Shea Weber Will Likely Collect All of the Predators’ Ticket Revenue Next Season if They Match the Flyers’ Offer

Screen Shot 2012-07-20 at 1.48.07 AM
Earlier, we detailed the importance of the structure of Shea Weber’s offer sheet. In short, the contract aims to 1) lessen total cap hit, 2) give Weber more guaranteed money upfront to avoid any CBA salary rollbacks… and 3) make it very difficult for the Predators to match the length and girth of the Flyers’ wallet.

One of the reasons the Predators will be so hard-pressed to match the offer is the upfront money. Weber is due $27 million in the next 12 months, $41 million in the next 24 months, and $56 million over the first four seasons of the 14-year, $110 million deal. We broke it down earlier, but almost all of that $56 million is guaranteed signing bonus money, which is due to Weber whether there is a lockout or not. That is a lot of coin for the team ranked 27th in the league in value by Forbes to match. So much coin, in fact, that Predators part-owner Brett Wilson had to turn to your friendly neighborhood blog to wrap his head around it:

Predators_owner

Well, Brett, I’m glad we have your attention. Now, let’s take a look at your books… 

About a year ago, a part-owner of the Predators (not Wilson) independently sought an investor to buy a 25% stake in the team for $50 million. One CB reader kicked that tire (yeah, we do that demo, too), and this is what they received:


 

Screen Shot 2012-07-20 at 12.56.07 AM

That’s an income statement, yo. And it’s not a good one. As you can see, the Predators lost money in every season except 2007-2008. [In April of this year, the Tennessean posted an in-depth article about the Predators’ struggling finances despite on-ice success and receiving public money.] But that happens. Businesses lose money all the time. Hockey teams do, too: According to Forbes, whose estimated team valuations report very closely mirrors our discovery from the Predators, 18 teams lost money during the 2010-2011 season (data for 2011-2012 isn’t out yet). Many of those teams, however, have much higher revenues than the Predators, making the losses less concerning. And while we don’t have enough information here to really understand the overall financial health of the Predators, what stands out to us are the gate receipts. In other words, ticket revenue. Admittedly, it’s more just anecdotal fodder than anything conclusive about what the Predators can and can’t do. But it’s fun. And we like to have fun here.

The Predators don’t have a major attendance problem – they sell 97.5% of tickets, good for 18th in the league – but they don’t charge a lot (average ticket– $51) and their home, the Bridgestone Arena, has a limited capacity (17,100). As such, they only collected $24 million (projected) in gate receipts in 2010-2011 (likely a bit more last season). So, if they match the Flyers’ offer to Weber, they will probably pay him more – $27 million – over the next 12 months than they will receive in ticket revenue.

What’s more, the $50 million-for-25% stake investment proposal values the Predators at around $200 million, meaning the $56 million due to Weber over the first four years of the deal would essentially allow him to buy a quarter of the team. Over the life of the contract? Weber would collect enough money to become majority owner. Now, I’m not an accountant, nor do I play one on the intertubes, but I’m guessing paying your employees enough money to own you in 14 years isn’t a great strategy.

How do the Predators’ finances compare to some of the most valuable teams in the league? Well, let’s look at the Flyers, who rank eighth in Forbes' valuations (that seems low, but Canadian teams and the Rangers have massive profit margins): According to Forbes, the Flyers collected $54 million in gate receipts and generated a total revenue of $111 million in 2010-2011, compared to the Predators’ $24 million in gate receipts and $75 million in revenue (projected). The Flyers, of course, didn’t lose $7 million– they profited a pedestrian $3.2 million. And none of this is to mention the deep pockets of Comcast Spectacor backing the Flyers, which makes their profit numbers inconsequential.  

But what you really want to know is: Can the Predators afford to match the Flyers’ offer?  We don’t know for sure. They have plenty of cap room– that’s not an issue. It’s the upfront money that will be the sticking point. We dove into that earlier, but here’s more: Weber’s agents told anyone who would listen that they’re not confident the Predators have the means. 

On 97.3 ESPN

"Nashville can probably match us, but does it really make sense for them if there may not be hockey next year?"

 

Talking to Flyers reporter Dave Isaac:

"They have to look at the financial side but the philosophical side as well. We could have a shortened season, maybe it doesn’t line up with their thought process. I don’t know what they’re thinking. I don’t know their ownership group as well as some others."

