Nashville Predators approaching key attendance goal, but NHL revenue sharing still at risk

In the latest update on the average paid attendance figures for the Nashville Predators, John Glennon reports that after 29 home games, the Preds now stand at 13,793 (up from 13,511 about a month ago).

Somebody make sure these figures get to "Rusty" Lawrence ahead of tomorrow's meeting of the Sports Authority, okay?

The Preds are currently enjoying the typical post-football season boost to their ticket sales, and are making progress towards the critical 14,000 milestone which represents a pre-condition for receiving full NHL revenue sharing under the Collective Bargaining Agreement. One thing to keep in mind, however, is that hitting the 14K benchmark doesn't necessarily mean the team will qualify for full NHL revenue sharing, and they've still got plenty of work to do down the stretch...

The Predators continue their home schedule after the Olympic break with 10 home games in the month of March. For discount tickets to any Nashville Predators home game, follow this link and use the special offer code "PREDS".

What's At Stake

Nashville's ability to meet these conditions is often seen as putting the team at risk of not receiving upwards of $10 million in NHL revenue sharing if they miss the target. Since a total loss of $20 million, combined with paid attendance below 14,000, can trigger an escape of the arena lease, this causes some observers to surmise that the Predators could move out of town as soon as this summer. A critical point that is often misunderstood, however, is that under the CBA, a team that misses the performance targets would only lose 25% of their share, so the stakes involved are more like $2-4 million. Since the team has come close to breaking even the last two seasons, and has kept payroll low this year, it remains absurdly unlikely that the $20 million net loss figure is on the horizon.

So forget the relocation talk, and focus on what's really on the line: somewhere in the neighborhood of $2-4 million in revenue sharing.

The Good News

As noted above, paid attendance is on the rise, and if they merely average 14,500 the rest of the way, the Preds will hit the 14K mark. Their last 5 home games have averaged 15,146, and with a playoff drive coming up which includes a heavy dose of Thursday/Saturday games, all signs are positive that they'll achieve that goal.

If the team averages 15,146 the rest of the way (as they have over the last home stand), they'll end up with the same overall total as last season (14,190). So there's also a chance they could make year-over-year progress in terms of tickets sold.

The Bad News

There is another criterion that must be met for a team to receive a full portion of revenue sharing, however. This comes from Article 49 of the CBA:

The Club is generating a year-to-year revenue growth rate in excess of the League average revenue growth rate (i.e., the Club's revenue growth rate from the previous League Year to the current League Year is greater than the League average revenue growth rate from the previous League Year to the current League Year);

In short, the team's revenue growth rate has to exceed the league average, and this is where the Predators could run into trouble. All indications so far is that the League's average revenue growth will be pretty flat, balancing out the general economic situation against the runup in the Canadian dollar (since all revenues are measured in USD, appreciation of the Loonie directly inflates the revenue of the Canadian teams as expressed in league figures, and thus the NHL as a whole).

Based on detailed information that I requested from the Metro Sports Authority that covers the first 23 home games, however, it appears that both gross and net sales (before and after ticket-based taxes paid to the city of Nashville) resulting from these paid attendance figures are running about 10% lower than last season, which could, if continued, result in a drop of $2-3 million in ticket sales. Whether this is the result of discounting, or a change in the mix of tickets being sold (lower vs. upper bowl) is impossible to say.

It should also be noted that there are other revenue streams that could theoretically make up for this gap; corporate sponsorships, stronger ticket sales in the coming weeks, etc. But the likelihood is that top-line revenue dollars during the regular season will decline from last season, putting the team at risk of missing the aforementioned 25% of NHL revenue sharing.

The Road Ahead

So if the Predators are in danger of bringing in $2-3 million less at the gate, and could miss out on a further $2-4 million in revenue sharing, are they doomed financially?

Hardly.

As mentioned previously, other revenue streams could help alleviate the ticket-selling shortfall, and the rumored upcoming partnership with Bridgestone could present a major step along that road.

A single playoff round (3 home games) would also close most or all of that financial gap, and anything further would not just push this season's figures into the black, but also build momentum for next year with both individual and corporate sales. The playoffs are a major profit generator for NHL teams, because player salaries have already been paid out over the course of the regular season, while gate revenues are typically very high as teams sellout the games at what are often premium prices.

As always, it comes down to the Stanley Cup playoffs. Making them, and making noise once they get there, is of critical importance to the Nashville Predators and their fans.

The Nashville Predators reviewed this article prior to publication and declined to confirm or deny the details presented above.

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