What Winnipeg Can Afford

Always such an ill-informed discussion, often filled with ludicrous figures and assumptions.  One thing needs to be made perfectly clear.  There is one key factor when running a campaign like I do.  You absolutely need to know your city.  Inside and out.  Good and bad.  Thick and thin.  And let me tell you, the Winnipeg Jets never left town because there weren’t enough fans or because we wouldn’t pay the prices and the same misconceptions won’t inhibit a return to the Manitoba capital either.  Neither will the capacity of MTS Centre (a perfectly intimate 15,000+ currently).  In fact these three essential ingredients; cost to attend, number of fans attending and enough seats to accommodate those fans, all combine to make quite the recipe for a successful Winnipeg team in the NHL.

As I already outlined the supply-and-demand argument for MTS Centre’s capacity in a previous post, I will instead visit the issue of ticket prices and what is required to sustain an NHL franchise in Winnipeg.  You’ll have to do me a huge favour and take my word that Winnipeg is hockey’s hotbed, second to none.  We are hockey mad here and the the desire for the sport; playing it, watching it, talking about it, is un-paralleled anywhere on earth.  (Here’s where citizens of Manitoba help me out here by posting a comment about our passion for the sport).  After all, Winnipeg is the birthplace of hockey’s first millionaire contract, given to one Bobby Hull in 1972.  Kinda came back to bite us in the butt didn’t it?  Oh the irony.

You might say that such a comment goes to prove that the NHL is in fact too rich for our wallets.  It does not.  In 1995, after years of falling on deaf ears, the owners of the Winnipeg Jets, led by Barry Shenkarow finally proved to the people of Winnipeg that the Jets could no longer exist in Winnipeg Arena, especially being that they didn’t even control it.  It was a building that was outdated the day after it was updated…several times.  It was a barn with a rink in the middle of it.  It was an awesome place to watch a hockey game with beer and buddies, but not to wine and dine a client or take a date.  The latter is what sports became in the 1990’s.  Gone are the Boston Gardens, Chicago Stadiums and Montreal Forums, replaced by luxurious office buildings with corporate logos splattered at every turn, warm cozy seats and grills with fireside dining.  It is precisely the lack of this kind of facility that made Winnipeg “too small” for the NHL.  Winnipeg lacked the ability to generate the kind of revenue that these new arenas could provide and that were needed to operate a pro hockey franchise.  Costs were escalating, sure, but with no parking or concession revenue, no control of the sub-par arena that did exist and nowhere near the number or quality of luxury suites needed, there was no hope of holding the team above water.  Without getting too deep into a history seminar here, the bottom line was that Winnipeg had the fans and those fans had their wallets open.  Always did.  But every time they opened that wallet to buy some popcorn, their beloved Jets never saw a penny of it.

Fast forward.

It is 2009, and the same fans exist in Winnipeg, passionate and longing for the NHL’s return, and maybe even a “sorry about the past 14 years, we screwed up” from the league.  I’m certain a gift-wrapped franchise will suffice as a replacement for that apology.  The wallets are still open.  We have made MTS Centre one of the busiest venues in North America and would love nothing more than to see 44 of those nights booked for NHL hockey.  But this time around the popcorn money does go to the team (currently the Manitoba Moose of the AHL) whose owners are also the building’s administration (True North Sports & Entertainment).  This time around there are luxurious suites and places to wine and dine.  There are 50 of these luxury suites that over 90 companies support the cost of, albeit at AHL prices.  But they will not go away once the NHL returns.  In fact there will be a longer line-up to get in one of them, even at triple the cost of the NHL.  In short, we got our building, just 8 years too late.

So just what does it take to generate the kind of capital needed to run a successful NHL franchise in an arena that currently seats 15,000?  There are many variables that go into all kinds revenue streams.  The one that can be most easily estimated is that of straight ticket and suite revenue.  You’ll be surprised at just what a market like Winnipeg can do.  Remember, there is no MLB, NFL, NBA, NASCAR, NCAA, MLS or other major sports to compete for corporate dollars or disposable household incomes.  Nor would any other sports teams share MTS Centre and therefore revenue from suites etc.  A Winnipeg team, owned by the same group that owns the building (True North) would be the sole tennant of MTS Centre and reap the benefits of profits from many other arena events like concerts, shows and other sporting events which fill the calendar up on a regular basis. Winnipeg also draws a fan base from rural Manitoba, Saskatchewan, NW Ontario, North Dakota and Minnesota.

Furthermore, to many people’s surprise, is where Winnipeg would rank in terms of per-game gross revenue.  All scenarios are based on sell-outs each and every game.  This is where MTS Centre’s capacity serves to assist the situation.  15,000 seats is not a stretch to fill every game.  19,000 seats is.  Just ask about 18 current teams in the NHL.  The fact is, Winnipeg will have to fill the building.  There cannot be tickets available on game day.  That doesn’t play into the whole supply-and-demand, marketing 101 theme that I speak of so frequently.

Take a peek.

Tickets range from $35-$119 based on ticket packages or $45-$139 as a door price.  This puts the average ticket somewhere in the $65-$70 range.  Based on these ticket prices, per-game revenue falls around $1.1 million CDN in tickets plus $175,000 CDN in suites.  This translates to $950,000 USD (with suite revenue not included) and $1.1 million USD (with suite revenue included) which either way would rank in or near the Top 10 in the NHL based on 2007-08 figures obtained from National Hockey League via The Toronto Star.  A Winnipeg team would certainly fare better than a good portion of the league, including Phoenix, Atlanta and Florida, as seen representing the basement of this list.

Notice how a Winnipeg team would fall in the range of our closest market sizes in the NHL today, namely Edmonton, Calgary and Ottawa.  Also notice that the 6 Canadian teams make up the top 7 revenues in the league!  This is a significant finding.

It means we can compete.  It means with the right ticket cost scale, it works.  It means we could somewhere between 8th and 12th.

The six Canadian teams are holding the NHL up right now.  Six teams generate 34% of revenue. That’s one-fifth of the league earning one-third of its money, and with three of its six markets barely 1 million people.  Winnipeg would be no different.  Winnipeg would only help dump money into that revenue pool…a pool the players’ salaries are tied to by the way.  Don’t think the players aren’t very aware of how Winnipeg could put more money in their pockets.  You can bet they think about it every time they step onto the ice in Atlanta or Miami or Phoenix and see empty seats generating zero dollars.  For every dollar lost, 57 cents of it is lost on the players’ bankbook.  Hello Winnipeg.  A recent players poll named Winnipeg, only behind Las Vegas, as the players’ choice for a team to relocate to when it becomes necessary.  Above Toronto II, Hamilton, Quebec City, Kansas City, Seattle, Oklahoma City and Portland.  Heck, Winnipeg Jets merchandise still outsells teams that actually exist in the NHL today.  We are now a very attractive destination.  Who would have thought?

These per-game gate revenues are based on 14,200 seats and 800 luxury suite seats.   Winnipeg can afford NHL hockey.  We have more fans per-capita then anywhere on earth and we will pay for it.  We have the corporate community support.  We have the arena.  Here’s how that arena seating map might look for the NHL, followed by a list of NHL gate-revenues by team.  For a more detailed revenue breakdown visit JetsOwner.com.