The Buffalo News from Buffalo, New York • 10

Page A 10 The Buffalo NewsSunday April 15 1990 Average Ticket Price 90 Average Ticket Receipts (per game) '88 89 Most Expensive Ticket (face value) 90 Most Expensive Ticket (season ticket) '87 90 Least Expensive Ticket (face value) '87 90 Least Expensive Ticket (season ticket) 90 Playoff Appearances 89 Average Game Attendance '89 90 Season Ticket Holders 90 League Sabres Average High Low $1558 21 $1919 $2424 $1558 $191600 20 $251192 $346000 $106000 $29 10 $2988 $45 $23 $21 18 $2715 $45 $18 $1250 8 $1178 $16 $650 (tied) $8 $1039 $1450 $650 3 74 15 2 (tied) 14462 12 14789 19001 7683 10500 13 11214 17000 5500 Of 21 teams Accounts for tickets sold on both individual and season ticket basis Only 19 teams sell season tickets in lowest price range SOURCE: Buffalo News research Roots of Red Ink i Sabres: Buffalo is 1 2th in attendance in NHL Continued from Page I Memorial Auditorium it also operates the Hatch in Erie Basin Marina and the orum in the Ellicott Square Team offi cials say the business is nominally profit able Organization branches out Over the years the Sabres have branched out into other areas In 1982 Sabres owners bought the Rochester Americans a minor league hockey franchise The Sabres lose money on the Rochester club but team officials say the losses are a normal cost of devel oping young players In 1985 the team purchased a covered ice rink in Wheatfield subsequently named Sabreland The team uses it for training camp practices there during the season and rents out ice time to youth and adult hockey leagues Sabreland is a break even operation according to team officials In 1987 the team bought WBNY in an effort to diversify its operations and boost The Sabres offer season ticket holders the biggest discounts in the league and have among the lowest season ticket prices in the league income The station in addition to the club is the biggest drain on the franchise's treasury The Sabres are one of only a small number of National Hockey League teams believed to be losing money The Minnesota North Stars are in the worst shape with losses of $16 million over the last three seasons Unlike the North Stars which are up for sale and possibly headed to Oakland the Sabres aren't losing money because of poor attendance Buffalo ranked 12th in attendance among the league's 21 teams attracting an average of 14462 fans per game this season Nor are the Sabres plagued with sever al of the other problems that often con tribute to a franchise's financial woes The Sabres' player payroll is modest ranking 17th among 21 teams Team owners who serve as directors and officers don't receive salaries or lavish perks And the team has what is considered an equi table lease and concession agreement with the city on Memorial Auditorium Instead the Sabres have failed to score sufficiently at the box office a disastrous shortcoming because ticket sales account for up to two thirds of a team's revenue Playoff failures prove costly The Sabres' box office problem is two fold irst they have been one of the least successful playoff teams in recent years Playoff success is crucial to a bottom line because that's when revenues increase and expenses decrease Ticket prices increase from 25 percent to more than 100 percent depending on the round of the playoffs while player salaries de crease to anywhere from 20 percent to 60 ocrcent of regular season wages Most teams enter a season hoping to break even during the regular schedule and earn their profit during the playoffs "The financial performance of the company is dependent to a significant degree upon the number of home playoff games which its hockey team plays each Sabres officials said in a 1987 confidential team document which esti mated that the team clears $175000 for each home playoff game The Sabres however appeared in few er playoff rounds from 1984 89 than all but two of the league's 21 teams They failed to make the playoffs in two of those seasons and were eliminated in the first round the other three years Lowest ticket price in NHL Low ticket prices arc the other major reason for the financial trouble The Sabres average ticket price of $1558 is the lowest in the league this season and its average box office take of $191600 per game last year was second lowest in the league The Sabres always have had one of the least expensive ticket prices in the league and the gap between them and most of their competitors has widened in recent years Ten years ago Sabres tickets were 96 cents or 1 1 percent below the league average The difference