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Panther's arena had net income of ~$90mm from 1998-2008

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12-10-2012, 01:05 AM
  #1
LadyStanley
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Panther's arena had net income of ~$90mm from 1998-2008

http://www.bostonherald.com/sports/h...nHerald.com%29

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The Panthers show a loss year after year. But are they really hemorrhaging red ink?
...
What is open to public scrutiny is the performance of the BB&T Center, which the SSE has run since 1998 through the sort of sweet deal that sports franchises tend to wrangle from government entities.

The ebb and flow of arena finances during the first 10 years, through 2008, are available for anyone to view on the county website in the auditorís report published in 2010 (Broward.org; search under auditorís reports).

During the initial decade, the Arena Operating Company turned a profit every year, generating a total net income of $89.9 million. The AOC is the sister of the Panthers, both under the SSE.

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12-10-2012, 01:11 AM
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Krishna
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I don't understand the point of this.

They are seperate entities owned by the same people. The panthers lost money. The arena made money. The arena's money shouldn't matter if it's not part of the HRR.

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12-10-2012, 01:13 AM
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Originally Posted by Krishna View Post
I don't understand the point of this.

They are seperate entities owned by the same people. The panthers lost money. The arena made money. The arena's money shouldn't matter if it's not part of the HRR.

Actually arena ownership or management rights, leases, etc. are very critical to a team's operations. For an arena operation, the ability to have an anchor tenant seems vital. One can argue the merit of that statement by comparing the operations of several NHL teams.

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12-10-2012, 01:20 AM
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Is there a list of franchises whose ownership also receives non-NHL revenue from arena events? I am seeing more and more NHL sustainability coming from subsidizing NHL losses with non-NHL revenue.

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12-10-2012, 01:41 AM
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Originally Posted by smackdaddy View Post
Is there a list of franchises whose ownership also receives non-NHL revenue from arena events? I am seeing more and more NHL sustainability coming from subsidizing NHL losses with non-NHL revenue.
That is still not a healthy model. NHL hockey should be able to function and profit on it's own.

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12-10-2012, 01:43 AM
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Originally Posted by smackdaddy View Post
Is there a list of franchises whose ownership also receives non-NHL revenue from arena events? I am seeing more and more NHL sustainability coming from subsidizing NHL losses with non-NHL revenue.
Most do.

Excluding Islanders (current home/lease), Columbus, Oilers, and a few others (off the top of my head), most teams (or parent corporations) control the lease on the arena.

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12-10-2012, 01:44 AM
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Originally Posted by LadyStanley View Post
Most do.

Excluding Islanders (current home/lease), Columbus, Oilers, and a few others (off the top of my head), most teams (or parent corporations) control the lease on the arena.

Or share with an NBA team-- Dallas and Chicago. LA, Toronto and NYR have owners who have an NHL and NBA team, plus control or own the arenas.

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12-10-2012, 01:53 AM
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Is that income earned after debt payments?

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12-10-2012, 02:10 AM
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Originally Posted by LadyStanley View Post
Pretty sure this was the same report as discussed earlier.

A few things - first, they only managed to make this much because they have one hell of a sweat-heart deal.

Second, the amount the arena made in profits was funneled back into Panthers. However, that may have been some accounting trickery, since by doing this, they reported no net profit, which resulted in not having to pay the county any kind of profit-sharing.

Bottom line is that maybe the Parent company is doing alright, and maybe a key to this is having the Panthers as a tenant. Nevertheless, the part where it breaks down is having to rely on a sweet-heart municipal deal.

I don't see how this could be considered a sustainable business model. Hockey + other events should be profitable to allow for private financing of arenas.

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12-10-2012, 02:29 AM
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Originally Posted by LadyStanley View Post
Most do.

Excluding Islanders (current home/lease), Columbus, Oilers, and a few others (off the top of my head), most teams (or parent corporations) control the lease on the arena.
?

Islanders owner currently receives non NHL revenue from arena events due to recent revised lease a few years ago. Problem is, they have few arena events on LI.

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12-10-2012, 03:02 AM
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Quote:
Originally Posted by Krishna View Post
I don't understand the point of this.

They are seperate entities owned by the same people. The panthers lost money. The arena made money. The arena's money shouldn't matter if it's not part of the HRR.
It is a difficult predicament and I don't think there is one right answer. Yes, the two are separate entities and it shouldn't matter if the arena is making money if the team is losing it. On the other hand though, if South Florida never got an NHL expansion franchise, does the arena get built at all?

