- The Washington Times - Sunday, May 3, 2009

The Washington Capitals’ appearance in the Eastern Conference semifinals of the playoffs marks another big step in the club’s transformation from National Hockey League doormat to one of the most respected — and, eventually, profitable — franchises in the league.

The Capitals, led by perhaps the league’s brightest star in Alexander Ovechkin, on Saturday opened their second-round playoff series with a 3-2 victory over the Pittsburgh Penguins at the Verizon Center — the continuation of a dramatic shift in fortunes for a club that before last season was known for losing both games and money.

Team officials said the club likely still will lose money this season regardless of how far the Capitals go in the playoffs. But the sharp turnaround that began little more than a year ago now positions the organization to do many things that appeared impossible over the past decade: Draw national attention, guarantee sellouts of home games even with higher ticket prices and, most important, contend for championships.

“You can talk about being a great team, you can talk about being a great team that’s finally reaching its potential, but especially in hockey there’s so much emphasis on the postseason,” said Howard Bloom, editor of the Ottawa-based Sports Business News. “I’m not saying the Caps have to win the Stanley Cup, but I’m saying they have to take steps forward. And clearly being down 3-1 and coming back and winning the final game on home ice offers them some credibility.”

The Capitals completed an inspiring first-round comeback against the New York Rangers on Tuesday night, rallying from a 3-1 series deficit to set up the conference semifinal against Pittsburgh. That victory adds fuel to the momentum that began for the club in 2004 with the drafting of the high-scoring Ovechkin, the NHL’s reigning MVP and most compelling player.

“Certainly, the Capitals have to be feeling pretty good about this,” said Maury Brown, founder of the Business of Sports Network. “It’s been a while for them, and it’s a great story. It definitely is helpful. Everybody’s going to be very interested in the team. You go out in the first round, well, maybe not so much.”

The arrival of Ovechkin to the Capitals came after the club’s owner, Ted Leonsis, citing losses of tens of millions of dollars, dismantled a team featuring pricey but underperforming stars. The fire sale and a season-canceling lockout in 2004 stifled the excitement of a fan base that resurfaced only last season when the team’s new crop of young talent took the Capitals to a surprising playoff appearance.

Now, the Capitals are on the best financial footing in years, thanks to revenue generated by the series with the Rangers, the guarantee of at least two more sold-out home games and the possibility of as many as 12 over the course of this postseason.

The ultimate prize, a Stanley Cup championship, would net the team between $13 million and $17 million, depending on the length of each series, according to officials from Park Lane, a Los Angeles-based sports investment bank.

More important than the short-term financial gain, team officials said, is the foundation for strong financial success down the road set by this playoff run.

“Without a doubt, the more success we have here in the playoffs, the better we’re going to do,” Capitals President Dick Patrick said. “Absolutely, there’s a correlation there.”

The Capitals now are poised to generate the kind of full-season revenue only reaped by some of the successful, big-market teams.

Capitals officials have used the team’s strong regular season and its playoff berth to help sell season tickets for next season, and they believe most games will sell out.

Despite an increase in prices for the second straight year, demand for season tickets has been so high that the club was forced to cut off sales — an improbable move for a team that one year ago was ranked in the bottom third in attendance.

The club is holding back for the more casual fan a small number of tickets for single games, partial season-ticket plans and group sales.

“We’re at the point now where we don’t really have any more tickets to sell,” Mr. Patrick said. “We held what we have left to keep some for certain groups or partial plans just to keep new people coming into the building, too. We’re down to 1,500 remaining seats in the whole building that aren’t sold for next year. But winning now gets those fans even more on board and even more excited.”

Winning now also means more money for this season. Direct profits from playoff games at Verizon Center have been relatively modest so far, largely because of revenue sharing among the league’s clubs and disbursements to players. Mr. Patrick said about 65 percent of the club’s gross revenue from home playoff games in the first round must be distributed to players and other teams.

“It’s not as much of a bonanza as one might think, or as it used to be,” he said. “A lot of what we get sort of goes right out the door.”

Nevertheless, Mr. Patrick said, the team likely will end up ahead of budget projections for the first round because the Capitals and Rangers played the maximum seven games in their series, including four at Verizon Center. The team had assumed $300,000 in net gain from just three home games.

Moreover, Mr. Patrick said there is great potential for additional revenue in later playoff rounds because tickets will be about 20 percent more expensive and fans are more likely to purchase team merchandise. Industry analysts said a $2 million profit from the conference semifinals isn’t out of the question.

“The further you go, the more lucrative it becomes,” Mr. Patrick said. “You’re making it into more games, you’re making more money. If you can get into the third round, you can really start feeling good about it.”

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