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Old
10-08-2012, 09:54 PM
  #1
jumptheshark
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Question about the Blues financial situation

Oiler fan--come in peace

Let me start to give you some background. I am currently studying economics at the London School of Economics and spend most of my time looking at spreed sheets, business theories and concepts and studying the history of business and why some some work and some don't

I am a little older then some on this site (41) so I remember the late 70's, into the 80's and into the 90's when the blues never missed the playoffs and sold out nearly every game.

Starting a few years ago, like all teams, the blues had to rebuild and they went through a few owners and had lots of off ice issues.

I was taken a back when I read that the blues lost upwards of 20mill over the last two years. From a business perspective this confused me a bit. I thought the blues owned their own arena or had an agreement with the city for revenue from NHL game days.

Question is this. This is a serious question.

How have the Blues lost so much money over the past few years. I live here in the UK and I know like most US cities part of St Louis is not in the best shape financially. However, looking at the attendance for the past few years--they have been drawing good

11/12 771,207
10/11 785,150
09/10 755,322
08/09 760,732
07/08 722,021
06/07 513,345
05/06 582,742

Obviously the bottom two there are nasty numbers--but four years of drawing 700k+ leaves me to question how the blues have been losing so much money. The last few years due to the rebuild they have been at the cap floor. Do the blues have a horrible lease with the city or did they have a bad business plan?

I like John Davidson and do not think he will be out of work long. However, as the hockey prez, obviously the fact they lost so much money under his watch could make a few teams walk away from the guy.

IF this is a sore spot I am sorry and if the mods think it is over the line feel free to nuke. As an outsider, I thought the blues would be one of the teams making money and not losing it

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10-09-2012, 12:36 AM
  #2
bleedblue1223
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Low ticket prices, horrible concession contract, and high administrative costs, that is the simple basic answer.

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10-09-2012, 12:48 AM
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The Grouch
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Here are some points to consider when analyzing the Blues' financial situation...


- The Blues do not own the Scottrade Center. Though leased and operated by SLB Acquisition Holdings LLC (Tom Stillman), it is owned by the City of St. Louis. I'm not sure if or how the revenue is shared, nor the monetary terms of the lease, those numbers will probably prove difficult to find.

- The Blues pay a 5%(last I checked) 'Amusement Tax' that is levied on certain entertainment events in the city of St. Louis. It should be noted that the Cardinals and Rams do not have to pay this tax.

- The Blues don't control the concessions for STC events. Dave Checketts signed a 20-year deal with Levy Foods to provide concessions for the Scottrade Center. Checketts received 10 million dollars, and severely cut into the future earnings of concession sales.

- The City of St. Louis owns the main parking structure connected to the STC. The franchise draws little if any revenue from parking.


Dave Checketts pulled as much cash as he could out of this franchise with little respect for its long term profitability. From an on-ice standpoint Checketts fared pretty well, however, in hindsight he hurt the franchise's off-ice viability.

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10-09-2012, 01:14 AM
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Quote:
Originally Posted by The Grouch View Post
Here are some points to consider when analyzing the Blues' financial situation...


- The Blues do not own the Scottrade Center. Though leased and operated by SLB Acquisition Holdings LLC (Tom Stillman), it is owned by the City of St. Louis. I'm not sure if or how the revenue is shared, nor the monetary terms of the lease, those numbers will probably prove difficult to find.

- The Blues pay a 5%(last I checked) 'Amusement Tax' that is levied on certain entertainment events in the city of St. Louis. It should be noted that the Cardinals and Rams do not have to pay this tax.
- The Blues don't control the concessions for STC events. Dave Checketts signed a 20-year deal with Levy Foods to provide concessions for the Scottrade Center. Checketts received 10 million dollars, and severely cut into the future earnings of concession sales.

- The City of St. Louis owns the main parking structure connected to the STC. The franchise draws little if any revenue from parking.


Dave Checketts pulled as much cash as he could out of this franchise with little respect for its long term profitability. From an on-ice standpoint Checketts fared pretty well, however, in hindsight he hurt the franchise's off-ice viability.
This, Checketts ruined this teams ability to make a profit for his own personal gain, Stillman has a lot of work ahead of him if he wants to turn the Blues into a stable team.

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10-09-2012, 02:53 AM
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I thought the Amusement Tax was 14%?

