Did Eighteen NHL Teams Really Lose Money?

Last November, Forbes.com listed 18 NHL teams as losing money, but that number is being challenged by some hockey bloggers and fans.

Considering some of the NHL’s top teams (San Jose Sharks, Pittsburgh Penguins, Washington Capitals, LA Kings) were listed among those which Forbes.com indicated were on the negative side of the ledger, its understandable why there’s scepticism over those numbers.

I’ve read several fans and a few bloggers questioning Forbes.com’s numbers in recent weeks. Blogger “J.J. from Kansas” of “Winging It In Motown” put it best in a recent observation:

“Every year, Forbes releases a valuation of NHL franchises in which the magazine does a lot of research not only to hammer down what each team is worth, but also how their cash flow works. Last year’s rankings showed 18 of the NHL’s 30 teams running at an operating loss. The problem is that NHL teams are run as private businesses and private businesses don’t release their financials for review. Forbes builds their data off what they can gather off publicly available data, but that data is extremely sensitive to Hollywood accounting. For instance, last year, the Colorado Avalanche reported $7M more in gate receipts than theFlorida Panthers, despite the Panthers drawing 1,100 more fans per game and having a higher average ticket price.

The Truth: Sadly, only the league, and possibly the players know the truth. Did the Panthers lose money? Yeah, probably. Did the Capitals lose more money than the Panthers? Probably not. Did the Sharks lose more than both of them? Come on now. Part of the reason for the Panthers’ gate receipts being so low is that their lease agreement leaves nothing to the team for luxury box sales. Of course, the Panthers lease their arena from a company owned by the same company that owns them, but Forbes doesn’t count that.”

For those unfamiliar with the term “Hollywood Accounting”, here’s the Wikipedia description:

“… the opaque accounting methods used by the film, video and television industry to budget and record profits for film projects. Expenditures can be inflated to reduce or eliminate the reported profit of the project thereby reducing the amount which the corporation must pay in royalties or other profit-sharing agreements, as these are based on the net profit.

I recently referred to Forbes.com’s evaluation in my six-part series examining the NHL’s money-losing franchises. While I agree with “J.J. from Kansas” that the numbers provided for some clubs may be worthy of a justified, healthy measure of scepticism, since the NHL doesn’t make their books public, the Forbes.com report remains the best available data to go by.

Few would quibble over the fact the Phoenix Coyotes, Columbus Blue Jackets, Tampa Bay Lightning, NY Islanders, Carolina Hurricanes, St. Louis Blues and Anaheim Ducks lost money during the 2010-11 season. Even “J.J.” agrees the Florida Panthers probably lost money that season.

For that matter, no one will question the Winnipeg Jets lost money in that season, their last in Atlanta as the Thrashers.

A decline in attendance also accounted for the Minnesota Wild’s losses in 2010-11, while the Buffalo Sabres losses were due in part to being the smallest and poorest NHL market in the United States.

In its report, Forbes.com does provide a brief analysis of each club, where some explanation for some of those losses can be found.

As I noted in my series on money-losing NHL teams, Forbes.com in November 2010 observed the Sharks losses for 2009-10 were due to:

“… a high payroll and a lease that funnels some of the arena revenues to the city. On the years that it is in the red its owners have funded the P&L statement with capital calls rather than debt. The Sharks contribute about 55% of the revenue to its parent company, Silicon Valley Sports & Entertainment, a $155 million a year business that is involved in everything from ice rinks and tennis tournaments to mixed martial arts and apparel.”

I daresay those factors, as well as a fan cost index among the bottom third of the league, continue to explain the Sharks losses for 2010-11, and their reported $15 million in losses for 2011-12.

As I also pointed out in my series, the Capitals are part of Monumental Sports and Entertainment, which suggests – like the Sharks – part of their revenue may be redistributed back to the parent company.

To be fair, I’m also sceptical when I see a team like the Pittsburgh Penguins showing losses in its first full season in a new arena:

“The Penguins sold out every game in their inaugural season playing in the $321 million Consol Energy Center. The Pens control the arena and generated revenue from a lot of non-NHL events, such as concerts, professional wrestling and the circus. The Penguins enjoyed the highest local television ratings in the NHL last season, averaging 8.7, 7% more than 2009-10. Mario Lemiuex continues to be innovative when it comes to creating sponsorship and marketing platforms for his team.”

But, as noted earlier, NHL teams don’t open their books for public scrutiny, so we have to defer to the Forbes.com evaluation.

It should also be pointed out the NHL, during the last lockout, dismissed Forbes.com suggestion the league’s losses were less than half of what it claimed to be. During the current lockout, however, the league has not been critical of the site’s report of eighteen teams losing money in 2010-11.

I’m certainly not implying Forbes.com is skewing the data. Indeed, they’re doing us a service by providing insight into the business of hockey, giving us some idea about NHL franchise values. Obviously, they’re doing the best they can with what’s available.

