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21 August 2007

Defending a Cheapskate

Actually, I have to defend Golisano and the Sabres on this one. The process came out of a trend that had developed in Buffalo. Most of the Weekend Games and marquee games (Leafs, Canadians, Sens, Flames, Oilers and a few other teams) sold out quickly. What they found was that fans were buying these and flipping them on e-bay for a large markup. Meanwhile, midday games, games against teams like the Wild, Thrashers, etc lagged.

In an effort to answer the supply and demand and maximize attendance and revenue the team instituted the variable pricing TWO seasons ago and it has been a large success. The Sabres have sold out the past two seasons and already are nearly there this year. The paln has had the desired effect of keeping the building full so the team can miximize parking, souvenier and refreshment revenue. A real stroke of genius in my estimation. Also remember that every single game is shown on TV as well. This team due to marketing, pricing and media coverage is the most accessible team in Buffalo. The NFL's Bills could learn some real lessons from the Sabres.

The fans here have actually embraced the variable pricing, for the most part, because it creates affordable lower end games for the income challenged and enables the Sabres to maximize profit on the uber-high demand games and the influx of Canadian fans that are willing to pay 200-300% premiums. Basically, they cut into the e-bay crowds markup and made that profit their own.

The policy extends to the season ticket base as well. Season ticket sales have gone through the roof for two reasons: 1) Team is very good and 2) The sabres have one of the lowest ticket costs in the league. Season ticket holders in Buffalo get a significant discount. This has enabled the Sabres to manage their revenue to their significant advantage.

The Drury and Briere decisions, in my view, were independent. What it really came down to is that Briere and Drury were vastly overpaid for their relative worth. The fact that both are getting $10 million in the first season is highly relevant. I don't think the Sabres flinched at Drury's price, It was clearly Drury's decision to just be done in Buffalo due to a falling out with management over a contract extension dispute. Poorly managed, yes. Cheap? No.

As for Briere I believe that the signing of Tim Connolly to a three year deal,even when injured, was the writing on the wall. Getting a 8-year deal with nearly $10 million in salary year 1 from the Flyers sealed the deal. I believe the plan all along was to cut Briere loose. I also believe they were genuinely shocked to lose Drury.

So, as opposed to crucifying the Sabres and Golisano for gouging the fans I tend to recognize the fact that he utilized good business sense that extended benefits to the fans. The fact that the Sabres are spending $12 million more per season on salaries than prior to the cap is also a significant argument against the cheapskate argument. It is truly a win-win situation. The fact that the team is financially viable in spite of this salary increase is the real story. The Sabres, while doing a terrible job with Drury and Briere, are a model of how to manage a small market team and be competitive in an inherently unfair marketplace.

2 fanatics have replied:

Isleschick said...

Variable pricing I believe lasted one season here. If there is no demand it just doesn't work.

The Ghost said...

It'll be intersting to see if it is as effective when the team isn't a contender. Like, next year.

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