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SBJ/June 11 - 17, 2007/This Weeks News
Expansion talk draws praise and a few gasps
Published June 11, 2007
Several owners and general managers said they support the idea of NHL expansion, but some people question whether it’s a wise move for a league that struggles to draw viewers on national TV and still has several teams claiming financial losses.
Carolina Hurricanes owner
Carolina Hurricanes owner Peter Karmanos said the league and its owners have been open to expansion for some time and the present makes as much sense as any period in league history.
“Our revenues are increasing, the interest in the sport is increasing and there’s enough players because it’s become a truly global sport,” he said. “The league is in excellent shape and if they want to talk expansion, I’m all for it.”
Patrick LaForge, the Edmonton Oilers’ president and CEO, said: “Not too many years ago the idea of expansion would be a very foreign topic. The league was … trying to get 30 teams to survive in the market they were in.”
But he said, “The commissioner has the responsibility to bring business opportunities to the board and have the board explore them on their merit, and I think that is good for us all.”
Several current and former general managers said that hockey’s international talent pool is deep enough to support two additional teams, especially now that the new rules limiting physical play mean smaller players can succeed in the NHL.
“Years ago, I thought there wasn’t enough talent, but look at the expansion teams and the success they’ve had,” said New Jersey Devils president and general manager Lou Lamoriello. “Ultimately, (expansion) depends on the market’s location and commitment. That’s what would have to be satisfied.”
Another owner seemed to express some reservations about adding new teams — not because of talent but because of financial stability.
“We have several teams, including our team, that are losing money operationally,” said Jeff Shumway, the Phoenix Coyotes’ chairman and CEO. “I would like to see the league help us build hockey in nontraditional markets so all of our 30 franchises are profitable before we begin looking at expansion.”
Sports business consultants agreed, saying expanding from 30 to 32 teams might be unwise for the NHL.
“The idea is preposterous,” said Matthew Pace, a partner at the law firm of Duval & Stachenfeld in New York and the former commissioner of Major League Lacrosse. “They’ve had the first strong year of operations in years, and you wouldn’t want to upset the apple cart.”
Other sports business consultants agreed, pointing out that the league’s expansion from 21 teams to 30 teams in the 1990s undermined the league’s economic stability by heightening a salary disparity that had already been brewing.
“There’s a strong argument that the NHL is overexposed already,” said Marc Ganis, president of sports consultant SportsCorp Ltd. “The strategy of expanding into the Sun Belt to create a footprint for national broadcasting has not been successful. Ratings have actually gone down, which has diminished the league as a broadcast property.”
With sources putting the cost of an expansion team at $300 million and the potential to attract a big-name owner like Hollywood producer Jerry Bruckheimer, however, the allure of expansion would be tough for Commissioner Gary Bettman to pass up, Pace said.
“Great ownership groups can be strong and tough to deny,” he added, “and if you’ve got a guy willing to pay $300 million, that could reset franchise values.”