“If you build it, they MIGHT come”
And there you have it, a deadline has come and gone, and a single, simple message resonates. If you build a state of the art building, as they are about to complete in both Quebec City and Las Vegas, you go to the front of the line when it comes to getting an NHL team. Don’t build one (or even have plans to do so), then don’t waste your money on an application that could see you lose $2-million to the league.
Simple. Right?
Not so fast.
This expedited expansion process that was announced in late June creates some important criteria for the league, potential owners, and cities who are considering investment in an arena.
To no one’s surprise, both Quebec and Vegas put up their money to try and join the club. And to the disappointment of some, the two places where many believed owners were salivating over, Toronto and Seattle, nothing happened.
The Toronto story is a simple one. The second arena that could have been built in suburban Markham fell apart more than a year ago, dooming any chance for a second team. One wonders if city council there might be gnashing teeth a bit at passing on the GTA Centre.
Publicly, there were no guarantees that an expansion team for the Greater Toronto Area was a slam dunk…or should I say an empty net. Privately, when you looked deeper at the investors in the venture and saw subsidiaries of companies controlled by Jeremy Jacobs and Ed Snider, there was a feeling of inevitability if the league got to expansion.
In Seattle, where most of the talk has been about the NBA, the lukewarm response of local government has left at least two groups on the outside looking in, for now.
Creating the deadline might actually force public officials in the Pacific Northwest to accelerate any deals with entrepreneurs Victor Coleman or Ray Bartoszek to build a new facility. If that’s the case, then Monday’s deadline might be a bit of a moving target. One would have to think that if a Seattle application showed up a week or even a month from now, the NHL would still listen. If that’s not the case, perhaps many of us have over estimated that area’s love affair with hockey. Seattle is a vibrant, growing, affluent city that fits every qualification for an NHL team, except a proper arena.
There’s also the possibility that another city in the Northwest will become a better candidate for a an NHL franchise. Portland has a strong hockey following for junior hockey. It has a quality arena, and there are rumblings that Trailblazers owner Paul Allen might just be lurking in the weeds. Inside Allen’s sports empire is a man named Peter McLoughlin, who has ties to the NHL through two previous employers, Anheuser-Busch and the St Louis Blues.
But enough of what could be or should have been.
Two suitors have put up their money and shut up the doubters. Over the next few weeks, the league will evaluate how these two groups will generate revenue in their markets beyond ticket sales.
What is the Corporate Community going generate? How many private boxes? What is the population growth rate in each of the cities? How will that reflect in disposable income? What kind of local or regional television money will be contributed to Hockey Related Revenue? And on the topic of tickets, is it feasible to generate five years of season ticket sales in that 13,000 range?
In modelling both markets, analysts will ascertain if these markets will be taking money out of revenue sharing or contributing to the pot. Teams like Toronto who wrote the largest revenue sharing cheque in excess of $25-million this season, I’m sure, have no desire to welcome two more teams they have to help keep afloat.
It has to be assumed that the mistakes of expansion in the early 1990s won’t be repeated this time around.
Twenty some years ago, owners used expansion money to get rid of some haunting debt for their owns teams. Hence, the addition of at least 4 teams in non traditional markets, creating a false security that their teams were, in fact, solvent.
Expansion became the owners’ ATM. This time around the money (which they don’t have to share with the players) could easily do the same. Short-term vision, such as that, is not the reason to expand. But owners in cities that rarely make money see these dollars as a way to at least turn a profit once.
There are other questions that will have to be answered as well.
What is the short term effect of the weak Canadian dollar? How much of an indemnity will the Montreal Canadiens get for allowing another team in the province? How much will Ottawa get and who will be forced to share their television market with a new Quebec team? Similarly, Las Vegas has always been considered Los Angeles Kings’ territory. What happens there? And certainly, the concerns about gambling and a team in the state of Nevada requires a level of transparent concern.
On the topic of realignment, it would appear at first blush that adding another team in the East isn’t going to create a major issue. What’s the difference between 16-14 and 17-15? Not the much, really.
With that in mind, if you can live with 31 teams in 2017 by adding Las Vegas, and 32 teams by adding Quebec in 2018, why not add a 33rd team in Seattle or Portland by 2020?
Questions certainly must be asked. Questions that I’m sure Gary Bettman and Bill Daly already have answers to.