now is $361 or 19 percent That translates into $59592 or 24 per cent less per game in ticket sales than the league average There are two major reasons for the low prices: the Sabres pricing strategy and the configuration of the And The Sabres like their counterparts around the league sell about two thirds of their seats to season ticket holders who purchase the same seat to all 40 regular season games Unlike most of their com petitors however the Sabres heavily dis count the price of season tickets or example other teams on average discount their top priced ticket by $273 or 9 percent The Sabres discount their top ticket by $8 or 28 percent The same holds true for the least ex pensive seats Other teams discount their cheapest seals to season ticket holders an average $139 or 12 percent The Sabres discount is $450 or 36 percent Configuration of Aud hurts In all the Sabres offer season ticket holders the biggest discounts in the league and have among the lowest season ticket prices in the league The price of individ ual game scats meanwhile is about aver age The configuration of Memorial Audi torium also contributes to the low ticket prices Thirty percent of the Aud's 16166 seats are in the low priced balcony The league average is 17 percent and only the Chicago Black Hawks have a bigger pro portion of low priced scats than does Buf falo Not only don't low priced seats gener ate as much revenue they also are more difficult to sell Demand from fans is for the most expensive not least expensive seats That holds true not just in Buffalo but throughout the league or each game the Sabres sell any where from 200 to 2000 of their 4839 balcony scats to groups for half price in order to pul fans in those seats Mean while they have a waiting list of fans wanting to buy top priced gold and red scats factor contributes Several other factors have contributed to the low ticket prices THE SABRES JAMES McCOYBuffalo News I he Sabres hockey team represents just one part of the Sabres organization Who owns the business NAME Seymour Knox III end family' George Strawbridge Jr Rich Products Northrup Knox and family Jose pfijT Ste wartjg John isher Peter Ontario Paper Corp Edwin Richard Rupp and family George recor Robert Swados and affiliates Paul 'Sch6ellkpfliif ill family Bison Steamship Robert lickinger Dr Vincent Scamurra Other krioxTarpijyfli membersOjggJM Others' All own less than 1 each OTHER BUSINESS ACTIVITIES Vice president Peabody Co investment firmfl Philadelphia area businessman idwri food busihosniiiiio and Buffalo Bisons baseball team Chairman of Marine Midland Bank NA Vice president of Advest Inc Buffalo investment firm Buffalo area businessman Retired newspaper reporter i a ndshar ehol Canadian subsidiary of Chicago Tribune Co i Manages investment portfolio Chairman of Armor Box Corp of Buffalo jVice president of BliliBlIiil Kidoer Peabody Co Counsel to Buffalo law firm Chairman Niagara Share Corp Buffalo investment firm Buffalo shipping firm Retired food purveyor Buffalo medical doctor Various OWNERSHIP SHARE 17 46 1 199 ylOGi 675 607 546 5p95! 481 3 00 268 215 208 168 136 OA31 654 jdHgi? Bp'2' Seymour Knox III Chairman Robert Rich Jr Vice Chairman Robert 0 Swados Vice Chairman 7 tri tw Joseph TJ Stewart Treasurer i MB What the business owns U1I Buffalo Sabres National Hockey League team posting recent losses of $500000 to $1 million a year Problems stem from lowest tick et prices in the league and poor record in Stanley Cup playoffs the most potentially profitable part of the season WNYB TV Channel 49 which Sabres are in process of selling has lost more than $6 million in three years The inability to get on Canadian ca ble systems has shut it out of a market con sidered essential for local independent UH stations SOURCE: Buffalo Research Sabreland Twin hockey rinks on Niagara alls Boule vard in Wheatfield are a break even opera tion Sabres use it for training camp and practices during the season Also one of the most heavily used rinks by youth and adult hock ey leagues Rochester Americans American Hockey League team posts moderate losses that Sabres officials say are reasonable and expected cost of de veloping younger players Americans considered one of the soundest franchises in the league Aud Club Inc Owned jointly with Delaware North Com panies Inc the nomi nally profitable res taurant concern operates the Aud Club in Memorial Au ditorium the Hatch restaurant in the Erie Basin Marina and the orum in the Ellicott Square building Sports franchises usually are reluctant to hit fans with major ticket price