 

All along, the Predators have said that they would match any offer for Weber. But this is a big one. And they don’t make money– they lose it. $27 million in the next year is a substantial sum of money, and it might be too much for them to stomach. If they can, and they match the Flyers’ offer, then they might as well position Weber outside the arena before games with a can and have him collect the ticket money from every. single. paying. customer, because he’s going to be getting all of it and then some.

44 Comments

  1. And that’s 26mil in the next calendar year regardless if there is a season! If I’m correct revenue from tickets sales would be lost? Which would make Weber’s price tag, even if traded after a year, an enormous burden.
    Do you keep your fan base happy while digging yourself a grave?

  2. Outstanding post Kyle. I think I speak for almost all of us hockey fans when I ask you to concoct a post that describes or at least gives some of the dynamics of this potential lockout/CBA situation. Either way, awesome job as usual.

  3. I’m learning things that actually matter about sports. No Shea Weber Gossip Girling so far, and I love it.

  4. Keepin' it real

    July 20, 2012 at 5:03 am

    If they resign Weber they become the 76ers – stuck in 7th/8th seed purgatory with no money to spend and no escape in sight. There’s only 2 ways to succeed in sports these days 1)have an excellent team 2) have an awful team. Edmonton will turn things around the way Pittsburgh did with all those high #1′s – imagine how stacked they’d be if they had an extra first round pick in the 20′s the past 4 years. Without Weber, Nashville would be picking premium talent in the top 5 as opposed to mid-level first round talent in the late teens & they’d have picks in the 20′s as well (Giroux & Richards were picked in the 20′s). They already have the piece the Flyers never had to build around – the goalie Rinne. They’d be better off with 6-8 very good (cheap) players from first round picks, Rinne, and cash to spend if they let Weber go as opposed to signing Weber, remaining a 7th/8th seed, and having no money to spend.
    If they’re afraid they’ll lose their fanbase – a defenseman doesn’t put butts in the seats. A 7th/8th seed team doesn’t put butts in their seats. Sign Weber they show up this year, but you lose your gate paying him and they throw in the towel on the team when they realize you’re stuck in limbo with no money to spend. Let him walk & you take a hit on attendance this year but you will become the Washington Nationals of hockey with all those picks – the fans will come back to see the young guys & you’ll be good a lot quicker than you think.
    Just my take.

  5. 3 Finger Lenny

    July 20, 2012 at 6:27 am

    Homer deserves to treat himself to a steak dinne & big glass of red wine.
    Maybe finish the meal off with a cigar

  6. Great post Kyle. Nice to see the breakdown and how it could impact either teams

  7. As someone who absolutely loves the sport of hockey, understanding the business/contract end of things has never really been a strong suit. Great post – made it really easy to understand where the Preds are in all of this.

  8. Chance- Vice President in Command of the GnA Falcons

    July 20, 2012 at 8:36 am

    Ed Snider should buy Homer a new bike to ride drunk on in avalon

  9. Harry Balzack

    July 20, 2012 at 8:37 am

    I think Homer deserves more than a dinner – he should get a complimentary gummer from Poile’s daughter. Way to stick it to ‘em Homer old boy!

  10. The most interesting Phillies fan on my street.

    July 20, 2012 at 8:44 am

    Weber might as well get sized for his Flyers jersey and start looking for a home close to Philly. The Preds are giggling like schoolgirls and drooling over the draft picks they’ll get by Weber going to Philly. This will allow the Preds to stay relevant while getting back into the black on their books. Homer is doing his buddy a big favor because this type of thing is easy to explain to fans. “We don’t have the money, but we’ll have up and coming stars on the cheap real soon.”

  11. My prediction..we give them Jake, Mez and two 1st rounders. They give us Shea Nasty and 2 1st rounders back…

  12. Good article but I’m confused how they come up with $24mil in gate revenue. My math breaks down like this… 17,100 seats x .95 = 16,245 (attendance average) x $51/ticket= $33,968,295. Not counting any preseason games.

  13. more kudos for kyle, this post was awesome. i agree with ryan, let’s talk about this potential lock out. does it have to do with the conference realignment they approved? Is that still happening? I know they put it off a year, but then i never heard anything else about it. A lockout would be stupid. The NHL just started to get back some of the fans they lost after the most recent lockout. I’d be pissed.

  14. ADRock.. take it easy there mr accountant. im sure they have done a few more math problems than multiplying 16245 by 51

  15. adrock– they didn’t quite sellout, many tickets are probably promotional giveaways, and other variables.

