The second part of an overview of the NHL’s money-losing franchises in hopes of better understanding the factors behind eighteen NHL teams losing money in 2010-11.
In Part One, I listed the NHL teams which lost money, based upon Forbes.com’s annual “The Business of Hockey” reports from 2005-06 to 2010-11. In the second part of this series, I look at which teams lost money each season during that period, seeking reasons behind their losses.
The Perennial Money-losers.
According to the lists provided by Forbes.com, six teams – the Nashville Predators, Florida Panthers, Columbus Blue Jackets, Phoenix Coyotes, NY Islanders and Atlanta Thrashers – annually lost money from 2005-06 to 2010-11.
That’s right, they lost money even in the early years of the current CBA, when the salary cap ceiling and floor were at their lowest.
The Predators (11th in ’06-’07, 19th in ’10-’11) and Blue Jackets (15th in 2008-09, 14th in 2010-11) were in the bottom third of the league in payroll for all but two seasons, the Coyotes (19th in ’09-’10), Thrashers (11th in ’05-’06)and Islanders (18th in ’05-’06) for all but one, while the Panthers were in the bottom third in payroll throughout this period.
The problem wasn’t payroll, but consistently poor on-ice performance, the Predators being the sole exception. The Panthers never made the playoffs from ’05-’06 to ’10-’11, while the Islanders, Blue Jackets, and Thrashers only made the post-season once during that period, while the Coyotes made it twice. As a result, their respective attendance figures were regularly among the league’s worst during those six seasons.
That also had an effect for most of these clubs upon their fan cost index (FCI), which calculates the average cost (tickets, concessions, parking, etc) for a family of four to attend an NHL game.
In ’05-’06, the Thrashers were 14th overall in FCI, but by ’10-’11, it had fallen to 23rd; the Blue Jackets from 18th overall to 22nd, and the Panthers from 11th to 15th. The Predators never placed higher than 19th overall throughout that period, while the Coyotes have consistently ranked among the lowest in FCI in the NHL. They were 30th in ’05-’06, 27th in ’10-11. Only the Islanders saw their FCI increase, from 17th in ’05-’06 to 13th by ’10-11.
So, while the NHL salary cap was rising, these clubs were usually in the bottom third in the league in payroll, while most reduced their respective FCIs.
Other issues came into play over this period for these teams.
As per Forbes.com, the Islanders play in what is generally considered the worst arena in the league, and their lease provides them only ticket revenue. The Blue Jackets, meanwhile, paid $5 million a year for the right to use Nationwide Arena and paid the stadium operator to run the building, plus they received no revenue from parking or arena-naming rights.
The Panthers went through an ownership change in 2009, while Forbes.com also noted the South Florida economy by that time was a wreck, which didn’t help them at the turnstiles.
While the Coyotes over the final two years of this period were a regular playoff club, the hangover from years of previous poor performances, combined with ongoing uncertainty over the club’s future in Arizona, kept their attendance near the bottom of the league, as well as on the list of money-losing franchises.
The Thrashers were victims of an ugly legal fight among the members of the Atlanta Spirit group, which also owned the NBA’s Hawks and the arena the two teams played in. The Spirit group was more interested in the Hawks and the arena than in the Thrashers, neglecting the team whilst spending several years attempting to sell it, first to local interests and finally, in 2011, to True North Sports and Entertainment, which moved the club to Winnipeg that year.
Now reborn as the Jets, it will be interesting to see what their numbers are for 2011-12. While the Jets last season played in the league’s smallest venue in the league’s smallest market, they also played before sell-out crowds at home, charging the third highest fan cost index (FCI) of $485.52 (which also included the second-highest average ticket price of $98.27), whilst maintaining the league’s sixth lowest payroll.
Throughout this period, the Predators were the only club to almost consistently (five out of six seasons) make the playoffs. Nevertheless, from ’05-’06 to ’09-’10, they were never higher than 23rd overall in league attendance.
That trend changed in ’10-’11, when they rose to 21st, which could explain why they lost less money that season compared to the previous one. It’ll be interesting to see what their figures for 11-12 will be, as their attendance rose to 20th overall, playing to over 97 percent capacity.
They also went through a complicated sale to a local ownership group in 2007, which at one point defaulted on a $40 million as one of their minority partners declared bankruptcy. Despite their on-ice success and slow but steady improvement at the gate, Forbes.com noted the Predators were still carrying a lot of debt.
In Part Three, a look at the “near-perennial” money-losers.