This is not Kansas City, where an arena was built to serve as a primary concert venue in the region. The arena in Sunrise was built with the intention that the Panthers serve as the anchor tenant. The lease reinforces that by tying the team to the arena management deal. Without the Panthers, in other words, there would be no profit to be had from the arena.

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12-10-2012, 05:14 AM
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Quote:
Originally Posted by Fugu View Post
Actually arena ownership or management rights, leases, etc. are very critical to a team's operations. For an arena operation, the ability to have an anchor tenant seems vital. One can argue the merit of that statement by comparing the operations of several NHL teams.
I lived in that area for a little while and it should be pointed out a couple things on this story. This arena generally places in the top 10 in terms of concert venues in the entire United States. So it is a very productive arena. But they do love having the Panthers as their major tenant. It is part of the reason it is boarderline laughable when people think the Panthers could be moved. Even while losing money the city has hinted that they would pursue legal avenues if they ever did try and move them.

Now here would be a big difference. I went to a couple concerts not really my thing I am not huge music guy at least not enough to care to spend that kind of coin. But I can say the two concerts I did go to, cost more than the 10 or so times I actually went to a Panthers combined. You see the Red Hot Chili Peppers or name a decent branded act, charge astronomically higher numbers than the Panthers do. So it is very possible for this venue to get major money and have the Panthers making less with their dates.

Now sure some accounting is probably going on, but turn on the tv and watch their games. It would make sense if they aren't making hand over fist there and that they do in fact keep these two areas seperate because otherwise it would provide a false read. Now I am sure they like the major tenant and I am guessing the Panthers group likes making the money off the arena. That doesn't mean they aren't allowed to show exactly (or publish what they wish to be) what the Panthers are making.

All I can say is two things about this article.

1.) Everyone should pay attention to what this building does do, it is why the next model thrown out that says move Florida to X is utterly ridiculous.

2.) Having a building that is suitable for concerts is really good for business. Now you know why Katz and Ilitch are pushing really hard for theirs.

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12-10-2012, 06:28 AM
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Originally Posted by Ernie View Post
Is that income earned after debt payments?
Interesting, since Rogers / Bell just paid 1.6 billion for MLSE and haven't played a game yet. The debt payments must be huge and with no income coming in. MLSE should probably collect rev sharing until they payoff their loan. They'll be in the red for quite sometime.

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12-10-2012, 06:29 AM
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Originally Posted by smackdaddy View Post
Is there a list of franchises whose ownership also receives non-NHL revenue from arena events? I am seeing more and more NHL sustainability coming from subsidizing NHL losses with non-NHL revenue.
Take a look at the appendix of this document. It will give you some detailed info.

http://www.glendaleaz.com/documents/...ilarArenas.pdf

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12-10-2012, 07:51 AM
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Originally Posted by PerformanceOil View Post
A few things - first, they only managed to make this much because they have one hell of a sweat-heart deal.

Second, the amount the arena made in profits was funneled back into Panthers. However, that may have been some accounting trickery, since by doing this, they reported no net profit, which resulted in not having to pay the county any kind of profit-sharing.
There was no "accounting trickery". There was no profit-sharing because the agreement says SSE can keep the first 14 million (/year) in profits before they have to share anything (they would share 20% of the excess). That happened only once, see link below.

Here is the actual (2010) Broward County audit report for the arena if anybody's interested, especially see the table on page 4:

http://www.broward.org/Auditor/Docum...inal052510.pdf

I agree with your conclusion that there's hardly any proof that this is a sustainable business model.

Quote:
Originally Posted by Krishna
I don't understand the point of this.

They are seperate entities owned by the same people. The panthers lost money. The arena made money. The arena's money shouldn't matter if it's not part of the HRR.
The point is that SSE's arena management deal is contingent on having the Panthers as a tenant. Therefore from SSE's point of view, the Panthers are a necessary loss leader for the arena cash cow to exist. The Panthers' numbers aren't public so nobody knows whether SSE still makes money after absorbing the Panthers' losses.

Quote:
Originally Posted by Ernie
Is that income earned after debt payments?
No. SSE is the arena manager, Broward County owns it. In the report linked above, it is said that annual debt service on the arena is $14.5 million per year. Broward received about $4.25 million per year from SSE so they still had to finance about $10 million through other means. Had all operating profits gone toward debt service, the arena would have lost a bit of money (almost break even):

Operating profits $133 million
Debt service $145 million
= Net loss $12 million

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12-10-2012, 08:32 AM
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I wonder how much of it is part of the lure Bettman try on guys to become NHL owners: the states and cities build you arenas and you get to be the one that get most of the profit even if there's no hockey!

