Wednesday, April 12, 2006

On New NHL Markets

While discussing the Penguins threats to move that they are making to try to get a new arena, the topic of potential new NHL franchises (specifically an NHL return to Winnipeg) came up. I think that this idea, though popular to some Canadian fans, is highly unlikely.

In an NHL, with even minor levels of revenue sharing, owners have no desire to add new markets that will potentially get their dollars through revenue sharing. Why would New York or Toronto want to add Winnipeg when they will likely have to pay revenue sharing dollars to Winnipeg? Any market that gets added to the NHL will be one that is appears almost certain to be well above the average revenue levels that currently exist in the NHL. I see two possible teams that could satisfy this requirement in North America. One would be a Houston team (with appropriate ownership and venue). Houston is the fourth largest city in the US - and gaining on Chicago for third. This is a large market that remains untapped by the NHL. The second is Southern Ontario. Toronto and area is hockey mad. If another team was put into Toronto, Mississauga or possibly Hamilton this team would likely be a huge success. Of course the Toronto Maple Leafs would have to okay a reduction in their territorial rights - which seems unlikely. In the case of Hamilton, the Buffalo Sabres would also have to okay a reduction in their territorial rights. This makes these possibilities remote, despite their revenue potential.

The NHL is not in a strong position to expand right now. They are still reeling from the lockout. Despite propaganda, NHL revenues are down from the pre-lockout numbers. In fact, the lockout was in part caused because of failing southern expansion under Gary Bettman. Expansion as a whole is unlikely.

Could franchises re-locate? Afterall Pittsburgh is threatening this. The likelihood of this actually happening is low. This is in part because Pittsburgh is a viable market that currently lacks a good arena. They have had historic success including two Stanley Cup victories. Gary Bettman marketed the lockout in part claiming that it was necessary to ensure that existing markets would not lose their NHL teams. If Pittsburgh then loses their NHL team a couple years after the lockout, it blows a hole in the idea that the lockout succeeded in accomplishing this goal (which of course was never truly a goal of the lockout). It would be bad publicity for the NHL if teams started moving.

In a case of a seriously jeopardized market that does not have a fanbase or finances, the NHL may be forced to move to contract that team, but Pittsburgh is not such a case. They have a fan base. The problem right now is that ownership is trying to extort a new arena from local government.

Eventually, I think the future of the NHL includes expansion to Europe. It would be the first major sports league in two continents. Hockey is huge in many big European markets. This could be successfully done. Of course travel would be an issue, but that could be addressed by severely limiting inter-contintental travel. It would be a bold move for the NHL to move into Europe, but in the meantime, they are still trying to shore up the markets they already have. It is unlikely that we will see expansions or relocations for several years.

Comments:
European expansion is an intriguing idea. And now that they've got the Euro across most of the continent, the finances of it are more workable than they would have been in the past. Over the long run, how would you like to see the league shape up? How many teams overall? Where would you locate the European franchises? And what kind of schedule would you set, especially in light of the transatlantic travel required? I still like the idea of each team playing every other one in at least one home and away game each year. Maybe this could be done through extended road trips to at least cut down on back-and-forth travel.
 
I am following this situation very closely.

Kansas City's new arena will be ready in 2007 and AEG (Kings owners and operators of KC's new arena) is actively looking for an NHL or NBA team to be a tennant.

www.kchockeybuzz.blogspot.com
 
With the failures attendance wise of the southern big city teams in the NHL it is amazing that people are still talking about moving teams to non-traditional markets due to the simple fact that they are large or have a new arena. Carolina cant sell out games after a Stanley Cup year. Atlanta, Nashville and Miami all have problems attendence wise. Even St.Louis a traditionally strong market has had extremely poor attendence. yet people think the NHL can do well in places like Kansas City and Houston? what the NHL needs to do is move some of these teams not to "large markets" but to hockey markets. the teams that are selling out every game are the likes of Toronto, Montreal, Vancouver, Calgary and Edmenton. The Canadian team are the ones leading the league in attendence. The NHL needs to embrace traditional Hockey markets and move teams to cities like Winnipeg, Hamilton and Quebec City. It dosnt matter that Winnipeg's new arena seats only 15,000 because most markets in the NHL average less then 15,000 a game that is including the inflation techniques used to calculate attendance. a market like Winnipeg would sell out its 15,000 seat arena and create demand for tickets, something strongly needed in what is a league that relies on ticket sales and not TV revenue.
 
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