"The franchise has never made a profit"
 

I'm trying to make heads or tails of this...

I was listening to In the Slot on NHL Radio, with Scott Laughlin, Phil Esposito, and guest by phone Bill Watters.

They were sent off on a tangent, talking about some of the economics of the NHL, when Scott Laughlin said, paraphrased:

The franchise has never made a profit in its 45-year history. He was talking about the St. Louis Blues.

I did Google the Blues "profits", and found some articles that estimated they'd made about $1 million in 05-06, but nothing more. I know from back in the Saloman days and the Ralston Purina days the team was operating at a loss.

I throw this piece of info to discuss, as I feel it's a damning piece of evidence to translate to other markets with similar size and demographic, such as Kansas City.

I always thought the Blues was a mid revenue team. So you mean they literally never turned a profit?

That's what I was led to believe, from the three people on the radio. And that technically wouldn't surprise me.

Yea its true the Blues have never made a profit. But some of the owners, like Bill Laurie, never tried to make a profit and just threw money at the team.

revenue and profit are completely different things.

Profit is nice, but as long as they are making positive cash flow (i.e. ignoring all the non-cash adjustments like depreciation), it is fine for the owners I'm sure.

QFT. The depreciation allowance for pro sports teams is huge and not at all representative of an asset that is diminishing.

Not to mention they own the lease on the stadium. They rent it out to other sporting events and concerts and such which isnt reflected in hockey related revenue. They may not make a profit on hockey alone, but the entire enterprise seems capable of turning a real profit.

Concessions, Arena Management, Parking, other events

You don't make money on Hockey Teams but you do make money on the operation of everything around it, and having an anchor tenant is incredibly useful

http://en.m.wikipedia.org/wiki/Hollywood_accounting

With sufficiently creative accounting, you can make just about any enterprise lose money.

Not surprising. This team only generates $500,000 or so per game in revenue. That was made clear on this board a year or two ago. Even with revenue sharing, parking and concessions this team still probably loses money. Other events at the arena like concerts (non-HRR) and extended playoff appearances by the Blues probably allow the Blues to make a little money.

The fact that the team, the AHL club, and the opera house and who knows what else sold for a whopping $120 million should make it obvious this is a break-even proposition at the best of times.

A while back Doug Maclean said the same thing on hockey central at noon. How the blues have never made money. Neither has the San Jose sharks

Ya, that right there is beyond telling. Not exactly lighting the sky on fire but their turning dollars, and I would assume the Blues themselves breaking even some years, losing a little others, making some with a deep playoff run; the Scottrade, Peabody, Suite Sales, Sponsorships, Broadcast Revenues, the AHL franchise all holding their own. Id still call it a middle of the pack market, and certainly one with deep roots in the game and a more than deserving spot in the league. Interesting city/market..... but Kansas? Dont think so.

The previous owner signed contracts for parking and concessions that paid pretty much all of the money up front so there really is not any money there for the current ownership

Oh really? I wasnt aware of that. Explains much then. That right there is worth a Kings Ransom as its immediate on-going cash flow. Take that away, youve got yourself a bit of a dicey situation, having to crimp & cut corners. Explains a lot. Do you know who those contracts are with and when they expire?

I find it hard to believe that a tightwad like Harry Ornest didn't turn a profit in the 80's.

How about other sports? Football teams probably are profitable, I think basketball has similar situation as hockey.

JOL

I did a quick google search, all I could find was articles saying the contracts are bad but not any details about them

They just sold off future cash flows for a present payment a few years back. Im betting Checketts had a lot of debt at the time, and the Blues took much longer than expected to sell. It is something that was reflected in the final selling price of the team when Checketts sold them.

Ok I found some info...

Parking: the garage is owned by the city the Blues get basically nothing for parking.

Concessions: Originally signed with levy foods for $20 mil over 20 years with $10 mil being paid upfront so that leaves only $10 mil to be spread over the 20 years. I am not sure when the contract was signed but it cannot be more than 7 or 8 years old. The sale price of the team was discounted to account for the upfront money but that does not help much year to year.

The Blues also pay a 5% amusement tax to the city that neither the Cardinals (MLB) or the Rams (NFL) have to pay.

The city owns the Scottrade Center where the Blues play but the Blues owners run the building.