Keep Calm and let them Carry On

The NHL has tried to figure out a solution for the Coyotes staying in Glendale for over 4 years. They obviously see something there that a lot of us hockey fans don’t see. It could be the 13th biggest TV Market, a rise in youth hockey, expected rebound in the housing market or maybe the NHL doesn’t want to leave a white elephant at the door of Glendale. Whatever the reason, it’s there.

jobingI have said this before and I will try to articulate it again. I never liked people publically commenting on Seattle local politics, I didn’t comment in Sacramento’s business  and I don’t intend to comment on what Glendale should do either. That is up to the Glendale City Council and their constituents. This doesn’t mean I don’t have an opinion, I just think it is up to them. Let the process play out. If you don’t like feeling like a leverage play, stay away from hockey news until July 10th or convince yourself the Coyotes are not moving to Seattle because there is a pretty good chance they aren’t. I am not being pessimistic, I am being a realistic. Teams just don’t move that often and there are countless last minute deals that get done all the time.

I believe in this sport and I very much believe Seattle can and will support an NHL franchise someday. When they come here we are going to light the NHL on fire with support. Look at the Mariners, Seahawks and Sounders! There is something about this city that is extremely loyal to our teams. You mix this with the greatest sport known to mankind, I am convinced

Credit to Frank Grotkopf who designed my new profile pic.

Credit to Frank Grotkopf who designed my new profile pic.

we will sell out every game within 7 years of the franchise moving here. This playoff alone I’ve had several non-hockey fans come up to me and tell me they are hooked, they are eager to see the game live & can’t wait to see an NHL team here. I have started to build a list of all my non-hockey friends I am dying to take to an NHL Game when they come. I urge you to do the same. Yes I know I can take them to a Thunderbirds or Silvertips game but it isn’t the same as seeing the best hockey players in the world on the ice at the same time.

We might end up being a fallback option if Glendale fails to approve their lease with RSE but it might not happen. It is theirs to keep, let them see it through. There will be plenty of time to party when we get a team, no sense getting ahead of ourselves.

If nothing else, we have established ourselves as a hockey. Most of us have known this all along. (I emailed John Buccigross in 2004 telling him what a great city Seattle would be for the NHL..he agreed). We’ve got several great grassroots organizations here, let’s keep it going.

Be respectful, lower expectations and let Glendale see this through.

Potential Gate Revenues in KeyArena

Let me first say that I’ve always felt analyzing Arena Revenues on the success of a franchise is just part of the financial picture & can be shortsighted. Arena Revs are important and it is largely reported that NHL relies on their Arena Gate revenue much more than other professional sports leagues. My point about the Gate Revenues is that it takes time and generations to develop a fan base that creates excess demand to allow for owners to increase prices. So when you hear of crazy cheap prices and promotions in other cities, this should be considered a good thing and part of the process in developing a fan base. Besides, isn’t cheap tickets a good thing to make hockey more accessible to people of all income levels?

Additionally, the NHL should be doing things to diversify their dependence on Gate Revenues. My analysis of the Forbes NHL Valuations from last year showed that 50% of Canadian Team revenues comes from Gate Revenue where most of the other teams are somewhere closer to 33%. With roughly 50% of NHL franchises selling out every game this year, higher prices and therefore higher gate revenues are surely coming. The unfortunate thing here is that teams don’t have much of a choice but to raise the prices because they will be sold on the secondary market for higher prices should they try to keep prices low.

Ok…thank you for letting me get that out of my system

Seattle revenues at KeyArena

I’ve seen a lot of banter over the last few days on the limited capacity in the KeyArena and the impacts to Arena Gate Revenue. There is a lot of concern that because of the small arena, it isn’t suitable for the NHL, even temporarily.

So I decided to look at the price points of the various I apologize for stating the obvious here but there are two elements to Arena Revenue: attendance and ticket prices. Again with the obvious, in order to make up for lost capacity, one can raise the price of tickets. With the added scarcity of tickets this shouldn’t be too hard to do.

I looked at the average attendance per game in 2013 and the average ticket price per team to get at a “projected gate revenue per game” for each team. For the most part, you can assume that the lower the ticket price, the lower the attendance. The loan exception is Tampa Bay who has the 2nd lowest average ticket price but the 8th highest average attendance per game. Ottawa is another anomaly with the 6th lowest ticket price per game but the 6th highest average attendance per game. Even with that high attendance, they rank the 6th and 7th lowest in gate revenue per game. Here is a graph of what the Seattle NHL Team would need to charge to raise the equivalent in Gate Revenues for each team.

