NHL to formally start expansion process (only LV and QC submit applications)

[Property Manager DB]

Originally Posted by Enoch Root

The league isn't stupid - they aren't going to let a potential new owner come in and grab a team on the cheap and then move them to a more desired (by the league) location.

This is precisely what Balsillie kept trying to do and the league shut him down.

Look at the league as a partnership (like a law or accounting firm). If someone wants to become a partner, they have to buy in. You don't build a successful partnership and then simply let others join in - watering down your stake - for nothing.

well said!

[Strange Brew]

Originally Posted by Enoch Root

The league isn't stupid - they aren't going to let a potential new owner come in and grab a team on the cheap and then move them to a more desired (by the league) location.

This is precisely what Balsillie kept trying to do and the league shut him down.

Look at the league as a partnership (like a law or accounting firm). If someone wants to become a partner, they have to buy in. You don't build a successful partnership and then simply let others join in - watering down your stake - for nothing.

I agree with alot of that. But one difference, at least at my firm, is that all partners have an equal amount of capital invested in the firm (equal in terms of a relative percentage of their firm earnings). You get admitted as a partner because you can demonstrate the ability to grow the earnings of the firm to the benefit of all partners. You don't get admitted on the basis of being willing and able to cut a gigantic cheque to all the existing partners.

A new expansion team will water down existing shared TV money etc. but at this price the existing owners are certainly cashing in.

[TX_Flame]

Originally Posted by Strange Brew

I agree with alot of that. But one difference, at least at my firm, is that all partners have an equal amount of capital invested in the firm (equal in terms of a relative percentage of their firm earnings). You get admitted as a partner because you can demonstrate the ability to grow the earnings of the firm to the benefit of all partners. You don't get admitted on the basis of being willing and able to cut a gigantic cheque to all the existing partners.

A new expansion team will water down existing shared TV money etc. but at this price the existing owners are certainly cashing in.

From what I read at the time, SN's contact with the NHL is on a per Canadian team basis. In other words, the amount SN pays the NHL would increase by 1/7 from the first season the new Nordiques start playing in the NHL.

[Strange Brew]

Originally Posted by TX_Flame

From what I read at the time, SN's contact with the NHL is on a per Canadian team basis. In other words, the amount SN pays the NHL would increase by 1/7 from the first season the new Nordiques start playing in the NHL.

Interesting. The owners are very motivated to make this work with such limited dilution of existing revenues. I am not too good at math in my head but $1B divided by 30 is a large number for anybody. I would not be looking to move the Coyotes either.

[TX_Flame]

Originally Posted by Strange Brew

Interesting. The owners are very motivated to make this work with such limited dilution of existing revenues. I am not too good at math in my head but $1B divided by 30 is a large number for anybody. I would not be looking to move the Coyotes either.

Coyotes are irrelevant when it comes to SN's contract. Their rights fees are based on the number of Canadian teams in the NHL IIRC.

[Strange Brew]

Originally Posted by TX_Flame

Coyotes are irrelevant when it comes to SN's contract. Their rights fees are based on the number of Canadian teams in the NHL IIRC.

My point is it will be very difficult if the Coyotes move to a city that is interested in expansion for the existing owners to get the same kind of financial windfall. A buyer would have to pay something to existing owner of Coyotes plus another $500 million to league. Any you limit the appetite for future expansion cities if the belief is you can get your hands on an existing franchise.

I had thought there would be a dilutive effect on revenue by increasing teams but your point shows that is not necessarily the case.

[TX_Flame]

Originally Posted by Strange Brew

My point is it will be very difficult if the Coyotes move to a city that is interested in expansion for the existing owners to get the same kind of financial windfall. A buyer would have to pay something to existing owner of Coyotes plus another $500 million to league. Any you limit the appetite for future expansion cities if the belief is you can get your hands on an existing franchise.

I had thought there would be a dilutive effect on revenue by increasing teams but your point shows that is not necessarily the case.

Right, but moving a team to QC would have the same effect on SN's rights fees as expanding there. IF I recall the details correctly.

BTW, adding teams in the US has no effect on rights fees, as NBC's contract has no such provision.

[Finger Cookin]

It'll be interesting to see if the Rogers TV deal actually behaves that way should Canada get another team. Breaking it down with an estimate of the year to year payments under the original deal, adding a team in Canada for 17-18 could increase the revenue under the deal by almost $600M. If a Canadian team is added in 18-19, the revenue increase could be something like $525M.

[Finger Cookin]

I can't find anything online about the fees going up for Rogers if another Canadian team is added. If anything, articles I've read seem to think return on investment will improve for Rogers and Quebecor if one or two Canadian teams get added over the term of the deal, with more viewers being attracted as a result in the case of expansion.

Like I say, it will be interesting to see it shake out.

[Strange Brew]

Originally Posted by TX_Flame

Right, but moving a team to QC would have the same effect on SN's rights fees as expanding there. IF I recall the details correctly.

BTW, adding teams in the US has no effect on rights fees, as NBC's contract has no such provision.

Exactly. Minus the $500 million the owners get in expansion vs. relocation. Unless you think they could extract same payment in a relo. But then you have the issue of detracting from future expansion.

[TX_Flame]

Originally Posted by Strange Brew

Exactly. Minus the $500 million the owners get in expansion vs. relocation. Unless you think they could extract same payment in a relo. But then you have the issue of detracting from future expansion.

