The education of the Buffalo hockey fan
By BOB DICESARE
4/24/2002
Good morning, class. Today's a special day. We're going to set aside our standard subjects and, at the request of Buffalo Sabres General Manager Darcy Regier, examine the economics of being a small-market hockey team. After all, Mr. Regier has said the hockey fans of Buffalo need to be educated, so let's see if we can't strive to make ourselves GM savvy.
I'll open it right up to questions. Yes, Danny, go ahead.
"Uh, Mr. Rigas - he's the owner, right? - well, he bought a minority interest in the Sabres in 1994. The team was claiming at the time losses of $2 million to $4 million per season. Owners and general managers throughout the league were already grousing about rampant salary escalation that was destined to further challenge small-market teams. So why, in 1997, did the National Hockey League announce it would expand and, at the same time, extend through Sept. 15, 2004, the existing collective bargaining agreement the owners despised? And why didn't owners like Mr. Rigas stand in vehement opposition?"
That's a very good question. Buffalo was getting ready to open its new arena. Those involved with the team were convinced a new arena would enhance revenues and financially stabilize the franchise. But they might have seen that, without a new CBA, salaries would, as they like to say, outpace revenues.
Marielle? Do you have a question?
"My daddy says he used to be able to afford hockey tickets. He says that during the Sabres' last year in the Aud, a season's ticket for a balcony seat cost from $5 to $10 per game. He said you could walk up off the street and buy a seat for as little as $10 and not more than $20. Now the cheapest seat in the balcony is $18 with a season's ticket. And the most expensive is $39 if you don't have a season's ticket. That's a big increase. And all the other seats have gone up a lot as well.
"The team's payroll during that last season in the Aud was $20 million. This season it was about $28 million. Ticket prices have doubled or tripled. The payroll has increased less than 50 percent. Yet the team now claims losses of around $10 million, two or three times more than before the arena. I'm baffled by the mathematics."
As well you should be. The conclusion we might draw is that Buffalo needed a new arena like it needed a rail line running down the middle of Main Street. The idea was the arena would attract more concerts and other events, widening the revenue stream. But that really hasn't happened.
Brittany?
"Remember when the Buffalo Bisons used to have all kinds of concerts after their baseball games? Then they didn't have as many because the mid-sized shows were going to places like Darien Lake and a lot of the bigger shows were going to cities where they could sell two or three dates. Why wasn't it apparent to those who favored building the arena that they might have trouble getting the concert revenue they were projecting?"
Not a lot of thought was given to that matter, was there?
Yes, Casey?
"I think the Sabres borrowed money to build the arena. So now they have to pay for that loan. I don't think the hockey team's losing all that money. I think most of it has to do with arena debt. I hear the Nashville team will be profitable this season. Edmonton said it would have been profitable if it made the playoffs, which means it almost made money. So, if the Sabres had stayed in the Aud, they wouldn't be in the predicament they claim to be in even though they said a new arena was the solution to the problem. Or maybe their losses aren't that great. Why don't they open their books?"
A very salient point, Casey.
Josh?
"Michael Peca was my favorite player. He says he would have signed for $3 million per season. That's a lot of money, but that's what players like him make. The Sabres signed Stu Barnes for more than that. Miroslav Satan and Alexei Zhitnik make more than that. It seems to me that the GM, that Darcy guy, blew it. He really didn't build the team that went to the Stanley Cup finals but he sure has dismantled it. This team isn't nearly as much fun to watch."
It does seem as though the Peca contract dispute was poorly handled.
Jillian?
"But the GM got a new six-year contract after that. Isn't that a lot of years? It's like being a senator!"
There certainly aren't many general managers given six-year contracts for winning the Stanley Cup, never mind driving the team's best all-around player out of town. It makes you wonder, doesn't it, how in tune the team's owners are with the sports business.
Let's go way in the back, to Alana.
"I hear the general manager made more money this season than the starting goaltender. That just seems crazy to me."
I've heard that, too. General managers are well-paid, but I can see where it would turn people off when a GM cries poverty while bathing in a high, six-figure salary.
Alex?
"Did you hear what he said the other day? He basically said that hockey fans in Buffalo should come to grips with having a lousy team. Then they announced an increase in ticket prices. I watched the news and they didn't show people rushing to the ticket windows."
Does that surprise you, Alex?
"Not really. I mean, if the GM isn't excited about the team, why should we be? If he can't fix it then why are they paying him all that money?
We're running out of time. Anybody else. Lauren?
"Let me see if I have this straight. This isn't about being a small-market franchise. It's about mismanagement of a small-market franchise. If teams like Edmonton and Nashville are doing OK financially, Buffalo certainly should be doing OK. We're suffering as hockey fans because no one stood up to Commissioner Batman when he wanted to expand, because nobody said a new arena might not be a good idea, because no owners, including this one, made a big deal out of extending a collective bargaining agreement they claim ruins the competitive balance. This isn't our fault. It's their fault."
Hmmmmm. I can see your reasoning.
Put your hand down, Danny. It's time to move on to other subjects.
"Please! Just one thing."
What is it?
"This was fun. I think we got a real education."