Tuesday, September 18, 2018
Business

Tampa Bay Lightning's finances on verge of skating into the black

TAMPA — The Tampa Bay Lightning are back in the Stanley Cup final — and maybe in the black as well.

The Lightning is close to breaking even for the first time in the Jeff Vinik era and only the second time in its 23-year history.

Team officials say that the longest postseason run since Vinik bought the team in 2010 has sparked sales of season tickets, suites and sponsorships that will fuel revenues for years to come.

They say this postseason has rejuvenated a Lightning brand that has languished in the years since the team hoisted Lord Stanley's Cup in 2004.

"It makes our brand stronger for future years," said Lightning president Steve Griggs. "The stronger the brand, the more popular the brand, the more people want to be associated with that brand, the more people are emotionally invested in the brand.

"Then financially, down the road, that's when you see the benefits."

Griggs would not say whether the team is projected to go into the black this season or next. But this year's playoff run, he said, has put that goal within reach.

It's hard to discern just how much money a professional sports franchise makes or loses.

The teams are often privately held by owners who don't want their finances subject to public or government scrutiny. The leagues themselves obscure their accounting when dealing with players' unions or municipalities over taxpayer-financed sports facilities.

Forbes Magazine, which regularly tries to assess the value of pro franchises, says that during the previous 2013-14 season the NHL's revenues rose 10 percent to $3.7 billion. Yet the magazine also said that 10 of the league's 30 teams lost money.

The Lightning's various owners have long said that they've lost seven to eight figures annually.

The lone exception was the 2003-04 season: The team played 13 extra home games en route to winning the Stanley Cup. The result was a $3.6 million profit, the only time the franchise ever finished in the black.

The team's former owner, Palace Sports & Entertainment Inc., revealed those details a decade ago when it opened its books while seeking tax breaks from the city and county.

But just because the Lightning has lost money doesn't necessarily mean that its owners have lost money. That's because whoever owns the Lightning also gets to run its home arena, which is one of the nation's must successful entertainment venues.

In 2014, Venues Today magazine ranked Amalie Arena the second best venue of its size in the United States based on ticket sales. Yet ownership groups have never separated their hockey losses from the revenues generated by concerts and events.

Palace Sports & Entertainment, for example, ran both the Lightning and the then-named St. Pete Times Forum when the team won the Stanley Cup. Yet the company claimed it lost $54 million from 1999-2004.

Lightning officials would not open their books to the Tampa Bay Times in discussing the franchise's current financial state. And like owners before him, Vinik does not separate the revenues and losses of his hockey team from his concert and events business.

"We see it all as one," Griggs said.

He said deficiencies in the hockey operation — unsold luxury suites and corporate sponsorships — detract from the entertainment side.

"There's a trickle down effect," Griggs said. "You might have a lot of concerts, but you still don't have enough suite-holders, and you don't have enough top-tier, blue-chip sponsorships, and you don't have enough season-ticket holders."

But this postseason has helped the franchise alleviate that. During this six-week playoff run, team officials said it sold 1,500 new season ticket packages for next season. That boosted the season ticket base by 15 percent to 12,000 total.

The team also sold 56 of its 69 suites this season. Officials expect to sell out all 69 next year.

• • •

University of Alberta sports business professor Dan Mason said there is one sure path to profitability for an NHL team in the Sun Belt: get to the playoffs.

That's why it's quite possible that this postseason could finally put the Lightning in the black.

When Tampa Bay won the championship in 2004, it said those 13 extra home playoff games generated $14.1 million, before expenses.

The Lightning would not disclose what it's making during this postseason, but the team president said that Mason's premise was valid.

"When we took over the team we had heavy losses," Griggs said, "and as we continue to push this organization forward, we're continuing to reduce those losses and a playoff run obviously helps that."

The postseason is particularly lucrative for NHL teams because their expenses plummet. Teams only pay players during the regular season, so during the playoffs their costs fall while they get additional home games to sell tickets, concessions and merchandise.

"You're not paying any money out in player salaries," Mason said. "So anything you get will just be gravy, really."

But even in the postseason, it's hard to compete with NHL teams based in Canada. They can make up to $5 million extra per playoff game, Mason said. Those teams have richer local TV deals and can make more money off their bigger, more committed fan bases.

"Unless you are being competitive," Mason said, "you really don't have a hope of being profitable."

In 2014, Forbes valued the Toronto Maple Leafs — one of the league's storied "Original Six" teams — at $1.3 billion, No. 1 in the NHL.

By comparison, Forbes valued the Lightning at $230 million, 26th out of 30 teams.

Team officials declined to comment on Forbes' figures. But Griggs said the Lightning are at a real disadvantage against their rivals up north.

"They have 300 years of hockey history in established markets," he said.

• • •

The only economic impact from the Stanley Cup final will be inside the Amalie Arena, not outside it.

Another two, three or four home games won't pump a noticeable amount of money into the local economy, said Andrew Zimbalist, a sports economist who has become well-known for challenging the gaudy values assigned to events like the Olympics and the Super Bowl.

He said events like the Stanley Cup and NBA Finals pale compared to a Super Bowl, which draws tens of thousands of visitors to a city who are ready to spend money.

But Stanley Cup games attract a mostly hometown crowd.

"It's a drop in the bucket, really," Zimbalist said.

The real beneficiary, he said, will be Vinik.

"If he wasn't profitable before, then in my view he would likely be after this," Zimbalist said, "and the momentum will carry him over to the next year as well.

"He's already won."

Times researcher John Martin contributed to this report. Contact Jamal Thalji at [email protected] or (813) 226-3404. Follow @jthalji.

 
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