Playing Below Capacity: Nashville Predators

Welcome to the third edition of Playing Below Capacity, a series here at Puck Money where I am looking at the teams that are playing (or were playing, when I decided to do this back in December) to see why certain teams aren't filling over 85% of their arenas. The first edition was the New Jersey Devils, followed by the Los Angeles Kings. Today, we make our way to Tennessee to visit the Nashville Predators. The Predators are 24th in Attendance ranked by Capacity, and they sit right at the magic number as of today of 85%. With that said, lets take a look at the Preds.*

*Warning: Please remember that I'm a young college kid who thinks he knows what he's talking about. Any "problems" that I suggest the Predators have are my opinion and are most likely not that accurate. Also, any information I used can easily be found on the Internet as I am a typical lazy college kid. With that said, enjoy.

Here are the ideas I came up with that could be problems with getting people to go to Preds game on a regular basis...

• Arena Location/Age
• High Ticket Prices/Poor Promotional Events
• City Population
• Financial Issues in Nashville, Tennessee (location of Arena)
• On Ice Product
• Location/History of Franchise

So before we dive in, lets take a look at some raw facts (yes, pun intended) of the Nashville Predators (All information taken from their wikipedia page, found here):

• The Predators were founded in 1998 when Craig Leipold was awarded an expansion franchise in Nashville by the NHL
• The Predators have made the playoffs four times in their 9 completed seasons. They have never gotten past the Conference Quarterfinals (first round). Their best finish in the league was third in 2006-2007.
• They have played all 9 seasons in what is currently known as the Sommet Center; which was formerly known as the Gaylord Entertainment Center and Nashville Arena. The Sommet Center opening in 1996.
• The capacity for Ice Hockey at the Sommet Center is said to be 17,113.

So, let the fun begin...

- Arena Location/Age

The Sommet Center is only 13 years old, and recently went through renovations in the summer of 2007. In these renovations, a new scoreboard was installed, along with changes to Concession and Public areas. The number of seats remained the same. Roughly looking at the ages of present arenas in the NHL, I would venture that the Sommet Center is around average age if not a bit older (I will look into getting a list together, I should know that stuff). As for location, the Sommet Center is in the heart of Nashville, as you can see here (Arena noted by the "A" arrow):


With a few major roadways leading to Nashville, and the Nashville International Airport to the South and East, I'd say the Sommet Center's location isn't a big issue.

- High Ticket Prices/Poor Promotional Events

As always, we will refer to Teammarketing.com, for our information. They rank the four major sports with ticket prices with their Fan Cost Index, which at a single game;

comprises the prices of four (4) average-price tickets, two (2) small draft beers, four (4) small soft drinks, four (4) regular-size hot dogs, parking for one (1) car, two (2) game programs and two (2) least-expensive, adult-size adjustable caps.

This season, the Predators are ranked 20th in the NHL with an FCI of $273.38, which is up 3.9% from last season but is till around 15 dollars below the NHL average. The average ticket price is $47.22, which is also up 2.8%, but still about $2 below the NHL average. The average premium ticket price is also about $5 below the NHL average at $107.91. Being below the average is good, and in the past couple of seasons, the Predators have done just that. But, ticket prices in Nashville have also been rising at a steady rate since at least 2005-2006; with the average ticket going up around $15 and the average premium ticket going up around $30. Is this outrageous? No, and considering inflation rates and the current economy, its not necessarily a big surprise either.

I couldn't find any Promotional Information on the Preds website at first, but after a google search I found the Predators Promotion page under the Fan Zone. I must say, I am impressed with their offerings. They tend to have something for every game, and they really mix it up. Offerings involving kids, the military, food, charity drives, pre-game parties, and college nights really hit home with a lot of different demographics. My favorite (real surprise here), would be the College night, where for $20 you get a shitty ticket and half-price on beer! Good stuff here, and I don't think its a major problem.

- City Population

Although Nashville has somewhat of a below-average metro population with a shade under 1.5 million, the city itself has almost 608,000; which ranks it right down the middle at 15th in the NHL. I think they could benefit a lot more from a larger metro population, but having the 15th largest city market definitely comes in hand at times. I wouldn't say the City Population is the big problem in Nashville for Attendance.

