NHL Set to Expand
- Thread starter Peter D.
- Start date
bustaheims
Active member
Frank E said:
Well, I assume the bid doesn't require applicants to already have all the financing in place, just some sort of evidence that they'll be able to. The $500M figure we've seen is more of a media estimate than anything else - though, it's probably pretty close to reality. The non-refundable part of the submission fee does seem a little odd, but I imagine it's a pretty standard practice.
Kin
New member
Frank E said:
I can. It's a small market, doesn't expand the fanbase, doesn't add much in the way of media coverage and doesn't address the east/west imbalance. If all they're looking for is the expansion fee, sure, but other than that it doesn't do much for the league as a whole.
Frank E
Active member
Nik the Trik said:
With over 1 million people in the Quebec City area, it's similar to Carolina, Ottawa, Calgary, or Columbus...bigger than Edmonton, Buffalo and Winnipeg.
So certainly not unprecedented in terms of market size.
And like I said, pretty enticing with billion dollar company ownership and an NHL rink almost completed.
hockeyfan1
New member
I find it ironic that at a time when expansion is coming back to Quebec, it's owner, Pierre Karl Peladeau, leader of the Parties Quebecois, is a self-proclaimed separatist.
It reminds me of the days of the Quebec Nordiques during those heady decades when separatism was rearing it's ugly head. When the Quebec Nordiques and Montreal Canadiens fierce rivalry was seen as representing separatists vs the rest of the country.
It would be with some slight trepidation that I would welcome the revival of a Quebec City (les Nordiques?) hockey team once again at a time when the Parti Quebecois could be rearing it's ugly separatist head yet again.
Here is an old article (but potentially relevant):
Peladeau?s case, his political leanings could hurt the Canadian dollar, either in the short or long term. That would cost NHL owners money, plain and simple, and could cost the owners in Montreal a boatload of money.
Will the current 30 owners want a man in their midst whose every political move could devalue their own franchise? A man whose market would slot in as one of the smaller ones in the NHL, and a decent candidate to be on the wrong side of revenue sharing within the decade?
http://www.sportsnet.ca/hockey/nhl/is-a-separatist-owner-good-nhl-business/
It reminds me of the days of the Quebec Nordiques during those heady decades when separatism was rearing it's ugly head. When the Quebec Nordiques and Montreal Canadiens fierce rivalry was seen as representing separatists vs the rest of the country.
It would be with some slight trepidation that I would welcome the revival of a Quebec City (les Nordiques?) hockey team once again at a time when the Parti Quebecois could be rearing it's ugly separatist head yet again.
Here is an old article (but potentially relevant):
Peladeau?s case, his political leanings could hurt the Canadian dollar, either in the short or long term. That would cost NHL owners money, plain and simple, and could cost the owners in Montreal a boatload of money.
Will the current 30 owners want a man in their midst whose every political move could devalue their own franchise? A man whose market would slot in as one of the smaller ones in the NHL, and a decent candidate to be on the wrong side of revenue sharing within the decade?
http://www.sportsnet.ca/hockey/nhl/is-a-separatist-owner-good-nhl-business/
Kin
New member
Frank E said:
Right. So it's a similar market size to a bunch of markets, none of which the NHL probably sees as ones that they're super eager to emulate. Ottawa, for instance, claims to lose money in basically every year where they don't make the playoffs despite very good attendance.
So, again, there's nothing appealing about the market size, it doesn't really expand the fanbase and it doesn't address the east/west imbalance.
I'm not saying it won't happen, especially if it's one of only two places that submitted a bid but I can absolutely see the NHL far preferring to go into Seattle or another Western US market.
Frank E
Active member
Nik the Trik said:
The NHL seems to have success in northern markets, more so than southern ones. I think it makes some business sense to go into those northern markets that don't have a football or basketball competing for entertainment/sports fans.
Some of the least valuable franchise are in the biggest population markets (Florida, Arizona), so chasing a population centre isn't always the best way to expand the NHL fanbase. Having said that, Seattle is a big market, and does seem like a decent fit given its more northern geography.
