Saturday, October 27, 2007

The funds behind the Leafs' empire

Internal financial statements show MLSE generated profit of $83 million on revenue of $383 million in the year ended June 30. The internal documents also show the company forecasts a profit of $105 million by 2011 on revenue of $477 million. Over the same period, ticket revenue is expected to increase 30 per cent, to $166 million.
Westhead gets access to some detailed financials in a story that ran on the front of the Star today, and adds some thoughts as to just what the team should do with that extra cash flow in another nice piece: Maple Leafs must spend more scouting for hidden talent

The Star goes Leafs crazy today, and has one more piece worth a read from University of Toronto assistant dean Richards Powers where he lays out why fans are partly to blame for the team's struggles.

It's been a tough week for team ownership in the press, for some reason.



At 2:29 p.m., October 27, 2007, Anonymous Anonymous said...

Simply breath-taking.

I'd like to see one example where having high ticket prices has alienated 'real' fans and hurt the team. That's something that is thrown around, but never backed up. Why wouldn't you want the wealthiest fans paying lots of money for your tickets?

At 3:04 p.m., October 27, 2007, Anonymous Anonymous said...

The interesting part of the article was that given high ticket prices - and even more large increases planned for the future - attendance is now mainly Bay Street bankers.

This - together with these very healthy profits - should raise the question why Canadian taxpayers are still subsidizing these teams.

All corporate ticket buyers write off one half of the cost against their taxable income. With a combined federal and provincial corporate tax rate of say 35%, over 17% of ticket revenue MLSE gets from its corporate ticket buyers comes out of the federal and provincial treasuries.

Isn't it about time we stopped this government welfare for very profitable teams?

The welfare doesn't end there. For example several years ago, when the Canucks were in difficulty because of the low dollar, the BC government allowed them to run a scratch and win lottery and keep all of the proceeds to help them out financially. No one knows for sure but it is estimated the Canucks net out at least one million a year from the lottery tickets.

Despite the fact the dollar has recovered - and the Canucks are making large profits - they are still running the lottery, and have said they will continue to run it and keep the money for the final two years of the agreement. A more honourable owner would have at least pledged all remaining profit from the lottery to minor hockey.

In Alberta, I believe the government put a special income tax on visiting hockey players income earned while playing in Edmonton and Calgary and then rebated the revenue to the two Alberta teams. I don't know if this is still in effect.

The bottom line is that with the rise of the dollar and all Canadian teams making large profits it is time to get rid of all these special arrangements.

At 3:28 p.m., October 27, 2007, Anonymous Anonymous said...

I'm actually surprised they haven't gone to variable pricing already. Several other teams have, and it makes sense that a more attractive matchup would have a higher ticket cost than a visiting team that is less popular-like charging less for matinee performances because there is lower demand.

Interesting that they don't pay for scouts' cell phone bills or give them a car allowance, but typical of many large corporations. Nickle-and-dime some of the less visible but highly important functions.

At 9:04 p.m., October 27, 2007, Anonymous Anonymous said...

My question is this. Why is the Toronto Red Star breaking news like this? is this not a story the Globe and Mail should own? Maybe you can tackle that James? I don't mean to offend. I just wonder why this kid from the Star is the only one consistently breaking sports business news. He looks 20 years old in the picture. I would prefer not to have to buy or even link to the Red Star to get news like this.
((It is a great story fer sure))

Kevin in Burlington

At 8:50 a.m., October 28, 2007, Anonymous Anonymous said...

I just think that the matter of corporate write offs should be clarified. One half of ALL entertainment expenses are allowable deductions for all business not just corporations. So maybe to say MLSE is subsidized is a little misleading. They are no more subsidzed than restaurants or golf courses.

At 7:30 p.m., October 28, 2007, Blogger Bruce said...

Judging from the bottom six rows that show up on my TV screen, Leaf fans do stay away. Maybe that corporate tax write-off stipulates that holders can only watch half of the game live, and must spend the other half in schmoozing in the corporate lounge. Do they get to write off their huge bar tabs as well?

I feel sorry for real fans in Canada's largest market who can't find or afford a ticket, that the most expensive seats in the house sit empty for long stretches. It's the worst of all worlds, cuz the "message" being sent by these paid-for empty seats is that the market will pay through the nose for anything, including nothing at all.


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