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12-18-2012, 03:25 PM
  #103
bozak911
Ignoring Idiots
 
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Join Date: May 2010
Location: Minnesota
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Quote:
Originally Posted by Jarick View Post
I think the 12 of 30 owners losing money is misleading due to the HRR calculations. Some of the owners are making money off the arenas, parking, or other concession deals.
It isn't as clear cut as you would think...

~60% of Parking during in-arena NHL events is sent to HRR for any "attached structure".

No joke.

The fees that you pay for Science Center Parking or the Smith Ramp don’t go to the club. It goes to a split between St. Paul and the Science Center or all of it to St. Paul. The open air lots are revenue generators for whoever owns them. The one directly west of the X is owned by St. Paul. The one to the north is owned by Travellers. The River Centre is attached.

Any official license deals involving concessions in-arena go into the HRR pie. These include your lovely "Davanni's" kiosks, deals with Pepsi/Coke, etc. These are counted 100% because the likely alternative is that these deals wouldn't be in place for the arena is there was no hockey there. Profits from concessions during in-arena events also go into the HRR pie, outside of "independent vendors".

What that means is that there can be an independent vendor that basically has to wholesale purchase the goods to re-sell from the club. That money is figured into HRR.

When I was writing up that HRR breakdown, I was shocked to see just how much of “in-arena” cash is sent to the HRR pie. The numbers get tricky when the tenancy is split between NBA/NHL.

The only owners that make cash off of their arena deals are the ones that have a stake in said arena. If a concert comes into their owned arena, then yes, they make money there. However… Most wise businesses would set up a separate LLC for the umbrella corporation to manage that. That LLC would then have to pay a smaller arena management fee to use the facility, therefore, attracting concerts and events that would otherwise be too pricey.

In the case of Leipold and the company his wife owns that does most of the food for the X… I am not sure of the ins and outs, but that would be one small way he is making a profit, indirectly, which would not be figured into HRR at all. Edit; Forgot to add that the merchandise agreement that he would have with said company would be a fee that he pays to that company. While that company has to pay a leasing fee to set up in the arena, often, you would see a savvy business guy pay the company more than that of their leasing agreement.

Shell game.

Double edit: excuse the rambling. i wrote most of that a bit groggy and with my eyes closed. reviewed for spelling, not grammar.

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