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Why the Blackhawks are losing (money)

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Old
06-15-2013, 04:13 PM
  #1
cbcwpg
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Why the Blackhawks are losing (money)

http://www.chicagobusiness.com/artic...e-losing-money

Despite making a second Stanley Cup Final appearance in four seasons and obliterating television ratings records, the Chicago Blackhawks will need at least two more years before turning a profit, owner Rocky Wirtz says.

Even with higher ticket and sponsorship revenues this season, Crain's estimates the Blackhawks annually spend between $10 million and $20 million more than they take in

The team generates $20 million to $25 million annually from sponsorships, television rights fees, including those from Comcast SportsNet Chicago (of which Mr. Wirtz is a part owner) and assorted income such as merchandise sales. That doesn't cover a third of the $68 million cost of player salaries. The Blackhawks spend nearly $20 million on staff, coaches and payments to subsidize the league's 10 lowest revenue-generating franchises as required under the NHL's newly minted collective bargaining agreement. Thus the reliance on ticket revenue.

Before the Stanley Cup playoffs began, the team said it would raise prices on next year's season tickets, which account for about 75 percent of all tickets sold, by an average of 16 percent, translating to an overall average ticket price of more than $70.


If a team like the Hawks can't make a profit, what hope is there for the bottom teams?

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06-15-2013, 04:21 PM
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MarkhamNHL
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Wirtz has only himself to blame... he is supporting keeping teams in idiotic places where the game can't be supported at the NHL level, so I don't feel sorry for him. Only the NHL can turn millions into red ink...

keep up the good work and soon we'll be back to 6 teams as no one else can afford to float Phoenix and their ilk anymore...

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06-15-2013, 04:21 PM
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Quote:
Originally Posted by cbcwpg View Post
http://www.chicagobusiness.com/artic...e-losing-money

Despite making a second Stanley Cup Final appearance in four seasons and obliterating television ratings records, the Chicago Blackhawks will need at least two more years before turning a profit, owner Rocky Wirtz says.

Even with higher ticket and sponsorship revenues this season, Crain's estimates the Blackhawks annually spend between $10 million and $20 million more than they take in

The team generates $20 million to $25 million annually from sponsorships, television rights fees, including those from Comcast SportsNet Chicago (of which Mr. Wirtz is a part owner) and assorted income such as merchandise sales. That doesn't cover a third of the $68 million cost of player salaries. The Blackhawks spend nearly $20 million on staff, coaches and payments to subsidize the league's 10 lowest revenue-generating franchises as required under the NHL's newly minted collective bargaining agreement. Thus the reliance on ticket revenue.

Before the Stanley Cup playoffs began, the team said it would raise prices on next year's season tickets, which account for about 75 percent of all tickets sold, by an average of 16 percent, translating to an overall average ticket price of more than $70.


If a team like the Hawks can't make a profit, what hope is there for the bottom teams?
Decent hope, actually. If they spend to the salary floor, for starters, rather than the ceiling, then have a great season and some sort of playoff run, and have revenue sent their way from teams like the Blackhawks, then there's no reason why bottom-feeder teams can't turn a profit...unless you're the Phoenix Coyotes, of course.

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06-15-2013, 04:22 PM
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i call ********.

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06-15-2013, 04:30 PM
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Quote:
Originally Posted by danishh View Post
i call ********.
So, I'm not the only one, who thinks $20m-$25m annually from sponsorships, television rights fees and merchandise sounds very low for such a popular team?

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06-15-2013, 04:31 PM
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Quote:
Originally Posted by danishh View Post
i call ********.
you should.


...and the reason the team isn't losing money (or, at least, it's misleading to say they're losing money) is set out in the article

Quote:
The team's losses are covered easily by his other highly successful interests, including Wirtz Beverage Co., which last year had nearly $2 billion in sales and distributes to the United Center, where his Blackhawks are a tenant.
He has some similar arrangement set up with other stuff, too...I think parking and some of the concessions - where they're owned by and their profits are captured in other companies Wirtz owns. If you have time to google things, there's an article out there which details the other $ Wirtz makes though other companies but are really Blackhawks-related. i'll see if i can dig it up.

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06-15-2013, 05:03 PM
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what threw me is the : nearly $20M in staff, coaches, and revenue sharing.

staff+coaches shouldnt cost more than 5M-8M (lets say 3-4M for the coach and GM)

that means the hawks are giving significant amounts of revenue sharing money, which means their HRR is considerably higher than this article leads us to believe.

