Equipment: How the Stanley Cup playoffs affect team revenue
“Playoffs! Playoff!? »
We all remember that exclamation from Indianapolis Colts head coach Jim Mora. It became a .GIF, soundbite and one of the most reproduced interview clips in sports history. After all, no matter the sport, the playoffs are what it’s all about.
As the NHL season draws to a close and the final playoff races roll around, chasing teams prepare for the most exciting time of the year, while failed teams begin to think about the promise next year. One of the most fascinating things to me about the playoffs is the difference in financial motivation between players and teams.
From a player’s perspective, the playoffs are more than just about the love of the game. Players don’t receive any extra pay for playing in the playoffs. Their salaries are paid in full whether they play four seven-game series or pick up their golf clubs after their last regular season game in late April. Of course, there is a common pool for the playoffs from which an amount is paid to each player who makes the playoffs, and the increments are higher based on round-by-round success, but the amounts are generally not in the same domain than the players. ‘ regular season salary. It’s more about the fun of chasing a collective goal and achieving the lifelong dream of winning the Cup.
On the other hand, the playoffs are where teams and owners really make their money. Most teams don’t factor playoff revenue into their budgets due to the uncertainty of qualifying, so playoff revenue is like a budget windfall. If a team can perform at breakeven or better during the regular season, the playoffs are pure butter sauce. The lure of staying competitive enough to have a chance at earning playoff revenue is why some teams have such a hard time giving in to a rebuild scenario. Even though fans want their teams to maximize the opportunity for this singular crowning achievement, it’s still a business measured and evaluated on an annual basis, and the rebuild years don’t tend to look very good in the financials.
When a team makes the playoffs, revenue streams become oceans of revenue. Ticket prices are being readjusted from what was charged during the regular season as the forces of supply and demand take over. Even without accounting for secondary market extortion, box office prices can be raised many multiples higher for playoff games than for regular season games. A good run in the playoffs can also influence ticket pricing for the following season. Teams want to capitalize not just on the fervor of the current season’s playoffs, but the carryover effect of fan interest in the team into the future.
When it comes to sponsorship, almost every partner company, from the company whose name is on the arena to the company that purchases a one-corner rink decal advertisement, will be charged additional amounts for their exposure and playoff activations. New sponsors are also coming into the fold to exploit playoff-specific visibility. Business operations for NHL teams are incredibly busy in the days and weeks just before the playoffs and then throughout the playoffs as they plan fan activations, promotions and marketing campaigns, all backed up by the money of sponsors who want their marks attached to a team during its time. of glory.
Merchandise sales are skyrocketing as fan interest spreads from hardcore fans who typically buy team gear to casual sports fans who suddenly want to jump on the bandwagon and get jerseys, caps or playoff t-shirts. Food and drink sales are soaring due to the sense of anticipation and party atmosphere in the arenas. Everyone knows that winning is the best predictor of strong beer sales.
Finally, there are ancillary revenue opportunities that can come from hosting road game-watching parties or playoff-themed events and gatherings.
In short, the playoffs are the goose that lays the golden egg. And after a few years of a pandemic that has drastically reduced team revenues, NHL teams and their owners could use a few more geese.
It’s not all about the money, of course. Team owners and managers want to win the Stanley Cup almost as much as the players. I suspect the satisfaction and sense of accomplishment that comes with group success outweighs the money for most people. Accumulating stacks of cash in the playoffs is a great consolation prize nonetheless.
When the 2011 Cup was awarded to the Boston Bruins, hearts and minds in hockey boardrooms and Canucks business operations were broken. Then one of our finance guys offered this sad but true reality.
« Technically, it was the best financial result we could have had. We hosted Game 7 of the Stanley Cup Finals, but you don’t have to pay for a parade, victory party, or rings of championship!”
His logic didn’t dull the pain of this devastating loss, but it did make for a pretty solid track record.
As you watch this year’s playoffs unfold, it might not be the Jim Mora .GIF you remember, but another much-circulated clip of Tom Cruise’s Jerry Maguire yelling « Show me the money! »
Chris Gear joined Daily Faceoff in January after a 12-year run with the Vancouver Canucks, most recently as the club’s assistant general manager and legal director. Prior to migrating to the hockey operations department, where his responsibilities included contract negotiations, CBA compliance, assisting with roster and salary cap management, and AHL franchise governance, Gear was vice-president and general counsel for the Canucks.
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