Oct 162009
 

So the word out of Phoenix last night was that the announced attendance for the Coyotes game was 6,899 but that probably more like 5000 people actually showed up. Clearly attendance in Phoenix is going to be a major issue this year, but it won’t just be Phoenix if early attendance numbers are any indication. Here are attendance numbers for three other southern U.S. teams that have played at least 3 home games so far.

Carolina Hurricanes

2008-09 2009-10 Difference
18680 18680 0
18680 16186 -2494
15016 13597 -1419
15635 14053 -1582

Nashville Predators

2008-09 2009-10 Difference
17113 14797 -2316
13259 14209 950
12042 12179 137
14704 13103 -1601

Tampa Bay Lightning

2008-09 2009-10 Difference
18552 17454 -1098
14420 14212 -208
15191 14126 -1065

It is still early but those are significant drops in attendance figures. Nashville is going to be particularly interesting to watch because they need to keep attendance above the 14,000 mark to maintain a full share of revenue sharing. Failure to achieve an average of 14,000 will cause them to lose 25% of their revenue sharing allotment which would equate to close to $4,000,000 which is significant to any team, particularly one that is struggling to break even. If Tampa struggles on the ice and fans become more disinterested because of it this could become a problem for them as well and we already know how unstable their ownership situation is. This despite a significant drop in average ticket price for Lightning games.

What is also interesting is that falling attendance may not be limited to non-traditional southern US hockey markets.

Ottawa Senators

2008-09 2009-10 Difference
20182 18075 -2107
20179 19360 -819
19318 17014 -2304
18952 17732 -1220

The rise in the Canadian dollar will help offset some of the drop in attendance revenue and if Ottawa can play well then I can see their attendance improving, but clearly some of the luster of high flying Senators teams of a few years ago when they sold out every game has faded away.

Detroit Red Wings

2008-09 2009-10 Difference
20066 20066 0
19011 19122 111
20066 17782 -2284

We all know that Detroit is an extremely hard hit city economically and it may start reflecting in the Red Wings attendance this year. The 17,782 that showed up to watch the Red Wings last night is 1,080 fewer fans that last years lowest attendance level of 18,862.

I revisit these teams and also take a look at a few other franchises (Atlanta, Florida, Dallas, etc.) in a few weeks once each team has played a few more home games but early indications are not all that good for some franchises.

Jan 222009
 

Over the past several weeks we have had several tidbits of information come out giving indication to the general state of the NHL economy.

Dec. 22: NHL defies economy, projects rise in revenue

The NHL projects a 2 percent increase in league revenue for the 2008-09 season despite facing one of the worst economic crises to hit North America since the league contracted from 10 to six franchises around the time of the Great Depression

Dec. 24: Report: Coyotes receiving financial assistance from NHL

According to The Globe and Mail, the Coyotes are receiving financial assistance from the National Hockey League to keep the team afloat. The report indicates the team is receiving advances on their share of league revenue.

Jan 18: Paul Kelly Admits Escrow Payments to Rise”

Last night between games on HNIC, NHLPA executive director Paul Kelly was interviewed by Ron MacLean (link to HD video of the entire interview). The first thing they discussed was the rumor that escrow payments made by the players would be rising from 13% of their pay to 17-20%. Kelly wouldn’t say exactly how much the payment would rise, but he did answer in the affirmative that the 17-20% range was accurate.

Jan. 22: Report: Predators may buy own tickets to ensure NHL funds

According to the Tennessean, Predators officials have discussed the option of buying up unsold tickets to ensure they collect the maximum revenue-sharing from the league. Earlier this month, an ESPN.com report indicated the Coyotes forfeited 25% of their full share for failing to meet specific targets.

So, what can we conclude from all of this. First off, not everything is all rosey in all NHL locations despite what Gary Bettman would want you to believe. Clearly the Coyotes and Predators continue to struggle financially and I am sure Tampa, Florida, Atlanta, the Islanders and a few others are not that much better off.

Second, the players are going to have to give back a huge chunk of money because their salaries will far exceed the percentage of revenue they are allotted. This, I believe, will be a first for the players under the new CBA and it will be interesting to see how the players react to not getting as much money as they contracts stipulate. We can be pretty certain that the players will decide not to opt out of the current CBA (a smart thing to do in tough economic times) but when it expires for real in a couple of years when hopefully the economy has turned around and they might be in a better bargaining position, lets see how much of an issue this becomes.

Finally, the 2% revenue increase should give us some insight into what next years salary cap could be. When the salary cap gets set it is based on the previous years revenue and then the players can opt to boost it by up to 5% pending revenue growth projections. The players have always opted to do this including for this season. But, revenue growth has not grown by 5% and thus the cap is essentially higher, by about 3%, that it should be based on this years revenues and this will be reflected in next years salary cap numbers.

A few months ago <a href=”http://www.hockeyanalysis.com/?p=804″I discussed a variety of scenarios of revenue growth and the falling Canadian dollar and the impact they will have on the salary cap next season. I can now refine that projection using the 2% revenue growth number.

2007-08 Revenue: $2.62 billion
2008-09 Revenue: $2.67 billion (estimated based on 2% growth)

With revenue of $2.67 billion next years salary cap will be approximately $55.8 million with the players having the option to increase it to $58.2 million. So far the players have always opted to increase the salary cap the maximum amount they are allowed to but with projections being next years revenue will drop, not increase, it is quite likely they will not opt to implement the salary cap increase.

The NHL probably has fairly good projections for the remainder of this years regular season as many teams have sold a significant portion of their tickets and advertising revenues are all pretty much booked and accounted for. Playoff revenue is a different story as not a single playoff ticket has been sold yet and if the economy is still in the dumpers as many people expect, will NHL teams be able to jack up playoff ticket prices as much this year as they have in the past? If they can’t, that 2% revenue growth could be an optimistic number. Only time will tell but everything seems to be pointing to a drop in the salary cap of $1-2 million next season and quite possibly stagnant or dropping further the following season.