HFBoards

Go Back   HFBoards > General Hockey Discussion > The Business of Hockey
Mobile Hockey's Future Become a Sponsor Site Rules Support Forum vBookie Page 2
Notices

The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

Edmonton Oiler Revenues: An Analysis

Reply
 
Thread Tools
Old
09-11-2010, 01:00 AM
  #1
GSC2k2*
 
Join Date: Mar 2005
Location: Hamilton, Ontario
Country: Canada
Posts: 7,384
vCash: 500
Edmonton Oiler Revenues: An Analysis

This thread is to set out and get feedback/discussion on an analysis that I did on Tyler Dellow's site over on www.mc79hockey.com. Tyler, who is a fellow lawyer in Toronto (an insurance defence counsel), often has interesting things to say, and he is a highly recommended blogger who gets mentions from time to time on HNIC and in the mainstream media.

In a discussion in the comments section of his blog on the immediately previous (unrelated) post about some Brian Burke article, an offtopic discussion arose regarding southern markets, and CAR was referenced as a poor market. I indicated that EDM was IMO not as strong a market as some believed, which then led to someone mentioning a recent comment by the Oilers PR flak in the Toronto Sun that they were a "$120M business" - http://slam.canoe.ca/Slam/Hockey/NHL.../15130461.html. After some discussions between Tyler and me on Twitter where we (civilly) debated the possibility of the EDM PR guy's $120M assertion, I agreed to take an educated guess at the Oiler revenues, using the CAR revenue streams as a template.

As an aside, before I review the work that i did (modified by some helpful feedback within the comments that my calcs received from Tyler and others), one of his other commenters got hold of some EDM officials who said the number, and he indicated that it represented all of the revenues of Katz's sports teams, which includes a junior team, a minor league affiliated team (I believe) and a minor league baseball team. As such, the idea that EDM Oiler revenues are $120M has already been shot down. It was also unclear whether he was using CAD or USD, since he also incorrectly overstated NHL revenues at $3B. [Edit: the gentleman who unearthed this was another Oiler blogger named Oliver Willis at http://oilersnation.com/2010/8/26/the-books ]:

Quote:
Curious about the discrepancy, I contacted the Oilers to ask for comment on Watt’s figures. While the club declined to comment for OilersNation, I was told that Watt’s figures represented the entire revenue stream for Rexall Sports Corp. (i.e. not just the Oilers), and that as a privately-owned company Rexall does not disclose its financial reports.
Despite the fact that we apparently know that the $120M number is not only Oiler revenue, it still was worth taking some educated guesses.

In any event, here are the calculations (all figures USD, sorry Fugu ; all revenue categories mirror the streams identified in the CAR revenue numbers - see that thread):

ADMISSIONS

Last official numbers (as per the TO Star) put EDM at $1.2M per game. The exchange rate for 2007-08 was higher (by ~4 cents) than this past year, but I assume that some ticket price increases since then have offset that. I will use the $1.2M without exchange rate offset. My initial number did not capture pre-season ticket sales, so I have bumped it up to (again, conservatively) assume the same revenues for pre-season games (a dubious proposition, but whatever). It is also unclear whether pre-season seats are included in season ticket plans, which would dramatically reduce incremental revenue.

Admissions revenue = $1.2M x 44 = $52.8M

ADVERTISING

This is a tough one, with little guidance. I would propose to use the suddenly jacked-up CAR number, adjusted upward. I will take $6.1M, adjust it upward by 15% and round it off to $7M.

Advertising Revenue = $7M.

NHL REVENUE SHARING

We have good figures for this, courtesy of the PHO bankruptcy. The central revenue sharing amount is just shy of $9M. We will not assume any revenue sharing received by EDM.

NHL Central Revenue Distribution = $9M.

TELEVISION

This figure is for local television, as opposed to the HNIC and other national deals which are captured in the immediately preceding amounts above. This is a tough one. Using the $20M received by MTL from RDS based on 82 games + a playoff schedule and based on 710k+ viewers (hgher now), and factoring in fewer EDM games, no playoff games (they would be already given to CBC/TSN anyway) and about a quarter of the audience, you could make an argument for perhaps a third of the MTL portion of the RDS contract at best. Again, though, I will err on the high side and give them $10M (half of MTL TV revenues, acknowledged to be well among the higher team local TV revenues).

Television Revenue = $10M.

FOOD & BEVERAGE

This figure is always much lower than people think. I am assuming that the Oilers get a piece of the concessions bought during hockey games (it may not be the case, but I will err on the high side). Concessions are done via a concession agreement (usually a master agreement) to a third party or parties, in return for a percentage of sales (often with a minimum annual guarantee, or “MAG”). THe CAR figures provide a decent proxy, if adjusted upwards for 15% or so greater attendance for EDM. Let’s bump that up by 20%, just to err on the safe side.

Food & Beverage Revenue = $3M

PARKING

I was initially unaware of any parking revenue to which the Oilers were entitled, since they do not control the building or (to the best of my knowledge) own any surrounding lots. Tyler subsequently suggested that they did, and a review of the Northlands annual report confirmed that they get parking revenue as part of their very sweet lease (a public subsidy, don't you know!!).

There are 1100 spots (http://hockey.ballparks.com/NHL/Edmo...lers/index.htm). I note from the Oilers website that one lot is dedicated for season ticket holders. Sometimes, parking is included in the season ticket or suite price. However, in the ongoing effort to err on the high side, I will not discount for that.

