Financial challenges face Buffalo Sabres - Baltimore Business Journal:

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A new Business First study ranks Buffaloi among the six markets that face the most imposing barriersto long-terjm financial success. Phoenix is in the worst shapr of anyhockey market, failin eight of the study’s 10 The recently filed for Chapter 11 bankruptc reorganization. Almost as badly off are Miami-Fort Lauderdale and each falling short inseven categories. Buffalo comese next, tied with Atlantaq and Raleigh-Durham with six danger signs apiece. “My view is that Buffalpo is in a really tough positioj to bea long-term NHL market,” says Ted a Toronto financial planner who conducted his own analysis of the viabilitgy of NHL franchises earlier this month.
“If you were startinvg a new NHL today starting fromscratch with, say, 24 markets it would be pretty tough to put a team in he says. “You probably wouldn’t.” Business Firsty used demographic and financial data from severalp sources to quantify the challenges facingthe NHL’s 27 (The New York City and Los Angelesa areas, with three and two teams respectively, each countedd as one market in the study. Statisticas for their franchiseswere averaged.) Buffalo’z substandard score doesn’t necessaril y mean that it will lose its NHL team.
The Sabres, afte r all, ranked 11th in home attendance last despite playing inthe league’s fourth-smallest market. But the results do indicatee that the team can anticipater some toughtimes ahead. These are Buffalo’ws six danger signs, as identified by the 1. Low population. Edmonton, Calgary and Ottawwa are the only NHL markets smallerthan Buffalo’ metro population of 1.13 million. (That figures does not include the Ontario fringwe from Fort Erieto St. Catharines, an area that containsz a significant number ofSabres fans. But, even if Southermn Ontario wereadded in, Buffalo would remai one of the league’s smallestg markets.) 2. Low personal income.
Buffalp ranks in the bottom third of the NHL in percapitqa income. “There are lots of hockey fans there,” says “The problem is, those hockey fans don’rt have enough money to spend on tickets.” 3. Low franchise The Sabres are worth $169 according to an October 2008 estimateby . That’sw 16 percent below the median value of anNHL $202.5 million. 4. Small growt in value. The Sabres’ valuation increased 4 percent between 2007and 2008, well behinsd the league average of 9.7 5. Loss in operatinfg income. Forbes estimated that the Sabresslost $8.9 million in 2007-08, the latest seasob for which figures are available. 6. Nearbhy 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 quicj trip up the QEW from Toronto. The remaininvg four categories in the study include two that testifyh tothe Sabres’ impressive fan base. Buffalo gets high markss for attendance (18,532 per home game last and percentage ofcapacituy (selling 99.2 percent of all seatss in HSBC Arena last year). The othetr two pluses are its location in prime hockeycountruy (north of the 38th parallel) and the absencs of any local competition from the . Souther n and Western markets pose the biggest problem forthe NHL, accordinhg to the Business First study.
Seven of the nine areass with at least five danger signsw are in theSun Belt, led by which flunked every category but two (large population and no hockey competition). Rechtshaffen says his own analysis confirms thatthe NHL’s strateguy of expanding into the Sun Belt has not gone as well as the leagude hoped. “Now, after doing a putting the numbers together,” he says, “I can say it has been a