NHL Teams Score Big in the Suite Market

Editor’s Note: Suite pricing across a multi-variant landscape is further investigated in this article, the third of a four part series. The average low and high cost of a suite for each team is sourced from the ALSD Reference Manual. However, the research does not take into account how many suites are priced at each price point, slightly misrepresenting accurate averages, but still providing a credible means of comparison. Addressed third in this issue is the NHL, following up our NFL and NBA analyses from previous issues of SEAT. Check back in subsequent issues for similar analysis for MLB and a summary of the findings across all leagues. 

This third installment of our series on how professional sports teams in each of the four major leagues stack up to each other in the suite market slides over to the NHL. Our data provides useful information that should be considered when pricing a suite; however, it is important to realize that this is only a gauge, and the research will not take into account variables that have not been reported. For example, the number of suites at each listed price, or if teams are offering all-inclusive food and beverage with the purchase of the suite.  
 
The NHL 2010-2011 season is underway, and soon the Chicago Blackhawks will have to defend the Stanley Cup. While they might find themselves as the best performing team again this season on the ice, they have a ways to go to challenge for the Forbes crown of most valuable NHL team. Forbes valued the Blackhawks at an impressive $300 million, but the top honor went to the Toronto Maple Leafs at $505 million. At the bottom of the list was the Phoenix Coyotes at $134 million. All sports franchises are not equal, but the reasons for the imbalance vary considerably. They could range from the team’s success on the ice to the age of a team’s facility or even the geographic location.
 
As reported by industry leaders, the variables taken into account impact the demand for suites and are likely to change by geographic market. The game plan for this article is to organize data across many variables in tables, allowing trends to emerge that shed light on why some teams can charge more than others for a seemingly comparable product.
 
The following list includes the variables chosen with the sources in bold type.
 
Forbes – Team value of the total franchise
Forbes – Team value ranking among all 30 NHL teams
Arbitron – Population of metropolitan area
Arbitron – Market ranking compared to other metropolitan areas
Fortune – Listing of the top 1000 companies in the United States and listing of Fortune 500 worldwide
Full House Entertainment Database Marketing – Breakdown of the number of Fortune 1000 companies by metropolitan area
NHL – Conference, Eastern or Western
ALSD – Low and high average cost of a suite
ALSD – Maximum suite seating capacity for all suites
ALSD – Suite seating percentage of total area capacity
 
Similarities are found among teams when studied across these criteria, as well as some large discrepancies. For example, the Chicago Blackhawks have 169 suites, which is the most in the NHL. By comparison, the New York Islanders have the fewest with 30 suites.
 
The market surrounding the Montreal Canadians includes only two major corporations, as defined by the Fortune Global 500 listings. Given the population, corporate presence and number of suites available, one might assume the overall value of the Canadians to be low, but it puts Montreal fairly high on the list with a value of $408 million, outweighing the majority of the teams in the league. Please note that Forbes does not compile a Canadian version of the Fortune 1000 available in the United States. Instead, we rely on the Fortune Global 500, which includes the world’s largest companies. Tables 1 and 2 show team standings on all criteria; the charts are broken down by division and conference.
 
The suites at American Airlines Center, host to the Dallas Stars, make up just over 14% of the 18,500 overall seating capacity. At the other end of the spectrum is Nassau Veterans Memorial Coliseum, home of the New York Islanders. The Coliseum has the lowest percentage at 1.99% of the 16,234 capacity.
 
Presently, the most affordable suite is found at The United Center, home of the Chicago Blackhawks, who charge $32,000 for a season. In contrast, the Toronto Maple Leafs, who play in Air Canada Centre, have a suite offering that commands $500,000 annually. These numbers have been converted to American currency at the time of writing this manuscript to allow for better comparison. Even so, Toronto offers the highest priced suite in the NHL.
 
It is also interesting to consider that the entire NHL averages $121,213 for the lowest and $281,019 for the highest cost of a suite. The Eastern Conference casts a tall shadow on the Western Conference in all phases of the game using these criteria. The average population is 40% greater and average team value is 21% larger in the East than the West. There are 11% more Global Fortune 500 companies, and the average high price is 7% higher. The only area where the Western Conference edges out the East is average low cost of a suite, where they command a mere $3,359 advantage. 
 
How does the East manage to command more value? Could it be because the original six teams grew out of the East, or is it that more northeastern cities tend to see hockey as a winter sport? Any way it is considered, teams in the East are worth on average $44 million more than teams from the West.
 
In terms of population density, New York was ranked highest by Arbitron in 2010 with 15,669,500 people. The smallest NHL metropolitan area is Edmonton with 730,372 residents, which would have earned a ranking of the 67th largest marketplace if located in the United States. Although the sixth largest metropolitan area in Canada, it is roughly half the size of Green Bay, WI. As a whole, the West plays in a smaller marketplace, averaging 3,191,355 people, versus the East, which averages 4,443,927 people in their cumulative regions.
 
Table 3 displays the commanding lead the Eastern Division has over the Western Division in all variables but one. The insights, taken from these tables, show how teams stack up against each other in terms of suite pricing in the NHL. A great deal of energy goes into the business side of suites and how teams justify setting their suite prices. Many factors contribute to the final pricing structure that teams employ. Teams do not want to leave potential untapped revenue, but how do teams know how they compare unless they consider the variables, and how they stack up against others in the league?
 
Spring training is coming, and so is the final installment in this series. The authors will next study Major League Baseball and how the same criteria affect suite pricing in that league.
 
CLICK HERE to see how the 32 NFL teams stack up against each other in the suite market. 
CLICK HERE to see how the 30 NBA teams stack up against each other in the suite market.
CLICK HERE to see how the 30 MLB teams stack up against each other in the suite market.

 

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