Link: Buffalo News - Sabres predict a profit.
An enocuraging article from the Buffalo News this morning regarding the state of the Sabres finances after the first twom onths of the season. They are projecting (without a playoff berth) a small profit in the range of $200-300k. Encouraging is too weak a description really. Bloody fantastic is more apt. From the depths of bankruptcy and a year-long lockout to the beginnings of a self-sustaining business in three years is nothing short of impressive. Almost as impressive as the Sabres current 6-game winning streak.
Those who know me personally (or from my now-abandoned personal blog) know I have a keen interest in things economic, and think of myself as a specific type of economist, namely an Austrian. So, this side of the game of hockey is of particular interest to me and I'm constantly reviewing the mechanisms of how this game translates into economic terms. As a believer in the pure power of the unfettered free market the Sabres return to profitability is encouraging. Granted nothing about the NHL exists in a free market, certainly not in economically socialist America, but given the context of the business, namely the very tough local economy and the competition from other sports and acitivites, the projections for this year imply that management has figured out how to provide a product worth paying for. That's what profit is, the arbitrage between your cost of production and the willingness of someone to pay for what you are offering. Without profit there is no reason to continue.
Revenue sharing will certainly account for part of the Sabres income... they will be subsidized somewhat by the other teams in the league.
But, to my mind that's perfectly fine. The NHL is a voluntary association, one that just went through a painful reorganization not only with its labor but also within its membership. The result of that reorganization could have been very different, and one that would have made it a lot tougher for markets like Buffalo to either remain or become viable.
Does hockey still belong in Buffalo? I think so. There was a time when I thought that the Sabres were going to be a casualty of the Federal Reserve's profligate money creation. But, now, after the lockout and the change in ownership, I don't think that as much anymore. There will come a time, perhaps sooner than people suspect, when this team will not need revenue sharing to remain viable, and that money will either be provided to another team undergoing a painful transition or not be needed whatsoever. Providing a good value to product ratio is the biggest governing factor in profitability and that's the attitude Mr. Golisano has been trying to instill in both his organization and his team. Give us a reason to come to the games and we'll give you our money, support and love. If you lose, lose with dignity and effort and if you win, do so with style, class and talent. First and foremost give us a reason to care.
So far this year, I'm more a fan of the guys in the AGH than I've been in a while. It may just be time to decide on whose jersey I want a copy of....
Ta,
Ghost-Dad, my friend. Ghost-Dad. Great piece, agree with the premise and the conclusion. Having the team achieve some sort of financial viability is essential to it's future success in Buffalo.
Posted by: Chris | Friday, 02 December 2005 at 11:34 AM
Yeah, Goose really is the man. It's hard to imagine how bad this team would be without him right now.
He's become that important to their overall success.
Ta,
Posted by: Tom L | Friday, 02 December 2005 at 11:51 AM