Ticket offer key for economics of hosting ice hockey world championships

There is no escaping the fact that the Czech Republic is hosting the current ice hockey world championships. Beer companies have fought over the rights to have the championship or ice hockey association logo on their products. Sponsorship is plastered everywhere, there are even collections of chocolate ice hockey stars on sale in supermarkets. And, it's estimated that around 300,000 tourists might visit the country in connection with the championships. But how do the economics of hosting the championships work out?

Photo: CTKPhoto: CTK The Czech Ice Hockey Association says that it is hoping that a new attendance record will be set at the matches being played in Prague and Ostrava, beating the maximum so far set in Belarus last year. The Czech Republic already scored well in 2004 when it last staged the championships with well over half a million tickets sold. And those sort of ticket sales will certainly boost the local ice hockey association cover its costs this time around.

The basic economics of hosting a ice hockey world championship is that the International Ice Hockey Federation gets the biggest slice of the television, marketing, and sponsorship payments that are part and parcel of such a major sporting events. The local association has some of the crumbs from that table but must overwhelmingly rely on getting the ticket offer right and pitch prices to fans so that attendance fees can be maximised.

The championships in Belarus were something of a special case as regards the business model being used. So to understand the economics of the world championships we looked a little further back.

Swedish model

Sweden co-hosted the world ice hockey championships with Finland in both 2012 and 2013. It had half of the qualifying group games and quarterfinals in 2013 but Stockholm hosted all the semi-finals and finals that year. I spoke to the chairman of the Swedish Ice Hockey Federation, Christer Englund, about how world championships are financed. This is what the former bank manager and member of the international ice hockey federation council had to say when I asked whether the world championships are a money spinner for host countries.

“Yes, I will say most of the tournaments are. I think that or the last 20 year that I know of no-one lost money apart from when we did it in 2013.”

And why was that? Was it because you were hosting it jointly or were there any special circumstances?

Christer Englund, photo: archive of Swedish Ice Hockey AssociationChrister Englund, photo: archive of Swedish Ice Hockey Association “First of all, we did not sell enough tickets and the financial conditions are based on what you can do with ticket sales. You can have some small, I would say minor, income from sponsoring but as Infront [the International Ice Hockey Federation sponsorship and marketing arm] have all the rights then there is not much that you can do about that. We have seen also that you can get support from your city which is hosting the championship or sometimes the government helps you to get some support. We did not get that in Sweden. We paid all of the costs by ourselves. “

The eventual loss was how much money in the end?

“The loss from the world championships, that included both 2012 and 2013, because it was just the the group stages in 2012 and then the finals and final rounds in 2013, was three-and-a-half million euros in Sweden. You should compare that with 10 years before in 2002 when we made a profit of around four million euros. The costs for an organiser is also getting higher nowadays and it can depend on the rental of the arenas and things like that.”

Normally it is a profitable even though?

“Yes, normally even if it is not that much, you should make three to four million euros. And that Is what we were calculating for our championships, the same level as 2002.”

End game

And how much of the overall income are ticket sales? Is it not the single biggest factor…?

“I don’t quite have it in my head right now how much was from the ticket sales. We sold around 320,000 tickets. But it also about what you need to sell, the more expensive tickets. Because we had a lot of different tickets, 16 different prices in the last year, 2013. You also have to sell tickets for the semi -finals and bronze medal games and we did not do that. We did not sell out the semi-finals. It’s a lot of money at the end of the tournament.”

On the advertising, in the Czech Republic it looks like there is advertising everywhere for these championships. But if I understand rightly, a lot of this advertising does not go to the national organisations. How does that all work out?

Photo: CTKPhoto: CTK “It works out that all the commercial rights around the world championships connected to the brand mark of the tournaments belongs to the International Ice Hockey Federation (IIHF). IIHF have a partner, Infront, which is paying for the rights and then they can sell the rights. So what you can see on the boards, what you can see within the arena and around the arena connected with the brand mark of the world championships, it belongs to the IIHF. It is very difficult for an organiser, I would say, to get any major money out of sponsorship. We got some possibilities in agreement with Infront, but it was very tricky. If you are not visible in what you are doing and can only in a small way show what you are doing, then you cannot earn any big money from sponsorship.”

And the television rights, it is the same story more or less? It is the international…

“Yes, yes, it is the same. It is IIHF which has the rights. As an organiser, you know you can earn some money from the ticket sales. But at the same time, if you look at Finland which organised the championships with Sweden, they made a lot of money, made a huge profit I would say.”

At the Finnish

And why was that? Did they get any money from the state or were there any special factors?

“No, they sold a lot more tickets. The ticket price was higher in Finland than it was in Sweden but the Finnish fans were prepared to pay that amount. We say that the fans in Sweden are a little but spoilt. You pay a lot of money to watch hockey on television so it is difficult to try and sell it twice. If we look at the figures on tv, it was the highest ever [viewing figures] when we played in Sweden from the Swedish fans.”

Finally then does that mean that you will try and host the championships again? And if you do host them again, presumably you will look at a different economic model or make some changes?

“Yes, of course we would like to host it again. Sweden is a big hockey country and of course we would like to do it again. But we will try to do it with a different economic model next time…

Higher ticket prices?

Photo: CTKPhoto: CTK “Ticket prices, have partners together us as we can see now for the tournament in Germany next year. I don’t know how it is in the Czech Republic, but you can partners in the city supporting things so that the costs are reduced for you. We have to look at the different angles to reduce the costs because at the end if you do not have enough income you should have smaller costs.”

On the ice, Sweden won the world championships in 2013. The economics of hosting the games was clearly less of a triumph and was not helped by the fact that the dark horse of the tournament, the Swiss, had a run all the way through to the semi-finals before being knocked out. The Czech organisers can hope for a home win and better luck from the crucial ticket sales this time round.