The Blackhawks ended their season with capacity attendance and record merchandise sales, television ratings and sponsorship revenues, and the Stanley Cup.
But financially the team was a loser.
Exactly how much money was lost is something team executives will not discuss.
One consequence: Season ticket prices will increase by an average of 20 percent this fall, which is projected to rocket them from the second-cheapest in the National Hockey League three seasons ago to among the 10 most expensive, according to the team. And fans should expect "more modest" increases in the future, team owner Rocky Wirtz said.
Wirtz first revealed that the team was not profitable in private. "It's going to take four (or) five years before we can actually get back in the black," Wirtz said at an April 19 forum at the Economic Club of Chicago, according to a transcript. "And right now we're still supporting the Blackhawks with our other Wirtz organizations."
In a follow-up interview this week, Wirtz said that the Blackhawks ran out of cash several times last season. Each time, he received a memo, known as an internal capital call, in which the team requested money from Wirtz Corp., the Blackhawks' parent company, to cover operating expenses. And at the end of the season, Wirtz said he double-checked that the playoffs did not cover those losses; the franchise remained in the red, the team's accountant told him.
"We have multiple businesses and obviously we want every one to stand on its own," Wirtz said. "And what you don't want to do is manage one business from the profit of the other one."
But Wirtz pledged he would never revert to the penny-pinching ways of his father.
"We're going to do everything we can to win," team President John McDonough said.
"We want this to be a destination for free agents. We want this to be a place where players want to play," he said. "We're going to charter our players (to away games) and we're going to stay in hotels that are going to be synonymous with a first-class operation. When Rocky and I first met, we talked about this commitment."
The team now typically lodges at the Four Seasons. Even last season's interns will receive championship rings.
The Blackhawks and its parent company, anchored by a lucrative liquor distributorship, are privately owned, so the Chicago Tribune cannot access their financial data. However, the last time a member of Wirtz's family discussed specifics, the numbers were not flattering.
Rocky's father, Bill Wirtz, ran the team from 1966 until his death in 2007. Earlier in 2007, Bill Wirtz told the Toronto Star that he had lost $191 million on the team in the last 10 years, including $31 million in the 2006-07 season.
Rocky Wirtz said he knew the franchise "wasn't doing well because I could see (Wirtz Corp.'s) consolidated tax return." But in October 2007, on his second day in charge, he learned through an internal capital call that the team was short $6 million to $7 million for that month's payroll.
"I was naive enough to think that if we filled the building up that we would be able to turn around economically the franchise," Wirtz said.
Weeks later he said he learned the team had close to the lowest average ticket price in the NHL for the 2007-08 season and the second-lowest attendance rate the season before.
Wirtz puts the responsibility squarely on his family; ticket prices were allowed to dip too low. Last season, the Hawks' average season ticket price was the 21st-cheapest in the league, according to the team.
Since he has taken over the franchise, the turnaround on the ice has been nearly unparalleled in the history of professional sports.
It also has been expensive.
One of Wirtz's early moves as team owner was to professionalize management, hiring McDonough, then president of the Chicago Cubs. As Blackhawks president, McDonough has tripled front-office staff to 75. He has hired veterans to run business operations (Jay Blunk from the Cubs), ticketing (Chris Werner from Ticketmaster Chicago) and marketing (Dave Knickerbocker, also from the Cubs).
Last season the team upgraded accommodations, constructing a private locker room, workout facility and offices at Johnny's IceHouse West, the Hawks' practice facility. The team declined to say how much the addition cost.
But Wirtz said those costs paled in comparison to players' salaries, which reached the NHL's $56.8 million salary cap last season. The team is expected to hit its maximum again in the coming season.
A 22-game playoff run had to have made a dent, right? Yes, but "it wasn't enough," Wirtz said during the interview at his office. "Every year has been a loss."
But Wirtz said he can see "the light at the end of the tunnel" because the team "is losing less every year."
Compared with professional basketball, baseball and football, the economics of hockey are difficult.
The league operates under a 2005 revenue-sharing agreement. The way it works is that the teams that rake in the most income, generally regardless of expenses, subsidize the teams that generate the least.
