Hockey Related Revenue versus Direct Costs
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09-11-2012, 08:31 PM
Join Date: May 2010
The arena operating costs vary significantly from team to team. I used to know verbatim how the Xcel operating costs worked out with the team, but I never followed through with that after Leipold purchased the team.
One of the reasons why the Swarm had to move out of the X was that after Leipold purchased the Wild, the team lost the "free rent" aspect of operating in the X. The concessions and most of the gate went with the owner and operators of MSE, not the Lacrosse team.
One aspect of why the Goldwater Institute was up in arms about the Glendale sweetheart deal is that the city was basically giving the arena to the new owners. That was deemed unconstitutional, therefore the summer before last sale was nixed. As it stands, the city plans on paying the Jamison group to operate the arena, which is considered separate from any HRR that team may generate.
Travel costs skyrocketed in 2008 when fuel prices were artificially inflated due to rampant speculation. This is similar to what is happening now. It costs plenty to operate a private charter for just a team. I would honestly be curious to see what the cost/price differential would be between "flying commercial" versus the private charter.
However, the players would pitch a fit at that, because commercial flights are nothing but cesspools of germs.
Back to what I know happened in 2008... With the spike in fuel prices, a lot of travel and entertainment companies went out of business and/or had to do massive overhead cuts. I made it through four rounds of cuts at the IT/BI group at CWT before it came down to a "me or you" decision between my boss and I. After fuel prices dropped, half the team was brought back as contractors, but the damage to that sector had already been done. Frankly, when business travelers realized that they could actually do business over video skype, the industry didn't really rebound.
How much of this is public domain, though? Could we request a HRR Report from the Wild so that we could see how much money is spent on travel? how about doing a comparison between the travel Direct Costs of a WC team versus a Boston or a Philly?
Considering that the average ticket price at the X is below the average ticket price at the Wells Fargo Center, Ed Snider is definitely making more profit than Leipold. Snider puts his players on trains. Leipold puts his players on a jet for ANY non-home game.
Hypothetically, if the gate receipts work out about as follows:
18,000 * $90 = 1,620,000 per home game for Leipold.
18,000 * $110 = 1,980,000 per home game for Snider.
If the Wild then spend $300k on travel expenses for the next away game and the Flyers spend $100k, that is a half a million dollar difference just on gross-expense based solely on comparing two teams made up numbers.
My brain is still thinking about somehow trying to work out the math to couple the player portion more closely to gate receipts. The product on the ice should invariably play a role in that portion, in my opinion. That wouldn't cover it all, though, which would lead to a complicated mess of algorithms to determine HRR and the split between buckets.
Anyway. Time for me to go play hockey rather than think about such things.
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