1100 x 44 (w/3 preseason games) x $20 = $968,000. Round it up to $1M.

Parking Revenue = $1M

NAMING RIGHTS

The Oilers do not control the arena. This is in fact a cost line item for Katz, rather than a revenue item. Tyler insisted that EDM gets the revenue for this. Even assuming this were true (and the Northlands website was not helpful on this), this is still a payment from a Katz wholly-owned sister company (Rexall). While I was inclined to allow a huge overestimate of $5M for this, I think this was overly generous, since it is really nothing more than a payment from a wholly-owned subsidiary to the team.

Naming Rights Revenue = $0

SUITE SALES

Edmonton has 39 suites and 16 “skyboxes”. I do not know the prices, but I will extrapolate from the per-game costs, which I believe are $5k per game for suites. Assuming a modest discount for committing to an entire season, I have assumed $175K per suite and $150K per skybox. This is ~$6.8M for suites and $2.4M for skyboxes. Note that this represents a huge increase over CAR suite revenue.

Suites Revenue = $9.2M

MERCHANDISING

This revenue source is far less than people think. THe NHL and its member clubs are licensors, and are paid as such. I am not aware of any manufacturing plants owned or operated by the NHL or the Oilers.

While CAR reported only ~$700-800k in merchandising on attendance that was comparable to EDM, I want to err on the high side. I will accordingly double the CAR figure, despite not having any reason for such a per-capita difference between markets. I will also not make any exchange rate adjustment.

Merchandising Revenue = $1.5M

TICKETMASTER

This figure from CAR appears to have been a single-season adjustment for some reason.

Ticketmaster Revenue = $0

OTHER

I know of no other Oiler revenue sources.

Other revenue = $0

To sum up:

Tickets $52.8 M
Advertising $ 7.0 M
Central Revenue $ 9.0 M
Television $10.0 M
Food & Beverage $ 3.0 M
Parking $ 1.0 M
Naming Rights $ 0.0 M
Suite Sales $ 9.2 M
Merchandising $ 1.5 M
Ticketmaster $ 0.0 M
Other $ 0.0 M

TOTAL $93.5 M

Note that I have taken what I believe to be estimates which favour the high end of revenue estimates. I am hard pressed to truly believe that ALL of the conservative estimates would favour the high side, so I would expect that the final number is somewhat lower.

Where does that put EDM?

It would put them at approximately the NHL average, which is pretty decent, to be frank. The notion that they lose money in a given year is, of course, absurd, absent hugely front-loaded contracts on a widespread basis. Before the lockout, average per-team non-player-comp costs were ~$25M. Inflation is not all that big. Even if we bump up those costs to $30M, you get a positive EBITDA, even with a near-cap player comp line item. Making the playoffs results in a sizeable profit.

What happens in these Canada/US discussions is that there is a tendency to create a single grouping of what really are two distinct groups of Canadian franchises - the TOR/MTL/VAN group and the CAL/EDM/OTT group. The former group can be said to be among the franchises (along with DET and NYR, to name but two) who “carry” the NHL (in the same way as the top franchises carry leagues in every sport). The second group carry their own weight - at this point in time.

Comments and additional informational contributions are all welcomed, of course. I would assume that disputes as to any numbers would be accompanied by alternative calculations and any assumptions upon which such alternative calcs are based.

Fugu, if you want to convert that to CAD for some unfathomable reason, simply apply the exchange rate differential at your leisure.


Last edited by GSC2k2*: 09-11-2010 at 11:32 PM. Reason: ... spelling, clarify how this whole thing got started, link to Oliver Willis' site re the source of revenues, etc.
GSC2k2* is offline   Reply With Quote
Old
09-11-2010, 01:13 AM
  #2
leer2006
Registered User
 
leer2006's Avatar
 
Join Date: Jan 2010
Location: Transcona
Posts: 198
vCash: 500
I'm curious as to why you believe that Edmonton's advertising revenue would only be marginally higher then Carolina's?
While I have no idea what it would be .
I do think it would be safe to assume that Edmonton's advertising revenue would be much greater and by a much greater margin then the 15% you've shown.

leer2006 is offline   Reply With Quote
Old
09-11-2010, 01:21 AM
  #3
kdb209
Global Moderator
 
kdb209's Avatar
 
Join Date: Jan 2005
Posts: 15,592
vCash: 500
Quote:
Originally Posted by GSC2k2 View Post
ADMISSIONS

Last official numbers (as per the TO Star) put EDM at $1.2M per game. The exchange rate for 2007-08 was higher (by ~4 cents) than this past year, but I assume that some ticket price increases since then have offset that. I will use the $1.2M without exchange rate offset. My initial number did not capture pre-season ticket sales, so I have bumped it up to (again, conservatively) assume the same revenues for pre-season games (a dubious proposition, but whatever). It is also unclear whether pre-season seats are included in season ticket plans, which would dramatically reduce incremental revenue.

Admissions revenue = $1.2M x 44 = $52.8M
Most Full Season STH package pricing I've seen recently include preseason games.

The Sharks include 3 pre-season games (at regular season prices) - I usually dump them below cost and just look at it as a STH tax.

I looked at several other teams cheap seat STH packages in the season ticket pricing thread and most seemed to be based on 44 games (41 regular season+3 preseason) - at least their prices were multiples of 44.