in creases when the learn performing well and the Sabres won their division or advanced beyond the second round of the playoffs in nine sears Additionally Buffalo is one of the league's smallest less affluent American markets and was rocked by high unem ployment and other economic problems for much of the past decade This has resulted in Sabres officials' reluctance to raise ticket prices as quickly as their counterparts around the league want to lose our labor au dience by jacking up the Swados said Robert Bickel the Sabres senior vice president of finance termed the Buffalo market sensitive" have been very conservative in our ticket price increases to season ticket holders 10 maintain our he said Ch 49 misses cable market The purchase of Channel 49 three years ago was supposed to help the Sabres financially over the long haul but it has done the opposite Team officials said they have lost more than $6 million in the three years the station has been on the air and are selling it for half of the $5 million they bought it for The team executives expected to lose money in the short run because the sta tion was a start up venture Pickel said But they didn't expect to lose as much as they have The station's unexpected losses are pri marily due to its failure to get on to cable systems in southern Ontario The Buffalo area's other independent UH station WUTV Channel 29 derives much of its income from advertising sold to air during programs carried on Ca nadian cable systems Channel 49 was counting on getting a piece of that mar ket "Canadian cable TV is really critical to the independents because they depend on the kids' dollars" said Ronald Martzolf the former program director at WKBW TV who is now a telex ision executive in New York City WBNY has been shut out of the mar ket mainly because Canadian regulations restrict the number of American stations carried on cable systems and station offi cials have been unable to persuade cable operators to carry Channel 49 in favor of stations already on the system In a complicated deal pending the ap proval of the ederal Communications Commission the Sabres are selling Chan nel 49 to Tri State Christian Television and in turn buying a minority share in Act Ill Broadcasting which has a pending deal to buy Channel 29 Swados said the entire deal will have the effect of reimbursing the Sabres for the losses they have sustained with Chan nel 49 That would cut the team's accu mulated debt by more than $85 million Knox Swados are in control The financial problems have not prompted any major changes in their ownership although the business reorga nized from a corporation to a limited partnership in April 1 988 so that stock holders could take advantage of tax write offs generated from operating losses Ownership is spread out with no indi vidual holding more than I 746 percent of the partnership Seymour Knox and his family are the largest share holder follow ed by Philadelphia area businessman George Strawbridge Jr and Rich Products Corp owners of the Buffalo Bisons base ball team Northrup Knox and other members of the family are the next big gest stock holders In effect everyone but Seymour Knox and Swados are silent partners because the limited partnership is controlled by a managing partnership in which only those two have voting rights Northrup Knox resigned as the managing partnership's third voting member when he was ap pointed chairman of Marine Midland Bank NA The Sabres have a $9 million line of credit with the bank The team's balance now stands at the maximum allowed but drops to about $3 million during parts of the year Pickel said Executives inside and outside the Sabres organization said it's not unusual for teams to borrow money to cover oper ating expenses because of hockey's cycli cal cash flows While stock holders have no dividends to show' for their investment the team has multiplied in value since it bought its way into the league for a $6 million ex pansion fee Sabres officials declined to speculate on the team's value But the Hartford Whalers a comparable franchise in a similarly sized market sold two years ago for $3 1 million Last year the league announced plans to charge future expansion franchises $50 million to join the league and the owners of the North Stars have used that figure as a starting point in fielding offers for that troubled team team has had financial difficul ties" Pickel said of the Sabres we feel the team is in the right direction If we go far enough in the playoffs we hope to make money this year" Monday: 1'hc economics of hockey.