- Financial Issues of Nashville

As of 2000, the city of Nashville was 67% white, which (to be honest) are the overwhelming majority of Ice Hockey fans. The median age is 34, with 67% of the population under the age of 45, which is good for a 18-45 target demographic of NHL fans. The median income was just a shade under $50,000, which leads me to believe the average household income should be in the ballpark of the $88,000 average household income for NHL fans (Forbes). In general, I think people in and from around Nashville could afford a Predators game most of the time, but again I don't think this is the main issue (all above from wikipedia).

- On Ice Product

As I mentioned before, in 9 seasons the Preds have made the NHL postseason four times, all three ending as quickly as it began; in the first round. As an expansion franchise, this may be considered a small success, but from a business standpoint, it does not help the matter of the bottom line. 18 of the 25 players on the Nashville roster are under the age of 30, which is obviously good for the future. Three key players for the future are Defensemen Ryan Suter (23) and Shea Weber (24, Assistant Captain), along with Goaltender Dan Ellis (28), who had a stellar 2007-2008 season. As the saying goes, everyone loves a winner, and I think its no exception here. In an indifferent expansion hockey market, the best way to create and retain fans would be to win some hardware. Easier said than done, I know, but at the same time I wonder if this is really the case. Take a look at the graph below (click to enlarge):


Even when hype was the highest, coming off a solid post-lockout season in 2005-2006 with a 6th place finish, and an even stronger season in 2006-2007, the Predators couldn't even break the top 20. Now, I understand that the Sommet Center can only fit 17,113, and those ranks are by Average Attendance, not Capacity. But still, if a legitimate winning hockey team can't attract customers, what is the problem?

- Location/History of Franchise

The state of Tennessee doesn't exactly have the best history of Ice Hockey. According to Arenamaps.com, there are only 10 Ice Hockey Arenas in Tennessee. I'm sure the game is prevalent in small pockets, but as of right now I have no way of identifying that. The Predators have most likely grown the game, but I would venture a guess that it hasn't grown by much. Their Franchise History isn't exactly historic, as 2008-2009 is only the 10th season, and many rumours have already swirled around the club focusing on relocation. The Summer of 2007 provided much drama for the club, as Craig Leipold looked to sell the club. A deal was in place with Jim Balsillie, but fell through when Balsillie went too far with his relocation plans (pre-selling season tickets in Hamilton, Ontario). A group of local business owners who called themselves "Our Team Nashville" rallied to buy the team to keep it in town. Throughout this whole debacle, the team did manage to re-negotiate their lease with the city of Nashville. The changes are as follows (wikipedia):

If by the end of the 2009/10 season, the team loses at least $20 million or more in cash flow and does not average 14,000 per game in average attendance, the team can break it's lease with the city of Nashville by paying a $20 million breaking fee.

- Conclusion:

The Predators have a value of $164 million, which ranks them 23rd on Forbes' list this year. Their revenue is at $70 million, but with an operating income of $-1.3 million and a debt/value ration of 50%. Are the Predators in good shape? Not so much. Are the Preds in the worst shape in all the league? No. Frankly, I never thought Nashville was much of a hockey market. I see it more as an American sports market. One with a big enough population and TV market to support professional sports teams. Can they support the Predators? For now, but I don't know if it can last. The only other professional team in the big four are the Titans of the NFL; which means the Predators don't have to directly compete with an NBA or MLB team, which helps them. I can easily see the team moving in the next decade, to where I am not sure. The problem with the Predators is that you can't pinpoint one problem, which usually leads back to the hometown market. The On-Ice product isn't the greatest, but if no one will go even when they are winning, what does that say about the market.

If I was in Nashville, I would continue to keep the ticket prices as low as possible, along with doing as much promotional work as possible. Getting the On-Ice issues sorted out would be great as well, but that is always easier said than done.

So that's the third edition of my series called Playing Below Capacity here at my little blog. Check back next week around the same time, as I plan on looking at the Phoenix Coyotes, which should be a really fun one.

Maybe more later today...