And expanding the fanbase is all good and fine, but cater to the low hanging fruit too and serve your current fanbase that is underserved in some areas at this point, at least in the short term. And really, if this process shows us anything, none of the bigger markets seem to feel as confident as you are that there's a good business case for a franchise...at least at the estimated current cost of an expansion franchise...and without public money for an arena.
I don't think the East-West imbalance thing is really relevant to the bigger picture of putting franchises where there are markets that will buy expensive NHL tickets.
Kin
New member
Frank E said:
Why? Does it create new fans? Does it generate a ton of revenue? Are those teams big road draws? Not really. What does it actually do for the business of the league?
Frank E said:
It is the best way, there's just no perfect way or a way that does it easily and instantly. Who in Quebec right now isn't a hockey fan that will be if there's another team around? Who in Quebec right now isn't watching hockey? Most people watching hockey in Florida or Arizona right now are probably only doing so because of a local team while the Canadian market is about as saturated as possible.
There's a reason the people running the NHL have been so lukewarm on putting teams in Canada. It just doesn't grow the business in any meaningful way.
Frank E said:
Except I didn't say it would be good for those markets. I'm a firm believer in sports teams having largely negligible effects on local economies. What's good for the market isn't necessarily the same as what's good for the NHL though. The NHL wants to attract new eyeballs. Putting a team in Quebec won't create new fans, it won't do anything to help the flagging Canadian TV numbers.
All it will do is add another lower-middle class team to a league that has a ton of them. It might be worth the trade-off to the league if they get half a billion in an expansion fee but it doesn't really do anything for their business.
Frank E said:
The bigger picture is, if I'm an NHL owner, doing what's best for the league as a whole and me specifically. If I own the Carolina Hurricanes, I don't care if people will buy tickets in Quebec City if none of that comes back to me and my share of leaguewide revenues is further splintered.
Frank E
Active member
Nik the Trik said:
It capitalizes on the available market and entertainment dollars. It turns those casual Saturday night hockey fans into season ticket holders and their kids into sweater buyers. Yes, that generates revenue. I've argued this point before, the NHL competes with a lot more than just other NHL teams...it competes for local entertainment dollars.
Road draws? Well, I guess that'll take some time with any new team.
Nik the Trik said:
Do you want me to put a number on this? Are you serious? You think that every entertainment dollar available to the NHL in Quebec City has been exhausted because there's another team 2-3 hours away?
Nik the Trik said:
That's a very sweeping statement. I say you're wrong. So does Quebecor and the City of Quebec who just put hundreds of million dollars on the line.
Nik the Trik said:
Is that right? Which bids from cities in Canada have been turned down? The Canadian teams generate a disproportionate 30+% of league revenues on 7 teams.
Canadian teams have certainly grown the business, and have certainly shown strong revenues no matter what Melnyk has sold you on. The fact that he can't turn good revenue into profitability is his problem, not the NHL's.
Nik the Trik said:
Well, attracting new fans is great and all, but capitalizing on current ones is just as important. And again, putting another team in Quebec will create more hockey fans than there are there today.
Nik the Trik said:
I don't know, adding another $150 million per year worth of revenue does something for their business. And there is no trade-off here, it's not Quebec or Kansas City...Kansas City can't make a business case for an NHL team at this point, but Quebec can. I'm sure the NHL would love to see expansion applications from bigger US markets, but there just doesn't seem to be an appetite...and even then, I'd argue that maybe the league doesn't want another Arizona or Atlanta issue on their hands, even if going there is the "best way to grow the fanbase."
Nik the Trik said:
I'm not sure I understand what you're saying here....If you own an NHL franchise, you should probably care about the league putting teams in markets that they can be profitable in. Your franchise value depends on it.
