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Luxury box revenues?

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11-17-2004, 01:53 PM
  #1
DuklaNation
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Luxury box revenues?

An interesting dilemma has come up from the Forbes report which involves luxury box revenues. Some owners have sold these off. By doing so, he has taken a large cash payment but has also reduced his annual revenue. Thereby increasing the % of salaries vs. revenues.

The question becomes in any salary cap system, these owners have artificially decreased their revenue base so should the proceeds of luxury sales be included? It will be further complicated by any subsequent sale of a team (i.e. the new owner never had the benefit of securitizing luxury box sales) although his purchase price would be lower.

This could be a sticking point in negotiations, but could be resolved now. The NHL should forbid this structure before it gets more complicated. If a current owner sold his luxury boxes, he could spread the proceeds over the term of the deal (i.e. $50M proceeds for 10 years could be applied as $5M each year to salary cap calculations).

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11-17-2004, 03:51 PM
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Luxury box revenues definitely have to be counted. There's a similar practice with arena naming rights. Teams can sell those for a lump sum. I believe the Habs did that. It's just like selling a $100,000 annuity before maturity for a lesser cash sum. I don't think the players have any claim to revenues generated from non-hockey events, but 100% of suite revenues from hockey games, and at least 50% of naming rights revenues should be counted as hockey revenues. The same goes for concessions and parking. If those rights are sold, an appropriate percentage based on how much is generated at hockey games should be amortized and counted as hockey revenue.

A lot has been made of the NFL's generous TV contract and how the NHL receives a pittance. Other than preseason, NFL teams can't have their own TV contracts. In the NHL, every team has a TV contract. Has anyone bothered to add up the revenues from the individual team's TV contracts and add that to the NHL's national TV contracts? That's the true TV revenue for the NHL, and I doubt if it's such a pittance.

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11-17-2004, 04:25 PM
  #3
triggrman
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Most suites are rented for a year, not just hockey, same with naming rights. This is not hockey revenue.

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11-17-2004, 05:31 PM
  #4
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Quote:
Originally Posted by triggrman
Most suites are rented for a year, not just hockey, same with naming rights. This is not hockey revenue.
A portion, based on the number of nights of hockey relative to overall events in the facility, should count as hockey revenue.

Naming rights should not count as "hockey revenue".

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11-17-2004, 06:26 PM
  #5
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Quote:
Originally Posted by Thunderstruck
A portion, based on the number of nights of hockey relative to overall events in the facility, should count as hockey revenue.

Naming rights should not count as "hockey revenue".
agreed completely. I've been saying this for quite awhile. I'd say divide the price of the suite should be divided by the number of events the arena hosts and then there's your price.

Quote:
Originally Posted by Buffaloed
Luxury box revenues definitely have to be counted. There's a similar practice with arena naming rights. Teams can sell those for a lump sum. I believe the Habs did that. It's just like selling a $100,000 annuity before maturity for a lesser cash sum. I don't think the players have any claim to revenues generated from non-hockey events, but 100% of suite revenues from hockey games, and at least 50% of naming rights revenues should be counted as hockey revenues. The same goes for concessions and parking. If those rights are sold, an appropriate percentage based on how much is generated at hockey games should be amortized and counted as hockey revenue.

A lot has been made of the NFL's generous TV contract and how the NHL receives a pittance. Other than preseason, NFL teams can't have their own TV contracts. In the NHL, every team has a TV contract. Has anyone bothered to add up the revenues from the individual team's TV contracts and add that to the NHL's national TV contracts? That's the true TV revenue for the NHL, and I doubt if it's such a pittance.
I've been trying to look up information on revenues based on average attendance, # of parking on site parking spaces, and concessions. Running into a problem as the site that i was using has been down for the last couple of weeks. I was going to ballparks.com and clicking on hockey rinks but now i get a 404 error, not sure if they took that part of the site down because of the lock out or what. It's making my progress a little slower, also was basing my $ figures around the numbers given on the League of fans Fan Cost Index page. I was only going back a few years, but i'm debating taking it back more.

Edit: I'm currently trying to find out how much parking is available for each team. According to the first site i mentioned, some teams had 0 on site parking, however when i went to the individual sites there were a 3 - 5 parking lots surrounding the arena, but no exact number was mentioned for number of parking spaces total.