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10-09-2012, 04:18 AM
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the concessions is a big kill on it. I am originally from Edmonton and when I was putting myself through UNI--I worked as a hawker at oiler games and have an idea how much could be made via concessions. 10mill is less the one season in Edmonton

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10-09-2012, 04:54 AM
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Quote:
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I thought the Amusement Tax was 14%?

As far as I know, it is still 5%. The link below, which I assume is current(it's a tax form from St. Louis' own website), states it as 5%.


http://stlouis-mo.gov/government/dep...usementtax.cfm

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10-09-2012, 07:37 AM
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No real way to get around the fact that there isn't a lot that Stillman and his group can do for the Blues.

Ownership stability and more streamlined financial responsibility, but ultimately the only chance we realistically have of breaking even is to be close to the cap floor every season. I think it will take coming incredibly close to losing the franchise to get the city to make concessions and give the franchise a chance of being financially stable. As much as we all want to see Tom Stillman succeed, I think the general feeling is that there is too much against him and too many of his consortium are there for show. In 3 or 4 years, nobody would be surprised if we are again going through the ownership nonsense that we have just been through.

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10-09-2012, 11:42 AM
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Blues ownership:
Salomans
Ralston Purina
Ornest
Shanahan
Local Group?
Laurie
Checkett's group
Stillman group

There is a reason the Blues have had so many owners.
As stated Stillman and group are hand tied, no parking or consession revenue, city amusement tax.

How many NHL teams have filed BK in the lat 10 years? How many teams has the league had to take over because the teams couldn't pay their bills? There may be record revenues for the league but the have teams are the ones generating most of the recoed revenues. Until Toronto and Montreal are willing to share more of their revenues we will continue to see teams have financial problems.

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10-09-2012, 07:18 PM
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Quote:
Originally Posted by stlweir View Post
Blues ownership:
Salomans
Ralston Purina
Ornest
Shanahan
Local Group?
Laurie
Checkett's group
Stillman group

There is a reason the Blues have had so many owners.
As stated Stillman and group are hand tied, no parking or consession revenue, city amusement tax.

How many NHL teams have filed BK in the lat 10 years? How many teams has the league had to take over because the teams couldn't pay their bills? There may be record revenues for the league but the have teams are the ones generating most of the recoed revenues. Until Toronto and Montreal are willing to share more of their revenues we will continue to see teams have financial problems.


Without taking this down a bad path. It looks to me that the problems the blues are facing is due mostly to bad decisions my the ownership groups previously. Concessions and parking is where the money is. While I can understand why some people would want the big revenue teams to share more, you then have in business slang "You want to come into my house, I get to come into your house." You can not just say to the big revenue you need to share and not expect to give something up. Those teams then could look at a team like the blues and say that many of the problems that they are facing are self inflicted and they need to sort out their house first. It sounds like most of the damage was caused by the Checkets group.

I am looking at that 20mil for concession and think that needs to be addressed.

I don't know how the prices are in your stadium but I know elsewhere I think the average spent in arenas in other cities is about 40 to 50 bucks on concessions Beers, popcorn, hamburgers and what not--it adds up quickly. I know when I lived in Edmonton and Vancouver, I usually spent between 100 to 120 at a game.

say if you are drawing an average of 15k per game(I know the blues are drawing more but I decided to use 15 to deal with the argument over my 50buck average per game) 15k times 50 is 750k you have 41 home games a year. Checkets got 10mill for concession for twenty years? This is where I get lost. The blues get nothing from concessions? Say if the average person spends 20bucks a game (beer was 8 bucks at the last canuck game I went to, Burger was 10 bucks, fries was 5 and popcorn was 4.25). 17000 was the average attendance for the blues times that by 20 you get 340k times that by 41 you get 13.9 mill or there abouts--Checkets sold it for 10mill for 20 years? I am confused--the blues have to get some of the concessions

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10-09-2012, 07:28 PM
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The tax makes little sense, if the Rams and Cardinals don't have to pay it. Especially if the city controls all the parking revenue; wouldn't giving the Blues some breaks actually help the city some then, allowing them to generate more parking revenue by making the Blues events more in demand?

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10-09-2012, 08:55 PM
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Would there be a possibility of restructuring the terrible deal checketts made with levy foods? or is it pretty much not gonna change until that 20 year period runs out?

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10-09-2012, 09:02 PM
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Originally Posted by STLBLUES44 View Post
Would there be a possibility of restructuring the terrible deal checketts made with levy foods? or is it pretty much not gonna change until that 20 year period runs out?
Probably not, but Im sure it was something that lowered the final selling price.

