The Value of a Replica

by Ryan

A few days ago we talked about the free jersey offer for the Sabres next two home games. Puck Daddy talked about it that same day, openly wondering if the Sabres should reconsider variable pricing on tickets. Our original thought was that this was merely an attempt to sell more tickets despite out pricing much of the market, but perhaps there’s something more to it.

Yesterday James Mirtle wrote about the Predators ownership attempting to buy tickets to home games in an attempt to hit revenue sharing benchmarks. Obviously this practice is a little shaky, despite the fact that the league has said this is okay. Mirtle quoted another article discussing the reaction from the NHL’s Board of Governors:

One source among the NHL governors says he and some of his peers are not happy that clubs can buy tickets to hit revenue-sharing targets. They are also not pleased that some low-revenue clubs have started offering larger discounts and more incentives such as merchandise and free trips to people buying single-game or season tickets.

It is all done with an eye to raising enough revenue to land a full share of revenue sharing, which comes out of the pockets of other clubs.

Emphasis mine.

This makes me wonder if that’s what is going on here. You’d be hard pressed to ever find out what’s going on with the Sabres’ front office on much of anything, but could this be a method of maintaining a good attendance record and boosting revenue-sharing marks? These two games have the most profit potential out of any home events, and so not selling a few thousand seats in each would potentially hurt the bottom line. But is it enough to warrant an offer like that for the sake of revenue sharing?

Last season the Sabres finished second overall in attendance figures, with a Winter Classic-aided average of 19,950 per game. This season that number has slipped, and the Sabres currently rank 11th with 18,539 per game. That’s still 99.2% capacity, but a full 1400 tickets less per game. Over a 42 game home schedule that’s a pretty large number, and with higher ticket prices this season that’s an even bigger potential drop. Is that difference in revenue from this season to last season enough to warrant a potential loss in revenue sharing?

Now, it’s very possible that the source isn’t talking about a team like the Sabres. Plenty of teams are having a tougher time putting fans in the seats, including Phoenix, Florida, Atlanta, Columbus, and the Islanders. Their promotions page is filled with deep discounts and “all you can eat” packages to prove it.

Still, the offer the Sabres put forth does seem curious given the situation. Is this merely an attempt to save face and sell tickets in a pricing tier they want to succeed, or is there something much more profitable behind it? Are the Sabres already well into the revenue sharing sector, or is there something more at stake with each free jersey sold? I’m not as well-versed in the CBA and revenue sharing as I’d like to be, so perhaps there is someone out there with these answers.

Either way, it’s an interesting move to ponder. According to a “Team Valuation” by Forbes.com in October, the Sabres received $6 million in revenue sharing last season, and operated at an $8.9 million loss. That’s good for 21st in the league. The question is, are a few free jerseys to sell an extra $800 in tickets enough to change any of that?

5 Comments

  1. Kevin

    One problem with the analysis of the Sabres attendance comes in using the Winter Classic numbers. The Sabres didn’t get any of the ticket revenue per se from that game as the NHL purchased the game from them. All ticket revenue then went to the NHL to pay for the game.

    So last years attendance (for revenue purposes) is likely about the same as this years attendance, plus-or-minus 25-50 seats per game. Hardly enough to matter from last year to this year.

    Now, I am not sure how the revenue received from the NHL from the Winter Classic is used in terms of computing revenue sharing.

    Also bear in mind that the Sabres raised ticket prices to season ticket holders this year, which is 77.6% of capacity and about 83% of the tickets available for sale to the public. Couple that with dramatically higher window prices and I would argue that their overall ticket revenue has increased in the range of 8-10% for the year.

  2. Ryan

    Kevin,

    If all of that is the case (and I do agree that it is), then what’s the point of a promotion like this? Does it do anything to save face when it comes to the Platinum price range? It seems to me that it’s obvious they are trying to cover for something, but isn’t it better to do nothing and not sell those few thousand seats? Why reach so far to sell a few more tickets if it makes you look that bad?

    It’s just… interesting that they would decide to do something that big. Holiday packages and pizza hut value nights are one thing, but $200 worth of merchandise for two tickets is a pretty big freebie. I do agree with your numbers, though, which only makes it more confusing.

  3. Steve

    I think it’s embarrassing that games that used to be a guaranteed sellout now have thousands of tickets available. It’s obvious they set the price too high and that’s all there is to it. I’m sure with the economy the way it is those jerseys aren’t selling as well as they used to either.

  4. twoeightnine

    I don’t think they’re trying to cover anything other than their asses. They know that the platinum games were a mistake and over priced so they’re doing anything they can to sell those out. It’s not like they can drop the prices on them mid-season, anyone who already purchased them would riot.

  5. Kevin

    I think twoeightnine has it, but look at it from an economic standpoint. Every package they sell gives them $400 in revenue they stand no other chance of getting. Apparently even the stupidity of Toronto fans has it’s limits.

    So they throw in a jersey that costs them $50. They still have a net of $350 in ticket revenue, plus parking and concessions.

    So why not do it? They obviously overestimated the market, as we all have been saying since September. They can’t go back and un-do that, so they need to try to make what they can from it.