2003 - 2004
January 24, 2004
City-managed team skates on red ink
Attendance during midweek games continue to be lackluster
The ice preparations are accomplished with a Pepsi -sponsored Zamboni before a spare midweek crowd on a recent Wednesday.
Photo by Joseph Rodriguez / News & Record.
By MATT WILLIAMS
GREENSBORO - Halfway through their first season under the city's management, the Greensboro Generals minor-league hockey team has been unable to boost ticket sales and has run up a $300,000 deficit.
On the ice, the Generals enjoy a winning record and are in third place in their ECHL division. But poor attendance continues to plague the team, with ticket revenue for the first 18 games down 11 percent from the same period last season.
According to financial records requested from the city, the team has spent $790,732 on operations and collected $493,771 in revenues from ticket sales and sponsorships through the end of 2003. Both figures include $130,000 in trade agreements in which the team traded advertising with local companies for services.
The franchise's original owners, led by Greensboro attorney Art Donaldson, said they could not afford to operate the team after losing money during each of the team's first four seasons. Not wanting to lose one of the coliseum's primary tenants, coliseum managing director Matt Brown orchestrated an agreement last spring in which Donaldson leased the team to a group of local investors called the Generals Brigade.
That group, led by local businessmen Bill Black and Don Brady, ceded responsibility for running the team this season to the city-owned coliseum while it raised money to buy the team outright. Under the agreement, the city is responsible for paying all of the team's expenses and will collect all revenues. The Generals Brigade pledged to contribute $200,000 this season to cover team expenses.
Before the season, Brown said he thought the team could break even if expenses were limited to $1.2 million, compared to the average ECHL budget of $1.5 million. Brown said he could save money by cutting staff and getting corporate sponsorships to defray expenses.
The coliseum director has succeeded in reducing many of the team's costs. Instead of paying cash to rent housing for players and the coach, the city signed agreements with apartment complexes and a home builder to pay for the housing and gave them free advertising in return.
In addition, coliseum staff has been used to run team operations, including marketing and accounting. Though the extra work has added to the employees' workload, it hasn't added to the coliseum's overall costs, business manager Laura Smith said.
At a meeting of the War Memorial Commission earlier this month, Brown said the team was "on the right track" despite some games that had unexpectedly low turnout.
Illustration by Margaret Baxter / News & Record.
"I believe we are on line with what my objective was to cut expenses," said Brown, who did not respond to several messages left this week at his office.
The coliseum declined to provide the News & Record with a budget for the team's operations. When asked in October whether he had written out an estimate of revenues and expenses, Brown pointed to his head and said "No. I have it here."
Smith said she could not provide a budget for the team's operation, saying Brown would have to approve its release. Smith said there was no official budget that guides spending decisions, but Brown gave her "guidance" on how much some expenses should be.
Smith declined to speculate whether the team's finances would fare better in the second half of the year. Some upfront expenses won't recur, and the Generals Brigade's $200,000 payment would boost revenue she said. In addition, the coliseum has also collected a small amount in concessions and parking revenue, which would help the team come closer to breaking even.
Smith said she hopes to see an uptick in ticket sales in the second half of the season, but the team's schedule and recent experience are not promising.
Historically, ticket revenue for the last half of the 36-game home season is 7 percent lower than the first half. Even last season, when the team was doing well on the ice, ticket sales started dropping off after the new year. The second half of this season also has fewer Friday and Saturday night games, which historically draw bigger crowds.
Weekend games such as this one on Jan. 10 have drawn large crowds. The Generals' new owners hope to attract committed fans to pitch in money toward buying the team in an ownership arrangement similar to the NFL's Green Bay Packers.
Photo by Rebekah Kates / News & Record.
At a Tuesday night game earlier this month, most of the arena's lower sections had only a handful of cheering fans. But there remains a contingent of fans who show up to most of the games donning Generals jerseys.
The Generals' new owners, led by Brady and Black, hope to attract those committed fans to pitch in money to buy the team outright from Donaldson. Fliers distributed at games ask fans to consider paying $1,000 for one of 800 shares in the Generals ownership group. The shares won't have voting rights in the company, but owners may get discounts on season tickets and parking.
The idea behind the planned offering is to broaden the base of support for the team and create an ownership arrangement similar to the NFL's Green Bay Packers, which' is owned by a large number of the team's fans. Those owners would be more likely to buy season tickets and less likely to move the team to another city.
Brady declined to say how much money has been raised in a separate effort to make the promised $200,000 payment to the city.
He said it isn't his intent to own or run a hockey team by himself, though he hopes the team will stay in the area. Ultimately, he said it is up to members of the public to vote with their pocketbooks to keep the Generals.
Buying the hockey franchise may be complicated by a pair of legal claims against Donaldson and the Generals' former holding company, which remains the legal owner. Winston-Salem bank BB&T filed a lawsuit this month claiming that Donaldson, minority owner Rocco Scarfone and a pair of former Generals' holding companies owe the bank $742,234 in overdue loans. In addition, former Generals coach Jeff Brubaker filed a lawsuit to collect on a $109,752 court judgment against the Generals' holding company awarded to him by a judge last year.
If either claim succeeds, a court may seize the franchise to pay off the team's debts.
Assistant City Manager Mitchell Johnson, who supervises the coliseum, said it isn't the city's intent to run the team indefinitely. The city's involvement with the Generals would be considered a success if Brown were able to preserve the team until private owners would step in.
Whether private owners would come forward to run the team is dependent on keeping costs down and interest in hockey high, he said.
"If there's not enough interest and not enough people want to see hockey, even with our best efforts it may not be sustainable."
Contact Matt Williams aqt 373-7004 or firstname.lastname@example.org
GENERALS EXPENSES THROUGH DEC. 31, 2003