Buffalo Sabres

The Coyotes move to Hamilton - as I see it

I’ve been hesitant to comment on the possibility of the Hamilton Blackberries (or whatever they will be called) taking up residence across the border, as it seemed a long-shot to me. ( I thought sure the judge would be loathe to step into this mess.) But, based on the outcome of Tuesday’s hearing, it seems to me that he will likely rule the Coyotes can be moved, as long as Balsillie is willing to pay the league enough money to do it. While how much money that is may still be up in the air, I don’t see him balking at anything upwards of $100 million US, as to get an expansion franchise in Hamilton would cartainly cost more than that. And the amount of money a Hamilton team would make would be huge.

But, what I’m here to talk about is this: what will the real impact on the Buffalo Sabres be?

Larry Quinn and the rest of Sabres management have been extremely quiet on this subject, though what has come out is mostly negative. Concern that 15 % of the season ticket base comes from our neighbors to the North, and roughly 20 % of total ticket revenue. A team like the Sabres, which does not have a big market to begin with, certainly could be hurt by this. And the Sabres will definitely argue that some sort of fee will be required to offset any losses that might occur.

Well, there is no doubt that we get a significant amount of fans coming from across the border, and I imagine the Sabres will take some sort of hit on that front. If this was 5 years ago, when the Sabres played to 2/3 empty houses, I would say it was a bigger concern. But with the current structure of having 14,000+ season ticket holders, I am not sure the addition would be that intrusive. I would even argue that potential rewards might offset the losses.

Why do fans in Southern Ontario come down to Buffalo rather than go to Toronto now? WEll, for some of them, it’s distance, if you live in Fort Erie or Welland, your 20 minutes from Buffalo, and for those people, nothing will likely change. For for many Canadian fans…it’s mainly the availability and price of tickets. Looking at this site, listing average ticket prices across the NHl, the average ticket price in Buffalo is $36.43, while in Toronto, it is $76.15, 109 % higher.

But here’s the rub, don’t for one second think that Jim Balsillie is bringing a team to Hamilton because he is kind and generous to Southern Ontario hockey fans…he sees $$$ as well. A team in Hamilton would obviously get much demand…and it has been said by many with little affect on Leafs revenue. Therefore, we can presume that ticket prices would be closer to those of the Leafs than the Sabres. And there is no doubt that he would have instant sellouts from the get-go.

So, if we assume that the prices are similar to the Leafs, and that Hamilton starts out in the Western Conference (likely at least for a year or two), how will that affect the HSBC attendance? The Sabres themselves state that 20 % of their revenue comes from cross-border traffic. These fans are made up of three groups:
1) Sabres fans:These fans will continue to come across the border.
2) Leafs fans: predominantly ones that can’t afford / get tickets in Toronto. With only 1 (at most) Leaf game in Hamilton, at similar prices to Toronto, these fans will continue to come to Buffalo for the games.
3) Fans of other teams/player/NHL in general: these are the fans most likely to be lost. If you are a Joe Thorton fan, and your guy comes twice a year without having to cross the border, you might not bother coming to Buffalo. And if you live in Hamilton, you certainly won’t want to travel to Buffalo, assuming you can get tickets locally. (Again, it’s quite possible that Hamilton tickets will be hard to come by.) But for Eastern Conference opponents…such as the Canadiens…Hamilton again will only have one at most game…the fans will still have to come to Buffalo to get their fix.

So, what percentage of Canadien fans fall into each of those categories. If we presume that 1/3 of revenue comes from each, and presume that the first two categories will remain largely unaffected, even if HALF the other fans stop coming, that’s a loss of about 3.8 % of the ticket base…still significant…but not necessarily irreplacable.

Not mentioned above are season ticket holders that live across the border. Those with deep pockets may choose to switch to Hamilton, depending on where across the border they live. (I know of at least 2 people that have season tickets to the Sabres JUST to go to the 3 Leafs games…they then sell all their other tickets.) However, again I would expect at least half those people to remain…simply because the price here will still pose a significant advantage to Hamilton.

So, now were talking the Sabres, potentially, could lose between 3 and 8 % of their ticket sales. However, that assumes that NO-ONE else would buy tickets to those games. This is clearly a silly statement. The variable pricing structure the Sabres now use is too brilliant to NOT sell out their season ticket prices. Season ticket holder get tickets for the games on average for 1/3 the individual ticket prices. As long as that pricing structure remains in place, season tickets will continue to sell out, whether to Canadiens or Americans. There may be some drop in individual ticket sales, especially to Western Conference opponents, but this drop will be minor compared to the big picture sales.

On the positive side for the Sabres will have another “Toronto” game every year where Hamilton comes to town. Another oppurtunity to jack the individual game ticket prices…and that game will certainly provide more income than a Pheonix Coyotes games. And if Hamilton eventually moved to the East…now that’s THREE extra big ticket games a year. And that would make up for a multiple of losses.

The biggest concern to the Sabres is probably the potential for increasing ticket prices. Canadiens tend to be willing to spend more for NHL Hockey than their Buffalonian counterparts, so in the long-term, there will certainly be revenue effects that would be seen. But how much this would be is almost impossible to say.

So, if I were the Sabres, privately I would not be THAT worried. But publicly, I would still use the move to my advantage…making sure to beg the NHL that Balsillie has to provide the team with some sort of payoff. Rather than a lump-sum payment, how about some sort of annual income fee? How about $3 million a year for the next 10 years? Or maybe 20? That’ll be a drop in the bucket on the eventual profit a Hamilton team will see.

So, I see the move to Hamilton as being a potential minor revenue hit, but could be an overall positive for the Sabres organization, especially if Hamilton eventually plays in the East. But for the Buffalo fan, this will help keep ticket prices down in Buffalo long-term for the Sabres to remain competitive. And there is certainly no threat to the Sabres, who are right now still considered a hot market by the NHL…there are certainly half a dozen markets that are of greater concern.