Pandemic moves keep sports business on defense

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A year ago, Todd Halloran faced a heavy decision. Shut down operations for a year, maybe longer, or work through a pandemic that would inevitably force a financial loss.

Halloran loves small businesses. He thrives on their challenges, the way they can unite communities, and how they move economies. As partner at a Los Angeles- and New York-based private equity firm, Halloran spends his days providing capital and counsel to consumer-focused businesses. But the pandemic produced a challenge that he didn’t anticipate when he became minority owner of the S.C. Stingrays hockey team in 2018.

Ticket sales are the No. 1 source of revenue for the Stingrays, which have a home at the North Charleston Coliseum, with sponsorships a close second. Both are driven by attendance, and last year the pandemic gutted the team’s fan base, with ticket sales restricted to 25% of capacity at the arena. Fans were hesitant to visit public places, and companies on lockdown weren’t purchasing big bundles for group nights.

The impact that has carried over into the 2021-22 season.

Halloran said ownership has been financially very challenging. The business has a large following and a large profile, but in terms of profits and losses, the Stingrays franchise works as small business.

“I remember sitting there having discussions and we weren’t the only organization in our league to have those same discussions, obviously,” Halloran said. “But we felt like, ‘Hey, there are limited options.”

His hope was if play continued, fans would respond and the sales would come.

Coming off the high of 2019-2020 when the Stingrays had a winning season cut short from coronavirus, the 2020-21 season was shaping up better. The team was 31-23-10. They won the Eastern Hockey League Championship. They made it to the Kelly Cup finals.

But last season started two months late and therefore extended into June and July for playoffs. At that point, the coliseum was already booked up for the summer, and the Stingrays were forced to play out the championship series in the Carolina Ice Palace in North Charleston — a practice facility that holds up to 500 people. That’s 6% of normal capacity at a time when sales soar.

“We couldn’t even accommodate ticket holders, which total closer to 1,100, so that was tough for business,” Halloran said.

Ticket sales typically fluctuate during the year, said Kevin Schildt, vice president of corporate partnerships. Sales are hot with the October opener, trail off through the holidays and then increasingly jump up from January on.

Those later months are crucial to the Stingrays business model as fans are packing the arena, bringing large parties and hopefully celebrating. That’s when the majority of ticket packages and sponsorships are purchased for the following year.

With fractional attendance at the Ice Palace, without space for loyal fans, without box seats and larger celebrations, a crucial business opportunity inevitably underperformed.

“In terms of why our attendance isn’t what it usually is, that was a factor — not being able to play the playoffs in the coliseum,” Halloran said.

This season, fan attendance averages 3,500 a game, but sponsorships have been huge. Stingrays reported a record year for corporate partnerships, Schildt said, matching pre-pandemic levels.

Sponsorships are an anchor of the Stingrays business model that Schildt has focused on growing over the year. For the Stingrays, those partnerships represent not only revenue, but they build relationships and draw in fans who might not come for the hockey.

The Stingrays aren’t just selling hockey. They’re selling an entertaining experience.

People also come simply because games are a fun and affordable night out. They attend for raffles, to dress up for Star Wars night or to bring the kids to Nickelodeon Day. They attend to support nonprofit nights and military or first responder appreciation events.

“I think our product is pretty unique compared to the movies or other options in the community… That’s why I feel it’s important to have these promo nights that appeal to the masses and not just specifically hockey fans,” Stingrays President Rob Concannon said.

At the beginning of the 2019-20 season, Concannon and Halloran spent days weighing the pros and cons of playing out the season. Whether that was the right choice, Halloran said it’s impossible to know for sure.

In his gut, though, he and Concannon believe they made the right call for the players, for the community, for the jobs.

Operations are run by 12 employees in the North Charleston-based office, including Concannon and Schildt. Add four coaches and 26 players and that rounds out the full-time squad. The arena and Stingrays then both employ temporary staff for game days.

“We could have sat there and debated about them all day long, but the bottom line was we made a commitment to play,” Concannon said.

“We as an organization got a lot of goodwill and good feeling about (remaining open),” Halloran said. “I felt like we did our part to bring some entertainment to the community and jobs at a time when there was a lot of suffering and a lot of challenges,” Halloran said.

Even South Carolina Gov. Henry McMaster extended his appreciation to Halloran for keeping jobs active during the pandemic.

Going on two years under the shadow of the pandemic, Concannon said the team and business have had to go about each season from a different perspective, keeping the community, the fans, the sponsors engaged with every win and  every loss.

“I think for the most part, we’ve done a good job of keeping things afloat, but we’re definitely looking forward to 2023,” Concannon said.