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10-09-2012, 09:12 PM
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Originally Posted by jumptheshark View Post
[/B]

Without taking this down a bad path. It looks to me that the problems the blues are facing is due mostly to bad decisions my the ownership groups previously. Concessions and parking is where the money is. While I can understand why some people would want the big revenue teams to share more, you then have in business slang "You want to come into my house, I get to come into your house." You can not just say to the big revenue you need to share and not expect to give something up. Those teams then could look at a team like the blues and say that many of the problems that they are facing are self inflicted and they need to sort out their house first. It sounds like most of the damage was caused by the Checkets group.

I am looking at that 20mil for concession and think that needs to be addressed.

I don't know how the prices are in your stadium but I know elsewhere I think the average spent in arenas in other cities is about 40 to 50 bucks on concessions Beers, popcorn, hamburgers and what not--it adds up quickly. I know when I lived in Edmonton and Vancouver, I usually spent between 100 to 120 at a game.

say if you are drawing an average of 15k per game(I know the blues are drawing more but I decided to use 15 to deal with the argument over my 50buck average per game) 15k times 50 is 750k you have 41 home games a year. Checkets got 10mill for concession for twenty years? This is where I get lost. The blues get nothing from concessions? Say if the average person spends 20bucks a game (beer was 8 bucks at the last canuck game I went to, Burger was 10 bucks, fries was 5 and popcorn was 4.25). 17000 was the average attendance for the blues times that by 20 you get 340k times that by 41 you get 13.9 mill or there abouts--Checkets sold it for 10mill for 20 years? I am confused--the blues have to get some of the concessions
I'm not sure how many NHL teams operate their own concession stands. I would imagine that most teams are like the Blues, they let another company pay them for the right to operate those stands. Sure, they may bring in ~$13.9M, but that is before the cost of the food, the cost of the workers, the cost of insurance, and the cost of the contract with the Blues.

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10-09-2012, 10:01 PM
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I'm not sure how many NHL teams operate their own concession stands. I would imagine that most teams are like the Blues, they let another company pay them for the right to operate those stands. Sure, they may bring in ~$13.9M, but that is before the cost of the food, the cost of the workers, the cost of insurance, and the cost of the contract with the Blues.
I can only use myself as an example. The two times I worked as a hawker at games the first time I was on min wage and the other time I basically was an independent contractor who bought his tray off goodies (usually popcorn and peanuts) and I bought the tray regardless of if I sold them all. Most Arenas and stadium buy in large bulk that reduces the overall cost.
I know at the arena in Vancouver, the beer cost $7 bucks but the actual cost of each pint was $1.5(when you factor in taxes and other things)

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10-10-2012, 07:41 PM
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Originally Posted by oPlaiD View Post
The tax makes little sense, if the Rams and Cardinals don't have to pay it. Especially if the city controls all the parking revenue; wouldn't giving the Blues some breaks actually help the city some then, allowing them to generate more parking revenue by making the Blues events more in demand?
Not a chance. Five percent sounds small, but that tax means literally millions in revenue for the city of St.Louis. It really is BS, but I believe the Blues have to pay it since the STC is in fact owned by the city. The Blues did actually try to sue the city in the 80's over the amusement tax, but were unsuccessful. My guess is the only way the Blues will ever get that tax removed is if they purchase the STC.

As far as Checketts is concerned, I honestly don't think he ever cared for the Blues or hockey in general for that matter. He is a basketball fan and business man. He was strictly here to make money, and that's exactly what HE did. Stillman and Co certainly have their work cut out, but I still think they can find a way to make it work. I know we've heard this story before, but Stillman seems different than previous owners. I think he really cares for this team and is excited about the direction they are headed. He also has a strong group of local investors backing him. Which could never hurt his chances.

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10-10-2012, 11:02 PM
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Quote:
Originally Posted by jumptheshark View Post
I can only use myself as an example. The two times I worked as a hawker at games the first time I was on min wage and the other time I basically was an independent contractor who bought his tray off goodies (usually popcorn and peanuts) and I bought the tray regardless of if I sold them all. Most Arenas and stadium buy in large bulk that reduces the overall cost.
I know at the arena in Vancouver, the beer cost $7 bucks but the actual cost of each pint was $1.5(when you factor in taxes and other things)
That is roughly 21% in cost right there that you missed right there. And while you may have been an independent contractor while you were hawking, the guy that you picked up the concessions from isn't. While all those factors may only add up to 25% of gross profits in costs, they still need to be factored in.

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