Jim Lites knows that even now, more than two years after the Dallas Stars exited bankruptcy court into the ownership of Tom Gaglardi, the finances of the team are still very much on the minds of fans.
So he wasn’t at all surprised when the question was posed in part one of the Stars two-part Ask the President video series.
“It’s a fair question and I know one that always concerns the fans,” Lites said. “Bankruptcy is a real scary thing. It’s a bad word. In sports it drives fans away. It scares people. It puts an image that you’re going to leave or be out of business, not that I think that was ever a possibility for the Dallas Stars… I think in people’s minds they are worried about our finances, so it’s the first question.”
The good news for Stars fans is that the business side of things is trending as positive as the on-ice side, if not better. According to Lites, the season ticket base has doubled from the time Gaglardi purchased the franchise, and the Stars are selling more “fresh full season tickets” than any other NHL franchise except the Colorado Avalanche. To be fair, the top tier teams like Blackhawks and Kings aren’t necessarily going to sell many new full season tickets because of high retention rates, but it’s still a great sign for the Stars.
Also a great sign is the uptick in non-attendance revenue. Lites cited improvements in both television and radio rights deals as well as a booming business of third-party bookings at the American Airlines Center, which feeds into the profits of both the Stars and Dallas Mavericks.
“We’ve been able to refinance all of our debt,” Lites added. “And most importantly, Mr. Gaglardi and his family… have brought a whole different approach to how we are able to do things. We borrow money much more efficiently than we did before. We have power in the marketplace. We have great advertising partners that have jumped on board… We just got the support of the business community, and all of those things make us a much better business than we were before.
“It doesn’t mean we’re making money yet in the sense that are we profitable. I would say this. We’re way less unprofitable than we used to be, and Mr. Gaglardi is very supportive of what we do and very understanding and appreciative of the fans.”
Not profitable may strike some as a bad sign, but as always, professional sports and publicly announced profit margins should be taken with a very large grain of salt. For one, ownership of a team is not generally viewed as a money-making venture per season – the vast majority of professional sports team owners are in the game for reasons other than the money to be made year to year. For another, there are all sorts of fun with numbers that teams employ, which means it’s often impossible to suss out where a money-losing team actually helps increase the profit of a larger money-making enterprise.
Take the Florida Panthers. While the team in and of itself is a money loser, Sunrise Sports and Entertainment (the company that owns them) almost certainly sees much larger profits because of its ownership of the team. One of the fun tricks Jerry Moyes used before putting the Coyotes into bankruptcy was employing his own companies for things like transportation at at-or-above market cost. Good times are had by many, many accountants working on team books.
Additionally, teams in every major sport are, at least publicly, as financially successful as best serves their public interest. The San Jose Sharks claim to lose money annually, and they are also looking for a way out of their current television contract. The Edmonton Oilers cried poverty in the midst of their pitch for a new arena.
Given all of that context, the fact that the Stars are happily saying they’re significantly less of a money-losing venture than they were during the nadir of the bankruptcy years is unashamedly good news.
Still, they are eventually going to try and actively make money rather than simply losing less. One of the obvious areas the team could target is ticket prices, and whether or not ticket prices are headed up was another question Lites addressed in part one.
“I react to that question carefully because it’s important,” Lites said when asked if ticket prices will rise as the team’s payroll does. “You’ve got to be honest with the fans. We currently have one of the lowest ticket prices in the National Hockey League, and certainly the lowest prices I think on an average basis across the Metroplex. We however have one of the highest payrolls in the National Hockey League, and to operate where we want to operate, we have to be there. While we have a really nice television contract locally and are the beneficiary along with the rest of the league of the national television contracts in both Canada and the United States, we anticipate that our prices will remain fair, but they will tend to reflect the quality of product on the ice.
“But we will remain fair to the fans. I think there was a time here when the American Airlines Center opened, under the old regime that I was a part of so I’m taking part of the blame, that we were operating at a very high payroll, and we took the prices beyond what I think the market was, which is never good. So I think we will be in touch with the fans needs, but I can’t tell you there won’t be price increases. I think there will. I think that will be inevitable, but I don’t think it will ever be dramatic, and I don’t think fans will ever think they’re not getting their money’s worth.”
That is also not a surprise, and given the team’s reemergence into the marketplace as a team to pay attention to (especially with the untimely injury bug hitting hard across town in Arlington), it may be an opportune time to start slowly bringing some levels back up. Lites emphasized that the team is concerned about not pricing the average fan, families and students out of the building, as they know they are still in regenerating fans phase of the sports team cycle.
He said promotions such as student rush, family sections and deals and military discounts are expected to remain in place. But at the same time, the team is also concerned about making sure the season ticket base holds its value despite single-game discounts.
“Our lifeblood really is our season ticket holders,” Lites said. “We have to never have a situation where a season ticket holder feels, ‘Why am I a season ticket holder if I’m not getting any more than the casual fan?’ So the important part here to balance everybody’s interest. But we have to make the season ticket holder feel like he’s paying the least amount for the best real estate because he’s making the biggest commitment.”