Quote:
FOOD & BEVERAGE

This figure is always much lower than people think. I am assuming that the Oilers get a piece of the concessions bought during hockey games (it may not be the case, but I will err on the high side). Concessions are done via a concession agreement (usually a master agreement) to a third party or parties, in return for a percentage of sales (often with a minimum annual guarantee, or “MAG”). THe CAR figures provide a decent proxy, if adjusted upwards for 15% or so greater attendance for EDM. Let’s bump that up by 20%, just to err on the safe side.

Food & Beverage Revenue = $3M
And just a quick SWAG here comes close to your number.

I've seen some articles showing that venue food concessionaires pay ~30-40% of revenues to the stadium operator - these were stadium concessions, but I assume arenas are similar.

Assuming that the Oilers sell out every game @ 16.8K and every person spends an average of $10 on food and beverage (*) and the Oilers get 40% that comes out to $2,956,800.

(*) This number may even be high. Contrary to the beliefs (aspirations) of many here - most fans do not buy multiple $8.00 beers. I know MANY STH fans who spend $0 on food and beverage. I rarely buy food or drink at the arena.

Quote:
MERCHANDISING

This revenue source is far less than people think. THe NHL and its member clubs are licensors, and are paid as such. I am not aware of any manufacturing plants owned or operated by the NHL or the Oilers.

While CAR reported only ~$700-800k in merchandising on attendance that was comparable to EDM, I want to err on the high side. I will accordngly double the CAR figure, despite not having any reason for such a per-capita difference between markets. I will also not make any exchange rate adjustment.

Merchandising Revenue = $1.5M
Yup. Teams only get merchandise revenues from the retail markup of the merchandise sold directly at the arena or other club affiliated entities (team stores, etc).

The Oilers do not get any direct revenue from jerseys, t-shirts, whatevers sold anywhere else. All merchandise licensing is done by the League (through NHL Enterprises, LLC) and all licensing fees from manufacturers are treated as Centrally Generated League Revenue and split evenly among all teams.

All those Hawks Stanley Cup T-Shirts out there in Chicago (and elsewhere) - unless they were sold at the United Center, Rocky Wirtz didn't get one cent of that money. (OK, he might have gotten 1/30 of the licensing fees).


Last edited by kdb209: 09-11-2010 at 02:14 AM.
kdb209 is offline   Reply With Quote
Old
09-11-2010, 04:29 AM
  #4
MAROONSRoad
f/k/a Ghost
 
MAROONSRoad's Avatar
 
Join Date: Feb 2007
Location: Maroons Rd.
Country: Canada
Posts: 4,068
vCash: 500
Quote:
Originally Posted by GSC2k2 View Post

MERCHANDISING

This revenue source is far less than people think. THe NHL and its member clubs are licensors, and are paid as such. I am not aware of any manufacturing plants owned or operated by the NHL or the Oilers.

While CAR reported only ~$700-800k in merchandising on attendance that was comparable to EDM, I want to err on the high side. I will accordngly double the CAR figure, despite not having any reason for such a per-capita difference between markets. I will also not make any exchange rate adjustment.

Merchandising Revenue = $1.5M
FYI, some data on CFL merchandise in the prairies as reported in the press:

Quote:
If you measure brand loyalty through merchandise sales, then the Bombers appear to be headed in the right direction. In 2009, the club had just over $2 million in retail sales, down $300,000 from the year before (keep in mind, the club was coming off a 2007 Grey Cup appearance).
Quote:
The Riders pulled in a whopping $7.1-million in merchandise last year, leading all CFL teams and rivaling the NHL's Edmonton Oilers and Calgary Flames in terms of retail revenue
http://communities.canada.com/regina...ughriders.aspx

Mind you, that is for CFL and not NHL, which is far more popular. However, note that the Riders "rivaled" the merchandise revenues of the Oilers and Flames according to the article.

GHOST

MAROONSRoad is offline   Reply With Quote
Old
09-11-2010, 06:29 AM
  #5
Fourier
Registered User
 
Fourier's Avatar
 
Join Date: Dec 2006
Location: Waterloo Ontario
Country: Canada
Posts: 11,651
vCash: 500
Bravo!!!!

My own previous estimates with many similar calculations have been in the $83-88M range, depending on which of the last few years you talk about.

I think you have been generous on many of these numbers. (Oiler season tickets do include preseason). Of course this was intentional and is the prudent thing to do given the premise of the post.

Fourier is offline   Reply With Quote
Old
09-11-2010, 06:42 AM
  #6
Fourier
Registered User
 
Fourier's Avatar
 
Join Date: Dec 2006
Location: Waterloo Ontario
Country: Canada
Posts: 11,651
vCash: 500
Quote:
Originally Posted by GHOSTofMAROONSroad View Post
FYI, some data on CFL merchandise in the prairies as reported in the press:





http://communities.canada.com/regina...ughriders.aspx

Mind you, that is for CFL and not NHL, which is far more popular. However, note that the Riders "rivaled" the merchandise revenues of the Oilers and Flames according to the article.
GHOST
These numbers may be gross sales of merchandise with their brands. Given the nature of how the NHL credits merchandising revenues to individual teams, and given what we know of the Coyotes and Canes, I would say that GSC's numbers are in the ball park. Though if you throw in the shared revenues this number does go up.

The Oilers have a few (perhaps two) team owned outlets outside of Rexall. Oiler merchandise can however be purchased pretty much every where in Edmonton.

