Monday, March 19, 2007

Penguins Nation

The deal has been done; the Penguins and their local fans will, it appears, get a new home. And I've been thinking more about the team's future, in response to Chad's response to this post. In an email note, Chad pointed out something that I simply wasn't tuned into: Some significant portion of the Penguins fan base, including (especially including) fans who show up for home games, doesn't actually live in Pittsburgh. They travel here, stay overnight here, and pay tourist dollars for tickets and food and parking and other things, in order to see Sid and Gino, et al.

What should we make of this?

First -- Are there any numbers on this? Has anyone counted bodies or dollars connected with hockey tourism?

Second -- If those numbers are significant, then maybe a Penguins / entertainment arena is not just a community resource, but instead an economic development resource. What I mean is that the arena would and will be useful precisely because of its appeal (or at least the Penguins' appeal) as a draw for out-of-towners. Hockey and entertainment dollars spent by locals would, in all likelihood, get spent in Pittsburgh anyway. Hockey and entertainment dollars spent by out-of-towners might get spent elsewhere. "Keep the Penguins in Pittsburgh" arguments for public money over the last few months weren't just or even mostly about saving the team for loyal locals. As a local team for local fans, the case for public funding just about collapses. Instead, those arguments were about saving the team for outsiders; public funding of the arena is justified, if it's justified at all, as an investment in attracting outside money.

Third -- What about the Penguins as a draw for inbound, relocating young'uns? As young as the home Pens crowd apparently is, I'm still skeptical that the presence of an hockey team is itself likely to draw people to Pittsburgh, or keep them here once they already have one foot out the door. We need numbers. As a justification for public funding, I still don't get why the city (or the state) should, in effect, bribe people to live here. Fortunately, if the Penguins are an economic development resource, per point two, then this third question is much less important.

Fourth -- If the arena is an economic development resource, then the team should expand its marketing (and its local fans should coordinate themselves accordingly): We need a Penguins Nation, of a size and scale and intensity that tracks (even if it can't quite approach) Steelers Nation. If you build it, they will waddle, and so on. Dear Mario: Publicly embrace hockey-starved fans in Cleveland, Baltimore, Harrisburg, Erie, and Morgantown and encourage them to catch a game in Pittsburgh. Organize hockey charters for Canadian and European fans. Build business-and-hockey relationships with professional and amateur clubs around the world. Work with the VisitPittsburgh team. (Of course, the Penguins themselves don't need to monopolize this market. Calling all entrepreneurs!) The Penguins may be the best flightless ambassadors in the history of Pittsburgh -- and marketing outreach may be the best way for the taxpaying public to see back-end value from their share of the arena deal.

[UPDATED 3/20: "Penguin" in the title became "Penguins," as it should have been in the first place]


Anonymous said...

I grew up in Johnstown, and we used to come to Pittsburgh for hockey games all the time. The first thing I ever knew about Pittsburgh was the Pens, and besides a fantastic Punk Rock scene when I was in high-school. the Pens games are what kept me coming back to Pittsburgh over the years and while I was at school in West Virginia too. (Don't et me wrong, it could have easily been the Pirates, or the Steelers, I just come from a hockey family, so hockey is my main poison.

Anyway, I moved to Buffalo to Buffalo in 1998 and stayed there until last year, when my wife (who is from Toronto) and I decided to move to Pittsburgh.

Now, I'm not saying that the Penguins were the main catalyst for our move, becuase obviously, no one moves to a city just because of a pro-sports team. However, my original trips into Pittsburgh to see the Pens started my original interest in Pittsburgh and was a *huge* influence in my growing interest and love for Pittsburgh.

In my case, I have to say that while they were not THE primary reason for my move, I still have to agree that "yes" the Penguins did have some kind of an influence on my decision last year to move to Pittsburgh.

Jason Levine said...

