The Abbotsford Heat hockey team's management and owners hope the NHL lockout will turn the club's dependence on tax dollars around.
Abbotsford will be paying $1.76 million to cover the Heat's shortfall in the 2011/12 season, the city announced Wednesday.
Since the contract began three years ago, Abbotsford has paid the Calgary Flames farm team a total of $3.58 million, including $1.3 million for the 2010/11 season and $450,637 in the team's inaugural 2009/2010 year.
The Heat ownership group has a 10-year supply fee agreement with the city that guarantees $5.7 million in annual revenue.
However, despite the ever-increasing subsidy, the city is committed to riding out the life of the contract, and the team's management and owners are optimistic.
City manager Frank Pizzuto said the season results were disappointing but the city and Heat were committed to improving the situation.
"We are not entering any discussions other than trying to make the agreement work," said Pizzuto.
"We signed a 10-year legal agreement and from our end, we will honour that agreement."
The city budget originally anticipated a $1.1 million deficit and the $866,000 shortfall will be made up by economizing in other areas, said Pizzuto.
Lower than desired attendance and commercial sponsorship levels were cited as factors in the deficit.
The Heat has struggled to put bums in seats, being a Calgary Flames affiliate playing in dedicated Canucks territory.
However the team's ownership and management are banking on building a permanent fan base during the AHL lock out.
"We anticipate this year will be a growth year in building our fan base," said investor Lane Sweeting.
With the lockout, hockey fans will have the opportunity to see NHL's top draft picks, like those on the Edmonton Oilers' farm team scheduled to play at the Abbotsford Entertainment and Sports Centre this week.
"Our challenge is to get [fans] in the building once and we know they'll be back."
The Canuck fan base, back-to-back games, often on weekdays, and public criticism of the AESC and the supply-fee agreement are all longstanding challenges to the Heat's success, said Sweeting.
"It's definitely been more of a challenge than anticipated. We've had three seasons and we never imagined it would be this difficult to fill the building."
The average attendance required to meet the break-even point is 3,905 paid customers; the paid customer base in 2011/12 was 2,653, according to the city.
Heat president Ryan Walter said attendance is better than last year at this time, and it is expected to grow with star-studded teams like the Oklahoma Barons rolling into town.
Average attendance for the Heat year-to-date is 4,463, according to the AHL website.
"Ticket sales are very strong. We are trending up," said Walter.
What's more the renewal rate for season tickets was at 83 per cent after dropping dramatically in the second and third season, he said.
"There's some light in the tunnel from year three to four," said Walter.
The franchise has also dropped ticket prices to $15, down from $20 to capture entry-level families that will hopefully evolve into season ticket holders, said Walter.
The club also has deals worked out with local sports teams and associations who are also selling Heat tickets and is working hard to establish itself as a community partner.
The franchise will also be pushing to radically increase group sales in the coming season, said Walter
However, Walter is also not contemplating an exit from the deal with the city.
"If things don't improve, there's not a lot that can happen. The city and heat ownership have a 10-year deal," he said.
"It's up to us to maximize sales and increase revenue and that's what we're working hard on doing."