Fourier is offline   Reply With Quote
Old
09-11-2010, 06:53 AM
  #7
Fourier
Registered User
 
Fourier's Avatar
 
Join Date: Dec 2006
Location: Waterloo Ontario
Country: Canada
Posts: 11,651
vCash: 500
Quote:
Originally Posted by GSC2k2 View Post
Where does that put EDM?

It would put them at approximately the NHL average, which is pretty decent, to be frank. The notion that they lose money in a given year is, of course, absurd, absent hugely front-loaded contracts on a widespread basis. Before the lockout, average per-team non-player-comp costs were ~$25M. Inflation is not all that big. Even if we bump up those costs to $30M, you get a positive EBITDA, even with a near-cap player comp line item. Making the playoffs results in a sizeable profit.

What happens in these Canada/US discussions is that there is a tendency to create a single grouping of what really are two distinct groups of Canadian franchises - the TOR/MTL/VAN group and the CAL/EDM/OTT group. The former group can be said to be among the franchises (along with DET, and NYR, to name but two) who “carry” the NHL (same as the top franchises carry leagues in every sport). The second group carry their own weight. At this point in time.
The only part of the equation I would disagree with is the claim in bold above.

As you said you have likely been generous on the revenue side. My high-end revneues were about $88M with much of the difference being on the local brodcast side.

Last year the Oilers paid out over $60M in salaries. LTIR was one reason for the higher number, but we need to remember that teams actually have to pay the NHL salaries of players on one way deals even when they don't count against the cap.

With the salary numbers know, and extrapolating from the Coyote numbers I came up with expense numbers in the $93-95M range. This is not so out of line with your own calculations since I would be surprised if the Oilers cost of doing business did not exceed the league average. Travel in particular, would be much more expensive than it would be for say a team in the NE.

Fourier is offline   Reply With Quote
Old
09-11-2010, 10:42 AM
  #8
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2004
Location: ϶(°o°)ϵ
Posts: 35,955
vCash: 500
Quote:
Originally Posted by GSC2k2 View Post
As an aside, before I review the work that i did (modified by some helpful feedback within the comments that my calcs received from Tyler and others), one of his other commenters got hold of some EDM officials who said the number, and he indicated that it represented all of the revenues of Katz's sports teams, which includes a junior team, a minor league affiliated team (I believe) and a minor league baseball team. As such, the idea that EDM Oiler revenues are $120M has already been shot down.
I need this to be substantiated.


Quote:
...
It was also unclear whether he was using CAD or USD, since he also incorrectly overstated NHL revenues at $3B.

...
Fugu, if you want to convert that to CAD for some unfathomable reason, simply apply the exchange rate differential at your leisure.
I would think your own comment from above would indicate why it's important to state the revenues in their original currency.



Thus, in order for me to apply the appropriate f(x) rate in say September or June or March..... I'd need the HRR in CAD to be accurate.

Fugu is offline   Reply With Quote
Old
09-11-2010, 11:06 AM
  #9
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2004
Location: ϶(°o°)ϵ
Posts: 35,955
vCash: 500
Quote:
Originally Posted by Fourier View Post
Bravo!!!!

My own previous estimates with many similar calculations have been in the $83-88M range, depending on which of the last few years you talk about.

I think you have been generous on many of these numbers. (Oiler season tickets do include preseason). Of course this was intentional and is the prudent thing to do given the premise of the post.

It would help if you showed how you came up with your own numbers.


Fugu is offline   Reply With Quote
Old
09-11-2010, 11:11 AM
  #10
Killion
Registered User
 
Killion's Avatar
 
Join Date: Feb 2010
Location: The Village
Country: Wales
Posts: 30,353
vCash: 500
Interesting. Couple of points.

You've obviously erred on the side of caution with respect to a number of the calculations & projections, which for argument sake is always prudent.

I do however think some of these numbers are short, which taken in totality actually beefs up Edmontons bottom line by at least $10M+.

The other point?; lumping Vancouver in with Montreal/Toronto. IMO their are 3 levels;

1) Toronto/Montreal
2) Vancouver/Calgary
3) Edmonton/Ottawa

Killion is offline   Reply With Quote
Old
09-11-2010, 11:38 AM
  #11
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2004
Location: ϶(°o°)ϵ
Posts: 35,955
vCash: 500
Quote:
Originally Posted by GSC2k2 View Post

In any event, here are the calculations (all figures USD, sorry Fugu ; all revenue categories mirror the streams identified in the CAR revenue numbers - see that thread):
And I will state right now that I absolutely refuse Carolina as the model for a Canadian team. At the very least, stick to Canadian teams, but obviously, Calgary and Ottawa would be closest.

I've already dismissed your ludicrous notion that HRR expressed in local currency is superfluous to the exercise. I think it's critical. Too much fudge factor otherwise.


Quote:
ADMISSIONS

Last official numbers (as per the TO Star) put EDM at $1.2M per game. The exchange rate for 2007-08 was higher (by ~4 cents) than this past year, but I assume that some ticket price increases since then have offset that. I will use the $1.2M without exchange rate offset. My initial number did not capture pre-season ticket sales, so I have bumped it up to (again, conservatively) assume the same revenues for pre-season games (a dubious proposition, but whatever). It is also unclear whether pre-season seats are included in season ticket plans, which would dramatically reduce incremental revenue.

Admissions revenue = $1.2M x 44 = $52.8M
There it is again. No exchange rate offset. So we're just guessing.