  16. Ad, he said average ticket price is 51 dollars, not all tickets, meaning some are more, some are less than the 51 dollars. Great Article Kyle.

  17. @So Taguchi
    we better not be giving up Jake. Dude’s way better than everyone thinks, him and Giroux are the next Jagr and Mario, you heard it here first.

  18. I just feel that if Polie really meant the franchise would match, it would be a no brainer to just match by now. Obviously there are underlying issues Nashville execs are considering and if I was a fan, I’d be a little concerned. However, props to Holmgren for being the master of badass-ery and not giving into complacency. No matter the outcome, Flyers really don’t “lose”, but not getting Weber would be a bit of a let down. Will be interesting to see moves post-Nashville decision within the Flyers organization

  19. Great read. Just next time you post a pic like that, make sure you have more than 14% battery.

  20. This all comes down to Ownerships liquidity outside of the team. How much scratch do these individuals have access to and how much do they want to risk. Going to the bank for a 26 million dollar loan with a balance sheet like that is not an option for sure.

  21. Crosby's Vagina

    July 20, 2012 at 10:27 am

    Let’s just hope that he doesn’t turn into Phil Kessel. Well, that being said, the Flyers aren’t the Leafs, so we won’t be giving them any high first rounders that turn into Tyler Seguin.

  22. Nice post, Kyle, and good addition (IMO) by Keepin’ It Real. He makes a real good point about N’ville potentially having both a high 1st-rd pick, and then another one (hopefully) WAY down in the round. Either way, with two firsties for 4 straight years, they’d better have a good scouting dept.

  23. Great move by homer but unless it pans out and we actually get webber than its just a standard hockey move. Not sure why everyone thinks paul is some genius here. He is doing his job.
    I’m sure that image of the income statement will be under cease and desist, subpoena and moment…… Nice scoop. Hope the pred didn’t tweak the numbers on each version they gave out to identify the leaker. I’d love to see the rest of the books! Do it!

  24. I agree with the comments above. Great post, and I would love to see a post breaking down the potential lock out as well.

  25. Christian 'JAR" Stengel

    July 20, 2012 at 10:59 am

    Drunk homer is so much more of a man than RAJ.

  26. Chance- Vice President in Command of the GnA Falcons

    July 20, 2012 at 11:15 am

    I agree with Steng. Homer has b@lls

  27. Phlorida Phillies

    July 20, 2012 at 11:29 am

    Sounds like Weber wants to come to Philly based on the ESPN clipping…
    Shea Weber’s agent Jarrett Bousquet told TSN Radio 1050 that the price for Weber went up after Ryan Suter signed a 13-year, $98 million deal with the Wild. Bousquet added that they had to be sure he was signing with a team he wanted to play for for 14 years and that the Predators were set back a few years by Suter leaving. “He’d like to play with the Philadelphia Flyers because we all feel that he’s just another piece in the puzzle to take them to the next level,” Bousquet told TSN. “He doesn’t want to go through a rebuilding process again.”

  28. fooling yourselves

    July 20, 2012 at 11:29 am

    wow – sounds like all the sack-sucking after the Phils got Cliff Lee – Remind me: How many Championships did that bring?

  29. @fooling
    There’s a difference. The Phillies’ weakness when they brought Lee back was not starting pitching. It was scoring runs.
    The Flyers’ weakness was on D. They needed a big time, shut down defenseman to replace Pronger. That’s exactly what Weber is.
    Your analogy would work better if the Flyers had broken the bank to bring in Parise. Adding offense to an already potent offensive team, not addressing the core need.

  30. Correct me if I am wrong… But isn’t this kind of contract one of the reasons why there might not be an NHL season???

  31. Scramblin Randall

    July 20, 2012 at 1:23 pm

    To all the asshats (so taguchi, boom) saying there is a trade to be had here: once Weber signed the RFA offer sheet there are only two possible outcomes. The Predators match, and he plays the at least the next year in Nashville (CBA states he cannot be traded for at least one year, and the offer does not have a No movement clause), or he doesn’t get matched, ans becomes a Flyer. Once the offer sheet is signed the player cannot be traded.

  32. Scramblin Randall-
    You’re correct. At the same time, though, a trade would not be all that unlikely. The Preds would have to make up for the salary they are losing out on in Weber to get to the salary floor, and a very reasonable assumption is that they will come back to the Flyers and offer one of the first round picks for Meszaros or Voracek. Or two first round picks for both of them.
    I would not be surprised- in the least bit- to see that happen.