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12-10-2012, 09:58 AM
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Originally Posted by Krishna View Post
I don't understand the point of this.

They are seperate entities owned by the same people. The panthers lost money. The arena made money. The arena's money shouldn't matter if it's not part of the HRR.
They're not exactly 'separate entities'. They're one large company. Not two companies owned by the same guy. SSE is Sunrise Sports & Entertainment.

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12-10-2012, 10:25 AM
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Originally Posted by Dr Beinfest View Post
They're not exactly 'separate entities'. They're one large company. Not two companies owned by the same guy. SSE is Sunrise Sports & Entertainment.
They're two separate entities (AOC and the Panthers), owned by a third entity (SSE).

The publicly available operating figures are only for AOC.

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12-10-2012, 10:35 AM
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Originally Posted by Stix and Stones View Post
Interesting, since Rogers / Bell just paid 1.6 billion for MLSE and haven't played a game yet. The debt payments must be huge and with no income coming in. MLSE should probably collect rev sharing until they payoff their loan. They'll be in the red for quite sometime.
Knowing that this isn't a serious comment, I'll answer regardless. MLSE is more than just the Leafs. They're making money off of the Marlies, Raptors, ACC and whatever else they own.

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12-10-2012, 11:18 AM
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What is the point of that? Do some people think just because the arena does well, that it means the NHL franchise is healthy? That is not how it works. The NHL Florida panthers should be making money on their own.

I own a large commercial complex amd have a restaurant in it. I rent out the empty spaces and make good money that way. My restaurant doesn't even break even. That is not a good business I am in.

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12-10-2012, 11:23 AM
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Originally Posted by LadyStanley View Post
Most do.

Excluding Islanders (current home/lease), Columbus, Oilers, and a few others (off the top of my head), most teams (or parent corporations) control the lease on the arena.
St Louis... I think they are in the worse shape and their bottom line looks like **** in large part because of this issue.

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12-10-2012, 11:42 AM
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it's interestin that they make money overall, and that is why the team won't move. but irrelevant in terms of the new CBA, if that's the point of mentioning it. Unless the players want to start counting all their other income as HRR (I'm thinking of all the radio ads I heard last year... and Sidney's Tim Hortons TV spots), the other revenue has no bearing.

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12-10-2012, 12:09 PM
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Quote:
Originally Posted by BlueChip01 View Post
What is the point of that? Do some people think just because the arena does well, that it means the NHL franchise is healthy? That is not how it works. The NHL Florida panthers should be making money on their own.

I own a large commercial complex amd have a restaurant in it. I rent ours the empty spaces and make good money that way. My restaurant doesn't even break even. That is not a good business I am in.
Yeah well that restaurant isnt your anchor business that drives and legitimizes your entire complex, does it? So to trvialize the role the panthers play by wrongly comparing it to a restaurant is absurd.

Without tye panthers, that arena losses money. Can the same be said for the failing restaurant?

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12-10-2012, 12:11 PM
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As I've said many times before whenever the discussion on possible relocation comes up and the Panthers are invariably raised, they may be losing money by themselves, but are part of an overall strategy that is making them money in local development plans and in the arena management.

Obviously, the ownership would prefer that the Panthers were in the black as well, but they'll gladly accept a team that's in the red if in return it helps them have a lot more black ink elsewhere. They're a loss leader.

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12-10-2012, 12:14 PM
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Quote:
Originally Posted by BlueChip01 View Post
What is the point of that? Do some people think just because the arena does well, that it means the NHL franchise is healthy? That is not how it works. The NHL Florida panthers should be making money on their own.

I own a large commercial complex amd have a restaurant in it. I rent out the empty spaces and make good money that way. My restaurant doesn't even break even. That is not a good business I am in.
You aren't forced to own the restaurant (Panthers) to make money on the rest of the complex (arena) though. You could sell the restaurant to another owner, or just empty it out and rent it and still make money off all the rentals. The Panthers, or any other team in the same situation, don't get that deal. Arena rights are contingent upon team ownership.

As for the team itself should have to make money, who says so? Not the cities they are located in, not the league. I'm sure they would enjoy making a profit just on the team, but it's not strictly necessary.

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