A drawback is that it disqualified the Blackhawks, because of the size of the Chicago market, from receiving revenue sharing dollars.
The primary benefit is that it capped players' salaries -- an owner's largest expense.
"The collective bargaining agreement has been a major help, but by no means did it create a league where all teams were going to be profitable from that point forward, or even most of them, quite frankly," said Marc Ganis, president of SportsCorp, a Chicago-based sports consulting firm.
Under the agreement, the more the Blackhawks earn, the more they have to share.
For instance, the Blackhawks keep ticket revenue from their regular-season home games. But for every playoff home game last season, the Hawks had to give the NHL at least 50 percent of what their gate receipts would have been at a regular-season United Center sellout.
And gate receipts are everything in hockey. Ticket sales typically account for up to half of a team's income.
"You can technically lose money during the playoffs if you don't raise your ticket prices" for them, Wirtz said.
While the National Basketball Association, Major League Baseball and the National Football League also operate under revenue-sharing agreements, professional hockey has a tougher financial road because the sport lacks broad appeal and therefore doesn't command lucrative television contracts.
The NBA, for instance, receives about $930 million per year from its national broadcasting partners.
In contrast, the NHL receives between $200 million and $300 million per year from Canadian and U.S. broadcasts. Split among the league's 30 franchises, that equals less than $10 million per team per year.
Locally, Wirtz and McDonough have made progress in increasing broadcasting revenue.
During the Hawks' worst years, the team bought airtime from WSCR-AM "The Score." Wirtz quickly moved to put Hawks' home games on Comcast SportsNet, reversing his father's practice of not televising them. McDonough declined to renew The Score deal and instead signed ones in which WGN radio and WGN-Ch. 9 paid for the broadcasting rights. Both WGN stations are owned by Tribune Co., which also owns the Chicago Tribune.
Unlike baseball, "where small market teams can get revenue from both television and Internet and a number of other sources," in hockey, that isn't there, Wirtz said. "You have your gate receipt, your local TV and radio package, and that's about it."
But the Blackhawks have been able to thrive because Wirtz provides a cushion.
Wirtz Corp. includes Wirtz Beverage Co., a five-state liquor distributorship, which Wirtz said has about $1.5 billion in annual sales; an insurance business; prime real estate; two banks; a 350-acre farm; a stake in Comcast's regional sports network; investments in Alberto-Culver, U.S. Bank, Sally Beauty Supply and The Sun-Times Media Group; and half of the United Center. The Bulls own the other half.
That means the Blackhawks' rent payments end up right where they started: in Wirtz's pocket.
And Wirtz has been able to mine all sorts of synergies between the liquor business and the sports franchise. For the coming season, the Blackhawks plan to add two more bars on the 300 level of the United Center, which are likely to include Wirtz Beverage brands, in addition to the two bars they installed last season.
But some benefits are more subtle, such as offering clients free tickets to games and inviting them to spend intermissions at the Wirtz family's private bar in the art deco Sonja Henie Room. Marketers call it the halo effect.
"Think about how many times Rocky Wirtz's name has been in the newspaper because of the Blackhawks, and he doesn't have to pay for it," said Bill Brandt, chief executive of Development Specialists Inc. and a bankruptcy expert.
"And I'm sure potential clients are going to agree to a meeting, just so they can tell their buddies they were hobnobbing with the owner who just won the Stanley Cup. Making money is the least of the Hawks' worries," Brandt said.
But Ganis, of SportsCorp, has a different take.
"Business people do not like keeping money-losing ventures on their portfolio," he said. "It's more than pride and ego. It's a business philosophy."
Wirtz said the plan is to increase sponsorships, the one traditional revenue source with room to grow; slowly raise ticket prices; draft well; and pay a premium for premium players so the team can contend for the Stanley Cup every year.
But he admits that's the hard way.
The easiest way to make money from an NHL franchise, Wirtz said, is to sell it.
And he has no intention of doing that. He said he plans to leave the franchise to his children "in better shape than I found it."Copyright © 2015, Los Angeles Times