Alex Ovechkin has the Capitals winning
both in the standings and finally, at the
bottom line. |
Think back just two seasons ago, and the Washington Capitals were abysmal, posting all of 70 points for the season, finishing last in the Southeast Division, and second to last in the Eastern Conference. My, how times have changed. With Alex Ovechkin matching Sidney Crosby’s hat trick, the Caps took a 2-0 lead in the Eastern Conference semi-finals, with a 4-3 win over the Penguins at the Verizon Center Monday night. And while the Capitals continue to climb in the standings, owner Ted Leonsis might finally – finally – see something other than red in the Captials ledgers. While there are marginal profits to be made by making the Stanley Cup Playoffs in the first place, the real rewards for teams in the playoffs start to appear in the second round, a location that the Capitals now are sitting comfortably in. Washington Times sports business reporter Tim Lemke covers the financial implications for the Capitals in his Sunday article, Caps' wins earn them respect, profits. Asked about how reaching the playoffs impacts the Capitals both now, and in the future, I responded: "Certainly, the Capitals have to be feeling pretty good about this," said Maury Brown, founder of the Business of Sports Network. "It's been a while for them, and it's a great story. It definitely is helpful. Everybody's going to be very interested in the team. You go out in the first round, well, maybe not so much."
In other words, there are marginal revenues to be had in the first round due to the large percentage of revenues that go to the players; approx. 65 percent. This is backed up by comments within Lemke’s article by Capitals President Dick Patrick. "Without a doubt, the more success we have here in the playoffs, the better we're going to do," Patrick said. "Absolutely, there's a correlation there."
There is also the fact that the further a team goes into the playoffs, the more a club can charge for tickets. As further reported by Lemke: Mr. Patrick said there is great potential for additional revenue in later playoff rounds because tickets will be about 20 percent more expensive and fans are more likely to purchase team merchandise. Industry analysts said a $2 million profit from the conference semifinals isn't out of the question. "The further you go, the more lucrative it becomes," Mr. Patrick said. "You're making it into more games, you're making more money. If you can get into the third round, you can really start feeling good about it."
Regardless of how far into the playoffs the Capitals go, club executives say that they will still take a loss on the season. As to how much extra revenue can be had by winning the Stanley Cup, the “team can net between $13 million and $17 million, depending on the length of each series, according to officials from Park Lane, a Los Angeles-based sports investment bank.” All things considered, the Capitals seem to be more than headed in the right direction. With a 2-0 advantage over the Penguins, odds are good that the direction involves moving up further still in the playoffs.
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