The Hartford Whalers Are Going Going ...

The Hartford Whalers are in a very tough situation at this time. When
Peter Karmanos bought the team in May of 1994, he inherited the worst lease
agreement at the smallest arena in the NHL. The Hartford Civic
Center lease agreement creates profit for private companies; however, the lease
causes the Whalers to lose money. The mall is owned and operated by Aetna;
therefore it has nothing to do with the Whalers. The city of Hartford owns the
coliseum, parking garage, and exhibition hall. The state of Connecticut pays a
1.6 million dollar annual leasing fee to take control of the coliseum, parking
garage, and exhibition hall. The state hired Ogden Entertainment Services to
run the coliseum, and Ogden receives all of the revenue from luxury boxes, the
coliseum club, advertisements, rental fees and the exhibition hall. The state
also hired Kinney Systems to run the parking garage and Service America
Corporation to run the concessions. Both companies receive all revenue from the
service they run. After all of this, there is no money left for the Hartford
Whalers (Swift & Arace, 1+).
The reason why these three companies keep all of the revenue from the
Civic Center can be blamed on Richard Gordon, the former owner of the Whalers
who did not want the city of Hartford to run the Civic Center. In 1993, the
state decided to negotiate a new lease with the Whalers. The state of
Connecticut did not want to run the coliseum so they hired three private
companies to take this job. These companies would only run the Civic Center if
they could keep all of the revenue from the service they controlled. Richard
Gordon accepted this lease because this agreement would repay him for an
additional ten million dollars in loses and he sold the team a year later (Lang
The Hartford Whalers is the only major league team in Connecticut and at
the Civic Center. They currently have a bad lease which causes them to lose
money. The Hartford Whalers play all exhibition, regular season, playoff games,
the training camp, and some practice time rent free at the Civic Center.
However, the Whalers get no revenue from concessions, luxury boxes, parking, and
the coliseum club. The Whalers get sixty percent of the revenue from
advertisements along the boards but no revenue from all other ads around the
coliseum (Swift, 1+). The Whalers can leave Hartford after the 1997-98 season
if they lose a cumulative thirty million dollars from 1994-95 through 1997-98.
They must also pay a five million dollar penalty to leave Hartford. If the
Whalers lose more than thirty million dollars and they choose to stay, they can
subtract one-half of only thirty million dollars from the 25 million dollars
they owe the state to complete the sale of the Whalers. This amount is 10
million dollars. If the Whalers do not lose thirty million dollars in this four
year period, they must subtract one half of their loses from the 25 million they
owe the state to complete the sale of the Whalers, and they are locked in
Hartford through the year 2013 (Lang, 53-69). This lease makes it impossible for
the Whalers to make money because even if they sell out the season, they will
still lose seven million dollars a year. If the Whalers lose more than thirty
million dollars in four year then the lease gives the Whalers an option of
paying five million dollars to leave Hartford or paying ten million dollars to
stay in Hartford. Which one do you think Peter Karmanos, the owner of the
Whalers, will choose.
Now the Hartford Whalers are at a major crossroad in their twenty-five
year history. This may be a bigger disaster than the Hartford Civic Center roof
collapse because the Whalers may not be in Connecticut in two years. Peter
Karmanos has only seen finical hardship since he bought the team in 1994 and he
inherited a terrible lease agreement from Richard Gordon at the Civic Center.
The Hartford Whalers lost twenty million dollars in the 1995-96 season and
eleven and a half million dollars in the 1994-95 season for a total of 31.5
million dollars in only two years (Jacobs, 1). The Whalers have not made a
profit since the 1990-91 season (Arace 1+). The Whalers current lease is so bad
that even if the they sell out every game of the season, they will still lose
seven million dollars a year. The Whalers had a season ticket drive last April
to double their season ticket base