to be."

The front office has been consulting a thesaurus to find as many synonyms for "pesky" to use in the coming years.

Now those are some nice and reassuring words right there

Words and deeds, old friend. Notice how Borowieckis 1-way kicks in when young Philly's contract expires?

Oglethorpe wrote:

wprager wrote:Let's get this discussion back to the off-topic topic.

I spend $100 on my 4 tickets, then pay $12 for parking.  Then I spend $20 on food/drinks, of which $10 is net income (being very generous here).  I've bought 3 jerseys over 15 or so years, and probably pay for tickets twice a year -- so $130 / 5 / 2 is $13 bucks.  Add some other crap (teeshirts, hats, etc.) and that's probably $20, of which at least $5 must be licensing fees that go to the NHL.  So all of a sudden my $100 "gate receipt" is actually $127 -- and that does not include TV contract, radio, internet, advertising revenues.

Sens had revenues of $113M in 2012, when they sold out (19,350) 41 home dates at an average ticket price of $58.  Gate receipts were roughly (19,350 * 41 * $58), so $46M.  They had 3 home playoff dates, so add another $6M?    So gate receipts were $52, which is less than half of the total revenue.

First off, playoff gates are not all gravy, 35% goes to revenue sharing regardless of team.   Second, the 14.5M operating income is prior to taxes, depreciation and interest. The big one is interest, since the Gene has obviously refinanced the team, the team debt is about 130M according to the Forbes report, so between interest and taxes I can see how he loses money.  Having said that he also makes other revenue through the building and capital tickets so overall I would estimate he does not lose money on these holdings.

Sens are *not* a money losing team. A year ago he said that they don't even have to make the playoffs to break even. Remember what I was saying when Leeder took over for Mlakar. Mlakar was not a CPA; Leeder is. He showed Melnyk how he could field a team that's not necessarily going to win the President's Trophy, and may even miss the playoffs now and again, yet remain cash-positive.

As pretty much all things, this is cyclical. Melnyk's fortunes will either rebound or he'll be forced to sell to someone else (to pay off his debts, if it comes to that). Sooner or later the Sens will be able to spend again.

wprager wrote:
Sens are *not* a money losing team.  A year ago he said that they don't even have to make the playoffs to break even.  Remember what I was saying when Leeder took over for Mlakar.  Mlakar was not a CPA; Leeder is.  He showed Melnyk how he could field a team that's not necessarily going to win the President's Trophy, and may even miss the playoffs now and again, yet remain cash-positive.

As pretty much all things, this is cyclical.  Melnyk's fortunes will either rebound or he'll be forced to sell to someone else (to pay off his debts, if it comes to that).  Sooner or later the Sens will be able to spend again.

So basically what you're saying is this team will be run like the Panthers, Islanders and Predators etc.

Hoags wrote:

wprager wrote:
Sens are *not* a money losing team.  A year ago he said that they don't even have to make the playoffs to break even.  Remember what I was saying when Leeder took over for Mlakar.  Mlakar was not a CPA; Leeder is.  He showed Melnyk how he could field a team that's not necessarily going to win the President's Trophy, and may even miss the playoffs now and again, yet remain cash-positive.

As pretty much all things, this is cyclical.  Melnyk's fortunes will either rebound or he'll be forced to sell to someone else (to pay off his debts, if it comes to that).  Sooner or later the Sens will be able to spend again.

So basically what you're saying is this team will be run like the Panthers, Islanders and Predators etc.

There are two sides -- the financial and the hockey side. The hockey side is solid. We'll be fine.