What are the revenues and expenses for an average NHL team and how profitable are they? Ottawa Senators case study

 Dear Reader:

This is the 3rd of three blog postings this week focusing on what the annual revenue and expenses of NHL, NFL and MLB teams look like. This is a little bit of a departure for me and no doubt a bit of an odd posting in a Sports Licensing blog, but I came to it because I wanted people interested in sports licensing to understand just how small a role the sale of licensed sports merchandise plays in a team’s budget. The point being, the royalties generated by the sale of licensed sports merchandise play a very small role in an NHL, NFL or MLB team’s budget.

I have also been genuinely curious as to what NHL, NFL and MLB team budgets might look like, so I thought I’d have a go at it. When I say “budget”, I’m talking about a somewhat realistic big picture estimate of a team’s annual revenues and corresponding annual expenses.

This posting showcases the Ottawa Senators of the NHL and looks at the 2021-22 season as if Covid didn't happen. It also shows the figures in Canadian $ and US$. This week’s two other postings show the NFL's Green Bay Packers and MLB’s Philadelphia Phillies.

Let me also say that I am well aware that within each league the revenue generation and corresponding profitability of teams can vary greatly – in the NHL the New York Rangers are reported to have annual revenues in the $US225million range while the Florida Panthers are reported to generate just $US92million – that’s a huge difference for two teams in the same league and thus they would have dramatically different profitabilities. But this revenue and expense exercise that I have done isn’t about comparing teams within each league, rather I have chosen a “middle team” in each league (the Ottawa Senators in the NHL, the Green Bay Packers in the NFL and the Philadelphia Phillies in MLB) and thought it would be interesting to compare “middle” teams across each of the three leagues.

Almost all NHL, NFL and MLB teams are privately owned and therefore their statement of revenue and expenses are also private. The NFL's Green Bay Packers are an exception because they are publicly owned, and thus they are a source of info for people interested in this subject. And once in a while you hear of a pro team having to reveal certain financial information in court for one reason or another. But for the most part, to the average fan it’s a bit of a mystery.

As you can imagine, there are a number of challenges and decisions to be made in undertaking a budget creation exercise like this. One such challenge is that you can be sure every team handles revenue and expenses differently, yet here I am creating a template model to fit every team. For instance, the building of a new arena/stadium/ballpark – how much of that gets charged to the team on an annual basis? Or what if the team’s arena is 25 years old – has the existing arena been fully paid for and at the same time, shouldn’t money be set aside each season for a new building fund? Another example is non-player salaries – does a team owner pay him/herself $100k or $10 million, and do they have umpteen family members taking up space on the payroll? In my spreadsheets you will see how I’ve handled these and numerous other expense items – not perfectly by any means, but I’ve tried to take them into account. If you disagree with some of my decisions, feel free to change the numbers as you see fit. This is meant to be a fun exercise, not the cure for cancer.

Here are the highlights of the Ottawa Senators 2021-22 (non-Covid) annual budget guesstimate as prepared by Scott Sillcox (then immediately below I have attached two pages of budget details):

Revenue (US$):
- National revenue $24 million
- Local revenue $92 million
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Total Revenue: $116 million
Expenses (US$):
- Player salaries $71 million
- Other salaries $16 million
- All other expenses $57 million
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Total Expenses: $144 million
Gross Loss: -$28 million

I have no ulterior motive for creating and posting these budgets. I’m a sports fan and I’m genuinely curious as to what a team’s annual operating budget might look like. And part of that is I’m curious how team budgets differ from the NHL to the NFL to MLB.

I welcome meaningful, constructive feedback, especially if you think I’ve gotten some numbers terribly wrong or have forgotten a major source of revenue or area of expense. So, have a look and let the dialogue begin.

Thanks

Scott

PS You might well ask - who is Scott Sillcox and how is he qualified to take a stab at NHL, NFL and MLB team budgets? Who I am is fairly simple - I was a licensee of the NHL, NFL, MLB and US colleges and after I sold my business some years ago, I became a consultant to people wanting to enter the licensed sports product marketplace. I also really like sports, spreadsheets and big picture viewpoints on subjects. So I thought I’d give it a whirl. If you are interested in a budget for a particular team, I’d be happy to put on my consultant’s hat and for a two hour fee ($350US), I would be happy to prepare a reasonable Sillcoxian guess at that team’s budget. Email me here or call/text me at 416-315-4736.

PPS And if you are a huge fan of an NHL, NFL or MLB team and are looking for a great gift idea in the $35 range, consider buying a ready-to-hang 8" x 24" plaqued poster of your team's uniform evolution at Heritage Sports Stuff. Every fan should have one of these babies hanging somewhere in their home.

PPPS In case you were wondering about the values of the 32 NHL franchises, which is related to the profitability but not in a straight line way, here is Forbes' list for 2021 as presented by Wikipedia. In essence this is what Forbes feels each NHL franchise could sell for in 2021.