SAN JOSE — By one key measuring stick, the Sharks are considered among the NHL's financial have-nots.

Only 11 of 30 teams benefited this summer when revenue-sharing money was handed out for the first time through a system set up in the league's lockout-ending labor agreement. The Sharks were one.

They might be again in 2007. Sharks CEO Greg Jamison is projecting his team will end up in the red once more.

"We're closer than we have been," he said. "I said last year we'd lose around $7.5 million, and we did a little better. If everything goes right, I think losses will be around the $4 million mark."

But sports economists point out that while the accounting ledger may legitimately show annual losses, that doesn't mean sports franchises are money-losing investments.

Allen Sanderson, an economics professor at the University of Chicago, likens the situation to someone who buys a home for $200,000, maybe has to cut into his savings to pay for a new roof, but then turns around and sells the house for $400,000.

"What you're really doing is eating some money over the short run because what you're trying to do is increase the long-term sale value," Sanderson said.

Dennis Howard, a sports marketing professor at the University of Oregon, says that beyond value appreciation, franchises have other incentives to report losses.

"What teams are trying to do is maximize their expenses for tax purposes and strengthen their competitive position in their bargaining with players," Howard said.


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Both men were talking about franchises in general, not the Sharks in particular. Silicon Valley Sports and Entertainment, a group of 13 investors who purchased the team from George Gund for a reported $149 million in 2002, does not disclose its financial records.

Jamison acknowledged that annual operating losses do not tell the entire story and that NHL franchises overall are increasing in value.

"But, trust me, in some cases the operational costs still outweigh the appreciation," Jamison said.

Economic indicators the team provided for the current season seem favorable.

The season-ticket renewal rate was 95 percent — the highest since SVSE took over the franchise — and that means guaranteed crowds of at least 14,000 for every game, said Malcolm Bordelon, executive vice president for business operations.

Capacity at HP Pavilion is 17,496, and of the 3,500 remaining seats, between

1,000 and 1,500 are set aside for group sales. Bordelon said advanced single-game sales are above the pace for last year, when the team averaged 16,831.

Jamison said he thought ticket renewals were a reflection of the team's performance and the overall economy.

The suite situation also has improved. All but one of the 65 are sold, Jamison said; last season, as many as 12 were vacant.

Corporate sponsorships haven't returned to pre-lockout levels, but income is up slightly from last season, Bordelon said.

Despite all that, the Sharks could again be on the receiving line when it comes to revenue sharing.

Jamison, who would not specify how much the Sharks received in revenue sharing, said limited income from local TV and radio stations is one thing that keeps San Jose in the red. In broadcasting, how much revenue a team receives for broadcast rights depends heavily on ratings.

"When you do a team comparison and analysis across the NHL, it's harder in this market to do well in television than it is in some other markets," he said.

Neither the NHL nor the players' association will disclose which teams donate to the revenue sharing pool and which teams draw from it. An NHL spokesman did say about $90 million helped 11 teams.

Sometimes the line that separates profitable teams from the others can get fuzzy, especially when franchise owners have tangential business interests. SVSE, for example, also manages the arena for non-hockey events and has set up publishing and merchandise operations.

"Teams may have a fair amount of discretion as to what costs they assign to the team and what costs they assign to the arena," said economist Sanderson, citing one of the flash points in the labor impasse that shut down the NHL for the 2004-05 season. 

As far as the Sharks go, Jamison said neither the hockey team nor the parent company is showing an annual profit.

Still, even that can be offset by tax benefits. Two years ago, a change in federal law gave franchises the ability to write off an increased amount of their expenses as player depreciation, for example.

Before 2004, owners could write off 50 percent of their player costs as business losses over a five-year period, explained Oregon's Howard. Now they can write off 100 percent over 15 years.

Howard sees NHL franchises only increasing in value, especially since owners got the "cost certainty" they wanted.

"In the decade prior to the lockout, the values of franchises more than doubled," Howard said. "Even though you don't see the incredible values associated with the NFL or even the NBA, you still see sustained growth. ... And what makes the NHL increasingly attractive is now they have a collective bargaining agreement where there is some economic sanity and a fairly hard salary cap."

Jamison doesn't argue with that last point but remains committed to finishing in the black as well.

"I still feel we're going in the right direction," he said. "It is still absolutely a goal to get to the point of profitability and compete for the Stanley Cup every year. There are some who will say that is not a feasible thing to do. And others of us say, 'Yes it is, you just have to work at it.'"