Posted: November 22, 2013

Sports biz: Av-onomics: Looking up

Stewart Schley

For Colorado Avalanche fans, the best thing about the new National Hockey League season is that it’s just that: new.

After closing the books on a forgettable year, the Avalanche returned to the ice with a legend in the coach’s box and a much-improved vibe among the fan base, if anecdotal chatter means anything. I know this because the guy at the neighborhood liquor store was practically salivating the other day about going to the Oct. 4 home opener against Nashville, and my Facebook friends are ga-ga over the Avs early in the campaign. If those aren’t valid indicators, I’ll eat my puck.

For a more nuanced opinion on Av-onomics, we’ll have to wait until later this month when the Forbes NHL team valuation estimates for 2013 are published. But the smart guessing is they’ll show Kroenke Sports Enterprises hasn’t exactly busted the bank with its investment in the Avalanche.

Last year, early on in the misery of a lockout-shortened, cellar-destined, 12-21-5 season, Forbes pegged the Avalanche’s enterprise value at $210 million, barely more than the $202 million that Forbes says boss Stan Kroenke paid to acquire the team in 2000. With estimated revenue of $91 million, a player payroll of $54 million and operating income of just $4.5 million, the Avalanche ranked 18 among 30 NHL teams for overall value. (The Toronto Maple Leafs topped the charts at $1 billion.)

Chances are the updated numbers won’t look much better after a 2012-2013 season in which average home attendance was 15,444 – well below the roughly 18,000 the Avalanche routinely hit at Pepsi Center during the heyday of the longest sell-out run in NHL history. That 487-game streak started at McNichols Sports Arena in 1995 and continued through Oct. 2006. Attendance has hovered around the 15,000 mark for the last three years, and with the Avalanche missing the playoffs last spring for the fifth time in seven seasons, the prospects for a revival seemed weak during the off-season.

But this year’s early sentiment may tilt in Kroenke’s favor, especially after the Avalanche began the season with a 3-0 record and a new coach whose early penchant for histrionics from the bench seemed destined to elevate the entertainment level all by itself. 

One indicator of a possible Avalanche recovery is the secondary ticket market, which was bullish on the team early in the season. Rinkside tickets for the Oct. 17 game against the reviled Red Wings were running $330, and up on stubhub.com, close to double face value. Good seats in the upper balcony were advertised at $200 and higher. Live NHL hockey isn’t cheap to start with, but ticket holders seem to be betting there’s enough early interest to support lofty premiums on resales.

Then there’s the media attention. When the Avalanche travelled to Toronto last month, coach Patrick Roy and crew were “swarmed by bright television lights and tape recorders, with reporters lined up four or five rows deep to get in a few words,” according to the Denver Post’s Adrian Dater. That’s not exactly the reception you’d normally expect for a team that has consistently underperformed of late. But it is exactly the sort of media love that can help catapult a team back into prominence – and prominence means ticket, beverage and food sales at home.

Sports is a funny business. You work to maximize customer loyalty by tending to details ranging from the availability of parking spots to the cleanliness of the restrooms; but in the end, it’s the sentiment attached to the team’s performance that matters most. Note that the important word there is “sentiment.” It’s not so much whether the team wins – although winning matters plenty – it’s whether there’s a sense that a team has a chance to win that ignites fervor. Early in the 2013-2014 season, the odds seemed good that the Avalanche could compete. That means more fans in more seats, and possibly some upward movement in Stan Kroenke’s hockey ROI.

Stewart Schley writes about sports, media and technology from Denver. Read this and Schley’s past columns on the Web at cobizmag.com and email him at stewart@stewartschley.com

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