Wings can flex financial muscle
Team's below salary cap, can bulk up roster
10.23.2011
By Bill Shea
...Estimates for the 2009-10 season by Forbes show Detroit seventh in the 30-team NHL with $119 million in revenue and sixth in operating income at $15.3 million.
The team doesn't comment on its financials.
The salaries are offset by a deeply loyal fan base that keeps the Red Wings near the top of the NHL's attendance rankings every year.
Detroit has played two home games out of a slate of 41 this season, and both have been sold out at 20,066 each. That puts the Red Wings third in the 30-team NHL in per-game attendance average. It finished last season fourth in the league at 19,680 per game.
A single fan is worth $101.48 per game to the Red Wings, according to Chicago-based sports research firm Team Marketing Report's Fan Cost Index published last year. The National Hockey League's FCI average is $101.66.
The calculation is derived by a simple formula: A fan at Joe Louis buys a ticket at $51.73 (average price), a $6 beer, a $3.50 soft drink, a $3.25 hot dog, $20 for parking, a $7 program and a $10 hat.
A full season of sellouts at Joe Louis, based on the Fan Cost Index, would generate $83.4 million over the 41 home games. Part of that is handed over to the city in a form of a 10 percent ticket tax, 10 percent surcharge on concessions and 7 percent on suite sales.
The team once had 396 consecutive sellouts from 1996 through the start of the 2007-08 season -- which coincides with the economic collapse locally and nationally.
Detroit also picks up supplemental revenue from pricier tickets, suite rentals and advertising during the playoffs. And the deeper into the playoffs the Red Wings get, the more money the team collects.
The Red Wings also have made moves on the corporate sponsorship front. In September, the team inked a deal with Ada-based Amway Corp., the network-based direct-marketing giant, to become the team's first-ever presenting team sponsor. Financial terms were not disclosed, but that contract is thought to be a two-year, seven-figure deal.
The Amway logo now appears on all Wings-branded signage at Joe Louis, on tickets and elsewhere.
Detroit also extended a deal with Chrysler Group LLC in another relationship that it declined to discuss the financials.
Another line of revenue comes from broadcast rights: The Red Wings, Tigers and Detroit Pistons have separate 10-year broadcast deals, signed in 2008, with Fox Sports Detroit and collectively are worth about $1 billion.
And if there isn't enough revenue from the team and its various deals, owners Mike and Marin Ilitch can dip into their other businesses to subsidize it.
The family fortune comes from its $2.2 billion in annual sales from its Little Caesars pizza chain or the $446 million from Marian Ilitch's MotorCity Casino.
The Ilitches, who are planning to build a new downtown arena for the Wings in coming years, bought the then-moribund team for $8 million from Bruce Norris in 1982. Mike Ilitch also owns the Tigers.
His stewardship of the Wings has led to him be recognized as one of the top owners in pro sports by Sports Illustrated, ESPN and Haddonfield, N.J.-based Turnkey Sports & Entertainment Inc., which measures brand effectiveness and values of pro sports teams.
The Red Wings are the top team in The Hockey News' weekly power rankings.
"Another year, another spotless start for the NHL's model franchise," the magazine said. (Complete Story)
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