August 25, 2006 in Business

Shock end in profit zone

By The Spokesman-Review
 
photos by CHRISTOPHER ANDERSON photo

Marshall Cuthbert, second from right, yells a cheer for the Spokane Shock earlier this month as he enters the Spokane Arena with Katie Sweatt, left of Cuthbert, and Eric Sweatt, right of Cuthbert. The team attracted about 100,000 fans in its first season. Shock attendees spent about $6 each on food and drinks.
(Full-size photo)

The Spokane Shock had a winning season both on the field and on the books.

Majority owner Brady Nelson spent a half -million dollars on franchise rights to start the Spokane Shock, a 25-man arenafootball2 minor league expansion team that’s a subsidiary of the Arena Football League. The team attracted about 100,000 fans to its home games in its first season, surpassed expectations for ticket, concession and merchandise sales, and earned a “six figure” profit, Nelson said.

Arena football is in an 8-on-8 game played on a 50-by-25-yard field with padded sideline barriers. The Shock play teams as far away as Arkansas and Texas. Spokane Shock players earn $200 a game – with a $50 bonus for winning – and receive free lodging and meals.

Although Nelson isn’t sure how long it will take to recoup the entire franchise fee, the Shock have already sold 4,500 season tickets for 2007.

Attendance for the 10 home games averaged 9,937 fans, bringing the Spokane Veterans Memorial Arena near capacity. Nine games were ranked among the top 10 largest crowds for league games, Nelson said, adding, “No one predicted we’d have more than a few thousand fans at any one of our games.”

Kevin Twohig, executive director of the Public Facilities District, said the Shock filled seats during a traditionally slow period at the Arena.

“The Shock has made an amazing difference. Almost 100,000 people have come to the Arena this year because of the Shock,” he said.

Fans not only filled seats – they spent money. Shock attendees spent an average of $6 each on food and drinks, Twohig said. Their spending was slightly higher than per-guest purchases at Spokane Chiefs hockey games.

Bobby Brett, owner of the Spokane Chiefs and the Spokane Indians baseball team, said the owners took a risk in buying the team and ended up with an exciting product coupled with a winning season.

“It was a pretty amazing first year,” Brett said. “I don’t think anyone expected they were going to go to the Arena Bowl.”

Minor League sports have their ups and downs, but winning definitely helps, said Brett, who has 21 years experience running a baseball team and another 16 years of experience managing a hockey team.

Within the Spokane Shock’s business model, Nelson said, the largest portion of revenue comes from a percentage of ticket sales. Advertising and sponsorships are the next biggest moneymaker for the franchise, which sometimes makes trades with businesses that feed and provide lodging for players. The Shock also earn a percentage of concession and licensed apparel sales. This season, concession sales averaged about $70,000 a game. Merchandise sales averaged $14,000 to $15,000 a night, he said. Fans also purchased licensed apparel through several local stores and Cuda Buffalo Apparel.

Establishing an initial budget proved challenging for management, which hadn’t run a sports operation before. Nelson, 28, also owns Regal Satellite, a Dish Network dealer.

He said the first year has been a learning experience.

“Every day it was just a couple hundred dollars worth of things we never thought about,” he said.

Adam Nebeker, the team’s general manager, said they studied other arena teams’ finances but found wild cards when it came to actual operations.

Initially, for example, management planned to spend a total of $50,000 for road games, thinking they would find a sponsor within the travel industry to defray costs, he said. But with no break in airfare, six of seven trips cost about $18,000 each – and the season travel total was more than double the initial budget.

Startup expenses were significant, Nebeker said, and included purchasing the field, padded boards, goal nets, shoes, uniforms and more. Still, having near-capacity crowds enabled the Spokane Shock to cut back on advertising. In the end, the revenue exceeded expenses and the team finished a winner.

“It has been a thrill to come to the office every day,” Nebeker said. “The business side of sports is even more fun than the sports side of sports.”


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