I'd prefer a bottom up model, maybe getting some input from Edmonton fans on average ticket price for the last year. Your figure neglects to compensate for any ticket price increases the Oilers might have made since the 07/08 data was published.

Are you saying that ticket prices were constant for the past three years in Edmonton?



Quote:
ADVERTISING

This is a tough one, with little guidance. I would propose to use the suddenly jacked-up CAR number, adjusted upward. I will take $6.1M, adjust it upward by 15% and round it off to $7M.

Advertising Revenue = $7M.
Absolutely rejected. If you're going to try to use comparables, we should get more than one, and preferably other Canadian franchises.

This figure is basically being pulled out of thin air because there is nothing you can claim that says Carolina and Edmonton are comparable in any realistic fashion. Save yourself from disgrace by offering at least a few more reasoned options.
Quote:

NHL REVENUE SHARING

We have good figures for this, courtesy of the PHO bankruptcy. The central revenue sharing amount is just shy of $9M. We will not assume any revenue sharing received by EDM.

NHL Central Revenue Distribution = $9M.
Now this is a figure that would apply equally to all teams. Accepted.


Quote:
TELEVISION

This figure is for local television, as opposed to the HNIC and other national deals which are captured in the immediately preceding amounts above. This is a tough one. Using the $20M received by MTL from RDS based on 82 games + a playoff schedule and based on 710k+ viewers (hgher now), and factoring in fewer EDM games, no playoff games (they would be already given to CBC/TSN anyway) and about a quarter of the audience, you could make an argument for perhaps a third of the MTL portion of the RDS contract at best. Again, though, I will err on the high side and give them $10M (half of MTL TV revenues, acknowledged to be well among the higher team local TV revenues).

Television Revenue = $10M.
And Toronto gets $41m, Tampa was getting $9m, Detroit receives $30m, the Islanders have that legacy deal that garners $17-36m....

Phoenix, according to you, was receiving ~$4m? CBJ garner $2m.

Furthermore, that RDS deal is worth $35m/yr, but it's been reported that $20m goes to Montreal alone, while $15m is central HRR.

I think you're underestimating this badly. I'd bump that number up to $15-20m.

Quote:
FOOD & BEVERAGE

This figure is always much lower than people think. I am assuming that the Oilers get a piece of the concessions bought during hockey games (it may not be the case, but I will err on the high side). Concessions are done via a concession agreement (usually a master agreement) to a third party or parties, in return for a percentage of sales (often with a minimum annual guarantee, or “MAG”). THe CAR figures provide a decent proxy, if adjusted upwards for 15% or so greater attendance for EDM. Let’s bump that up by 20%, just to err on the safe side.

Food & Beverage Revenue = $3M
Agreed.

Quote:
PARKING

I was initially unaware of any parking revenue to which the Oilers were entitled, since they do not control the building or (to the best of my knowledge) own any surrounding lots. Tyler subsequently suggested that they did, and a review of the Northlands annual report confirmed that they get parking revenue as part of their very sweet lease (a public subsidy, don't you know!!).

There are 1100 spots (http://hockey.ballparks.com/NHL/Edmo...lers/index.htm). I note from the Oilers website that one lot is dedicated for season ticket holders. Sometimes, parking is included in the season ticket or suite price. However, in the ongoing effort to err on the high side, I will not discount for that.

1100 x 44 (w/3 preseason games) x $20 = $968,000. Round it up to $1M.

Parking Revenue = $1M
Absent any further info on the parking charge, this is a reasonable starting point.

Quote:
NAMING RIGHTS

THe Oilers do not control the arena. This is in fact a cost line item for Katz, rather than a revenue item. Tyler insisted that EDM gets the revenue for this. Even assuming this were true (and the Northlands website was not helpful on this), this is still a payment from a Katz wholly owned sister company (Rexall). While I was inclined to allow a huge overestimate of $5M for this, I think this was overly generous, since it is really nothing more than a payment from a wholly owned subsidiary to the team.

Naming Rights Revenue = $0
Hey, kind of like one Moyes entity doing business with another one?

I think you have to count it, because if it is paid to the Oilers, it gets counted as HRR.

Let's add the $5m-- but note that it's just a guess.


Quote:
SUITE SALES

Edmonton has 39 suites and 16 “skyboxes”. I do not know the prices, but I will extrapolate from the per-game costs, which I believe are $5k per game for suites. Assuming a modest discount for committing to an entire season, I have assumed $175K per suite and $150K per skybox. This is ~$6.8M for suites and $2.4M for skyboxes. Note that this represents a huge increase over CAR suite revenue.

Suites Revenue = $9.2M
A good starting point. Can't any of our Oilers faithful offer insight? I know the prices for suites at The Joe.


Quote:
MERCHANDISING

This revenue source is far less than people think. THe NHL and its member clubs are licensors, and are paid as such. I am not aware of any manufacturing plants owned or operated by the NHL or the Oilers.

While CAR reported only ~$700-800k in merchandising on attendance that was comparable to EDM, I want to err on the high side. I will accordngly double the CAR figure, despite not having any reason for such a per-capita difference between markets. I will also not make any exchange rate adjustment.

Merchandising Revenue = $1.5M
Again, absolutely rejected. There is ZERO basis for choosing Carolina as a comparable to Edmonton. Furthermore, you're taking a relatively new team trying to establish itself in a nontraditional market, and use that as the basis for extrapolating Edmonton's revenue from merchandising???? A team that has been in existence for ~40 yrs in a town that has little competition for what is arguably the leading sport in that city?

