It wasn’t that long ago that the Sharks were such a laggard in terms of TV ratings and revenue, they sold their own ads. With no competition to Fox Sports and its successor, Comcast Sportsnet, the Sharks always ended up the runt of the litter compared to the MLB and NFL teams, plus the Warriors. When CSN California was started in 2009, the Sharks gladly leaped to the fledgling network in hopes of better exposure and fewer time conflicts. While they got both of those goals realized, the actual contract terms severely favored Comcast, netting the Sharks only $7 million a year.
Mark Purdy mentions Sharks ownership’s exasperation with the deal, which was negotiated in 2010, years before Hasso Plattner assumed the throne at the Tank. The NHL hasn’t been affected as much by the TV rights bubble as the other three major sports, but there’s enough of a discrepancy that it’s problematic for the Sharks, who have the 4th highest payroll in the league. SoCal rivals, the Kings and Ducks, bring in $20+ million annually. Even the Florida Panthers rake in around $11 million per year. Toronto has the most lucrative deal at $41 million per year, which expires after next season. That said, Toronto’s deal is approximately the same as the middle-of-the-pack deal the A’s signed, ironically also with Comcast Sportsnet.
And it’s not like the A’s are a ratings powerhouse. Both the A’s and Sharks are in the 1.x ratings range on CSNCA. You’d think that would translate to similarly sized deals. Evidently not. Purdy speculates that former Sharks exec Greg Jamison lost his job after making the deal. Jamison had a long tenure dating back to George Gund’s time as the owner, so maybe Jamison was too fixated on how the deal compared in proportion to previous deals. Perhaps he didn’t see the bubble coming.
Current team CEO John Tortora is a former media lawyer, so renegotiating the contract should be right up his alley. Unfortunately, the team is locked in for another 14 years, and while Comcast may be accommodating to some degree, they’re not gonna give away the farm. I like the idea of NHL commissioner Gary Bettman getting involved and holding next winter’s Stadium Series game as a carrot, though I’m not convinced it’ll make that much of a difference. When Comcast files its annual financial statement, CSNBA and CSNCA are lumped with all of the other regional sports networks and non-sports properties like USA and Bravo. But it’s obvious that each network is its own unit and must perform up to par. Take CSN Houston, whose carriage situation outside its sister cable provider has been disastrous. CSN Houston is currently undergoing bankruptcy proceedings, and the two teams who have partnered to start the network, the Rockets and Astros, are feeling the pinch because of that mess. For Comcast, CSN Houston may be the canary in the coal mine that signals the end to the bubble.
Trapped for now with a poor TV contract, the Sharks could look elsewhere locally for revenue. Santa Clara has harbored ambitions of a huge Coliseum City-like entertainment complex, with Levi’s Stadium and Great America acting as anchors. An arena – presumably on the current Golf & Tennis Club – would complement the existing options, with a Santana Row-like development bridging the area between the arena and the stadium. Since the City is tapped out because of obligations for the stadium and redevelopment dead, the Sharks would be on their own the same way the Warriors can’t expect help from San Francisco for their Mission Bay arena. Even with free or cheap land, the arena’s price tag would be $600-700 million. Most franchises can attempt such a move if they have ballast in other areas like TV. The Sharks do not, so it’s hard to see how they’d take on such a huge debt obligation.
Attendance has been great for all 20 years the Sharks have been at the Tank, so the only motivation to reach for more is the premium seating segment. SAP Center has plenty of suites and club seats. The suites could be better situated, and the newer segments in between suites and club seats haven’t been addressed, whether you’re referring to 4-6 person loge boxes or outlandish accommodations like the “bridges” under the ceiling at MSG. Even standing room only seats have been turned into something of a premium experience in some arenas.
The cheapest solution would be to make improvements to SAP Center to match what’s being offered. There are only two concourses, main and club. The upper suite level above the seating bowl is too narrow to serve anything besides the suites and penthouse area. The ceiling is among the lowest in the NHL, which limits expansion to an extent but also contributes to making the arena very loud (compared to Staples Center and Honda Center it’s no contest).
Knowing the Tank’s limitations, I have a short list of improvements that could be made to keep the place competitive:
- Install 40 loge boxes – As you can see from the chart above, the club seats begin where the club level vomitories (tunnels) provide access to the seats (near the 100-level numbers). The seats immediately next to the vomitories are non-club seats. If the Sharks want to add loge boxes, they can do so in those 4 rows. Doing so would displace a bunch of season ticket holders. Hopefully they can be relocated to comparable area.
- Replace the wire/metal railings at the front of the upper deck – Currently the Sharks sell Ledge seats at a premium, as most teams do. If they remove the wires and replace them with glass, the views from the 2nd and 3rd rows won’t be as compromised, allowing the Sharks to sell those seats for more.
- Redo the lower half seating bowl with dual-rise seating at the ends – Doing so will make the arena configuration more flexible and efficient. See this post for more.
- Install rafters seats – Like the MSG bridges, these seats would be in the ceiling and would practically overlook the rink. The elaborate truss framework in the ceiling is designed to make various parts up there easily serviceable and accessible. Look up during a game and you’ll often see people scurrying along the catwalks. If the Sharks can figure out a way to properly provide fan access, there’s an obvious opportunity. The only question is whether the trusswork causes obstructed views.
All of this costs money. SJAA, the authority that manages the arena over the top of the Sharks, has a capital improvements budget that it negotiates with the City and the Sharks. Over time they’ve funded replacement scoreboards, the addition of new suites, and other changes. It’s through SJAA that future improvements will be funded, though the Sharks will have to pony up a lot of their own money to get it done. For the rights to operate the Tank and get a cut of concessions, parking and other revenues for all events at the arena (not just hockey), the Sharks pay San Jose $7-8 million a year – mostly for debt service. The Sharks have claimed paper losses for several years now, partly owing to that rent payment, the TV shortfall, and the team’s high payroll. Perhaps the Sharks will offer to make the improvements in exchange for lease concessions. Also, there’s still the deal struck in 2010 to build a garage north of the arena in case the A’s come to San Jose. The lease is up in a few short years, so both sides better get prepared.
Finally, there’s a much simpler market-related question to ask: Can the Bay Area support 4 arenas? With the W’s building their own in SF, Oracle Arena and SAP Center probably still standing for some time to come, how does a 4th arena (2nd in the South Bay) make any sense? Touring acts will play the 4 off each other, killing the arenas’ profitability in the process. LA and NY support 3 up-to-date major arenas, mostly because all the arenas have sports franchise tenants (the Forum is an outlier). In the Bay Area’s case, only 2 arenas would have sports franchises. Each arena would be specced out for their respective team, multipurpose being synonymous with compromise. From a demand standpoint it makes little sense. Plattner, Tortora, and their staff probably realize this and know how to move forward with the venue. But consider for a moment that the Bay Area could have 4 very nice arenas yet only 1 modern NFL stadium and 1 modern ballpark. Frankly, that looks more than a little skewed.