Story by Chris Cotillo
Almost two months into the NHL season, the Carolina Hurricanes once again find themselves in a place no team wants to be. The Canes are dead last in attendance, drawing an average of just 11,665 fans per game to PNC Arena, which seats up to 18,680.
While the optics don’t look great, team management insists the numbers are all part of a greater plan. Carolina’s new ticketing strategy focuses on maximizing revenue instead of filling seats, leading to a significant drop in complimentary and discounted tickets and a growing focus on improving the experiences of fans.
Carolina finished last in attendance in each of the last two seasons and has seen its average attendance decrease more than 31 percent in the eight seasons since the team’s last playoff appearance in 2009. Attendance has fluctuated significantly already this year, with PNC being filled with both huge crowds (18,680 in the season opener against Minnesota and 16,778 for a Saturday night game against Chicago) and less-than-half-capacity offerings against lesser-known opponents (fewer than 9,000 fans for games against Columbus, Florida and Dallas).
These attendance woes have been attributed to the team’s poor performance, the lack of a bona fide superstar and three coaching changes since the team’s Stanley Cup title in 2006. All of those factors have caused a natural atrophy in the fan base amid leaks that longtime owner Peter Karmanos Jr. is negotiating a sale of the club and a worry among some that relocation could be possible.
There’s no sense of worry at the team offices in Raleigh, where team president Don Waddell is in his fourth season. Waddell, a 59-year old hockey lifer who served as general manager and team president of the defunct Atlanta Thrashers from 1998 to 2010, owns the difficult task of making money selling a team that has underperformed for most of the last decade .
“If you look back at the history of the franchise, through the 2000s before the recession of 2009 and 2010, the Hurricanes were a very strong franchise from a ticket standpoint,” Waddell said. “Then the recession hit. We spoiled the people here early by winning the Cup in 2005-06, and now we’ve gone eight years without making the playoffs. I think people are looking for a reason to come back.”
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Decreasing free and discount tickets
When discussing ticket sales in sports, it’s important to remember the inherent problem that exists in ticket offices throughout the country: the widespread inconsistency between organizations and leagues in how sales and attendance are recorded and reported.
Nels Popp, an assistant professor of sports administration at UNC-Chapel Hill, is a ticket sales expert. Even he has trouble determining the accuracy of attendance numbers.
“I actually think a lot of teams do it differently, whether it’s tickets sold or ‘show rate,’” Popp said. “They usually tend to take the bigger number, which is going to be tickets sold in most cases. It is misleading.”
Waddell, who has access to the NHL’s internal ticketing reports, believes this confusion contributes to the perception that the Hurricanes are struggling more than their 29 counterparts.
“I know we aren’t the lowest team,” Waddell said. “When people look at which attendance numbers get posted, they get the announced attendance. What you don’t know there is if someone sold 5,000 tickets and comped 5,000 tickets.”
Distinguishing between paid tickets and complimentary tickets has been a crucial part of Waddell’s revision of the Hurricanes’ ticket strategy. Under previous management, Waddell said, there was a significant focus on giving away complimentary tickets as a way to fill the arena, aiding the team’s optics and giving them an improved home-ice advantage.
In the four years since Waddell took over, things have been much different. The Canes have decreased their number of complimentary tickets from an average of 4,000 per game in 2014 to about 1,000 this season. The remaining comp tickets, Waddell said, largely consist of tickets the team is required to give players as part of the collective bargaining agreement and tickets for staff members.
“We’ve cut it down by over 3,000, so it looks like our attendance has dropped drastically while our paid attendance is actually up a little bit,” Waddell said. “To me, we had to start protecting our season tickets. That was a decision made back in 2014.”
The pre-Waddell group, under current Penguins general manager Jim Rutherford, operated under the thinking that it was better to have at least some people in seats at PNC than none. This, that regime believed, would at least generate some auxiliary revenue from parking, concessions and merchandise sales. What the previous group failed to consider, Waddell believes, is the intangible effects on the team’s most loyal fans.
“When I got here, that summer we were having a tough time renewing [season tickets],” Waddell said. “I called about 160 people about their reasons for not renewing, and the common theme was people sitting next to them for free and people sitting next to them with real cheap tickets.”
While a full arena may look nice on TV, the economics of giving tickets away for free simply don’t add up.
“If lower bowl seats at the Canes are, say, $75, and per caps [non-ticket money spent per fan] are like $15 per person… if you’re giving away that comp seat, you’d have to have six or seven people make up for that with concessions,” Popp said. “That’s a pretty big swing. For a major-league team, concessions will be like 5 percent of revenue.”
“Think about that season-ticket holder, and not only the full season-ticket holder but what about the person that buys the 10-game package?” Popp said. “That person is disincentivized to buy that package if he knows if he just waits, someone will have a free ticket or they’ll have some promotion where he can get most of the games he wants for cheap. I don’t think the benefit of the concession value outweighs that.”
