Fooling Yourself - The NHL Lock-Out Remembered

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Fooling Yourself - The NHL Lock-Out Remembered

As I mentioned yesterday, the 2008-09 ticket prices were just released by the Carolina Hurricanes. It looks like there was an across the board 10% increase for all season ticket holders.

Here are some examples:

Full season ticket prices for upper corners went from $20 to $22 each game. Club corners went from $55 to $60.50. Lower level north from $45 to $49.50 and lower level south from $50 to $55. It appears that the 10% increase was consistent for everyone.

The good news is that the Canes are throwing in some extra value by including vouchers for extra tickets. After you factor in those vouchers, there is little or no increase in the net cost for the year. The trick for season ticket holders will be if they can sell those extra tickets and recoup that money.

I think that the voucher system is a good idea and could be a win-win scenario for both the club and for fans. The Hurricanes can put more fannies in the seats and hopefully qualify for more revenue sharing next year, and fans are at least getting something for the extra money that they are shelling out.

Another change from previous years is the “point system”. If a ticket holder pays in full by June 13th, they earn points that can be exchanged for gifts. In years past, fans could get a 10% discount for early payment.

If we take a look at gate prices, the increases are more significant.

Gate prices for upper corners went from $30 to $35. Club corners went from $75 to $85. Lower level north and south went from $60 to $70 each.

Indeed, these are pretty substantial increases. Remember the lock-out and how that was going to save hockey fans money and bring “cost certainty” to the NHL?

Well, the only “certainty” that has actually come to light is the fact that fans will need to keep paying more and more money.

I pulled out my old season ticket brochure and copied down the ticket prices from the year before the lock-out, the 2003-04 season. Then I compared those prices with the most recent ones released by the team for next season.

You probably won’t be surprised by what I discovered.

Full Season ticket prices

___________________2003-04____2008-09____% increase

  • Upper Goal Zone ____$12.00_____$13.25_____ 10%
  • Balcony Premier_____$22.00_____ $27.50_____ 25%
  • Upper Corners _____$17.00 _____ $22.00_____ 29%
  • Mezzanine ________$29.00______$37.50_____ 29%
  • Club Corners_______$55.00_____ $60.50_____ 10%
  • Club Center Ice_____$85.00_____ $93.50_____ 10%
  • Lower Level North __$42.00______$49.50_____ 18%
  • Lower Level South___$47.00_____ $55.00_____ 17%
  • Lower Center Ice____$70.00_____ $82.50_____ 18%

Gate prices

______________________2003-04____ 2008-09____ % increase

  • Upper Goal Zone_______ $12.00______ $25.00______ 108%
  • Balcony Premier_______ $28.00______ $40.00_______ 43%
  • Upper Corners________ $21.00_______ $35.00_______ 67%
  • Mezzanine___________ $35.00_______ $50.00_______ 43%
  • Club Corners_________ $65.00_______ $85.00 _______31%
  • Club Center Ice_______ $99.00_______ $105.00_______ 6%
  • Lower Level North_____$52.00_______ $70.00________35%
  • Lower Level South_____$57.00_______ $70.00________23%
  • Lower Center Ice______$85.00______ $100.00________18%

Those are some pretty hefty increases, especially for gate pricing.

If we examine these changes, we see that the upper deck people have absorbed the bulk of the increases, percentage-wise. Fans sitting upstairs have had an average 28% increase, while lower level people have had an 18% average, and club level 10%.

The gate pricing is even more out of whack. The upper level took on an average increase of 65%, while the lower level went up an average of 25%, and the club level went up 17%.

This is “cost certainty”?

Some of you might want to say, “Now wait just a minute Bubba, Carolina’s salaries have gone up over the years as well,” and you would be right.

According to USA Today’s NHL salary report, the Canes have had the following annual salaries during the same time frame:

  • 2003-04 $35,908,000
  • 2005-06 $35,308,000
  • 2006-07 $38,970,000
  • 2007-08 $49,948,000

If you compare those raw numbers, that’s an increase of 39% from 2004 to last year. But according to several published reports, the Hurricanes are now receiving large portions of revenue sharing to help out with the bottom line. Estimates seem to hover around 10 million per year.

If we subtract 10 million of revenue sharing from last year’s total, the four year increase in salary expense is a much more palatable 11%.

Taking into consideration revenue sharing over the years, ticket prices have gone up at a much higher percentage than net salaries have, so where is the revenue sharing going? It doesn’t appear to be used in helping to control costs for fans.

How has the lock-out worked for the other NHL teams?

I played around with a few more numbers generated at the “USA Today” site. If you total up all 30 teams' salaries from 2004, the average per team was $44,400,667. If you total up all 30 teams from 2008, the average per team comes to $44,369,700. I kid you not.

It seems like the lock-out was a raging success for some people, but not necessarily for fans, or the players.

Franchises are paying about the same amount in salaries, (by average), as they did four years ago, but ticket prices have gone up considerably.

Teams justify the price increases so that they can pay more in salary and keep up with rivals. But as league revenue keeps climbing and climbing, the salary cap keeps going up, and more money is being spent.

Many people are having a hard time identifying why revenue is climbing as much as it has, and what keeps driving the cap increases.

Some experts say that it’s because the American Dollar has dropped in value. Some say it’s because the Canadian Loonie is valued higher. While both those factors might have some merit, this non-expert is here to tell you that revenue keeps growing because ticket prices keep growing.

It’s a classic Catch-22 scenario.

Salaries go up as the revenue goes up. Revenue goes up as the ticket prices do. But the blame for raising ticket prices is placed on elevated salaries. Each factor controls the other, and none of them will stop growing under the current mind set.

And the greatest fans of any sport will keep paying…….until they reach a breaking point. What happens then, another lock-out?

Carolina’s attendance went down last year from the previous year. It almost seems foolhardy to raise ticket prices regardless of that fact, but we will see how the strategy works out.

In the meantime, the next time Gary Bettman tells you how much the lock-out has benefited fans, just smile and think to yourself of an old George Bush quote.

“Fool me once, shame on you, but fool me twice, and…um….we won’t get fooled again.”

 

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