Just no.

Quote:
TICKETMASTER

This figure from CAR appears to have been a single-season adjustment for some reason.

Ticketmaster Revenue = $0
Sure, doesn't mean there isn't something else like this in Edmonton, but it's probably immaterial to the discussion.


Quote:
Where does that put EDM?

It would put them at approximately the NHL average, which is pretty decent, to be frank. The notion that they lose money in a given year is, of course, absurd, absent hugely front-loaded contracts on a widespread basis. Before the lockout, average per-team non-player-comp costs were ~$25M. Inflation is not all that big. Even if we bump up those costs to $30M, you get a positive EBITDA, even with a near-cap player comp line item. Making the playoffs results in a sizeable profit.
If they are average, then they'd fall right in around 14-16 rank, correct? Why are they paying into revenue sharing then? Doesn't this mean they're in the top ten at the very least? (Last figure I saw was ~$3m into revenue transfer. I'm open to getting more accurate info.)

Fugu is offline   Reply With Quote
Old
09-11-2010, 11:46 AM
  #12
Tinalera
Registered User
 
Tinalera's Avatar
 
Join Date: Feb 2007
Location: The Known Universe
Posts: 6,361
vCash: 500
Quote:
Originally Posted by Fugu View Post
And I will state right now that I absolutely refuse Carolina as the model for a Canadian team. At the very least, stick to Canadian teams, but obviously, Calgary and Ottawa would be closest.

I've already dismissed your ludicrous notion that HRR expressed in local currency is superfluous to the exercise. I think it's critical. Too much fudge factor otherwise.
....

Sure, doesn't mean there isn't something else like this in Edmonton, but it's probably immaterial to the discussion.




If they are average, then they'd fall right in around 14-16 rank, correct? Why are they paying into revenue sharing then? Doesn't this mean they're in the top ten at the very least? (Last figure I saw was ~$3m into revenue transfer. I'm open to getting more accurate info.)


My understanding is that the Canadian teams fall into that "special" category where they are considered big enough markets they wouldn't get it (I may be wrong, but I was told Toronto for IE would NEVER get revenue sharing because (layman speak) it's a "sure thing" marketwise-I thought all the CDN franchises were the same)?



What I do see so far is no one is majorly disagreeing with the general gist of the analysis (has that ever happened on these boards?!). Thanks GSC for doing this for us, I fear though if everyone is generally agreeing on the general facts, I fear there won't be much discussion-except maybe on minor points


EDIT, well, Fugu does seem to have some issues with the facts, so I retract that last statement if it please the court

Tinalera is offline   Reply With Quote
Old
09-11-2010, 11:55 AM
  #13
LadyStanley
Elasmobranchology-go
 
LadyStanley's Avatar
 
Join Date: Sep 2004
Location: North of the Tank
Country: United States
Posts: 65,820
vCash: 500
Quote:
Originally Posted by Tinalera View Post
My understanding is that the Canadian teams fall into that "special" category where they are considered big enough markets they wouldn't get it (I may be wrong, but I was told Toronto for IE would NEVER get revenue sharing because (layman speak) it's a "sure thing" marketwise-I thought all the CDN franchises were the same)?
Perhaps just a matter of semantics. GTA/Hamilton might not even be eligible for revenue sharing slice due to population of region. No "special" category because they are Canadian teams. NYC-area teams don't get it either.

(Sharks just exceeded CBA defined population threshold in the last year or so, so "on paper" are a bit more in the red without any revenue sharing, and do "pay in" for playoffs, etc.)

LadyStanley is offline   Reply With Quote
Old
09-11-2010, 12:07 PM
  #14
leer2006
Registered User
 
leer2006's Avatar
 
Join Date: Jan 2010
Location: Transcona
Posts: 198
vCash: 500
Do the Oilers also not own the Whl Oilkings? Who also play out of Rexal Place and get all revenue from that team as well. I'm sure I read that somewhere

leer2006 is offline   Reply With Quote
Old
09-11-2010, 12:13 PM
  #15
LadyStanley
Elasmobranchology-go
 
LadyStanley's Avatar
 
Join Date: Sep 2004
Location: North of the Tank
Country: United States
Posts: 65,820
vCash: 500
Quote:
Originally Posted by leer2006 View Post
Do the Oilers also not own the Whl Oilkings? Who also play out of Rexal Place and get all revenue from that team as well. I'm sure I read that somewhere
They also own an AHL franchise (which has been dormant since 05-06 and is re-starting this season).

But we're looking at NHL Hockey Related Revenue (not the parent company/ies' bottom line).

LadyStanley is offline   Reply With Quote
Old
09-11-2010, 12:32 PM
  #16
Tinalera
Registered User
 
Tinalera's Avatar
 
Join Date: Feb 2007
Location: The Known Universe
Posts: 6,361
vCash: 500
Quote:
Originally Posted by LadyStanley View Post
Perhaps just a matter of semantics. GTA/Hamilton might not even be eligible for revenue sharing slice due to population of region. No "special" category because they are Canadian teams. NYC-area teams don't get it either.

(Sharks just exceeded CBA defined population threshold in the last year or so, so "on paper" are a bit more in the red without any revenue sharing, and do "pay in" for playoffs, etc.)
Thanks, so it isnt' all Canadian teams like I thought-thanks for clearing that up.

