Jaromir Jagr is a Washington Capital. Now the team needs to find a way to afford him.
Less than 24 hours after the Caps completed the trade with Pittsburgh, majority owner Ted Leonsis said single-game ticket prices will escalate as much as 15 percent from last year’s levels.
The team also is furiously forming plans to conduct major merchandising and marketing campaigns this summer and fall to take advantage of Jagr’s arrival on an already deep and talented team.
As a result, Leonsis and other senior team officials are confident that despite a two-year, $20.7 million contract for Jagr making him by far the highest-paid Cap and another $4.9 million outlay to the Penguins to complete the trade, the Czech star will pay for himself in higher team revenues.
“Yes, we do think it could happen,” Leonsis said. “He is a powerful global brand, and brands win in today’s economy. The reaction we’ve seen since this trade was announced, I think, speaks very powerfully that Washington is indeed a hockey town and that we have put together a very strong, very exciting team.”
By the end of yesterday, the team had sold more than 300 season tickets since the deal became public at 4 p.m. Wednesday, far eclipsing any typical one-day sales pace in the middle of the summer. More than a third of those orders arrived on line. A dozen companies also expressed interest in team sponsorships.
“It’s been very, very busy, but it’s a great problem to have,” said Declan Bolger, the team’s senior vice president of TV operations. “Usually this time of year, we’re simply making outbound calls, trying to drum up new business. Now we’re just writing down orders as fast as we can. Anyone can be a great salesman in a situation like this.”
The Caps’ average ticket price of $38.42 ranked fifth lowest in the 30-team NHL last season, according to Team Marketing Report, a Chicago sports industry newsletter. Season ticket-holders, now commanding nearly 11,000 seats at MCI Center, received a price increase averaging 3 percent in late May.
A firm decision on the Caps’ single-game pricing is expected early next month, team officials said. A 15 percent price increase in single-game prices would be higher than the 5 to 10 percent bump Leonsis projected in May. But should the average ticket price rise as much as $6, it would still position Washington below the league average. A typical NHL ticket cost $47.70 last year, and with hefty hikes in St. Louis, Dallas and other markets that average likely will rise above $50 next season.
The Caps’ average attendance was 15,534 last season. An increase of 1,500 a game at MCI Center is plausible considering the addition of Jagr, the NHL’s leading scorer four seasons running and arguably the game’s biggest star.
Thus, an average ticket price of $44 and 61,500 more tickets sold over 41 regular-season home games would generate an additional $2.7 million in revenue. Add in a possible deep playoff run and merchandising and sponsorship elevated by Jagr’s arrival and the revenue total rises even faster.
Even with the additional revenues, the Caps will lose more than $10 million this season, Leonsis said. That, however, would represent a substantial improvement over last season’s figure of $20 million. As a result, Leonsis said he was not the least concerned about the $25.6 million total investment in Jagr.
“I lost more in AOL stock yesterday than it cost for us to sign Jagr,” Leonsis said, giving a clue as to how much damage a seemingly innocent $1.68 a share dip can render on paper for the well-heeled AOL Time Warner executive.
“So I won’t buy a boat,” he said. “I was thinking of buying a yacht. Instead, I got Jaromir Jagr.”
Leonsis regained nearly all that AOL loss yesterday, as the stock rallied by $1.55 to $50.05 a share.
Jagr jerseys the instant No. 1 wish list item among Caps fans will not start hitting area stores until tomorrow. But once they do, they could elevate the team to one of the league’s best merchandise sellers. As recently as two years ago, the Caps were among the NHL’s five lowest clubs in national merchandise sales.
“We’re scrambling right now, trying to get it all together and get the stuff out [on the sales floor],” said Joe Linn, general manager of the Modell’s Team Store at MCI Center. “There have been many calls, many requests. This is going to be real good for us.”