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Old
11-17-2004, 07:13 PM
  #6
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Quote:
Originally Posted by Buffaloed
at least 50% of naming rights revenues should be counted as hockey revenues. The same goes for concessions and parking. If those rights are sold, an appropriate percentage based on how much is generated at hockey games should be amortized and counted as hockey revenue.
And you well highlight the complicated problem of defining designated hockey revenues. An artificially bargained number broadly applied. What they designate as being allowed to spend, would be less than the value they would personally assign to what they choose to spend. Which should be ok if it isnt uncompetitive. Such as if UFAs had to be 35. No one would need a cap then.

Quote:
A lot has been made of the NFL's generous TV contract and how the NHL receives a pittance. Other than preseason, NFL teams can't have their own TV contracts. In the NHL, every team has a TV contract. Has anyone bothered to add up the revenues from the individual team's TV contracts and add that to the NHL's national TV contracts? That's the true TV revenue for the NHL, and I doubt if it's such a pittance.
Thats an interesting point. I wonder what the combined local tv revenues add up to, and what would be the effect of sharing it equally.

Like the NFL, the NHL does share its national TV revenues. But hockey also has local tv revenue which the NFL apparently doesnt really have. Perhaps if they made all local NHL broadcasts use NHL Centre Ice it would be national tv revenue they could share. Of course the group of owners who get a lot of non-hockey designated revenue advantage from their cable stations broadcasting the games would probably hate that.

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11-17-2004, 07:15 PM
  #7
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Most suites are rented for a year, not just hockey, same with naming rights. This is not hockey revenue.
Yeah, because the corporations are really lining up to get Corel Centres suites for Stars on Ice and Nickleback.

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11-17-2004, 07:35 PM
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Quote:
Originally Posted by Lexicon Devil
Yeah, because the corporations are really lining up to get Corel Centres suites for Stars on Ice and Nickleback.
And GM place only has about 30-40 other events a year. Jeez there paying the bills. Lets put it to you this way the only things scheduled at GM Place between now and the end of Febuary, Monster Inc on Ice and the Harlem Globe Trotters.

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11-17-2004, 09:04 PM
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Quote:
Originally Posted by vanlady
And GM place only has about 30-40 other events a year. Jeez there paying the bills. Lets put it to you this way the only things scheduled at GM Place between now and the end of Febuary, Monster Inc on Ice and the Harlem Globe Trotters.
is it the nhl's fault that orca bay can't get other groups or features to rent GM place? They've known for awhile now that the lockout is going to leave an empty arena that could be used for other purposes to bring in other revenue.

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11-18-2004, 07:30 AM
  #10
triggrman
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Quote:
Originally Posted by Lexicon Devil
Yeah, because the corporations are really lining up to get Corel Centres suites for Stars on Ice and Nickleback.
Guess it depends on the market. In Nashville you also get the suites for the concerts during Fan Fair, which is a fairly big event and also the country music concerts that come here throughout the year a fairly popular too. RCA, Sony, ASCAP, CMI, all have suites here. You tell me, is it for hockey?

Gaylord bought the naming rights to the building. Did they buy the rights for hockey or the "country music" scene? Gaylord a business that owns hotels (Opryland), music labels, the Ryman Auditorium and the Grand Ole Opry at Opryland.

We also have arena football, which is fairly popular here, I'm sure a couple of suites were sold for that.

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11-18-2004, 07:44 AM
  #11
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Quote:
Originally Posted by triggrman
Most suites are rented for a year, not just hockey, same with naming rights. This is not hockey revenue.

It should be split though. Some of the money should count as hockey revenue, some shouldn't. I know i've never seen a Wings game from our company suite. But i've seen concerts and other stuff. The fact is the owner of my company buys/rents it for the NHL and thats the only reason he forks over that money, not to see WWE or concerts.

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11-18-2004, 08:08 AM
  #12
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Quote:
Originally Posted by JWI19
It should be split though. Some of the money should count as hockey revenue, some shouldn't. I know i've never seen a Wings game from our company suite. But i've seen concerts and other stuff. The fact is the owner of my company buys/rents it for the NHL and thats the only reason he forks over that money, not to see WWE or concerts.
I think that would be almost impossible to determine. What about Nashville and all the record labels that have boxes, would you split their money? If so how? What about the hotels in Nashville that buy the suites to offer fan fair packages and concert packages, would you count their money? What about all the teams that have NBA teams and arena football, how would you split those?