GhostofPotvin29
New member
On the issue of Quebec City...this is from 2009:
http://www.conferenceboard.ca/press/newsrelease/12-02-09/nine_canadian_cities_can_support_national_hockey_league_franchises.aspx
http://www.conferenceboard.ca/press/newsrelease/12-02-09/nine_canadian_cities_can_support_national_hockey_league_franchises.aspx
Redleaf
Active member
No. No. NO. Do NOT bring Hamilton back into the equation (at any level of conversation). I've been down that path enough times to know that it always ends at a 100-ft high, stone wall with broken glass atop, and 'no admittance' signs plastered all over it. Hamilton had its chance at securing an NHL team, and got screwed over more than a few times, and in agonizing fashion.
hockeyfan1
New member
Here is an article (from 2014) on economists (now non Conference Board of Canada) explaining why Canada can support two to three more teams (NHL expansion):
[Mario]Lefebvre, who no longer works for the Conference Board, said in an interview that cities like Hamilton and Quebec City meet basic requirements including adequate income levels, population base and corporate presence.
But potential franchises in these smaller markets would require dedicated owners and would likely face tough times in the event of economic shock waves such as a falling Canadian dollar.
"As has been the case with the Ottawa Senators, there will be deficit years if the team doesn't make the playoffs for a few seasons," Lefebvre said. "The owner can't just pack everything up the first time this happens (a deficit year)."
Lefebvre said he doubts the Canadian dollar will ever fall as low as 62 cents US, which it did in January 2002. He believes the current level of roughly 90 cents US would be workable. Most professional sports teams operate in U.S. dollars.
Quebec City has already begun construction on a new NHL-calibre arena set to open next year. The city has said it hopes to attract a team ? expansion or otherwise ? to play there.
Lefebvre argues that Quebec City residents are better off now than they were when their city lost the Nordiques to Denver in 1995. Lefebvre quoted Statistics Canada figures that indicate the average per-capita income has grown from $17,500 in 1995 to $28,903 in 2012. He says that's better than Montreal, where the income per capita in 2012 was $26,722).
Lefebvre said that suggests Quebec City locals can afford to buy tickets. Corporate sponsorship, he added, will present a different challenge.
"You will have to work a lot harder to make sure your private boxes are full, when compared to Montreal and Toronto where there are waiting lists," said Lefebvre. "For Quebec City and Hamilton, it will take a marketing department that will have to work a lot harder."
Andre Richelieu, a sports marketing professor at Universite Laval, agrees.
"The (Montreal) Canadiens have become, out of necessity, the team of the province," Richelieu said. "There would be a huge amount of work to be done when it comes to marketing and corporate boxes in order for the team to survive."
On another Ontario expansion franchise:
Lefebvre said there is no doubt that Hamilton, a city that has long been linked to NHL franchises in financial trouble, can sustain a team.
"Purely from an economic standpoint, it can't Lefebvre said.
Being in proximity to Toronto means having access to the big businesses which could become eventual sponsors or season ticket owners for a new franchise.
Another question revolves around a fee to compensate the Buffalo Sabres and the Toronto Maple Leafs, who currently claim the territory.
"We did not tackle this question," Lefebvre admitted. "First of all, we don't know (the amount) and secondly, would it be such a prohibitive price that it would keep any new franchise from coming over to Hamilton?"
As for another franchise in the Toronto area, the gambit would be a long-term one. Currently, none of the major Canadian cities with an NHL franchise ? Vancouver, Toronto or Montreal ? have the population to sustain a second one.
By 2035, however, the population of Toronto is forecast to grow to 10.5 million. Factors to be considered, however, include start-up costs as well as financial compensation for the Leafs. The board estimates the entire bill would be in the neighbourhood of $1 billion.
Read it all here:
http://www.cbc.ca/news/canada/hamilton/news/economists-say-canada-could-support-three-more-nhl-teams-1.2610461
[Mario]Lefebvre, who no longer works for the Conference Board, said in an interview that cities like Hamilton and Quebec City meet basic requirements including adequate income levels, population base and corporate presence.
But potential franchises in these smaller markets would require dedicated owners and would likely face tough times in the event of economic shock waves such as a falling Canadian dollar.
"As has been the case with the Ottawa Senators, there will be deficit years if the team doesn't make the playoffs for a few seasons," Lefebvre said. "The owner can't just pack everything up the first time this happens (a deficit year)."
