Welcome to the Real World, Part #1?

Question

You are the potential owner of a team in Winnipeg.
The costs associated are after discussions with the city of Winnipeg and the Province of Manitoba for tax breaks. The MTS Centre currently holds less than 14,000 for hockey, and as such, we will be using an average ticket price of $80 USD (most expensive in the league)

Players $50,000,000.00 USD
Staff $5,000,000.00 USD
Manitoba Taxes $1,000,000.00 USD
Winnipeg Taxes $ 300,000.00 USD
Winnipeg Arena Lease $ 2,000,000.00 USD
Travel Costs $ 3,000,000.00 USD
Hydro for Winnipeg Arena $ 3,700,000.00 USD
Water for Winnipeg Arena $ 2,000,000.00 USD
Ice Making Costs $ 2,000,000.00 USD
Advertising $ 5,000,000.00 USD
Total Costs $74,000,000.00 USD

Potential Revenues
For revenues, The MTS Centre currently holds less than 14,000 for hockey, and
YOur advisors have told you the hughest ticket price the market will bear is $56 We have had discussions with several large corporations but we are unable to significantly increase corporate revenue. Television revenue is also scarce in Manitoba as well so no significant increase there.

Ticket Revenue $32,144,000.00 USD
Corporate Revenue (Total) $10,000,000.00 USD
Local Television/Radio $ 3,000,000.00 USD
CBC $ 4,5000,000.00 USD
NBC/Versus $ 2,000,000.00 USD
Revenue Sharing $4,400,000.00 USD

Total Revenues $56,044,000.00 USD

What do you do to make up the shortfall?

Sunsfan
The arena IS new

Warren,
How would you sell tickets at $80?

Zapcity
I thought the amount to make ice, water, hydro was a little high as well. Doing some further research in the past year, and Winnipeg is actually financially better suited to make ice that Dallas, Phoenix, and Denver because the cost of water and ice making is a LOT cheaper.

These are the numbers a prospective Winnipeg group came up with that wanted to purchase the Penguins in 2005 btw

Mel
If the Winnipeg owners owned the rink, it would be much easier because revenue from concerts, events would offset the hockey losses. But the city owns the arena...AND the city gets the money for the naming rights from MTS

Darren
You are looking at it correctly. All the salary cap does, is prevent the rich teams from spending every cent on players. It doesn't make the teams in Columbus, Calgary, Edmonton etc any better off. It just prevents them from being outbid for every player. (In reality, it makes the rich richer - they just can no longer spend their riches on anything other than equalization)

Notes
I believe a team can work in Winnipeg, and through the various answers there are things that would work.

As a city that is 'actively' trying to pursue an NHL team, you would have thought the new arena would have been bigger than the old arena (one of Shenkarow's arguments was that a bigger arena would have kept the team).

Bob,
People far more in the know than I am....say that the team would be doing better in Winnipeg than it is now in Phoenix

Answer 1

I thought the new Winnipeg arena held more like 17,000 but I guess I am wrong because you seem to have the numbers to back it up. Research tells me it is over 15,000-lower than I thought.
Small market teams don't spend 50,000,000 is one glaring error I think. Nor do you need to spend that to compete if run well.
Also, everything being listed in US dollars is a plus right now because the Canadian dollar is worth more, don't hold much faith in that though because it can always change.
I am not personally on a high horse about Winnipeg having a team but I am sure these numbers crunch better than some in the U.S. Nashville can have a 50,000 seat arena as far as I am concerned and what is the difference if they only attract 10,000?

Answer 2

Here's a simple answer: Don't hire pro players. Pull a "Major League" and get a few players from the Manitoban Penal League.

But seriously, less than 14,000 for hockey??? Seems like that would be the biggest drawback to acheiving profitability. Let's say an extra 1000 people at your avg price of $80 is $80,000 per game is another 3.2 mil.

Maybe the best bet is to pull in more advertising revs? Turn this into NASCAR and tattoo the uniforms with ads. Put subliminal messages in the Jumbo-Tron messages.

Answer 3

Trade a high-salary player for say an early round draft pick. I know this would degrade the caliber of the remaining team's play, but this would save a bunch. They would also now be in a much better position for later on in the season when teams are usually scrabbling to sign free agents for a run at the cup. Winnipeg would have more 'cap room' (having released the high salary player) and able to pick a more expensive better free agent if they got to a play-off position.

Either that or you have to have an amazing promotional department that could sell tickets at $80. I know that Winnipeg has always been a hocky-town, so that might fly.

Answer 4

Sounds like Gary Bettman wasn't just blowing smoke.The lockout/strike was for real.Costs and parity are related.Owners in the big markets with unlimited resources spoiled all the players.If your a star and I am a star but you make 3 million more a year.I am now unhappy with my 2.6 million a year.The players get most of the revenue.The owners are LUCKY to only loose a million a year.Mr John McConnell has lost money every year in Columbus.And we have a great fan base with a poor on ice team.The saddest part of reading your costs to me,is thinking how awesome a team would be in Winnipeg.I wish the league was split 50/50
with US and Canadian teams.Communities are being denied watching the highest level of Hockey live because of outrageous salaries and tremendous operating costs.That's not the spirit of the game,or at least it shouldn't be.

Answer 5

First keep to low end of cap can save $15 million.
Get an arena with 19,000 seats to make up $16 Million more and try and include all other incomes (programs, items with team logos etc). The money could be there.

Tough slugging still.

Also my est for revenues just from tickets is 13 mill more than yours using the 14,000 seat plan. Wanna check the figures?

Answer 6

I would move the team to Phoenix where there is plenty of corporate money to utilize, and roughly over 4 million people in the metro area to buy tickets at a larger arena, even though it wont be a sell out crowd, it would most likely gain average attendance higher than the 14,000 max at the MTS Centre.

Sounds familiar doesn't it?

Answer 7

Firstly, why would the team spend $50 mil on players? That's the max of the cap, the Coyotes will only spend $30 mil on their players this season (well I guess that would explain why they suck). Anyway, if your numbers are all correct, and I will trust you because you do seem very knowledgeable (and also because I have absolutely no idea how much any of those expenses are), then I guess yeah, it isn't possible to put a team in Winnipeg.

Answer 8

You begin with an present of $20 mil and move from there if you're Fox or ESPN you remind the folks asking $50 mil that if you don't duvet video games there is not any motive for any of your sporting events indicates (adding country wide radio) to remind folks that hockey even exists. It isn't the stations activity to take a look at and persuade sponsors to pay extra. If they stroll away I'd want them success to find a high-quality outlet for his or her product. Then, snigger my *** off once they signal on with an proprietor owned (Ed Snyder's Comcast) cable community realizing that a gigantic percent of Americans do not even get that channel. Lastly, I'd fill the empty time with bowling, poker or the following fad in TV sporting events so as to nonetheless do good rankings clever. On a extra severe notice the league will have to fear much less approximately their country wide product, the NHL may be very powerful domestically. They will have to take a near seem at who isn't doing good of their vicinity and take into account motion.

Answer 9

Programs here, get yer pro grams here. These grams are for pros buddy, they're a hundred bucks. Pro grams here.
Since the value of a team in Winnipeg is not going to increase by $20,000,000. a year, what time does that bus leave for Phoenix anyway?

Answer 10

THANK YOU!!

I doubt this will end the Winnipeg fans' campaigning, but your math speaks volumes to those who keep on insisting a team can be supported there.

Btw, $2M for water alone? Yikes.