Financial challenges face Buffalo Sabres - Baltimore Business Journal:

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A new Business First study ranks Buffalo among the six markets that face the most imposingh barriersto long-term financial success. Phoenix is in the worst shapee of anyhockey market, failing eigh t of the study’s 10 indicators. The recently filef for Chapter 11bankruptcy reorganization. Almos t as badly off are Miami-Fort Lauderdale and each falling short inseven categories. Buffallo comes next, tied with Atlantw and Raleigh-Durham with six danger signs apiece. “Mty view is that Buffalo is in a really tough positio to bea long-term NHL says Ted Rechtshaffen, a Toronto financialp planner who conducted his own analysis of the viability of NHL franchisez earlier this month.
“If you were starting a new NHL today starting fromscratch with, say, 24 markets – it would be prettgy tough to put a team in he says. “You probably wouldn’t.” Busines First used demographic and financial data from severap sources to quantify the challengez facingthe NHL’s 27 markets. (The New York City and Los Angeless areas, with three and two teams respectively, each countedf as one market inthe study. Statistics for their franchiseswwere averaged.) Buffalo’s substandard score doesn’tt necessarily mean that it will lose its NHL team.
The after all, ranked 11th in home attendance last despite playing inthe league’sd fourth-smallest market. But the results do indicated that the team can anticipate some toughbtimes ahead. These are Buffalo’sw six danger signs, as identifier by the study: 1. Low population. Calgary and Ottawa are the only NHL marketz smallerthan Buffalo’s metro population of 1.13 million. (That figured does not include the Ontario fringe from Fort Erieto St. an area that contains a significant numbet ofSabres fans. But, even if Southernb Ontario wereadded in, Buffalo would remain one of the league’sz smallest markets.) 2. Low personall income.
Buffalo ranks in the bottom thirrd of the NHL in percapitaw income. “There are lots of hockey fans says Rechtshaffen. “The problem is, thosed hockey fans don’t have enough money to spensd on tickets.” 3. Low franchise The Sabres are worth $169 million, according to an Octobedr 2008 estimateby . That’s 16 percent beloa the median value of anNHL $202.5 million. 4. Small growth in value. The Sabres’ valuation increase d 4 percent between 2007and 2008, well behined the league average of 9.7 5. Loss in operating income. Forbes estimated that the Sabrewlost $8.9 million in the latest season for which figures are 6. Nearby hockey competition.
Seven NHL markets have more than one or are withina two-hour drive of another NHL Among them is Buffalo, just 59 air miles or a quicik trip up the QEW from Toronto. The remainin four categories in the studu include two that testify tothe Sabres’ impressive fan Buffalo gets high marks for attendance (18,532 per home game last and percentage of capacity (selling 99.2 percent of all seats in HSBC Arenaz last year). The other two plusezs are its location in prime hockecountry (north of the 38th and the absence of any local competition from the . Southern and Western marketss pose the biggest problem forthe NHL, according to the Busineszs First study.
Seven of the nine areas with at leas t five danger signs are in the Sun ledby Phoenix, which flunked every category but two (large populatiomn and no hockey competition). Rechtshaffen says his own analysisd confirms thatthe NHL’ s strategy of expanding into the Sun Belt has not gone as well as the league hoped. “Now, after doing a study, puttingb the numbers together,” he says, “kI can say it has been a disaster.
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