Given how guarded NHL teams are with their books, fans will never know what the true figures are, how many teams are truly losing money, and which clubs may be employing “Hollywood accounting” to their figures.

Ultimately, fans will have to use their best judgement when reviewing those figures.


  1. Great writeup. I definitely think the Forbes numbers tell us some really good information; I just kind of bristle at the thought of people using them as the absolute truth, especially in cases where a team and the company from whom they lease the arena are owned by the same parent.

    Much like the NHL’s last offer though, I consider the Forbes numbers a very good starting-off point for discussion rather than an end-point. Thank you for the consideration.

    • Thanks for the kind words, JJ. Keep up the good work over at “Winging It In Motown”.

  2. I wonder where the Blackhawks fall into all of this. Didn’t they claim that, despite having a huge arena that sold out often, they lost money as well?

    • That was their claim back in 2010. Rocky Wirtz claimed it would still take some time to recover from their years of losses.

  3. I, like everybody who reads this, am a big hockey fan. How big? Well, I have 15th row center ice seats at Centre Bell for the Habs, see twenty + games a year, but live in Hong Kong! How many fans travel 10,000 km to see games? I too have had it. I won’t stop watching and going to games, but this lockout can last the year, and the next as far as I am concerned and I won’t mind. Geoff Molson is paying me 3% which is better than the bank, and I can save a fortune on air fare. In the mean time, I have sent my invoice for my recent flight (for the home opener) to Mr. Molson….

    • Care to share those seats at an eventual game?

      Haha, I know, I know – but it was worth a shot!

  4. Some of the highest paid people in any corporation are the tax experts and accountants…CFO’s if you will and heir job is to see that the corporation (team) uses every loophole available to pay the least amount of taxes. To do that they must make it look as though the corporation is barely keeping its head above water or else the IRS/revenue Canada comes knocking for its fair share. So using, what will now probably be a daily catch phrase, “Hollywood Accounting” they submit their financials to the NHLPA and cry poor all the way to the bank. Except no one in their right mind should take these statements at face value and as we are all finding out … Just like in that old TV series The X Files …the truth is out there but this is going to take more than Fox Muldar and Dana Scully to debunk myth from truth.

  5. Well said Captain Ahab. “Hollywood Accounting” !!! thats funny ill have to use your quote.
    I use to take my kids to NHL games at the Coliseum for $20 bucks a ticket back in the 80s and now that wont even pay for parking.
    Ah well wonder when the owners greed will end!!
    I really enjoyed my recent trip to watch a Seattle Seahawk game, it was awsome I think ill get season tickets for next year.

  6. Hollywood accounting goes on in every business in the world and most people also use it doing their own taxes so using that against the NHL is just silly.
    Blaming the owners as greedy with high ticket prices is one sided as if you check what players salaries were in the 80’s and what they sre now it would be a much clearer reason why tickets are so high.
    I have even seen interviews with players from the 80’s and even they are in awe of the salaries now made but also make a point to say that with salaries being the main source of owner cost that reflects in the ticket prices.
    That goes for all sports and not just the NHL.
    I think it is at a saturation point and that is the reason i have big doubts about revenue increases going up as much as some predict.
    Sports now depends most on the TV dollars and that is not something easy to predict especially in hockey.
    Greed is on both sides but i always look at it as if the fans demnded players salaries all get cut in half and that cuts ticket cost in half the owners would do it but the players would go berserk.
    But i am a bit prejudiced here as i have never known an owner but known nhl players past and present and they really could care less about the fans as long as they made the big bucks that is all that mattered.
    some even called fans a pain in the ass because they were fed up with autograph seekers and picture takers.
    back when i was young in the 60’s i met many players and they were nice and honoured to sign autographs and chat and shake your hand.
    over the last few years i have seen some tell youngsters to get lost and stronger language to adults.
    just some of many reasons why siding with players in sports is no longer for me.

  7. So refreshing to see a write up that puts reported NHL team losses in context. Nothing drives me crazier than people taking pro sports teams’ reported losses at face value. They all exist within corporate structures, and in many cases, are there to help reduce tax liability. We don’t really know who lost or earned how much money, and I wish the sports media would stop parroting the figures whenever there is a lockout, relocation threat, or demand for a new building.

  8. TopRightCorner
    I have a business and i do my best to write off my related business expenses. But owning a pro sports franchise is a different beast. There is no comparison in what you are able to write off as an individual vs a small business vs a pro sports franchise. I couldnt afford to hire one of there accountants never mind the numerous accountants and tax litigators these guys employee.
    As to the character of the players today: you may be partly right it all depends. It wasnt long ago that Trevor Linden played in this league and he was/is an awsome individual. So it all depends we are all different as human beings.
    As far as the owners go they have all become greedy with no care (edmontons owner)
    Years and years ago owners of large businesses were proud to have the majority of a small town work for them and they were socially responsible. Todays those mills are all shut down.
    I can go on and on but enough said I gotta get back and see how everyone is doing here.