The Third Man In - An Independent Chicago Blackhawks Web Site

In an article in today's Chicago Tribune by Melissa Harris, Blackhawks' chairman Rocky Wirtz confirmed despite his team's tremendous success both on the ice and at the box office, the team operated much of this past season deeply in the red and finished the year at a loss.

As the story notes, despite record merchandise sales and eleven playoff home games (which, since players don't receive a salary in post season, is a limited-expense cash influx) Wirtz Corp continues to cover operating losses.  Just how much money the organization lost in 2009-10 is not known or voluntarily shared by the team at this time.

Wirtz does claim that losses have decreased each year since he's taken over.  In his final year at the helm,  Bill Wirtz claimed the team to have lost $31 million in the 2006-07 season.

This news should come as little surprise to those with basic knowledge of the NHL's economic structure.  While the Blackhawks' revenues have risen greatly in the past three seasons, so have their expenses.  A league-high payroll in 2009-10 and ever-expanding management and office staff, in part, drains revenues.  The organization has spent a great amount of time and resources in attempt to recapture both new and departed fan bases, as well as infiltrate the community and consciousness of the general Chicago sports fan.

The NHL remains a gate receipts-driven business.  Merchandising and licensing comes next, then whatever monies are captured from national and local television rights.  In the case of national television, that is virtually nothing.  Local markets very, but again, its not a significant source of revenue.  In respects to merchandising revenues, the league has a huge problem on its hands with counterfeit jerseys and other unauthorized merchandise, as anyone who has walked the concourse at the United Center in the past two seasons would know.  Also, each season the Blackhawks must contribute to the league's revenue-sharing pot, to aid those NHL cities less fortunate.  Or, run by a bunch of jackasses.

As Melissa Harris notes in today's report, Rocky Wirtz revealed to the Economic Club of Chicago back on April 19th, he isn't surprised the Blackhawks are still losing money at this point.

"It's going to take four (or) five years before we can actually get back in the black," Wirtz said.

So, how will they get there?

For starters, another 20% increase on ticket prices for this upcoming season.  Wirtz also tells the Tribune that fans should expect more "modest" increases in the future.  For those who bought season tickets before the Rocky administration took over and had their original ticket prices "grandfathered,"  those tickets have been raised by as much as 100% for the 2010-11 campaign.  In other words, the "good-will" period is over.

Part of the simple explanation as to why the team in still seeing red lies in Rocky Wirtz's commitment to running the Blackhawks in ways that are in a 180 degree turnabout from his father's practices.

As John McDonough told the Tribune:

"We're going to do everything we can to win," team President John McDonough said.  We want this to be a destination for free agents.  We want this to be a place where players want to play.... We're going to charter our players (to away games) and we're going to stay in hotels that are going to be synonymous with a first-class operation.  When Rocky and I first met, we talked about this commitment."

Those who continually point their accusatory finger at ex-general manager Dale Tallon for spending recklessly should dissect that quote a few more times.

While expenses involved in aesthetic and facility enhancements (including the construction of a new practice facility) contributed to the 2009-10 season losses, Wirtz confirmed that his team spending to the maximum salary cap limit (and beyond as they did last and will again this coming season) is the prime financial burden.

Looking ahead to the next NHL-NHLPA collective bargaining negotiation, one would easily discern an area Rocky Wirtz would have considerable interest in.

For those unfamiliar with the basics of NHL revenue sharing, the story highlights a major issue a team such as the Blackhawks has with the league's current revenue-sharing policy.

As stated above, while expenses involved in playoff home games are limited mostly to game-night operations, those gate receipts are nearly cut in half by revenue sharing.  In each of the Blackhawks eleven 2010 playoff home dates, they owed the NHL's revenue-sharing pot "at least 50 percent of what their gate receipts would have been at a regular season United Center sell out."

"You can technically lose money during the playoffs if you don't raise your ticket prices," Wirtz told the Tribune.

I think if you figure he's using playoff money to fund the non-seasonal operating budget and you add up the costs of transporting and basing much of the organization in the opponent's city for 5-6 days or more in a round and take into account the fact that team stayed in a hotel on game days at home (granted, this is proverbial peanuts to the team) during the post-season, he's probably not exaggerating all that much.

In all, a great story by Harris.  Especially considering I've continually listened to even the most-knowledgeable Blackhawks fans insist this team is "printing money," this piece was long overdue.  One which ends with a revelation that should surprise few - that Rocky intends to one day turn the franchise over to his children.

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