The run the parking garage and Service AmericaCorporation
The Hartford Whalers are in a very tough situation at this time.
WhenPeter Karmanos bought the team in May of 1994, he inherited the worst leaseagreement at the smallest arena in the NHL. The Hartford CivicCenter lease agreement creates profit for private companies; however, the leasecauses the Whalers to lose money. The mall is owned and operated by Aetna;therefore it has nothing to do with the Whalers. The city of Hartford owns thecoliseum, parking garage, and exhibition hall. The state of Connecticut pays a1.6 million dollar annual leasing fee to take control of the coliseum, parkinggarage, and exhibition hall. The state hired Ogden Entertainment Services torun the coliseum, and Ogden receives all of the revenue from luxury boxes, thecoliseum club, advertisements, rental fees and the exhibition hall.
The statealso hired Kinney Systems to run the parking garage and Service AmericaCorporation to run the concessions. Both companies receive all revenue from theservice they run. After all of this, there is no money left for the HartfordWhalers (Swift & Arace, 1+).The reason why these three companies keep all of the revenue from theCivic Center can be blamed on Richard Gordon, the former owner of the Whalerswho did not want the city of Hartford to run the Civic Center. In 1993, thestate decided to negotiate a new lease with the Whalers. The state ofConnecticut did not want to run the coliseum so they hired three privatecompanies to take this job.
These companies would only run the Civic Center ifthey could keep all of the revenue from the service they controlled. RichardGordon accepted this lease because this agreement would repay him for anadditional ten million dollars in loses and he sold the team a year later (Lang53-69).The Hartford Whalers is the only major league team in Connecticut and atthe Civic Center.
They currently have a bad lease which causes them to losemoney. The Hartford Whalers play all exhibition, regular season, playoff games,the training camp, and some practice time rent free at the Civic Center.However, the Whalers get no revenue from concessions, luxury boxes, parking, andthe coliseum club.
The Whalers get sixty percent of the revenue fromadvertisements along the boards but no revenue from all other ads around thecoliseum (Swift, 1+). The Whalers can leave Hartford after the 1997-98 seasonif they lose a cumulative thirty million dollars from 1994-95 through 1997-98.They must also pay a five million dollar penalty to leave Hartford. If theWhalers lose more than thirty million dollars and they choose to stay, they cansubtract one-half of only thirty million dollars from the 25 million dollarsthey owe the state to complete the sale of the Whalers. This amount is 10million dollars. If the Whalers do not lose thirty million dollars in this fouryear period, they must subtract one half of their loses from the 25 million theyowe the state to complete the sale of the Whalers, and they are locked inHartford through the year 2013 (Lang, 53-69).
This lease makes it impossible forthe Whalers to make money because even if they sell out the season, they willstill lose seven million dollars a year. If the Whalers lose more than thirtymillion dollars in four year then the lease gives the Whalers an option ofpaying five million dollars to leave Hartford or paying ten million dollars tostay in Hartford. Which one do you think Peter Karmanos, the owner of theWhalers, will choose.Now the Hartford Whalers are at a major crossroad in their twenty-fiveyear history.
This may be a bigger disaster than the Hartford Civic Center roofcollapse because the Whalers may not be in Connecticut in two years. PeterKarmanos has only seen finical hardship since he bought the team in 1994 and heinherited a terrible lease agreement from Richard Gordon at the Civic Center.The Hartford Whalers lost twenty million dollars in the 1995-96 season andeleven and a half million dollars in the 1994-95 season for a total of 31.5million dollars in only two years (Jacobs, 1).
The Whalers have not made aprofit since the 1990-91 season (Arace 1+). The Whalers current lease is so badthat even if the they sell out every game of the season, they will still loseseven million dollars a year. The Whalers had a season ticket drive last Aprilto double their season ticket base and it only was partially successful. Manyteams in the NHL have recently received new arenas that can generate a lot ofrevenue for their hockey team (Swift & Arace 1+).
The state of Connecticut mustgo all out to save the Whalers, our only major league franchise, by giving thema very attractive lease at the Hartford Civic Center and the Whalers need a newarena for the 2002-03 season that can produce a lot of revenue.The first step toward solving the Whalers’ problems is changing theCivic Center lease. The state must no longer allow private companies to run theCivic Center. The private companies are taking all of the revenue away from theWhalers and they are not even making money so the state of Connecticut must runthe Civic Center.
Ogden Entertainment Services, Service America Corporation,and Kinney Systems will no longer be allowed to run the service that they run.The state will pay all of the salaries of the employees and the maintenancecosts of the Coliseum. The state will only pay 500,000 dollars a year to leasethe Civic Center from the city of Hartford.
It will cost the state about twentymillion dollars a year to run the Coliseum but the state will be able to keepall revenue form the Civic Center that does not go to the Whalers. Now that theprivate companies are out of the way, it will open up revenue streams for theWhalers and eliminate an endless cycle operating in the red (Swift 3).The Whalers need a new lease at the Civic Center which is similar to alease they would get if the Whalers moved to a different city and similar toother teams in the NHL. They will continue to get all ice for free. TheWhalers will receive one hundred percent of the revenue generated during theirgames from concessions and parking.
