Phoenix LXXII: Send in the Clowns
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02-19-2013, 12:16 PM
Join Date: Nov 2009
Location: Bay Area, CA
Originally Posted by
Attendance is a mystery for me as I do believe there are enough NHL fans in the Valley to support the team, but the proof is in the pudding and to date, that belief of mine is groundless. It would have been interesting to see, had the NHL given an ultimatium of say 12k STH's or an average attendance of over 16k, if the market would have responded. Instead, we just limped along (well the market that is - the team did its job by winning).
I was also intrigued by what could have been done. Quite a while ago, someone had posted a question similar to "what would it take for the Coyotes to be successful in Glendale?" And while ultimately I arrived at the same conclusion the rest of the investing world seems to have found, the closest I could come was:
- Reduce the venue capacity for Coyotes games to approx 10,000
- Tarp off the upper level with the exception of 3,000 seats at center ice
- Increase the retail price of upper level tickets from $40 to $55*
- Persist the retail price of lower level at $75/$115/$215*
- Seat split: 3000 @ $55; 4000 @ $75; 1500 @ $115; 1500 @ $215
- Avg Ticket Price would be approx $96
- Eliminate all admission price reductions, give aways, and discounts
The Coyotes brand has been significantly harmed, I think the shortest path to reviving the brand would have been creating demand. Instead of devoting time and effort to trying to fill 17,000, why not concede that the draw is 10,000 and focus on premium customers. I understand that displacing the "blue collar fan" would have poor optics but, at this point, what have the NHL/Coyotes done that has good optics? You might even be able to market the fans you are displacing under the guise of "this is in the best interest of saving the team". Perhaps cross promote it as "Fox and Coyote" or something to drive viewership on the regional sports network for those who no longer could afford the ticket prices.
Once the higher price point is established, the opportunity to sponsor premium seating areas would likely be more lucrative, allowing for additional revenue opportunities. Eliminating all admission discounts would protect the integrity of the premium price. The thought behind this is that without a core of premium customers, this business isn't going to fly anyway. So why not just put it in the lap of the market. If it were demonstrated that the market would consume the product at that price point, then the probability of investor interest would likely increase dramatically.
But the idea derails pretty quickly (if it wasn't already an absurd idea to begin with). The inventory for premium sports entertainment products is insane in the market. It's not just the competing interest of the NBA/NFL either. It's the Phoenix Open devouring sponsors and premium products, auto racing, etc. I was also quite surprised to see that majority of the Spring Training venues are essentially brand new -and- they all include premium/sponsor seating products; several even have suite offerings.
In the end, I ended up right where I was before: the market is over saturated and not viable for the NHL business model. There is no magic bullet to fix it. A potential owner could slog along, perhaps even coming close to a profit on occasion; provided Glendale was providing a large scale subsidy. But who would be willing to put up $100MM or so for that opportunity? So far, the answer is no one.
* all seat numbers and dollar figures approximate. There is no accounting for Club Seats, which I believe are SRP $85.
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