The difference is relocations happen because the NHL is over a barrel, like in the Thrashers situation. The League already had its hands full with bailing out the Coyotes and couldn't afford another situation like it. Winnipeg was Bettman's only option. With expansion the League has all the power to say yea or nay and set any ridiculous price it wants to.

[Strange Brew]

Yeah we keep saying the same things.

Except the league is never over a barrel.

[TX_Flame]

Originally Posted by Strange Brew

Yeah we keep saying the same things.

Except the league is never over a barrel.

So how would you describe the Atlanta Thrashers situation, especially after Bettman had spent several years proclaiming the League's commitment to keeping franchises in their current location? Relocations, especially relocations to good, logical hockey markets, are an absolute last resort for the NHL.

[Darkwater]

The league and Bettman are forced into their rhetoric. Right or wrong. It does get annoying though.

[Strange Brew]

Originally Posted by TX_Flame

So how would you describe the Atlanta Thrashers situation, especially after Bettman had spent several years proclaiming the League's commitment to keeping franchises in their current location? Relocations, especially relocations to good, logical hockey markets, are an absolute last resort for the NHL.

Sorry I can't follow what we are debating. I agree with you on every front. Guess I would say that the league being "over a barrel" is an overstatement but as I stated multiple times, expansion is infinitely preferable to relocation for the owners.

[TX_Flame]

Originally Posted by Strange Brew

Sorry I can't follow what we are debating. I agree with you on every front. Guess I would say that the league being "over a barrel" is an overstatement but as I stated multiple times, expansion is infinitely preferable to relocation for the owners.

What I am saying is that for a market/owner that had sticker shock at an expansion franchise, relocation might end up being a more affordable option IF the League finds itself in the position where it becomes the only option for a troubled franchise (other than folding). The relo fee would likely not be as high because the prospective owner would be helping the NHL out of a predicament, much as Chipman was doing with the Thrashers situation. If the NHL finds itself considering relocation for say, Phx or Fla, it would mean that they are not bargaining from the same position of power that they are with expansion.

[Resolute 14]

Originally Posted by TX_Flame

So how would you describe the Atlanta Thrashers situation, especially after Bettman had spent several years proclaiming the League's commitment to keeping franchises in their current location? Relocations, especially relocations to good, logical hockey markets, are an absolute last resort for the NHL.

FWIW, the Thrashers situation had been running for years before the Coyotes mess began in earnest. It was just handled behind the scenes because there was no Balsillie bankruptcy stunt to draw it public. The league hates relocation and tries to avoid it as long as it can. And somehow Bettman and the NHL convinced Atlanta Spirit to hold onto a hockey team it wanted nothing to do with for years. The Thrashers relocated and the Coyotes didn't for a simple reason: Nobody with the ability to do so was interested in owning a hockey team in Atlanta. So when Atlanta Spirit finally said "no more", the league had to move on a relocation because there was no other option.

[TX_Flame]

Originally Posted by Resolute 14

FWIW, the Thrashers situation had been running for years before the Coyotes mess began in earnest. It was just handled behind the scenes because there was no Balsillie bankruptcy stunt to draw it public. The league hates relocation and tries to avoid it as long as it can. And somehow Bettman and the NHL convinced Atlanta Spirit to hold onto a hockey team it wanted nothing to do with for years. The Thrashers relocated and the Coyotes didn't for a simple reason: Nobody with the ability to do so was interested in owning a hockey team in Atlanta. So when Atlanta Spirit finally said "no more", the league had to move on a relocation because there was no other option.

Exactly. IMO, "no other option" is exactly why True North didn't have to pay as much as for an expansion franchise. And also why, if Phx or Fla reach the "no other option" stage, an owner who didn't apply for an expansion franchise could probably get in for less than $.5B. "No other option" is not a position of strength. "Give us $2M and we'll see if we even want to expand for another $.5B." is.

[Strange Brew]

The league has options for troubled franchises. The league could have bought the Thrashers back from their owners and either operated them, sold them or contracted. The league may well have looked at True North and the Winnipeg market and thought " there's a decent hockey market, will support a team but will never be able to pay the outrageous expansion fee we will be charging". So they were OK with the relo scenario.

IMO it's still not a certainty that there are 2 groups able to fork over $500 million for a hockey team. Yeah you can finance it with debt but I don't think most sports teams have fantastic cash flow situations. It is the increase in franchise values where the real money is made. If they do get their $1 billion the next relo is going to cost someone a ton of money.

[atb]

A Nordiques fan on twitter noticed a couple private planes flying between Raleigh to Quebec City over the past week: https://twitter.com/jocellecauvier

Wow! 2 private flights Raleigh - Quebec today! Arrived at 12:28 & 24:32. Very rare! Raleigh NC =http: // flightaware.com/live/findfligh t / KRDU / CYQB ... # Nordics

Update 2 simultaneous flights Raleigh - Qc yesterday. The plane belonging to a Raleigh law firm is always Qc # Nordics

It's big! The aircraft is N550AA in Quebec City! Belongs to Allan & Co ... firm engaged by Karmanos to sell Hurricanes! # Nordics

Evidence that the N550AA flight Quebec belongs to Allen & Co (bottom) http://registry.faa.gov/aircraftinqu...umbertxt=550AA (thank you # spicy ) # Nordics
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Proof that Allen & Co is related to Hurricanes (engaged in the sale of Hurricanes) http://www.bizjournals.com/triangle/...24/daily2.html # Nordics

Could be nothing but interesting to speculate on the Hurricanes moving to QC.