In addition, the team has radically decreased its amount of discount promotions since Waddell arrived, cutting down from 57 different promotions throughout the year to only a handful of items like the Homegrown Series, family plans and special programs for students and veterans.
“By cutting those discounts out and getting rid of comp tickets,” Waddell said, “it’s now re-training the marketplace. If you’re coming to a hockey game, this is what you’re going to have to pay to come to a hockey game.”
Season-ticket holders as a priority
The increased focus on season-ticket holders is no coincidence for a team like the Hurricanes, who draw 70 percent of annual revenue from season tickets. And while some may believe winning is the team’s top priority, professional sports is and always will be a business.
“I’m not sure I can ever pay my players with comp tickets,” Waddell said. “Revenue is the No. 1 thing we strive for here.”
The Waddell-led Hurricanes have begun to turn the corner, making a profit last year for the first time in a non-playoff year. The jump in revenue allowed the team to increase payroll to $60 million, a significant leap for a small-market club that has consistently ranked among the league’s lowest in that category.
Industry experts like Popp say that revenue is an important first step in turning around a franchise, as having money to spend can improve all aspects of an organization.
“It’s about optics versus revenue. In pro sports, it’s revenue. It’s unquestionable. You ask any owner or any GM, they’re far more concerned about revenue than optics. Obviously they want the optics as well.”
“It’s a unique proposition,” Popp said. “As you raise ticket prices, you have fewer people coming to the game but make more money.”
Those “fewer people” consist largely of season-ticket holders, which Waddell describes as the “bread and butter” of every professional franchise. The Canes have seen their base of season-ticket holders rise this season from 7,000 to 7,300, a positive sign for an organization that now prides itself on catering to its “Caniacs.”
“If you talk to season-ticket holders now, they feel like where the customer service is now… they’re ecstatic,” Waddell said. “They know who to call. Every season-ticket holder has a personal rep. If they need something, it gets taken care of quickly. I’m not sure where we’d be with season tickets. I think our ticket department has done a tremendous job of being able to raise our numbers under more of a difficult situation.”
Waddell routinely has dinner with season-ticket holders to personally address their concerns and hear suggestions on how the organization can be better. He stays in contact with the team’s Boosters Club, an unofficial fan club with a significant number of season-ticket holders.
“I think this current regime of management is doing a pretty darn good job of finding ways to create other revenue streams,” said John Gallagher, the president of the Boosters Club. “There are still a lot of die-hards that do go every single time, and if you look at our attendance over anyone else who has sustained losing as much as we have, I think you’ll see it’s probably pretty comparable.”
The next steps
With revenue and season-ticket sales on the rise, the Hurricanes are making strides toward creating an overall product for fans. The challenge of a mediocre on-ice product complicates matters, even for a team off to a strong 10-8-4 start this season.
“If Colgate wasn’t selling enough toothpaste, would you blame people that aren’t buying their toothpaste?” Popp said. “No, you’d blame the product that it’s not a product people want to buy. In sports, we say ‘look at the community, they’re not supporting the team.’ Well, they don’t have a product that they’re ready to buy yet. That’s where it does fall on the Canes. They have to produce a better in-game experience for the fans.”
While on-ice performance is ultimately up to the players and coaches, the ticket department will instead focus on the next step in the overhaul of the Canes’ ticket strategy: corporate sales. Waddell, who has increased the team’s ticket staff from eight employees to 35 in less than four years, has also grown Carolina’s corporate and sponsorship staff from three to eight.
Waddell personally focuses much of his time on securing corporate sponsorships, a step Popp believes is crucial to making money in today’s pro sports landscape.
“The bigger concern to me is that you see a lot of teams relying heavily on corporate ticket buying,” Popp said. “Does Raleigh have the corporate base to support that more than hardcore fans? I don’t know, relatively speaking, if the Triangle has that corporate base. To me that’s the bigger concern than the question of if this is a hockey market.”
The Triangle is a unique place to secure corporate sponsors, Waddell said, due to the large number of pharmaceutical and technological companies in the area. This challenge has caused the Canes to be creative in its attempt to partner with local companies, with a focus on attracting potential employees instead of consumers.
“It’s not your typical branding, like a retail store,” Waddell said. “For them, some of the advertising just doesn’t make sense. Some of them that have signage in the building, it’s the same thing – they’re not gonna sell anything because they’re not a consumer-selling product. They’re still trying to get their brand and their company awareness out there. We hear about it all the time in this marketplace. It’s a very competitive marketplace for employees.”
Waddell said the Hurricanes’ corporate sponsorship increased by 12 percent last season and is projected to increase by double digits this year. That kind of improvement, along with the uptick in revenue and season-ticket accounts, has Waddell acknowledging that winning isn’t a cure-all for the club’s attendance woes.
“If we were just all about winning,” Waddell said, “I’d lay off all my salespeople and just bring them back when we’re winning.”
