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.

5 thoughts on “Potential Gate Revenues in KeyArena

  1. It’s frustrating that some people who are not from the NHL who believe that Key Arena would not work as a temporary venue when, historically, at least 4 teams, Tampa Bay, Calgary, Ottawa and San Jose, played in venues of at least 11,000 or lower for 1 to 3 years before their new arenas were built. Of course, cost of living, average ticket prices and revenue in the 1980s and 1990s were much lower than right now.

    Thanks for your analysis.

    • Yup.

      “However, many teams have made small venues work on a temporary basis. Before the Shark Tank was built, the San Jose Sharks played in the Cow Palace (1991-1993), an arena that seated just over 11,000. Likewise, the Tampa Bay Lightning played their first year (1992) in the 11,000-seat Expo Hall before moving to the much larger Thunderdome. The Carolina Hurricanes played two years (1997-1999) at Greensboro Coliseum (23,000 seats), where they averaged just 8,637 fans. So, there does seem to be a precedent for arenas of this size, but the question depends largely on the magnitude of financial loss that the new owners are willing to absorb while a new venue is built.”
      http://sciencewitness.com/the-nhl-in-seattle-can-key-arena-be-a-temporary-home-2/

      As for Calgary, I’ve played in both the Corral and Key Arena and Key Arena is light years ahead. Still, the Flames move was a generation ago, so maybe not so relevant.

  2. Here is a thought, what would be the cost of an expansion team versus a relocated existing franchise?

    Would it still be cheaper to use a temporary location for x years rather than the upfront cost and startup costs of an expansion club?

  3. An NHL season ticket at Key arena will mean an equal seating choice for season tickets in the new facility when the team moves.

    By the way, I wish Gary Bettman hadn’t named one of the divisions ‘Metropolitan’. C’mon Gary…..the Seattle Metropolitans were born in 1915 and beat the Montreal Canadians to win the Stanley Cup in 1917. They defeated the Vancouver Millionaires to go to the 1919 Stanley Cup final which was cancelled because of a flu epidemic. The were almost a dynasty from 1917 to 1920. Go Metros.

Leave a Reply