Do we have data on the number of youth hockey leagues in the tri-state area? and where those leagues are? I ask because I grew up in Waynesburg, Greene County, PA. My principal at Waynesburg High School was John Barbero who announced Penguins games for many years. Jaromir Jagr stayed with my friend's family when he first arrived in America and learned English through them. Despite this, there were no youth hockey leagues in Greene County. Basketball and wrestling, both, of course, had youth leagues, and dominated winter sports. At best, interest in the Penguins peaked in the early 1990s (I was 10 yrs old in 1990), and waned after the Stanley Cup victories. The first (and only) time I attended a Penguins game I was in college at Pitt. On the other hand, my first Pirates game was when I was 7 yrs old. My point: if the Penguins expect to bring in out-of-towners, youth hockey leagues must be established in areas that don't have such leagues. The Penguins, of course, have little say in establishing such leagues. But if you don't hook the kids early, the interest in the Penguins may never come.

Jefferson Provost said...

When we talk about bringing in money from outside the region, we have to ask what are the boundaries of the Pittsburgh region. Do people coming in from Johnstown count? On one hand, Cambria County is technically outside the Pittsburgh Metropolitan Stastical Area (MSA). On the other, it's not out of the question that someone traveling in from Johnstown would drive back the same night -- thus not spending money for a hotel, breakfast, etc.

My intution is that there's a pretty large economic difference between the money brought in from out-of-town Pens fans coming to games and something like Westinghouse selling nuclear reactors to China. But without data, it's hard to confirm or deny my intuition.

We can do some speculative math to see what the ballpark figure might look like. if we were to assume that the average home game brings in in 1000 people from outside the Pgh MSA, and each person spends $100 here, then over a 41 game home season we're talking about bringing around $4M dollars into the region. Which is enough for 80 50k/year jobs -- not counting benefits and assuming none of the money goes back out again. Or, put another way, the $290M public investment pays for itself in 70 years.

1000 fans is about 6% of a sold out 17,000 seat house, and I think that number is a pretty high estimate, but even if you double my estimates for both the number of fans and the amount they spend, we're still talking about no more than 300 good paying jobs, once you factor in costs and benefits. Not insignificant, but still substantially less than the estimated 900 new jobs ($60k/year) from the new Samsung chip plant planned for Austin, TX. That plant cost the region $250M in tax incentives.

Anonymous said...

Well, maybe no one has done an analysis specific to Pittsburgh and the Penguins. But people have done plenty of studies to see how often sports-as-redevelopment schemes deliver on their promises.

The answer ain't pretty.

jroddy said...

First, some hard economic data: cites the Greater Pittsburgh Convention and Visitors Bureau as listing a number of $48 million lost from the lockout of the 2004-5 season. Obviously that money isn't all going to the city's coffers, but there's no local money going in anyway. I don't know what state taxes would apply (other than sales tax on just about everything purchased by an out-of-towner, minus a jersey or t-shirt), so I really don't know how quickly the state's contribution will pay for itself. But I would dispute Jefferson Provost's estimate of seventy years; given that the state is only contributing $10.5 million up front, plus $7.5 million in slots money (not taxes), figuring the state takes their 6% sales tax cut means that the $10.5m is paid off in six years, even with financing.

At the risk of sounding like a flamer, neither the author of the post nor most of the commenters seem terribly familiar with the demographics of Mellon Arena crowds or, as the author put it, "Penguins Nation." There are certain teams that always draw a large traveling contingent to Mellon Arena, and there are certain cities where Penguins fans make themselves heard, whether part of the "Pittsburgh Diaspora" or because they made the drive. Toronto Maple Leafs fans are the hockey equivalent of Pittsburgh Steelers fans -- since the home games are always sold out, lots of them make trips across the American Northeast to see their team play. At a Pens-Leafs game I attended in December of 2005, chants of "Let's go Pens!" and "Go, Leafs, go!" battled for supremacy. While the situation isn't quite the same in Buffalo, there are always a fair amount of New Yorkers at Mellon Arena for Pens-Sabres games. These situations are great for the city: Neither team is a divisional rival for the Penguins, meaning there is (generally, and relative to, say, the Flyers or New York teams) solid ticket availability for the out-of-towners. Obviously, fans from Atlanta, Tampa, and Miami (whose teams each play in Pittsburgh as often as teams such as Toronto, Buffalo, and Boston) aren't as likely make the trek, but fans from the northeast are coming and spending money.