Tinalera is offline   Reply With Quote
Old
09-11-2010, 12:57 PM
  #17
Confucius
Registered User
 
Confucius's Avatar
 
Join Date: Feb 2009
Location: Toronto
Country: Canada
Posts: 12,178
vCash: 500
I just looked up Forbes, they pegged Edmonton's revenue at 83 million, which is 10 less than you did. Considering you claim to have went high on the 8 streams you calculated. I'd say you're pretty close. Forbes claimed Edmonton made about 10 million in Operating Income. I'd say they're fine, as a profitable business. They fit in the category of being able to take care of themselves but not have others depend on them.

Confucius is offline   Reply With Quote
Old
09-11-2010, 12:58 PM
  #18
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2004
Location: ϶(°o°)ϵ
Posts: 35,955
vCash: 500
Quote:
Originally Posted by kdb209 View Post

Yup. Teams only get merchandise revenues from the retail markup of the merchandise sold directly at the arena or other club affiliated entities (team stores, etc).

The Oilers do not get any direct revenue from jerseys, t-shirts, whatevers sold anywhere else. All merchandise licensing is done by the League (through NHL Enterprises, LLC) and all licensing fees from manufacturers are treated as Centrally Generated League Revenue and split evenly among all teams.

All those Hawks Stanley Cup T-Shirts out there in Chicago (and elsewhere) - unless they were sold at the United Center, Rocky Wirtz didn't get one cent of that money. (OK, he might have gotten 1/30 of the licensing fees).
Do you think that Edmonton sells more sweaters and t-shirts through its outlets than Carolina? Furthermore, there should be a line for their share from the NHL under Merchandising-Central?

Fugu is offline   Reply With Quote
Old
09-11-2010, 01:08 PM
  #19
LadyStanley
Elasmobranchology-go
 
LadyStanley's Avatar
 
Join Date: Sep 2004
Location: North of the Tank
Country: United States
Posts: 65,820
vCash: 500
Quote:
Originally Posted by Hockeyhopeful View Post
I just looked up Forbes, they pegged Edmonton's revenue at 83 million, which is 10 less than you did. Considering you claim to have went high on the 8 streams you calculated. I'd say you're pretty close. Forbes claimed Edmonton made about 10 million in Operating Income. I'd say they're fine, as a profitable business. They fit in the category of being able to take care of themselves but not have others depend on them.
And Forbes $$s are WAGs as well.

LadyStanley is offline   Reply With Quote
Old
09-11-2010, 01:31 PM
  #20
Tinalera
Registered User
 
Tinalera's Avatar
 
Join Date: Feb 2007
Location: The Known Universe
Posts: 6,361
vCash: 500
Quote:
Originally Posted by Fugu View Post
Do you think that Edmonton sells more sweaters and t-shirts through its outlets than Carolina? Furthermore, there should be a line for their share from the NHL under Merchandising-Central?
Okay, colour me confused: I thought that merchandise all went to the NHL and was divided evenly among the teams-that there weren't "percentages" involved, part of revenues-where am I confused?

Tinalera is offline   Reply With Quote
Old
09-11-2010, 01:36 PM
  #21
Fugu
Administrator
HFBoards
 
Fugu's Avatar
 
Join Date: Nov 2004
Location: ϶(°o°)ϵ
Posts: 35,955
vCash: 500
Quote:
Originally Posted by Tinalera View Post
Okay, colour me confused: I thought that merchandise all went to the NHL and was divided evenly among the teams-that there weren't "percentages" involved, part of revenues-where am I confused?
From kdb's post:
Quote:
Teams only get merchandise revenues from the retail markup of the merchandise sold directly at the arena or other club affiliated entities (team stores, etc).
Once the NHL rolled out its collective (aka cartel-like control of the web, per the NYR owner) website control, teams lost that as a direct revenue stream. The NHL now runs all the individual team sites.

Merchandise sold anywhere else is revenue for the NHL's merchandising arm.

Thus teams would have two categories under merchandising revenue:

1. Local, direct sales, such as the arena stores
2. A 1/30th share of the NHL's merchandising revenue (recall the NHL itself is a non-profit entity)

Fugu is offline   Reply With Quote
Old
09-11-2010, 01:44 PM
  #22
Confucius
Registered User
 
Confucius's Avatar
 
Join Date: Feb 2009
Location: Toronto
Country: Canada
Posts: 12,178
vCash: 500
Quote:
Originally Posted by Fugu View Post
From kdb's post:


Once the NHL rolled out its collective (aka cartel-like control of the web, per the NYR owner) website control, teams lost that as a direct revenue stream. The NHL now runs all the individual team sites.
.....and screwed them up. Hence the reason myself and a few others no longer go there.

Confucius is offline   Reply With Quote
Old
09-11-2010, 01:45 PM
  #23
Tinalera
Registered User
 
Tinalera's Avatar
 
Join Date: Feb 2007
Location: The Known Universe
Posts: 6,361
vCash: 500
Quote:
Originally Posted by Fugu View Post
From kdb's post:


Once the NHL rolled out its collective (aka cartel-like control of the web, per the NYR owner) website control, teams lost that as a direct revenue stream. The NHL now runs all the individual team sites.

Merchandise sold anywhere else is revenue for the NHL's merchandising arm.

Thus teams would have two categories under merchandising revenue:

1. Local, direct sales, such as the arena stores
2. A 1/30th share of the NHL's merchandising revenue (recall the NHL itself is a non-profit entity)
You see, I saw that earlier, and I thought "that's interesting", then my blanked on it lol.