Ticket Prices

Note there are two figures that are being compared against the team averages. One price point at 11,000 people and one at 13,000. The 11K figure is popularly reported but Chris Daniels for Channel 5 in Seattle had done some investigating and noted that the figure is around 13K. Important to note that this assumes that all games sell out in KeyArena, regardless of capacity. I don’t recall how some other markets did when playing in a temp facility but it might be a little naïve to think that they could sell out every game.

Here are my findings:

  • Assuming a sellout of 13K, the Seattle NHL Franchise would need to charge an average of $43.18 to bring in the same gate revenues that Phoenix is brining in at $40 per ticket. 43.18 would be the 6th cheapest ticket in the league.
  • Conversely they would need to charge $186.33/seat to bring in what the Toronto MapleLeafs bring in at the gate per night. (I know not realistic but kind of fun to look at.)
  • If the Seattle team charged the league average of $61 per seat they would make more than 6 teams do today at the gate.
  • At $50 a seat, they would be charging the 12th lowest ticket price in the league and still generate more than 4 other teams.

Those are just some fun stats and thoughts to look when it relates to gate revenue. There are things like variable pricing per game where the team could charge a premium: Vancouver, Pittsburgh, Boston, Detroit, & Chicago draw extremely well on the road.

Let me know if you have other scenarios and I will run them against my model.

Seattle is Plan B for Phoenix Coyotes: a crazy 5 days in NHL to Seattle news

Here is a summary of activity that went down over the last 5 days with links to the most important articles/stories.

Wednesday June 12, 2013:

Bettman and Daly triggered the chain of events with interviews saying that they could relocate the Phoenix Coyotes next season if the City of Glendale and the Renaissance Group. The Renaissance Group (RSE) is the interested party in purchasing the Coyotes with the intent to keep them in Glendale. Bettman was very clear he didn’t get into specifics on where the team could move and noted said something to the effect that it was not fair to the fans in those cities.

This was the catalyst that led to Ken Campbell publishing an article later in the day saying the potential relocation city is Seattle and not Quebec. Quebec has been long favored by the hockey community as the destination of the Coyotes should they relocate.

Thursday June 13, 2013:

Not picked up by many, Pierre Maguire gave an interview with a Montreal Sports Radio station where he talked about the rumors about Seattle being the back up option. He said he spoke to the potential (backup) owner and said he was extremely wealthy and money is not an issue. This is when I recognized this was not just a random reporters opinion/speculation. First, he talked to the potential owner and second he was very very wealthy which implied he could work out some arrangements with Hansen to being the Arena without the guarantee of an NBA team. This was my tipping point. Interview is here (go to June 13th post at the ~16:45 mark)

Friday June 13, 2013:

Late in the day a story broke out of Arizona that the gap between RSE and the City of Glendale had been bridged. Craig Morgan is a top notch journalist and very fact based so the jobingstory is very credible. Think of this as a preliminary deal that was negotiated between the city manager and RSE. It still needs to be taken back to the Glendale City Council for Review (6/18) and final approval (6/25).

Saturday June 13, 2013:

During the second intermission of Game 2, (While I was watching on NBCsn at a local watering hole) CBC broke more details about the backup plan. Specifically that the Vancouver Canucks were blocked from moving their AHL team affiliate from playing in the Key Arena next year. It wasn’t clear if the City or the League blocked it. Also revealed was identification of two people from the ownership group that will be moving the team to Seattle: Here is the Hot Stove that trigger the rest of the hockey world to pay attention.

Sunday June 13, 2013:

With a local perspective Chris Daniels uncovers that both Gary Bettman and members of the potential NHL franchise in Seattle have met with the Mayor and other Seattle city officials. Important because this confirms that the NHL is ok with KeyArena as a temp site and that the MOU could be reworked to lead with NHL vs. NBA. (It appears that Hansen is in the loop on all of this progress and helping with facilitation)

Everything else is really just a derivative off of the above. It is being reported everywhere but I’ve seen very little new info beyond the articles I have linked to above.

Important to stress that Seattle is a Plan B/contingency should things in Glendale not work out which we will know by next Tuesday and should hear some more rumblings tonight or tomorrow. Two solid articles laying out next steps/current situation located here: Globe and Mail & one out of Arizona.