Lefebvre said he doubts the Canadian dollar will ever fall as low as 62 cents US, which it did in January 2002. He believes the current level of roughly 90 cents US would be workable. Most professional sports teams operate in U.S. dollars.
Quebec City has already begun construction on a new NHL-calibre arena set to open next year. The city has said it hopes to attract a team ? expansion or otherwise ? to play there.
Lefebvre argues that Quebec City residents are better off now than they were when their city lost the Nordiques to Denver in 1995. Lefebvre quoted Statistics Canada figures that indicate the average per-capita income has grown from $17,500 in 1995 to $28,903 in 2012. He says that's better than Montreal, where the income per capita in 2012 was $26,722).
Lefebvre said that suggests Quebec City locals can afford to buy tickets. Corporate sponsorship, he added, will present a different challenge.
"You will have to work a lot harder to make sure your private boxes are full, when compared to Montreal and Toronto where there are waiting lists," said Lefebvre. "For Quebec City and Hamilton, it will take a marketing department that will have to work a lot harder."
Andre Richelieu, a sports marketing professor at Universite Laval, agrees.
"The (Montreal) Canadiens have become, out of necessity, the team of the province," Richelieu said. "There would be a huge amount of work to be done when it comes to marketing and corporate boxes in order for the team to survive."
On another Ontario expansion franchise:
Lefebvre said there is no doubt that Hamilton, a city that has long been linked to NHL franchises in financial trouble, can sustain a team.
"Purely from an economic standpoint, it can't Lefebvre said.
Being in proximity to Toronto means having access to the big businesses which could become eventual sponsors or season ticket owners for a new franchise.
Another question revolves around a fee to compensate the Buffalo Sabres and the Toronto Maple Leafs, who currently claim the territory.
"We did not tackle this question," Lefebvre admitted. "First of all, we don't know (the amount) and secondly, would it be such a prohibitive price that it would keep any new franchise from coming over to Hamilton?"
As for another franchise in the Toronto area, the gambit would be a long-term one. Currently, none of the major Canadian cities with an NHL franchise ? Vancouver, Toronto or Montreal ? have the population to sustain a second one.
By 2035, however, the population of Toronto is forecast to grow to 10.5 million. Factors to be considered, however, include start-up costs as well as financial compensation for the Leafs. The board estimates the entire bill would be in the neighbourhood of $1 billion.
Read it all here:
http://www.cbc.ca/news/canada/hamilton/news/economists-say-canada-could-support-three-more-nhl-teams-1.2610461
LuncheonMeat
New member
bustaheims said:
To add to that, apparently any costs involved in the NHL's due diligence for a particular applicant comes out of that $10 million as well.
I was in Seattle for a concert last night and happened to run into one of Paul Allen's buddies at a restaurant prior to. He's a Vulcan employee, and top-level management, specifically involved with Allen's sports franchises. He mentioned something interesting about Chris Hansen, one of the people of interest in Seattle's bid for hockey (and basketball). He thought the biggest issue with Hansen's bid was that he didn't grease the appropriate wheels in his process. He skirted some important people in the city and pissed them off in the process. I believe his bid was to bring a franchise to Seattle proper. As a result, the city's making it very difficult on him, and from what I've read it's been a frustrating process.
The other 2 Seattle bids are for outlying cities. Tukwila would be well supported, but would be akin to the Senators playing in Kanata, and without the public transport to get people to/from games. Plus, there's Toronto-caliber traffic the entire way trying to get to a game from the Seattle area. Not fun! Bellevue, the third city, is where my business is located. It's definitely not a big city, and a NHL franchise here would be crippling in terms of traffic. Heck, it's almost there already.
I really Seattle makes a lot of sense. The fans here are rabid, and there is NO shortage of money here. There are a ton of Canadian transplants with all the tech in the area, and a lot of hockey fans. Portland, OR is 2.5 hours south, and I can get to Vancouver, BC in under 2 hours. I think that adds to the draw of the area as well.
Our county city council is urging a group effort between the 3 groups, and I think if that happens they will have the support of the city. And I think that support is what threw a wrench into the bidding process this week.
Kin
New member
Frank E said:
And nobody in Quebec City is a Habs fan? They don't buy Centre Ice? There are a ton of people who see hockey being broadcast 24/7 on Sportsnet and don't watch but would throw down thousands of dollars on season tickets? A lot of that revenue is just out of one pocket and into another.
Frank E said:
So 25 years for Ottawa isn't enough time? Almost 40 years for Edmonton?
Frank E said:
No. Not every dollar. But the amount of new dollars in Quebec isn't all that robust. Especially not when compared to a potential American success story like Seattle or Portland or Milwaukee.
Frank E said:
Man, it's a good thing cities have never made poor financial decisions when it comes to sports franchises then.
But again, I'm not saying this won't be good for the people who own the team in Quebec. I just doubt it's benefit to the NHL as a whole.
Frank E said:
Sure. Chiefly based on the teams in gigantic market places with long established fanbases like Montreal, Toronto and Vancouver. Using those as arguments for Quebec City as a future economic powerhouse is as deluded as saying that because a team in New York City makes a ton of money, a team in Rochester will as well.
Don't be obtuse. I'm not looking at the bigger market Canadian teams here. I'm looking at teams like Ottawa and Winnipeg and similar markets that have struggled to generate the sorts of revenues you're talking about.
Frank E said:
Says who? You? Hockey is pretty deeply ingrained in this country and nobody struggles for exposure to it. I'm pretty sure this country has done a pretty good job of producing hockey fans even in cities where there is no team NHL team. I'm guessing if I walk into a bar in Victoria or Saskatoon or Halifax, I might find some hockey fans.
Frank E said:
That 150 million number is pulled completely out of nowhere and isn't anywhere close to being realistic. Forbes only had 6 teams last year generating that kind of revenue: Toronto, New York, Montreal, Vancouver, Chicago and Boston. Imagining that Quebec City will join those ranks isn't just naive, it's delusional.
Smaller Canadian markets like Ottawa and Edmonton are, according to Forbes, around 115-120 million in revenue and Winnipeg, which is probably the best comparable here, was at 102 million. So at best you're exagerating by 20%, more realistically you're at a third.
Quebec City isn't Winnipeg either, with a pretty large swath of territory that doesn't already have a NHL team people root for. Canadiens fandom is pretty deeply ingrained in Quebec. A New Nordiques would face a lot of the same challenges that the old Nordiques faced in terms of asking people to put their already established allegiances on hold to watch a new team. The Jets could come into Winnipeg and immediately be all of Manitoba's team for TV purposes and probably have a ton of appeal all over the prairies. Where would Quebec City's reach end? How many Montrealers would become Nordique fans? What's their TV market outside of people who would go to games?
You can't pretend like the league hasn't generally been indifferent to the idea of putting a second team in Southern Ontario for exactly these reasons. You're selling ice to people who live with a ton of ice outside.
Frank E said:
If I'm a NHL owner, I care far more about my ability to be profitable than I do about an expansion team's and adding a mid-level revenue generating team in Canada does nothing for the franchise value in Miami or Raleigh while splitting the pie. It won't drive the TV deals. They won't be a good draw for national TV numbers if they make the finals.
Nobody is going to look more favourably on buying a team in one of those markets if Quebec City is in the league. What would be the rationale?
hockeyfan1
New member
Zanzibar Buck-Buck McFate said:
Les Nordiques Parte Deux
The Las Vegas Vipers. Seriously, I like the sound of the Las Vegas Knights.
Kin
New member
Zanzibar Buck-Buck McFate said:
Considering that the NHL probably very much wants to balance the conferences and very much doesn't want to have to bone over Detroit or Columbus in order to do so, I could see them accepting Vegas and rejecting Quebec City in the hopes that some sort of thing could get worked out in Seattle in a few years time.
The NHL apparently invited one of the Seattle groups to their HQs in New York on Tuesday, so unless it was just to scold them for not ponying up the cash I'd say the NHL is still very interested in working something out there.