My suspicion is that HRR like parking for games, concessions, arena naming rights (50% with bulls), luxury boxes (50% with bulls), etc are being considered in this article as "United Center" revenues, which for accounting purposes may make sense, but the NHL really treats them as HRR internally.

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06-15-2013, 05:14 PM
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Quote:
Originally Posted by MarkhamNHL View Post
Wirtz has only himself to blame... he is supporting keeping teams in idiotic places where the game can't be supported at the NHL level, so I don't feel sorry for him. Only the NHL can turn millions into red ink...

keep up the good work and soon we'll be back to 6 teams as no one else can afford to float Phoenix and their ilk anymore...
Maybe the fact that they were one of the places where a team was located that didn't support them for like 10-15 years and they accrued mountains of debt which needs to be paid back. Funny how people forget 7 years ago they had horrible attendance which if not for the northern location of the city would have had people screaming relocation/contraction.

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06-15-2013, 05:27 PM
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Quote:
Originally Posted by danishh View Post
what threw me is the : nearly $20M in staff, coaches, and revenue sharing.

staff+coaches shouldnt cost more than 5M-8M (lets say 3-4M for the coach and GM)
Are the AHL farm team staff costs included or separate?

Head Coaches salaries seem to be in the range of $1m-3m
Associates probably 3/4s to 1/2 ($500k-$1.75m)
Assistants probably 1/3rd to 1/2 ($350k-$1.5m)

And how many NHL coaches on the team (HC, defense, offense, special teams, goalie, skating, video)? I can easily see $10m just for half a dozen coaches.

Equipment manager, assistants. Trainer, masseuses. (Not to mention the additional part time/game day staff.)

GM, staff. Scouts. (Do they include the travel costs for scouting department in that $$?)

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06-15-2013, 05:36 PM
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Ernie
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If history has told us anything, you should never, ever, ever trust a sports franchise's self reported earnings.

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06-15-2013, 05:54 PM
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It's all a load of crap. Just creative accounting, nothing more.

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06-15-2013, 06:25 PM
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Someone should really pin him down on this. He is still probably using the loans the Hawks got from Wirtz Inc in the 2000s in his Calculations.

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06-15-2013, 06:27 PM
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Quote:
Originally Posted by danishh View Post
what threw me is the : nearly $20M in staff, coaches, and revenue sharing.

staff+coaches shouldnt cost more than 5M-8M (lets say 3-4M for the coach and GM)

that means the hawks are giving significant amounts of revenue sharing money, which means their HRR is considerably higher than this article leads us to believe.

My suspicion is that HRR like parking for games, concessions, arena naming rights (50% with bulls), luxury boxes (50% with bulls), etc are being considered in this article as "United Center" revenues, which for accounting purposes may make sense, but the NHL really treats them as HRR internally.
Could be they're just counting the % of playoff ticket sales that go towards revenue sharing.

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06-15-2013, 06:31 PM
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Quote:
Originally Posted by IU Hawks fan View Post
It's all a load of crap. Just creative accounting, nothing more.
Yup.

They co-own the barn. The revenues from that, along with other parts of the business, will mean the overall venture is turning a profit.

Not as blatant as the Panthers, but same overall strategy - paper loss on the team is still a winner in the pocket.

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06-15-2013, 06:36 PM
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I wouldn't be surprised if there are big loans from Wirtz Corp sitting on the books and the Hawks are making interest payments back to the company (that they're also writing off).

Also, keep in mind that Wirtz co-owns the UC ... and I 'm sure the Hawks are paying a healthy amount of rent back to the venture.

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06-15-2013, 07:07 PM
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I can't believe I'm the first guy to mention that he owns part of the TV network. That's a classic place to hide money - report artificially low rights fees while hiding that you're making a killing on TV.

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06-15-2013, 07:10 PM
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Sheesh... Wish this guy would stop crying poor with this nonsense accounting already.

Under no realistic definition of HRR, i.e. game day tickets and sales (including concessions), merchandising, and TV, are the Hawks actually in the red. Just a joke that this lie repeatedly gets perpetuated, from Wirtz and other owners.

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06-15-2013, 08:06 PM
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Hawks to Seattle !

