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LESS TO LOSE IN LOCKOUT? <br> STRANGE AS IT MAY SEEM, HOCKEY TEAM SAYS IT WOULD LOSE LESS MONEY THAN LAST YEAR IF NO GAMES ARE PLAYED THIS SEASON. A TEAM OFFICIAL BELIEVES SOMETHING IS WRONG WITH THE SPORT.

The Buffalo Sabres lost $8.2 million last season playing hockey.

This year, they expect to lose $7.4 million -- if they don't play.

In other words, the team will cut its losses by $800,000 if the National Hockey League lockout wipes out the season.

That's just one of the projections that Sabres officials make, as they consider the increasing possibility of no hockey this season.

"There's obviously something seriously wrong with the economics of our sport when we can lose less money by not having hockey," said Dan DiPofi, the team's chief operating officer. "In Buffalo, for our situation, it obviously speaks to the fact that something is broken."

It should be noted, though, that the numbers provided by the Sabres cannot be independently verified. In addition, since club owner B. Thomas Golisano also operates HSBC Arena, tracing the exact cash flow can be difficult.

A lost season also would:

Cost local governments at least $1.25 million in sales tax, and the state government more than $3 million in income- and sales-tax revenues.

Deny about 1,000 game-night workers of $2 million total in extra income they use for everything from parochial school education to family vacations.

Put a major dent -- hundreds of thousands of dollars worth -- in the cash flowing toward downtown bars, restaurants and hotels.

Figures supplied by top Sabres officials back up their previous claim that they would lose less money if HSBC Arena remained dark all season. While these numbers cover only one small-market franchise among 30 NHL teams, they help explain why many NHL owners seem so intent on playing hardball in the current labor negotiations.

Ted Fay, associate professor of sports management at Cortland State College, called it "counterintuitive" for a sports franchise to lose less money by not playing.

"One has to ask the question 'What's going on here?' " he said. "Does this business model work?"

How could a team lose less money by not playing?

Mostly by eliminating last season's $35.5 million in player salaries and benefits, and saving another $10.5 million by slashing all other expenses almost in half.

Last season, for example, the Sabres spent $58.4 million on operating costs and took in $50.2 million.

Without hockey, expenses would plunge 79 percent to $12.3 million, while revenues would plummet by 90 percent to $4.9 million.

Among the expenses that would be saved: $2.2 million in annual NHL dues.

While a season-long lockout would wipe out nearly half the prime events at HSBC Arena, that loss won't have any major impact on the arena's finances or rent payments to local governments.

To understand why, you need to understand how the arena operates.

HSBC Arena, while technically owned by Erie County, essentially operates as an arm of the Sabres and their owner, Golisano. The Sabres pay no rent to the arena, whose revenues and expenses both flow into and out of Golisano's pockets.

Erie County, while owning the physical structure, no longer has a stake in arena finances, other than the sales tax generated there.

The only annual rent the Sabres pay, $500,000 in ground rent to the City of Buffalo, will be paid this season, whether there's hockey or not.

One reason why the Sabres and the arena would take less of a hit from a lockout dates back to the complicated bankruptcy proceedings involving the team and its previous owner, Adelphia Communications Corp.

In essence, the bankruptcy scrubbed away the roughly $6.5 million in annual interest payments owed by the arena to its banks and government lenders. So the arena has far lower fixed costs under Golisano.

Last year, HSBC Arena hosted 95 events, including 41 Sabres games. The other 54 dates included about 10 Buffalo Bandits lacrosse games, four local college basketball events and about 40 concerts and other special events.

This year, Sabres and arena officials expect about the same number of non-hockey events, although it's too early to speculate about next spring's concert schedule.

DiPofi said it's a fallacy to believe the arena will be able to book more concerts and special events to replace some of the lost Sabres games.

Bringing in an event that draws only a few thousand people isn't worth the expense of opening the arena. And there are only so many major concert tours willing and able to play Buffalo.

DiPofi talked about the game-night employees hurt by the lockout, including single mothers, students and young people trying to use their arena jobs as a second income. For someone making a salary in the low $20,000s, that $2,000 for the season represents an important chunk of income.

"You have deep-pocketed owners arguing with well-paid players," Fay said. "The person getting killed is the minimum-wage worker who's absolutely dependent on the games being played. That's criminal."

Before the lockout, the Sabres already had increased their season-ticket base slightly, thanks to a drastic new ticket-pricing scheme that lowered prices. The team also required a deposit of only $50 per ticket.

Last season, the Sabres sold the equivalent of 7,870 season tickets, including partial-season packages. About 93 percent of them renewed for this season. With more than 700 new ticket holders, as of Sept. 15, the base topped the 8,000 mark.

The Sabres traditionally sell a lot of their partial season-ticket packages just before the season starts.

"But when Sept. 15 hit, we hit a wall," DiPofi said.

Until the lockout ends, the only pro hockey players on HSBC Arena ice will be wearing the uniforms of the Rochester Americans. The Amerks will play here Friday and Dec. 28.

e-mail: gwarner@buffnews.com
and drobinson@buffnews.com

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