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11-18-2004, 08:53 AM
  #13
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Quote:
Originally Posted by triggrman
I think that would be almost impossible to determine. What about Nashville and all the record labels that have boxes, would you split their money? If so how? What about the hotels in Nashville that buy the suites to offer fan fair packages and concert packages, would you count their money? What about all the teams that have NBA teams and arena football, how would you split those?

I think it's pretty simple. Lets say owner sells/rents his suite for i dont know 50k a year (just a randon number). There are 80 events at said arena and 41 are hockey games. Each event would be worth $625.00. So 41 games X $625.00 is counted as hockey revenue.

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11-18-2004, 08:58 AM
  #14
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So even if those suites aren't being used during the hockey games they should count toward hockey revenue?

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11-18-2004, 08:59 AM
  #15
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Quote:
Originally Posted by JWI19
I think it's pretty simple. Lets say owner sells/rents his suite for i dont know 50k a year (just a randon number). There are 80 events at said arena and 41 are hockey games. Each event would be worth $625.00. So 41 games X $625.00 is counted as hockey revenue.
Exactly

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11-18-2004, 09:42 AM
  #16
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Quote:
Originally Posted by triggrman
So even if those suites aren't being used during the hockey games they should count toward hockey revenue?
considering the only other way to figure what is and isn't hockey revenue would be to have a person go around to each and every suite during each home game to mark which are being used for hockey and which aren't, i'd say what jwi19 said is the fairest way to designate luxury box revenues

the companies that purchased the boxes did so for the whole year, regardless of how many or what kind of events they attended or were planning to attend.

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11-18-2004, 10:16 AM
  #17
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Quote:
Originally Posted by garry1221
considering the only other way to figure what is and isn't hockey revenue would be to have a person go around to each and every suite during each home game to mark which are being used for hockey and which aren't, i'd say what jwi19 said is the fairest way to designate luxury box revenues

the companies that purchased the boxes did so for the whole year, regardless of how many or what kind of events they attended or were planning to attend.
That's why it's not included. It's arena revenue, not hockey revenue.

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11-18-2004, 10:32 AM
  #18
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Quote:
Originally Posted by triggrman
That's why it's not included. It's arena revenue, not hockey revenue.
It's not just arena revenue. I can pretty well guaruntee you that people that own those luxury boxes this year are getting some sort of refund/discount because no hockey is being played.

This is especially true for the buildings that don't have a basketball team.

The Wachovia Center in Philly is one of the nations busiest arenas, usually having over 300 events a year.

If your company wants to purchase a luxury suite, they are leased for 3,5,7 or 10 years. You receive tickets to all Flyers and 76ers games including pre-season and playoffs.

Tickets for all other events (concerts, arena football, lacrosse, children's shows, figure skating etc.) are purchased separately.

There are also club box suites, where you can choose, just Flyers, just 76ers, or a combination of the two.

http://www.comcast-spectacor.com/pre...ng/default.asp

All building are set-up different, but I would think that most are set-up very similarly to this, as Spectacor, which Ed Snider owns, runs a high% of building throughout the country ... it's how Ed made all his money.


I'm not sure of the pricing, but if a comapny in Philly bought a luxury suite for $1 million for 10 years .. that money should be split evenly between the Flyers and 76ers.

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11-18-2004, 01:34 PM
  #19
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Quote:
Originally Posted by John Flyers Fan
It's not just arena revenue. I can pretty well guaruntee you that people that own those luxury boxes this year are getting some sort of refund/discount because no hockey is being played.

This is especially true for the buildings that don't have a basketball team.

The Wachovia Center in Philly is one of the nations busiest arenas, usually having over 300 events a year.

If your company wants to purchase a luxury suite, they are leased for 3,5,7 or 10 years. You receive tickets to all Flyers and 76ers games including pre-season and playoffs.

Tickets for all other events (concerts, arena football, lacrosse, children's shows, figure skating etc.) are purchased separately.

There are also club box suites, where you can choose, just Flyers, just 76ers, or a combination of the two.

http://www.comcast-spectacor.com/pre...ng/default.asp

All building are set-up different, but I would think that most are set-up very similarly to this, as Spectacor, which Ed Snider owns, runs a high% of building throughout the country ... it's how Ed made all his money.


