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Paul Nicholson
Nashvegas TN
Digital Marketing guy for Captain D's. Hockey fan, photographer, and father of 2 awesome boys.

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Friday, August 10, 2007

predator profitability

This article in the Winnipeg Free Press is asking the question that i think a lot of people around the sports (and business) world have been asking themselves: Why would anyone buy hockey teams that have been losing serious amounts of money. The Predators reportedly lost $15mil last year, and a total of $70mil over the past 10 years. The previous owner of the Lightning reportedly lost "more than $70mil" over the 7 years he owned the team. The teams first owner reportedly lost $20mil in one year (1998-1999).

So why would anyone, especially less-than-billionaire groups of owners, buy these teams? It's a fair question.

I can't speak to the case of the Lightning, but for the Predators the answer is that the NHL franchise was not the only thing changing hands. There was also Powers Management.

Powers Management is the separate company that manages and runs the Sommet Center. Every concert, revival, rally, and gathering that happens there. Every major artist tour that uses the state-of-the-art practice facility. Everything that goes on in that building - Powers Management gets to keep the profits. Better yet, thanks to the agreement with the city, Powers Management is guaranteed not to lose money. The city of Nashville has to subsidize any losses. Though Metro sees none of the direct profits, it does see benefits in tax revenue and other peripheral economic impact. There have been a few years where Metro has had to pay, but i believe on the whole, Powers has been running a positive balance sheet.

So while the Predators can honestly be losing money year after year, the overall business of running the team and being the anchor tenant of the Sommet Center is still quite profitable i am sure.

Note: Normally i would have this post chock full of links to references backing up my statements. There are articles too numerous to mention that talk about the teams losing money - but amazingly few places online that reference the deal that Powers Mgmt has with the city, and fewer still that give any details about Powers Mgmt itself. In fact, there was a lawsuit by the Tennessean last year against Powers Mgmt for them to open their books as a public entity. The courts agreed that though Powers Mgmt was a private company, they operated a city-built and owned arena and therefore functioned in a public capacity.

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