News Column

More Small Businesses Feel Sharp Blade of NHL Lockout

Page 2 of 1

This coming Saturday, the Sabres were supposed to play their first home game of the 2012-13 season, hosting Sidney Crosby, Evgeni Malkin and the rest of the Pittsburgh Penguins in front of a fired-up crowd at First Niagara Center.

Instead, the arena's doors will be locked and the building will sit dark and empty. No ticket scalpers or hot dog vendors will sell their wares on the sidewalks in front of the arena. No cars and SUVs will fill the nearby parking lots.

The visiting team won't fill dozens of rooms at a downtown hotel and fans won't flock to restaurants and taverns to grab a bite to eat or a drink before, during and after the game.

That's because eight years after its last lockout, the NHL once again is canceling games because of a contract dispute with the league's players.

The most recent lockout cost the entire 2004-05 season. This one started Sept. 16, and on Thursday, the league announced the cancellation of all regular-season games through Oct. 24 amid little optimism that the sides will reach a deal any time soon.

"We're fans, too. We're hoping these guys get it together," said Bryan Drew, general manager of the Embassy Suites hotel in the Avant Building, where nearly all of the Sabres' opponents stay during their trips to Buffalo.

The loss of Sabres games is a psychological blow to a sports-mad town, but the effect ripples through the local economy, too.

Hundreds of people work on game nights at the arena, from ticket takers to concession workers, and a good number are seasonal, part-time employees who will lose those this income if the games aren't played.

Fewer people will buy Sabres memorabilia, see the ads for the team's sponsors or drive in from Southern Ontario and Rochester to watch the games.

"Nobody wins if they stay in a lockout situation," said Mark D. Croce, owner of downtown taverns and restaurants including the Buffalo Chophouse.

Some economists say much of the Sabres-related money spent by local fans will just be spent on something else during the lockout.

But the lost games still will hurt many area businesses, and their employees, and they feel like the collateral damage in a fight between wealthy players and wealthier owners.

"Of course, we're in the middle. We have a direct hit based on their decision," said Richard A. Serra, president and CEO of Allpro Parking, which operates nine lots and garages near First Niagara Center.

It's all but impossible to pin down the precise economic impact of the Sabres on the region, but it's fair to say canceled games -- or a canceled season -- have wide-ranging effects in Buffalo Niagara.

The Sabres front office in 2004 calculated that the 600,000 or so fan visits over 41 home games of a season generates $35 million to $40 million in hockey-related spending.

The Sabres under owner Terry Pegula don't release financial or employment data, but the team under previous owner Tom Golisano was more forthcoming about its business operations.

The team generated $50.9 million in revenue but still lost $8.2 million in the season before the 2004-05 lockout, Sabres officials said at the time.

The team's revenue certainly is much higher today, but so are its expenses, with $75 million in payroll committed to the players on its roster for the upcoming season, CapGeek reported.

The Sabres must pay hefty signing bonuses to some players even if the NHL doesn't play any games, including $10 million to defenseman Tyler Myers, according to TSN, the Canadian sports network.

The Sabres by January 2005 had cut their full-time staff from 151 to 96, but Pegula said at a news conference last month that the team has no plans to lay off or lower the salaries of their full-time workers.

"We are disappointed the NHL and [the players union] have not been able to negotiate a new collective bargaining agreement," Sabres President Ted Black said in a statement to The News. "We want to play hockey under the right circumstances that the NHL will negotiate on our behalf and on behalf of all the other NHL Clubs."

The employees who will feel the effect of the lockout almost immediately are those seasonal, part-time workers who staff the First Niagara Center on game nights and won't be called into work if there aren't any games.

Their ranks include the 95 or 100 ticket-takers and ushers represented by Local 200 of the Service Employees International Union, said John Heidinger, the union representative.

Those workers, some of whom have worked for the Sabres since the 1970s, typically use their game-night income to supplement the pay from their day jobs or to earn a few extra bucks in their retirement. They earn a little more than $50 per game, Heidinger said.

"If you're able to put some of this money away, it helps with the Christmas bills," he said, and his members struggled in 2004-05 to find another job to replace their Sabres income.

Sportservice, a division of Buffalo-based Delaware North Cos. that has the concessions contract at First Niagara Center, employs about 700 people on game nights.

About 20 are managers and other salaried, full-time workers, but most are part-time, seasonal employees who won't be brought on if the games are canceled, said Glen White, a spokesman for Delaware North. Some of those part-time workers, who earn about $65 for a Sabres game, will be assigned to work at Ralph Wilson Stadium.

