What making the playoffs means to the Carolina Hurricanes’ bottom line

Carolina Hurricanes’ fans celebrate after a goal by Teuvo Teravainen to give the Hurricanes a 2-1 lead over the Washington Capitals during the second period in game four of the first round Stanley Cup series game on Thursday, April 18, 2019 at the PNC Arena in Raleigh, N.C. Robert Willett rwillett@newsobserver.com

A year ago at this time, with their season already over and their playoff drought stretching into its ninth year, the Carolina Hurricanes found themselves reliant on a familiar-yet-stale season ticket sales pitch, one that a cynic might have argued bordered on false advertising:

There’s hope.

The franchise used the promise of a better tomorrow in an attempt to sell itself to supporters after last season, and the season before that, and the one before that — and as far back as Don Waddell could remember. He’s in his first season as the Hurricanes’ general manager, and fifth as president.

“What we were selling,” he said in a phone interview on Monday, “was the future and the hope. And that only takes you so far.”

Win or lose on Monday night in the sixth game of their Eastern Conference first-round playoff series against the Washington Capitals, the Hurricanes at last have something else to sell. The vague promise of hope has turned into reality. A vision of a better tomorrow has turned into today, finally.

The financial returns from the Hurricanes’ first playoff appearance since 2009 will take some time to be calculated. They might not be all that consequential anyway, Waddell said, given that the majority of first-round playoff revenue goes to the NHL and not individual franchises. Regardless, the Hurricanes’ leadership is less interested in what the team’s recent success means to the current bottom line compared to what it might mean years from now, so long as the team builds on the momentum it has created this season.

“The driver is for us to create the excitement of building your season ticket sale base for next year,” Waddell said.

Since Waddell became the franchise’s president, season ticket sales have largely been sluggish — and reflective of the Hurricanes’ on-ice stagnation. Five years ago, he said, the Hurricanes’ season-ticket holder base amounted to 5,200. This season, it was approximately 7,400.

On Monday, Waddell pointed to another data point that, he said, offers an encouraging sign of the Hurricanes’ renewed financial health. A year ago, he said, the franchise had generated about $400,000 in “new” ticket revenue for next season — meaning revenue from first-time ticket buyers. Now, he said, the Hurricanes have already generated $2 million in new ticket revenue for next season.

When Tom Dundon bought the Hurricanes in January 2018, one of his most important priorities, if not the single most important, was rebuilding the franchise’s connection with the local market. Winning is paramount to that, but it’s hardly the only part of the equation, Dundon, the Texas-based businessman, said in a phone interview on Monday.

Under Dundon’s leadership, the Hurricanes have tried to build a culture of showmanship and entertainment. They have embraced their history, and their pre-North Carolina roots, by paying homage to their past as the Hartford Whalers. They have become known for the Storm Surge, the postgame victory celebration that involves short, sometimes silly skits.

The Storm Surge led one national hockey television analyst to label the Hurricanes “a bunch of jerks” — a nickname that the team embraced as its own, and then began to sell on t-shirts. That, especially, fit into Dundon’s strategy of developing a bond between the fans and the franchise, or at least rebuilding a bond that had deteriorated over years of mediocrity.

“It can’t just be winning,” Dundon said of what drives the success of any franchise, “because there’s 32 teams and only 16 make the playoffs, right? So if winning is your only plan, then you’re only going to be halfway successful on average.”

He added, “We’ve got to make sure we entertain the fans, (and) have enough winning that the fans develop a relationship with our players and coaches to where they stick with us in the good and bad times, and they’re entertained, and they’re emotionally connected.”

Dundon understands better than anyone that a few playoff home games won’t rebuild what was lost, gradually at first, over a decade of malaise. In the five seasons after the Hurricanes’ most recent playoff appearance before this one, in 2009, the team’s average home attendance continued to be above 15,000.

That number shrunk to 12,716 by the 2014-15 season, and the team’s average attendance bottomed out at an NHL-worst 11,776 during the 2016-17 season. Attendance has risen in the two seasons since, but the Hurricanes’ average attendance this season still didn’t surpass 15,000, which was a mark it hit for nine consecutive seasons from 2006 through 2014.

Dundon bought the Hurricanes, he said, in large part because he believes in the value of any NHL franchise. The league is doing well, he said, “and so when you’re part of a league that’s doing really well, that’s probably the biggest thing you have to worry about.” His specific investment, though, has come with concerns.

The Hurricanes’ financial particulars are difficult to discern, as they are with any NHL team, given that those numbers mostly remain private. Still, Dundon acknowledged, the Hurricanes have much work to do in the areas of corporate sponsorships, ticket sales and suite sales, which are all significant revenue drivers for any professional sports franchise.

“All the NHL teams are healthy because they’re part of the league,” Dundon said. “What we have to do is measure ourselves against the other teams. And our revenues are below are other NHL teams. And given that, what you’d like to do is at least be average, maybe slightly above.”

How far are the Hurricanes away from becoming an average, or slightly above average NHL team, financially speaking? Dundon said they’re not “anywhere near where we need to be.” It’s early yet, though, in his ownership tenure.

Recently, Dundon drew some measure of publicity, and criticism, for the way he handled another large sports investment — his ownership of the Alliance of American Football, a start-up league that he funded with an infusion in February of $250 million. By early April, the league was shutting down, much to the disappointment of its players and employees.

To some, the move might have looked ruthless, the decision to fold an entire league before the completion of its first full season. To Dundon, it was business. He disagreed with the characterization that he’d acted with ruthlessness.

“With the AAF stuff,” he said on Monday, “most of what is out there isn’t true. So there wasn’t anything ruthless about anything there. I don’t think you have to be ruthless to be successful. Never would believe that.”

Then he shifted his thoughts back to the Hurricanes. He planned to be in attendance at PNC Arena on Monday night, where he’d come to learn that playoff hockey in Raleigh is “a lot of fun,” he said. He hopes it’s only the beginning of a resurgence.

“As long as we do our part, I believe the market will support the team,” Dundon said, “and as long as the revenues are there, then there’s nothing to talk about (of concern). They’re not there today, but we’re making progress.”