Bettman: No, NHL isn’t offering expansion teams, and they’ll cost way more than that anyway

Those unsourced rumors about the NHL being about to expand by four teams for $1.4 billion finally got to the point where commissioner Gary Bettman responded to them on Wednesday, and he did so in classic Bettman fashion, both denying that the league is looking to expand, and saying it would want way, way more money if it does:

On Wednesday, Bettman called the report a “complete fabrication,” and took issue with the franchise fees cited in the story — US$1.4-billion, or $350-million per team.

“The part of the story that I found particularly difficult is: suggesting that we would sell four franchises for $1.4-billion is way too low,” Bettman said. “It undervalues our franchises.”

Of course, Bettman could just be saying that, in an effort to make prospective owners (and cities) think that they not only need to put up enough money to grab an available expansion slot, but enough money to make the league think it’s worth their while to expand in the first place. Or the whole thing could just be a trial balloon — hey, let’s hint that we’ll give out expansion teams for a billion dollars apiece and see if anyone bites. There’s really no way of knowing, since the gambit would look the same from the outside either way.

As for $350 million per expansion franchise being “way too low,” well, maybe. The average NHL team was worth $413 million last year, according to Forbes, a number that’s been steadily rising. That’s heavily skewed by big-market Canadian teams like the Toronto Maple Leafs, though — and aside from Quebec, all the likely NHL expansion targets would be smaller markets and in the U.S.

In short: Hey, if Bettman wants to ask for half a billion dollars for an expansion team, he might as well try it — there are clearly a bunch of billionaires out there who just want a team and don’t care what it costs to buy one. And worst case, you just don’t expand, which means forgoing a bunch of quick cash, but also avoiding any more Arizona Coyotes messes, which isn’t the worst thing in the world. Man, is it a good time to be running a tightly controlled monopolistic sports league, or what?

6 comments on “Bettman: No, NHL isn’t offering expansion teams, and they’ll cost way more than that anyway

  1. It’s not so much the franchise fee but rather the fact that there is still a bunch of teams that don’t have their house in order. Why expand to places like Seattle, Portland and QC when there is a good possibility that Columbus, Nashville, Florida or Arizona will wind up in your city before long. Or more to the point, where do the weak market teams relocate to if places like QC, Portland and Seattle are already taken via the expansion route?

  2. “… hey, let’s hint that we’ll give out expansion teams for a billion dollars apiece and see if anyone bites…”

    Well, it worked last time…

  3. TB: If the league expands, it will take the best markets out there (make that potential markets…) as expansion franchises and leave the second tier ones for relocation. One of the side benefits of having an expansion round is that there are losers in the process… and those cities are encouraged to spend hundreds of millions of dollars anyway, because you know, maybe a team might become available down the road (see: Quebec City, which is currently building a single purpose arena absent any promise of a franchise, or Kansas City, which built one and doesn’t have a major tenant).

    A fool and his money, as the saying goes…

  4. The irony is that if the franchises cost $1B, that just about guarantees a public subsidy for the parties that pay that much. Hey, $600M for an arena, $1B for a franchise… How can anyone make money unless there’s a subsidy?

  5. John Bladen:

    If there are enough second tier relocation candidates after you expand by 4 to QC, Seattle, Portland and Toronto suburbs then that’s great. I just don’t see it though. Is KC, Vegas, San Antonio and Houston really much better than the markets that they would be abandoning?

    Maybe it’s just me but I’d take the NBA route and get all my houses in order before considering expansion.

    OTOH, I wonder if this has anything to do with wanting to expand to QC but wanting to even out the conferences without pissing off Detroit and Columbus as well. If you expand to QC then you need 3 WC markets to even it out at 17 and 17. Probably far fetched but that would make sense from a realignment standpoint.

  6. I really don’t think there is any basis for the belief that the NHL would consider expanding by four teams. They have said there is “nothing on the horizon” or words to that effect. But if they do consider it, I can’t imagine they would add more than two teams. I think Bloom is wrong about the four teams… but time will tell. Last time they expanded, they added 4 teams (over 3 seasons I believe).

    Your point about “cleaning up the present” mess is a logical one. However, Bettman has proved time and again he doesn’t care about those markets and believes them to be the owner’s problem (more or less alone – look at what they tried to do to Moyes in Glendale…)

    I believe they look at it like this: “We can get $600m for two franchises now. We can always move the problem children later if we need to, and if we move them to lesser markets, so what? The deal we negotiate to move them (to a market that would never be considered for expansion) will guarantee that taxpayers will pay for them if the hockey fans won’t”.

    Put another way, they can get solid expansion fees for Quebec and Seattle (let’s say. It could be Vegas for all I know, but I think that would be a mistake). Why would they move Florida and Arizona into those markets? Yes, they’d lose less money (or maybe none at all) on operations there. But the revenues earned from operating in those markets will have to be shared with players… whereas expansion revenues do not have to be shared… they stay with the owners. So while it may seem counterintuitive, saving good markets for expansion is a tremendous windfall for the owners. Since the revenue sharing provisions require that money goes to the bottom teams anyway, it’s not like the high revenue clubs would save money by not giving it to Florida and Arizona. They’d just end up giving it to different teams.

    Finally, Like their partners, the struggling owners in bad markets all have signed personal guarantees with the league. They are absolutely required to fund their club’s operation out of their own pocket indefinitely. There is no option to declare bankruptcy or “throw the keys on the table”, though several owners have tried this in recent years. The NHL can just let them bleed until they are ready to pay anything to be let out of the agreement (one of the partners in the Devils recently offered tens of millions to Vanderbeek if he’d simply take his share of the team off his hands… “Not so fast”, Bettman said, and actually prevented that transaction). If they are made personally bankrupt, the league simply revokes their franchise and sells it to someone else.

    Sports owners should be careful what they sign… but then, we all should.