Sportservice has the concessions contract for six NHL arenas including the Sabres. The company will feel the effect of the lockout, but Delaware North is a large, diversified company and Sportservice has contracts with 10 Major League Baseball and seven National Football League stadiums, among other venues, White said.

The Sabres' sponsors, too, will feel the lockout's effect because fans won't see their signs posted around the arena and TV viewers won't see and hear their names during game broadcasts.

First Niagara Financial Group, whose name is plastered throughout the arena and in giant letters on its exterior, would seem to have the most to lose among the sponsors, but the bank was not sounding the alarm last week.

"We continue to work closely with the Sabres organization. They are always great to work with. They've been very responsive and we're moving forward with some very exciting new promotional programs in anticipation of a great season," Kim Jackson, First Niagara's sponsorship manager, said in an email.

Ticket scalpers and resellers also will feel the pinch of the lockout. VIP Seats, a ticket broker based in Williamsville, owns about 1,000 season tickets for 10 NHL teams. The company had to pay nearly $1 million up front for the tickets, said Nick Giammusso, operator of VIP Seats, which employs six.

"It just kind of handcuffs us," he said, because VIP Seats doesn't collect payment from ticket buyers until the company ships the tickets to the purchasers, something it hasn't done because of the lockout.

VIP Seats took out a line of credit to help the company get through the lockout and made a decision to cut back on NHL season tickets -- dropping about 250 tickets for four underperforming teams -- and to invest more in concerts and NFL and NBA games. Sixty percent of the company's ticket sales last season were for NHL games, a share Giammusso would like to get down to 50 percent this year as a cushion against a lockout.

"We started buying other things a year ago," he said.

With no Sabres games, fans won't drive down to the First Niagara Center and look for a place to park and companies such as Allpro and Pay2Park lose this revenue and their employees lose those paychecks.

Allpro has nearly 2,000 spaces in lots and garages near the arena and typically has 25 attendants and supervisors working on game nights, Serra said.

The company charges between $6 and $15 to park in those lots on a game night. "We would love to see them settle it as soon as possible," he said.

Croce will take a double blow from the lockout. His Pay2Park company has seven lots near First Niagara Center, but Croce also owns a number of bars and restaurants downtown, from D'Arcy McGee's Irish Pub to the Statler City Lobby Bar.

His Buffalo Chophouse, an upscale steak house, often hosts the visiting team the night before they play the Sabres here. Those traveling parties can boast up to 40 people and run up a tab of $3,000 or $4,000 in one evening, Croce said.

"I've got more to lose than anybody in the city," he said.

The visiting players, coaches and support staff usually stay for at least one night at an area hotel, and the Embassy Suites in the Avant Building puts up nearly every NHL team that comes through Buffalo, said Drew, the general manager.

Teams typically take 45 rooms, and the hotel may cater two or three meals according to their strict nutritional requirements, Drew said. Depending on the team, out-of-town fans may take another 20 to 30 rooms, he said.

"It's substantial," Drew said.

The Embassy Suites, which has 182 rooms, has prepared for the lockout but wasn't able to release any of the booked rooms until receiving official notice from the league.

Drew expects to be able to fill many of the unneeded rooms in the fall, but those NHL bookings are welcome in slower January, February and March.

When those out-of-town visits aren't made, those tourism dollars are gone for good.

The rows of cars with Ontario license plates parked in downtown lots, and the clogged traffic on the Peace Bridge before and after games, are signs of how many Canadian fans trek to First Niagara Center.

"That will be a lost opportunity," said Peter Burakowski, communications manager with Visit Buffalo Niagara, who noted the "extra level of vibrancy" downtown before and after Sabres games.

But not everyone feels the sting of a lost Sabres season.

Economists argue that much of the money spent on Sabres games will circulate during the lockout elsewhere in the community. For every bar near the arena that sees its sales plummet, a bar in another part of town might get more business.

Or hockey fans will find something else to entertain themselves, from college basketball to plays.

"They're still going to do something with that money," said George M. Palumbo, a Canisius College economist.

Shea's Performing Arts Center saw season ticket sales soar by about 2,500 from 2003-04 to 2004-05, the year of the lockout, but theater officials attribute most of this increase to a powerhouse lineup of shows that included "The Lion King," "The Producers" and the Radio City Christmas Spectacular.

Yet veterans of the 2004-05 lockout are bracing for a lengthy lockout that could damage the sport they love.

"I'm afraid it will come to the point people will find something else to do with their limited entertainment money," said Local 200's Heidinger. "They may not come back as fast as they did the last time."



Distributed by MCT Information Services

Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters