[Rumour] Why Canada May Never Get Another NHL Franchise

[bluejays]

https://business.financialpost.com/f...-nhl-franchise


Probably one of the best written business of sports articles I've come across.



Imagine, as per Seattle, that an expansion team costs around US$650 million. If you are not Quebec City, a new arena would need to be built, costing another $200 million, give or take, assuming the new owner convinces taxpayers to pick up a chunk of the tab. Now, almost a billion dollars later — huzzah — you have yourself an NHL franchise earning, in a good year, about US$25 million before taxes, interest, depreciation and amortization or, in other words, close to a zero-per-cent annual return on a huge investment.

Some really good tidbits in there about the league expanding, and a second Toronto team from Richard Peddie himself. Of all things, proposals to play both teams out of the ACC.


Peddie was approached, post-MLSE career, by a private group looking to examine the possibility of Toronto being home to another NHL team, a big what-if requiring an ownership group with a monopoly agreeing to waive its monopoly. The working assumption was that the alliance between Bell and Rogers would eventually fracture, forcing one of them out of the Leafs’ ownership group. Peddie, in crunching numbers, had the Leafs and the expansion team both playing out of Scotiabank Arena, a model that could work financially, he says, but, in talking to his connections, it fell apart, because both Bell and Rogers were only interested in owning the Leafs.

[Northendzone]

Not surprising. I'd like to hope that someone can make the numbers work.

[Press Level]

"Never" is a long time. In the late 90's all of the experts were predicting that Canada would eventually lose all but three of its Canadian teams (Toronto, Montreal, Vancouver) due to the economics of the time. Then the we had the lockout, a salary cap, a new revenue sharing model and the Canadian dollar at par and all-of-a-sudden Winnipeg got their team back!

Things change, never say never.

[Mickey76]

I am honestly amazed there are new franchises anywhere for $650 million.

[curves2000]

The business of the NHL has really changed over the years and teams have gotten smarter milking fans for more dollars.

I am 34 y$ears old and I recall only being able to get Flames games on tv when it was a 2&7 Game or the odd HNIC game on CBC. The idea for the owners at the time was to encourage the local fans to come to the Dome and spend $30 on a ticket or something like that. A lot of fans didn't wear jerseys to games, look at old footage of any Canadian hockey team and you don't see a lot of jerseys, many years ago in place like Toronto and Montreal, men worse suits and women wore dresses. Now teams are selling $400+ "authentic" jerseys. Adjusted for inflation compared to the 40's, 50's etc, a new jersey should cost like $75.

A lot of NHL clubs have also become more heavily involved in the real estate business in the area around their arenas, that wasn't the case before.

Revenue sharing, especially for the bottom feeding clubs who are at the bottom every year, has really helped some of the poor markets, stay poor.

In markets like Florida, Arizona, Carolina, Anaheim etc the owner might be alright with writing chq's to cover losses if they have the arena management contract or they paid a cheap price for their team and hope the value goes up. Given the choice, I am sure they would want to be a larger, more profitable club that wins and is a big deal in the local sports scene.

In reality what has the NHL really gained in the 10 years they have had Arizona on life support doing absolutely nothing other than being a C** dumpster for every teams bad contracts?? Players in the Hall of Fame, players retired, players living overseas all being on the roster and payroll, this is suppose to be a professional hockey club?

I think the message has been sent to some of these clubs that their time in their market place is limited because sooner or later the NHL needs to move teams to markets that are or at least possibly viable. You can only defy gravity so long before things just need to change.

[Matty81]

Think the nhl getting 650 Mil for an expansion team was pretty much its high water mark. There just aren't enough big markets left for it to happen more than another couple times max. No doubt the economics are near impossible in Canada for markets like Quebec city and Hamilton... and the leafs won't waive monopoly rights. So the Canada piece seems pretty obvious for now.

I think after the nhl adds a couple more teams in NA if they are still looking to expand its gotta be Europe.

[Groot]

Isn't the expansion cost generally a lot higher than what the relocation cost has been or would be? Seeing as a team would likely relocate versus expanding the league to 33 teams.

[RM14]

Originally Posted by Matty81

Think the nhl getting 650 Mil for an expansion team was pretty much its high water mark. There just aren't enough big markets left for it to happen more than another couple times max. No doubt the economics are near impossible in Canada for markets like Quebec city and Hamilton... and the leafs won't waive monopoly rights. So the Canada piece seems pretty obvious for now.

I think after the nhl adds a couple more teams in NA if they are still looking to expand its gotta be Europe.

NHL will cap at one more to get to 32 teams to even the divisions. Any other action will come from relocation, which will include a 500 million fee or so.

[calgaryred]

I dont see professional sports being as big in the long term future. Theres so much out there fighting for entertainment dollars.

Sent from my SM-G930W8 using Tapatalk

[GGG]

Originally Posted by calgaryred

I dont see professional sports being as big in the long term future. Theres so much out there fighting for entertainment dollars.

Sent from my SM-G930W8 using Tapatalk

The next round of rights when Facebook, Twitter, Google and Apple come outbidding will at least give it one more significant boost.

[Tyler]

Still don't see the NHL ever expanding to Europe.

Odd game here or there? Sure.

But there's no way to fix the time zone issue to make it viable for 82 games IMO.

[Erick Estrada]

Originally Posted by calgaryred

I dont see professional sports being as big in the long term future. Theres so much out there fighting for entertainment dollars.

Sent from my SM-G930W8 using Tapatalk

There is only so much money to go around but I don't think professional sports will ever decline or go away. The way we watch it and the way we pay to watch it may change but the NFL, NHL, MLB, NBA, soccer etc will probably get more popular not less with the advancement of statistics, 24/7 access, gambling, etc. Twenty five years ago professional sports drafts happened behind the scenes and now they are massive events. There's only so much entertainment you can get from streaming movies or TV which already heavily saturated and there's always going to be a big market for live competitive sports.

[calgarygeologist]

Originally Posted by Tyler

Still don't see the NHL ever expanding to Europe.

Odd game here or there? Sure.

But there's no way to fix the time zone issue to make it viable for 82 games IMO.

Not to mention the NHL would likely have to make the season a full year if they started shipping teams to and from Europe or China. They would have to add sugnificant travel time to the schedule which would mean a longer season or less games being played.

Imagine the nightmare of a playoff or Cup final with a west coast team and a Euro team or east coast team and China.

[Resolute 14]

Originally Posted by calgaryred

I dont see professional sports being as big in the long term future. Theres so much out there fighting for entertainment dollars.

Professional sports has been big for thousands of years. Literally, thousands of years. It's not going away. In fact, the richest athlete of all time was an ancient Roman charioteer who earned the modern equivalent of $15 billion throughout his career.

[shutout]

There will be in the greater Toronto area a second franchise before Bettman leaves the game. A $1Billion dollar expansion fee that will be split 75-25 with the NHL and the Leafs. Not sure in which area the new team will be located, probably not in the direction of Buffalo, but another team will be added.

[troutman]

I'm not sure why the article spent so much time talking about Saskatoon, which is a completely different situation than Quebec City.

[Resolute 14]

Originally Posted by troutman

I'm not sure why the article spent so much time talking about Saskatoon, which is a completely different situation than Quebec City.

Because "one market got a team and another hasn't yet got a team" doesn't make for a strong argument when trying to push a "NHL dislikes Canada" narrative. So he threw a couple of incredibly flimsy examples in.

[WilderPegasus]

The author is either not very good job at his job or he's carrying the League's water when he does stuff like complain about the costs of AHL teams for Canadian NHL franchises "typically based in the U.S." when only Calgary, Edmonton and Vancouver fall into that category. Toronto, Montreal and Winnipeg see their AHL affiliates in the same market and Ottawa's is a 3 hour drive away in Belleville.

The league is planting these stories as a way to drive support in Canada for another stupid lockout.

[Flamenspiel]

Well, I would say that Quebec is a forgone conclusion and will get a team, they will end up with Ottawa, Carolina or maybe Florida.

[Northendzone]

I have to admit that everytime I read about the nhl expanding to Europe I laugh because I have yet to see a good plan to make the logistics work.

To me you would have to start with something like 5-10 teams at once to make the logistics work. You can’t be going over to Europe for a 1 game roadie. Next try and figure out an expansion draft and trying to find enough quality players.

It is my understanding that most arenas in Europe are 7 to 10 k seats, so you are left with expansion or charge massive bucks.

Imagine how flat teams would be after playing a continental road trip. It would be brutal.

And as mentioned above how do you manage a playoff series or Stanley cup finals.