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06-15-2013, 08:16 PM
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So they're raising ticket prices 16% and the team is claiming to be in financial difficulty. Now if only I could find a link between the two, some kind of connection where one would explain, or somehow attempt to justify the other.... what could it be? That's a tough one.

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06-15-2013, 08:21 PM
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This too funny. The way I see it is that if the Blackhawks were really losing money. They would not pay into revenue sharing.
The article quoted said they were.

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06-15-2013, 08:27 PM
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I'm thinking a lot of teams will lose money this season. Bonus monies will still be paid to the players without revenues from lost games. I also love the wording that they "subsidize" other teams. All pro sports have some form of revenue sharing but only in hockey does the media and fans whine constantly about it existing. It's existed in the NFL since the 70's and that helped kick start the incredible growth because of it.


Last edited by Gnashville: 06-15-2013 at 08:32 PM.
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06-15-2013, 08:28 PM
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Quote:
Originally Posted by danishh View Post
i call ********.
yep--Hawks own part of the arena and I believe Wirtz is not factoring this into the day to day revenues when talking about money

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06-15-2013, 08:51 PM
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Hmmm if they are really losing money, which he really isn't, why would they be putting money into the revenue sharing, which he says he is, which means they are one of the profitable teams doesn't it?

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06-15-2013, 08:53 PM
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Quote:
Originally Posted by UsernameWasTaken View Post
I wouldn't be surprised if there are big loans from Wirtz Corp sitting on the books and the Hawks are making interest payments back to the company (that they're also writing off).

Also, keep in mind that Wirtz co-owns the UC ... and I 'm sure the Hawks are paying a healthy amount of rent back to the venture.
http://www.nytimes.com/2010/06/02/sp...irtz.html?_r=0

Wirtz became team chairman soon after his father died and learned firsthand how bad the franchise’s finances were.

He had to use $40 million in family business money to finance players’ salaries through the 2006-7 season. Fans had been abandoning the team for years; attendance was lingering close to the bottom of the league.

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06-15-2013, 08:59 PM
  #25
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Got my laugh for the day.


Quote:
Originally Posted by cbcwpg View Post
http://www.chicagobusiness.com/artic...e-losing-money



The team generates $20 million to $25 million annually from sponsorships, television rights fees, including those from Comcast SportsNet Chicago (of which Mr. Wirtz is a part owner) and assorted income such as merchandise sales. That doesn't cover a third of the $68 million cost of player salaries. The Blackhawks spend nearly $20 million on staff, coaches and payments to subsidize the league's 10 lowest revenue-generating franchises as required under the NHL's newly minted collective bargaining agreement. Thus the reliance on ticket revenue.


If you assume Chicago makes a paltry $1 MM/game on gate, that's $45 MM + $25 MM (before playoff revenues which add another $10-20 MM), so player costs are taken care of right there. Furthermore, if the Hawks are paying into revenue sharing, they are in the top ten of NHL HRR ranking, which ostensibly puts them well into the $100+ MM club.

Quote:
Before the Stanley Cup playoffs began, the team said it would raise prices on next year's season tickets, which account for about 75 percent of all tickets sold, by an average of 16 percent, translating to an overall average ticket price of more than $70.
Which would have mean $60 avg ticket price, with 22,000 capacity, x 45 home dates = $60 MM from gate alone.


Quote:
Originally Posted by danishh View Post
what threw me is the : nearly $20M in staff, coaches, and revenue sharing.

staff+coaches shouldnt cost more than 5M-8M (lets say 3-4M for the coach and GM)

that means the hawks are giving significant amounts of revenue sharing money, which means their HRR is considerably higher than this article leads us to believe.

My suspicion is that HRR like parking for games, concessions, arena naming rights (50% with bulls), luxury boxes (50% with bulls), etc are being considered in this article as "United Center" revenues, which for accounting purposes may make sense, but the NHL really treats them as HRR internally.
There is a formula they use for shared NBA arenas. You're right however. This seriously underestimates their actual revenues, and even HRR. My quick/dirty up there with just the average ticket price shows they're well ahead of most NHL cities (in the US).


Quote:
Originally Posted by Ismellofhockey View Post
So they're raising ticket prices 16% and the team is claiming to be in financial difficulty. Now if only I could find a link between the two, some kind of connection where one would explain, or somehow attempt to justify the other.... what could it be? That's a tough one.
Yes, exactly.


And as they keep raising prices and growing revenue at a faster rate than the league average, guess what happens to the cap?

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