These revenue streams are created onlybecause the Whalers play at the Civic Center so they deserve this money. TheWhalers are the only hockey team that plays at the Civic Center so people onlysee the board and ice advertisements when the Whalers play, therefore theyshould receive all of the revenue from advertisements along the boards and inthe ice (Jacobs 1+). Most other NHL teams receive seventy percent of all otherads around their coliseums so the Whalers will get the same treatment at theCivic Center.
The Whalers should receive seventy percent of the revenue fromluxury boxes and the coliseum club which is what most NHL teams receive. All ofthis will give the Whalers an addition eight to ten million dollars in revenueeach year and allow them to make a profit at the Civic Center until a new arenacan be built in Hartford (Swift 1+). In additional, the Whalers will pay thestate 9.25 million dollars which is twenty five million minus one-half of theirloses, 31.
5 million dollars, to complete the sale of the Whalers (Jacobs 1+).The Hartford Civic Center has become obsolete to support an NHLfranchise. Right now, no one is making money on the Civic Center except thecity of Hartford, and even if the Whalers get the new lease agreement statedabove, the state of Connecticut will lose money as a result of running the CivicCenter. The Whalers need a new arena in Hartford that will allow the Whalersand a private corporation running the new arena to make money.
Nineteen oftwenty six NHL teams have first class arenas or will have one within the nexttwo years. A first class arena is defined as one which has the followingthings: At least 17,000 seats for general seating, at least one hundred luxuryboxes, club seating which seats at least five hundred people, concession standsat every given point around the arena, a food court, at least one fancyrestaurant, and a huge parking garage. The Whalers need an arena that seatsover 18,000 people plus all of the other things listed above. Most NHL teamsreceive seventy percent of the revenue created from the arena in addition toticket sales so the Whalers should get the same thing in their new arena. Forexample, the Montreal Canadiens can receive up to 150 million dollars in revenueper year from just the luxury boxes in the new Molson Centre. This is enoughmoney for five NHL teams’ pay rolls. In addition, a new arena will have so manynew revenue streams that both the Whalers and a private company running thearena will be able to make money.
This is what has happened in other NHL citieswhen new arenas have been built (Swift & Arace 1+). In order to guarantee thisnew arena will have a main tenant, the Whalers will sign a lease to play theirthrough the year 2020.Saving the Whalers is extremely important for the state of Connecticut.The Whalers provide this state with an identity because they cause the name Hartford to be discussed by sports fans all across North America. How oftenare the cities of Quebec and Winnipeg mentioned on the news or discussed bysports fans now that they lost their NHL teams? Not often. If the Whalers move,Hartford will become a stop between New York and Boston without its own identity.
The Whalers help Connecticut’s economy directly and indirectly. The Whalersprovide jobs for within their organization. According to their media guide,they have over forty people working in the Whalers offices.
In addition, abouthalf of the players live in Connecticut and they make a lot of money that theyspend on houses, cars, and other stuff to help Connecticut’s economy. Whenpeople go to Whalers games, they shop and eat in downtown stores and restaurantsand this helps boost the economy of downtown Hartford. The effects of theWhalers leaving Connecticut were shown during the NHL lockout in 1994 and storeowners lost a lot of revenue. In the past few years Hartford has been trying toget an NFL team. If the Whalers leave Connecticut, it will show the NFL thatConnecticut cannot support a major league franchise so they will put not a teamhere. On the other hand, if the state saves the Whalers, it will show the NFLthat this state can support a major league franchise (Arace 1+).Most importantly, the Whalers are active in community service in thisstate.
The Hartford Whalers Foundation supports charitable programs inConnecticut that help inner city youths, save children’s lives, and improve thequality of life. The UConn Children’s Cancer fund is the main charity theWhalers support. It helps kids with cancer and last year they raise over 4.
5million dollars for this fund. In addition, the players go to the hospital tovisit these kids to try to cheer them up. The Student Athlete LeadershipProgram teaches high school athletes the importance of being good role models.In addition, this program prevents drug and alcohol abuse.
At the Tip A Whalerdinner, the players serve food to anyone who comes and the tips they receive goto charity. The Enfield Junior Whalers is junior B hockey team and itdevelops the top hockey players in Southern New England under the age of twentyfor Division I college hockey. Street Whalers Street Hockey Program teachesinner city kids how to play street hockey and provides them with equipment. ForKids Sake teaches inner city kids how to ice skate and it provides equipment.
If Connecticut does not go all out to save the Whalers then we will lose all ofthis excellent community service (Hartford Whalers).John Rowland, the governor of Connecticut, cannot continue the take itor leave it attitude toward the Whalers because pretty soon the Whalers just mayleave it. The Whalers currently have the worst lease of any team in the NHL atthe Civic Center plus this arena is the smallest in the NHL.
The Whalers needto be treated like a major league franchise so they deserve the same treatmentas any other NHL team, like the Montreal Canadiens. Revenue from the CivicCenter is necessary for the Whalers to make a profit so they won’t be gone intwo years even though they get a lot of fan support. New arenas are popping upall over the NHL so the Whalers need one compete with these teams withoutbankrupting the state or themselves. If the Whalers leave the state will belosing a lot because we will no longer have our own major league team and wewill probably never get another one. In addition, all of the community servicethe Whalers provide will be gone.
It is now time to end political battlesconservatives, liberals, and the Whalers and they should just team up to do whatis right or else the Whalers will be gone in two years.Category: Miscellaneous