SBD/August 28, 2014/Leagues and Governing Bodies

NHL Expansion Creating Buzz, But League Faces Unique Obstacles In Different Markets

Bruckheimer has shown interest in bringing an NHL franchise to Vegas
NHL expansion "is going to continue to be a hot topic" because the league is "as stable economically as it has been in years," according to Scott Burnside of ESPN.com. The NHL yesterday denied reports that Las Vegas was a "done deal" to land a team and that the league could expand by as many as four clubs. However, with 30 teams currently split into two conferences -- 16 in the East and 14 in the West -- it is "easy to draw the conclusion that the league could, and maybe should, accept two more teams to provide a balanced setup and schedule." There is "no shortage of potential ownership groups surfacing the past couple of years with eyes on putting" franchises in expansion markets. The fact that expansion fees -- which could run $300M "or more, depending on location -- do not count as hockey-related revenues and therefore don't have to be shared equally with the players also contributes to expansion fever." Sources said that there is "no formal expansion process at this time," and the league is "merely looking at all opportunities that present themselves." No city has been "identified as the next to get a team." Burnside wrote every option floated by the league "has varying obstacles preventing it from becoming reality." There "will always be indemnification issues with expanding into Quebec City and the Toronto area, with teams already existing in Montreal and Toronto" (ESPN.com, 8/27). SI.com's Allan Muir wrote a "viable NHL facility is under construction" in Las Vegas and there "has been a string of potential owners, including Hollywood mogul Jerry Bruckheimer, who are interested in placing a franchise in the city." It is a location that, while "saturated with entertainment options, has no other major league teams to split that particular market." When you look out west, there "aren't many viable options" for expansion "outside of Las Vegas, Seattle and possibly Portland" (SI.com, 8/27).

A MATTER OF TIME? In Toronto, Mike Zeisberger writes NHL expansion is "a question of 'when,' not 'if.'" The issue in its most basic form "comes down to simple math" for the league, both "in terms of a) the number of teams in the league; and b) the number of zeros that follow the dollar signs associated with expansion fees." But there are currently "too many questions remaining on a handful of fronts for the league to have an official expansion framework in place" (TORONTO SUN, 8/28). THE HOCKEY NEWS' Ken Campbell wrote the NHL is "ripe for expansion," but for the league to even "entertain the thought of adding or moving a team two things must firmly be in place." That includes a "well-heeled ownership group that is committed to the long-term and an NHL building in which it can play." Las Vegas will have one, while Quebec City will have two, but the two "most desired destinations in terms of revenues -- Toronto and Seattle -- have one between them." Campbell: "To suggest that anything is a slam-dunk in terms of expansion at this point is pure folly" (THEHOCKEYNEWS.com, 8/27).

NORTHBOUND TRAIN? Conference Board of Canada Senior VP & Chief Economist Glen Hodgson said that an expansion team in the Greater Toronto Area "would likely need to pony up a lot more" than C$100M in order "to please" the Maple Leafs. In Toronto, Josh Rubin cites a source as saying MLSE "would likely want" C$250M to "compensate for the decreased value of the franchise." That amount "would be prohibitively expensive for an expansion team to cover, especially on top" of $400M in expansion fees to the league, and "roughly that same amount to build an NHL-capable arena" (TORONTO STAR, 8/28). Meanwhile, NHL broadcaster Don Cherry believes the "first priority" in terms of expansion is not a second team in the Toronto area. Cherry: "Quebec Nordiques all the way. It’s a no-brainer. They have an arena half built, the greatest fans and so much tradition." Cherry "is skeptical" about the Maple Leafs "getting a cross-town rival." He said, "As for a second team here, sure it would be great and would work. I also think it would be terrific in Hamilton. The problem is, either way it would not hurt the Leafs but hurt Buffalo" (TORONTO SUN, 8/28).

DESERT ROSE: In Phoenix, Dan Bickley writes NHL expansion "would provide a wonderful security blanket for the Coyotes." Expanding to 34 teams "could create" more than $1B "for immediate revenue sharing among the 30 existing franchises." That would "certainly help the profitability and sustainability of the Coyotes." Expansion to Las Vegas, Seattle, Quebec City and Toronto "would also take the most logical relocation destinations off the map, leaving only" K.C. as a "remote possibility." That "would also help assure a long-term future" for the Coyotes in the Valley (ARIZONA REPUBLIC, 8/28).
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