I'm not sure of the pricing, but if a comapny in Philly bought a luxury suite for $1 million for 10 years .. that money should be split evenly between the Flyers and 76ers.
See the Flyers are in a totally different situation than the Predators, and I bet if we dug deeper we can find 20 other different situations between NHL rinks, suites and arena management, which is why it's not as cut and dry as you make it out to be.

John, do they only get the suites during basketball or hockey?

In Nashville if you own a suite, that's your space for a year, any time during business or event hours you can use that suite for meetings, whether there's an event or not. Also like I said in Nashville a lot of the suites sell for fan fair and conert events, I know Philly doesn't have fan fair but what about concerts and other events, do they not get the suites then?

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11-18-2004, 01:42 PM
  #20
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Quote:
Originally Posted by triggrman
See the Flyers are in a totally different situation than the Predators, and I bet if we dug deeper we can find 20 other different situations between NHL rinks, suites and arena management, which is why it's not as cut and dry as you make it out to be.

John, do they only get the suites during basketball or hockey?

In Nashville if you own a suite, that's your space for a year, any time during business or event hours you can use that suite for meetings, whether there's an event or not. Also like I said in Nashville a lot of the suites sell for fan fair and conert events, I know Philly doesn't have fan fair but what about concerts and other events, do they not get the suites then?
Agreed, that every arena is different.

In Philly you get tickets to the Flyers and 76ers .. and the option to purchase tickets to anything else, whether it's Springsteen, Arena Football, The Rolling Stones, Disney on Ice etc. etc.

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11-18-2004, 02:48 PM
  #21
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Quote:
Originally Posted by John Flyers Fan
Agreed, that every arena is different.

In Philly you get tickets to the Flyers and 76ers .. and the option to purchase tickets to anything else, whether it's Springsteen, Arena Football, The Rolling Stones, Disney on Ice etc. etc.
In five Canadian cities - Toronto excepted - the only reason to buy a box is the hockey team. You may get the option to buy tickets to other events but without the hockey yeam there would be zero luxury box money.

Tom

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11-18-2004, 02:53 PM
  #22
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Quote:
Originally Posted by Tom_Benjamin
In five Canadian cities - Toronto excepted - the only reason to buy a box is the hockey team. You may get the option to buy tickets to other events but without the hockey yeam there would be zero luxury box money.

Tom
Agreed, and IMO any arena in the NHL without an NBA team would be the same:

That would include Tampa, Isles, Buffalo, Carolina, Florida, Pittsburgh, Detroit, San Jose, St. louis, Nashville, Minnesota, Anaheim, Phoenix and Columbus.

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11-18-2004, 02:55 PM
  #23
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See the huge disparity.

What about those areas owners that don't get suite revenue (if there are any) do you count that as a loss?

I'm not on either side of the labor issue heavily. Naturally I want a system that benefits my team the most so I'd like to see some type of cap that levels the field as far as salaries. I also think the owner proposals thus far are just as crap as the players. I do believe the league is hurting financially, and Levitts report is as close as it needs to be.

Oh, and the property manager in me will not allow me to believe that suites are not arena revenue. Does hockey help sale suites in most areas, yes, but that doesn't change my stance, it's still arena revenue.

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11-18-2004, 02:56 PM
  #24
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Quote:
Originally Posted by John Flyers Fan
Agreed, and IMO any arena in the NHL without an NBA team would be the same:

That would include Tampa, Isles, Buffalo, Carolina, Florida, Pittsburgh, Detroit, San Jose, St. louis, Nashville, Minnesota, Anaheim, Phoenix and Columbus.
You're wrong on Nashville, refuse to believe if you want but hockey is just one of many benefits here to having a suite to most of the owners.

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11-18-2004, 03:00 PM
  #25
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Quote:
Originally Posted by triggrman
You're wrong on Nashville, refuse to believe if you want but hockey is just one of many benefits here to having a suite to most of the owners.
I'm not saying that the hockey team is the only reason to buy a suite, and I don't think that all the money should go to the hockey team, but if there are no Nashville Predators

#1. is their a Gaylord Entertainment Center (hope that name is correct)

and

#2. how many people would still own a lusury suite if the Preds were contracted tomorrow ??? Are business spending $50K-100K a year for a luxury suite just for concerts, fairs etc. ???

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