I also realized that you were in fact saying there should be a line (or category) for said merchandise. I read that (wrongly) as you suggesting something about getting their "percentage" as it would relate to total sales (IE they would have bigger Merch sales than Carolina, and from the NHL should bigger cut)rather than the 1/30 which is why I was confused.....confused yet?

As for the arena stores question(now that I understand it lol), it would be interesting to see the numbers-I would THINK there would be a lot more jerseys sold in Edmonton to the pop vs Carolina.

Tinalera is offline   Reply With Quote
Old
09-11-2010, 03:40 PM
  #24
kdb209
Global Moderator
 
kdb209's Avatar
 
Join Date: Jan 2005
Posts: 15,592
vCash: 500
Quote:
Originally Posted by Fugu View Post
Do you think that Edmonton sells more sweaters and t-shirts through its outlets than Carolina? Furthermore, there should be a line for their share from the NHL under Merchandising-Central?
I would guess that Edmonton has higher per-capita sales on NHL Merchandise (and likely somewhat higher arena sales) than Carolina - but I have no real way to quantify that. Also, I have no visibility into team owned or affiliated sales channels - although I suppose Katz could hawk Oilers goods through Rexall stores.

I assumed that licensing revenues (as well as net revenue from merchandise sales thru nhl.com) and all Centrally Generated League Revenue was included in the NHL Revenue Sharing line item in the Carolina numbers.

Quote:
Originally Posted by Tinalera View Post
Okay, colour me confused: I thought that merchandise all went to the NHL and was divided evenly among the teams-that there weren't "percentages" involved, part of revenues-where am I confused?
Yup.

Realize that there are two types of revenues generated from merchandise.

There are license fees paid by the manufacturer to the NHL (NHL Enterprises, LLC) for the rights to use NHL names, logos, and other trademarks. The manufacturer will typically pay an upfront rights fee and a fee for every item produced. This money is collected by the league and divided evenly among all 30 teams.

There are the net revenues from the retail markup and end sale of the merchandise. This goes to whoever actually sells the item. If the item is sold by the team (arena concession stands, team stores, etc) the team gets all or part of those revenues (depending upon their agreements with their concessionaires). If some third party (sporting goods store, Walmart, whoever) sells it, they get the revenue and the team gets zilch. If the League sells it (nhl.com, etc) the revenue becaomes part of the League' central revenue.

Quote:
Originally Posted by Fugu View Post
From kdb's post:


Once the NHL rolled out its collective (aka cartel-like control of the web, per the NYR owner) website control, teams lost that as a direct revenue stream. The NHL now runs all the individual team sites.

Merchandise sold anywhere else is revenue for the NHL's merchandising arm.

Thus teams would have two categories under merchandising revenue:

1. Local, direct sales, such as the arena stores
2. A 1/30th share of the NHL's merchandising revenue (recall the NHL itself is a non-profit entity)
The only caveat to add is that if the total of Centrally Generated League Revenue exceeds $300M - 50% of the amount over $300M is used to fund Revenue Sharing.


Last edited by kdb209: 09-11-2010 at 03:46 PM.
kdb209 is offline   Reply With Quote
Old
09-11-2010, 04:29 PM
  #25
Tinalera
Registered User
 
Tinalera's Avatar
 
Join Date: Feb 2007
Location: The Known Universe
Posts: 6,361
vCash: 500
Quote:
Originally Posted by kdb209 View Post
I would guess that Edmonton has higher per-capita sales on NHL Merchandise (and likely somewhat higher arena sales) than Carolina - but I have no real way to quantify that. Also, I have no visibility into team owned or affiliated sales channels - although I suppose Katz could hawk Oilers goods through Rexall stores.

I assumed that licensing revenues (as well as net revenue from merchandise sales thru nhl.com) and all Centrally Generated League Revenue was included in the NHL Revenue Sharing line item in the Carolina numbers.



Yup.

Realize that there are two types of revenues generated from merchandise.

There are license fees paid by the manufacturer to the NHL (NHL Enterprises, LLC) for the rights to use NHL names, logos, and other trademarks. The manufacturer will typically pay an upfront rights fee and a fee for every item produced. This money is collected by the league and divided evenly among all 30 teams.

There are the net revenues from the retail markup and end sale of the merchandise. This goes to whoever actually sells the item. If the item is sold by the team (arena concession stands, team stores, etc) the team gets all or part of those revenues (depending upon their agreements with their concessionaires). If some third party (sporting goods store, Walmart, whoever) sells it, they get the revenue and the team gets zilch. If the League sells it (nhl.com, etc) the revenue becaomes part of the League' central revenue.



The only caveat to add is that if the total of Centrally Generated League Revenue exceeds $300M - 50% of the amount over $300M is used to fund Revenue Sharing.
Thanks kdb. I didn't know about that little gem- so if the Oil made 320 million dollars in Merch sales, 10 (of the of the 20 over) would go to Rev Sharing? Interesting, so theoretically having massive merch sales for the Oil would go towards funding for one of revenue sharing teams(aka the competition)-wow.

Tinalera is offline   Reply With Quote
Reply

Forum Jump


Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 05:28 AM.

monitoring_string = "e4251c93e2ba248d29da988d93bf5144"

vBulletin Copyright ©2000 - 2016, Jelsoft Enterprises Ltd.
HFBoards.com is a property of CraveOnline Media, LLC, an Evolve Media, LLC company. ©2016 All Rights Reserved.