Thursday, November 12, 2009

We're #25! (But that's not all bad.)

I've decided to take a break from panicking over the Columbus Blue Jackets' meltdown last night...those still interested in that, please go look at my Twitter page.

It's time to (partially) get past that abomination, and I wanted to touch on yesterday's Forbes release ranking the relative value and financial strength of the National Hockey League franchises.

If you couldn't tell from the title of this post, Columbus is the 25th most valuable NHL franchise at $165 million.  Quite a bit less than the lead-leading Toronto Maple Leafs (where the motto is, "No Stanley Cups since 1967, but we're working on it!"), who are valued at $470 million, but nowhere near the bottom of the barrel.  Mr. Mac and his partners bought the team for $80 million, though, which makes for a tidy gain in value over 12 years.

More interesting to me are the numbers under the hood .

My take: If you want to know why we don't spend more on player salaries, look at these two charts. You have a near-direct correlation between operating revenue and player salaries since the lockout ended. That screams "Team Policy" to me. If we want to see higher-priced free agents on the ice, we'd better buy season tickets - and four for our friends.

My take: The "Jackets are a poorly-run franchise that has lost $11 million a year since their inception" had best put up or shut up. Forbes is a reasonably reliable source, and they're saying that the team has only experienced double-digit losses in the most recent season. Interestingly, they were apparently profitable until the lockout.

Now this chart likely does not take other arena business into account, which I believe is the source of the revenue shortfalls and the reason why the Jackets want to get out from under the arena management business burden by offloading that to the taxpayers. As Forbes says, "The Blue Jackets operate Nationwide Arena, which is owned by the insurance company. Non-hockey events at the arena have not generated enough revenue to cover the team's arena operating expenses."

Regardless, this does not present the picture of an inept franchise in this NHL revenue-sharing world. In fact, it probably suggests that team mangement is pretty darned shrewd.  It also presents, however, the result of building two state-of-the-art arenas at the same time in a market that can only truly support one.

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