  33. Correct JT, they did this with the Gratton signing in ’97. Gave back Dykhuis and Renberg and 2 first rounders instead of 4 first rounders.

  34. Interesting post, and I’m especially interested in that income statement.
    As someone who covers the Nashville Predators, and follows the paid attendance data closely, I can vouch for those Gate Receipts numbers as being reasonable.
    For those who wonder how the numbers make sense, there are a few factors to consider. As some noted, the total attendance figures include a number of “comp” tickets given away for free (the level of those have declined in recent years):
    http://www.ontheforecheck.com/2012/3/8/2852805/nashville-predators-paid-attendance-numbers-continue-strong-growth
    There’s also the fact that the ticket price includes taxes and fees which go to the city, so that reduces gate receipts accordingly.
    Overall, though, $26M seems reasonable for gate receipts from the 2011-2012 season, and if they do well the Preds might approach $30M next season (also assuming no lockout, haha).
    There are a couple important factors to consider that argue in favor of the Preds matching the offer sheet, however. The challenge of meeting the financial obligations here is more about the timing of the signing bonuses than anything else. After all, they’ll still be way below the cap even after matching this and signing their RFA’s, so the total payroll over the course of the season should still be manageable. And I would hope that given the interest in Parise, and expectation that they would re-sign Suter, the Preds’ ownership is prepared to shell out lots of signing bonus money.
    No matter how this turns out, it’s good to have folks talking hockey here in late July…

  35. Dirk, what would a lengthy lockout mean for the Preds & the Weber contract? Right now it looks like the season is NOT going to start on time.

  36. Brandon, basically it would mean they’d end up paying Weber close to his full $14 million for the 2012-2013 season, while everyone else would get pro-rated salary based on how much of the season they end up playing. It would be a one-time hit, but I don’t think it’s an insurmountable one.
    There are some pretty deep-pocketed guys in the Preds’ ownership group, and I would hope they’ll be up to the task, but we’ll see…

  37. I don’t know that I like the Flyers trading either of these guys, but do you think Couturier+picks or a separate deal of Brayden & Luke Schenn would cause the Preds to let this thing go through? I think there’s NO WAY the Flyers would part with both (Coots and Brayden Schenn) in a trade. It seems like Nashville is at least considering not matching the offer sheet so do you think they’re in a position where that type of return could get it done? From the Flyers perspective I almost think its better to keep those young guys, let the Preds match, and be happy Shea is a Pred for life & won’t wind up in Pitt or NY.

  38. I doubt the Preds would go for that deal ultimately, as team ownership has been adamant that they will not let star players get away due to a money issue. With the fan base still in a bit of shock after seeing Ryan Suter go, not matching the Weber offer would be a PR nightmare.

  39. Seems like you are of the mindset that the Preds matching this thing is a done deal. Out of curiosity what package of Flyers players would it take for the Preds to let this go through in your opinion?

  40. I wouldn’t quite say it’s a done deal, but I doubt the issue hinges on what package Philly is offering in trade, it’ll instead boil down to those questions of financial risk such as lockout or career-ending injury and the insurance implications.
    David Poile is known for being very thorough, so I wouldn’t be surprised if he were investigating the options on the table on both sides of the match/don’t match decision.

  41. Was Weber’s concussion this year the 1st (documented) of his career?

  42. No, I think he had one early in his NHL career that came in a fight, and he had a really scary one back in junior. Read about that one here:
    http://hfboards.hockeysfuture.com/archive/index.php/t-53652.html

  43. That’s frightening. There was a sports concussion specialist on 97.5 (Philadelphia espn radio affiliate) discussing concussions after DeSean Jackson’s 2nd that explained studies have shown the 3rd concussion puts you into the danger zone as far as permanent brain damage is concerned. Not enough to deter me from wanting Weber on the Flyers but it’s a bit worrisome handing out a 14 year deal to a guy w/ a concussion history (especially after Pronger). I know there’s LTIR, but it’s still something to think about.

  44. That’s frightening. There was a sports concussion specialist on 97.5 (Philadelphia espn radio affiliate) discussing concussions after DeSean Jackson’s 2nd that explained studies have shown the 3rd concussion puts you into the danger zone as far as permanent brain damage is concerned. Not enough to deter me from wanting Weber on the Flyers but it’s a bit worrisome handing out a 14 year deal to a guy w/ a concussion history (especially after Pronger). I know there’s LTIR, but it’s still something to think about.

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