By now, everyone has seen the quote from Minnesota Wild owner Craig Leipold from April 11, 2012 regarding the need to decrease their expenses.
By now, everyone has also seen that he signed Zach Parise and Ryan Suter to deals that would make Rick DiPietro feel inadequate. Forgetting the cap hit of the respective players, each is receiving $12 million in each of their first two seasons (combining salary and signing bonus) - $48 million over two years.
So start the uproar, right? How dare Leipold claim that he needs to cut back his expenses, and then go dish out this kind of money! It’s an outrage! It’s a scandal! It’s…financially smart, in actuality.
The Minnesota Wild blew into the NHL with vigor, selling out 409 consecutive home games. Last season, however, they averaged 17,772 per game, just short of the Xcel Energy Center’s 18,064 capacity.
Leipold recently announced the the team has garnered almost 2,000 additional season ticket orders since the signings of Parise and Suter. (Paruter? Sarise? We gotta find a way to shorten this.) The Wild reportedly had gate receipts of $44 million in 2012, and $97 million of total revenue (e.g. gate receipts were 45% of total revenue). If we assume they sell out every game in 2013, with a 10% ticket price increase, the gate receipts should jump to around $52 million. Not a huge increase, but their other revenues (concessions, merchandise, television contract, sponsorships, etc.) will also increase, so using the same 45% calculation, their total regular season revenues should be approximately $114 million. And before you tell me, “That’s an outrageous number! That puts them equal to large-market teams like Philadelphia, Chicago, and Boston!” Look at the numbers: Minnesota was 14th in revenue last season, and with a potential jump to $114 million, they would jump to 8th – not unreasonable at all.
However, that alone would not make them profitable. In 2012, their player payroll was $61 million, and their total expenses were $102.9 million (payroll was 59% of total expenses). So applying the same percentage in 2013, their total expenses should be about $123 million (based on player expenses of $72.7 million). That would equal close to a $9 million deficit – almost twice that of 2012.
But wait, there’s more! Playoffs! Owners love playoffs, not just because of the prospect of a Stanley Cup, but because the revenue generated from these games are almost pure profit. Players and staff are not paid extra (save for bonuses), since their salaries are paid by the end of the season. The only true expense is the cost to operate the arena each game.
Assuming ticket prices increase a bit for each playoff round (as they often do), the Wild could generate an additional $4 million if they make it to the first round ($-5 million operating income), $5.8 million in the second round ($800,000 operating income), $6.8 million in the third round ($7.6 million operating income), and $8.1 million in the fourth round ($15.7 million operating income). Note that this is assuming they play three home games in each round, a generous, yet plausible assumption.
Now before you tell me I’m crazy (and trust me, there are many of you), understand that NHL organizations’ numbers are generally not public. So these 2012-13 figures are estimates based on using similar formulas, percentages, and numbers used in the 2012 campaign.
It is conceivable that the Wild could advance to the second, or even third round of the playoffs with superstars up front, on the back end, and in goal. Crazier things have happened in past seasons. And if the Wild can make it to the second round, Leipold will be sitting even on his investment (a good sign, since most sports owners do not buy teams to make money). But if he can watch Paruter (this
will work) lead the team to a Conference Finals berth, his team could possess the eighth-best operating income in the league – quite a turnaround from the past.
Alan Bass, a former writer for The Hockey News and THN.com, is the author of "The Great Expansion: The Ultimate Risk That Changed The NHL Forever." You can contact him at [email protected], or on Twitter at @NHL_AlanBass. 
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