Skating On Thin Ice Hockey
Skating On Thin Ice: Are Professional Sports Teams Profitable without
Merchandizing and Sales of TV Time
Hockey is one of the most recognizable sports around the world, and The National Hockey League (NHL) is the sport's most recognizable league. It was formed in 1917 and has gone through many changes before reaching its current format. By, 1942 the league had been reduced to six teams, the "Original Six" and during this time the league began to become immensely popular throughout North America. Over the years the NHL has added many expansion teams to help increase their value and revenue and promote hockey across North America. By 2000, the NHL had 30 teams, 24 in the USA and 6 in Canada. However the financial gap between teams leaves …show more content…
There are many ways in which NHL teams gain revenue, so I will just separate them into six categories.
Traditionally, revenue platforms in the sports sector consist of: (1) gate revenues for live sporting events: (2) rights and fees paid by broadcast and cable television networks and TV stations to cover those events: (3) merchandising which includes the selling of products with team or player logos: (4)sponsorships, which include naming rights and payments to have a product associated with a team or league: (5) actual team ownership: and (6) concessions (Rosner, 2011, p. 187).
Starting with gate receipts, (the sum of money taken at a sporting venue for the sale of tickets), these are where the majority of teams gain their revenue. An average taken from all 30 teams shows that 39.8% of the teams revenue will come from ticket sales, the high end being 56.6% from the Edmonton Oilers and the low end being 26% from the Dallas Stars. This means that 2/5 of an entire teams revenue comes from ticket sales. The amount of tickets sold will likely depend on a few factors such as location, population, team popularity and win percentage. For example; a team like the New York Rangers, who are …show more content…
The average gate revenue for the six Canadian teams was about $63 million, while the average gate [revenue] for the 24 American teams was about $35 million. This is a difference of $28 million, despite the fact that three of the four smallest NHL markets are Canadian (Keller, 2011, p. 18). If the NHL has any hopes of these teams making profits then they move them to Canada. The ideal locations for these new teams would be; (Quebec City, Hamilton, Toronto, Halifax and Vancouver). Each city has been studied and economically proven to be able to support a NHL team while making a profit.
In conclusion, it is now clear that NHL teams make their revenue through; Gate receipts, merchandising, sales of TV time, sponsorships, team owners, concessions, etc. I have concluded that at an average, no professional sports team, in the NHL, will be able to profit without merchandising and the revenue gained from TV time. However, it was shown that one team, The Toronto Maple Leafs, were able to make a small profit even after the deduction of merchandising and TV sales. As well I have shown that profits are essential for the NHL to continue to grow. With so many teams at a loss it can lead to a league wide financial crisis. As well I have given 5 new areas where the bottom 5 teams based on Operating Income could move to, to start making a profit. The mixed results show that in some cases teams
Merchandizing and Sales of TV Time
Hockey is one of the most recognizable sports around the world, and The National Hockey League (NHL) is the sport's most recognizable league. It was formed in 1917 and has gone through many changes before reaching its current format. By, 1942 the league had been reduced to six teams, the "Original Six" and during this time the league began to become immensely popular throughout North America. Over the years the NHL has added many expansion teams to help increase their value and revenue and promote hockey across North America. By 2000, the NHL had 30 teams, 24 in the USA and 6 in Canada. However the financial gap between teams leaves …show more content…
There are many ways in which NHL teams gain revenue, so I will just separate them into six categories.
Traditionally, revenue platforms in the sports sector consist of: (1) gate revenues for live sporting events: (2) rights and fees paid by broadcast and cable television networks and TV stations to cover those events: (3) merchandising which includes the selling of products with team or player logos: (4)sponsorships, which include naming rights and payments to have a product associated with a team or league: (5) actual team ownership: and (6) concessions (Rosner, 2011, p. 187).
Starting with gate receipts, (the sum of money taken at a sporting venue for the sale of tickets), these are where the majority of teams gain their revenue. An average taken from all 30 teams shows that 39.8% of the teams revenue will come from ticket sales, the high end being 56.6% from the Edmonton Oilers and the low end being 26% from the Dallas Stars. This means that 2/5 of an entire teams revenue comes from ticket sales. The amount of tickets sold will likely depend on a few factors such as location, population, team popularity and win percentage. For example; a team like the New York Rangers, who are …show more content…
The average gate revenue for the six Canadian teams was about $63 million, while the average gate [revenue] for the 24 American teams was about $35 million. This is a difference of $28 million, despite the fact that three of the four smallest NHL markets are Canadian (Keller, 2011, p. 18). If the NHL has any hopes of these teams making profits then they move them to Canada. The ideal locations for these new teams would be; (Quebec City, Hamilton, Toronto, Halifax and Vancouver). Each city has been studied and economically proven to be able to support a NHL team while making a profit.
In conclusion, it is now clear that NHL teams make their revenue through; Gate receipts, merchandising, sales of TV time, sponsorships, team owners, concessions, etc. I have concluded that at an average, no professional sports team, in the NHL, will be able to profit without merchandising and the revenue gained from TV time. However, it was shown that one team, The Toronto Maple Leafs, were able to make a small profit even after the deduction of merchandising and TV sales. As well I have shown that profits are essential for the NHL to continue to grow. With so many teams at a loss it can lead to a league wide financial crisis. As well I have given 5 new areas where the bottom 5 teams based on Operating Income could move to, to start making a profit. The mixed results show that in some cases teams