There IS something of a Penguins Nation already. Games at Washington's Verizon Center are well-attended by Penguins fans, a mixture of those who live in Washington and those who make the trip from Pittsburgh. Given, however, the dominating presence of black and gold at preseason Capitals home games, however, I would venture to say more of them live in the D.C. area. I don't know how well Pittsburgh is represented in other arenas -- I only know D.C. because I go to George Mason University -- but given the hometowns shown in the "Penguins Q&A" on, there certainly are Penguins fans across the country. And Mario is reaching out to potential fans who might not otherwise spend their money in Pittsburgh. By locating their minor league teams in Wilkes-Barre (the AHL's Baby Penguins) and Wheeling (the ECHL's Nailers), he's created a draw for fans outside the immediate area.

To say that the Penguins' popularity peaked in the early 1990s and waned thereafter is somewhat misleading. While it's tough to argue that a team would be more popular after winning two championships, Jason seems to forget that they made the playoffs the next ten years running, including winning the President's Trophy for the best regular season record in 1993 and made the conference finals in 1996 and 2001. It's not like the Penguins have fallen off the map. In addition, they have been extremely active in youth hockey, helping to fund (along with the Flyers) the Pennsylvania Interscholastic Hockey League, which is not overseen by the PIAA. Growth in youth hockey is evident, as eleven former members of the Pittsburgh Hornets junior team have been drafted by NHL teams, and the first four Western PA NHLers were all born in the 1980s.

All that said, you're spot on with point number three: I love the Pens, but that ain't keeping me in town.

Anonymous said...

A couple of posts above prompt some questions. I confess ignorance with regard to the Pens, but have great interest in the well-being of the city.

First, a comment was made about $48M lost during the lockout. I've heard that number, or similar, quoted before. However, it is not given a context about overall spending in the city during the lockout. I think the $48M refers to direct monies lost due to the Pens. But, where was the money spent? I don't think the $48M is a net loss, rather a loss only attributed to the Pen's lockout.

I think back to Dec/Jan a year ago when the Steelers were in the Super Bowl hunt. Much talk was made about "how much extra money was being poured into the city because of the Steelers' success." When the dust settled and the financial information was accumulated, the overall spending in the city dropped during this time. The explanation given was people were focused on one area, at the expense of another areas of spending.

Therefore, my question regarding the $48M is focused on net spending habits, or gross losses. Oh yes, I'm sure that those businesses that rely upon Pens fans were hit hard. But, perhaps other businesses did better during the lockout.

I understand from those who have studied these matters that an geographical area has a fixed amount of discretionary spending money. Is this right? If so, the arguments about "loosing $xx if the Pens leave," may not be a very strong one. The money would merely be distributed differently than before.

From my reading here, others of you undoubtedly have a better understanding of these financial matters. Help me out, please.

My second question relates to the demographics of the fans. I have heard that the seats have been well filled this season. A poster above comments about those from out of town, and the money they spend. However, my question concerns the practice of selling "remaining seats" to students an hour or two before the game, at discount. I have heard no statistics the makeup of the fan base when the games begin. The PR factor about "sellouts" is good, but is the audience partially populated with students who bought tickets at deep discounts an hour before the game?

My reason for the question is building a fan base. If many of those taking seats at the Arena are students, they will be gone next year, the year after, or the year following. That base is not one to build much of a faithful following. Oh yes, those attending may become Pens fans and later take seats in a rink in another city, such as Washington, Boston, or New York. But, these are not the ones dropping much money into the local economy.

As a side note, when I was a graduate student in the Boston area, I could get a walk-up ticket right before a Boston Celtics game for $1.00. And, I could get the same seat game after game! But, when I finished school, I left town, never to spend another dollar. This time was the era of Bill Russell, KC Jones, Sam Jones, John Havlecheck, ... Sorry, I digress.

Anybody on here with some comments or answers to these questions?