NHL to take expansion bids from Vegas, Quebec, Seattle, etc. because MONEYYYYYY

The NHL is taking bids on expansion franchises starting July 6, which doesn’t necessarily mean it’s going to expand, but does mean it’s testing the waters. And given the price tag, it’s easy to see why:

That’s kind of aggressive, considering that Forbes estimates the average NHL team to be worth $490 million, and given the markets we’d be talking about here (more on that in a minute), these teams would be below average. But then, the magazine’s team value figures always seem to lag a bit behind actual sale prices — as Forbes notes, there’s a bit of a bubble thanks to the fact that “Wall Street guys like Joshua Harris (New Jersey Devils) and Andrew Barroway (trying to buy a controlling interest in the Arizona Coyotes) are willing to pay a lot of money for hockey teams that lose money.” (It also doesn’t hurt that they can get huge tax breaks on their purchase price.)

The next question, obviously, is where, and everybody from Deadspin to the New York Times is assuming that one of the cities will be Las Vegas. This seems pretty daft from here — Las Vegas would be the second-smallest NHL TV market (ahead of only Buffalo), it’s in the middle of the Sun Belt where hockey franchises go to die, and it has a relatively poor permanent population. (A proposed Vegas team has managed to get $150 deposits on 11,500 season tickets, though those are refundable if there’s no team starting in 2016.) But it does have a new arena going up, and those things are guaranteed gold mines, right?

If Vegas were one team, the other would likely be either Quebec (where telecom giant Quebecor is almost certain to throw its hat in the ring) or Seattle (which has interest but still no solid NHL arena plan). Quebec would actually be the smallest media market in the NHL (smaller than Flint, Michigan!), but it’s in Canada, so maybe that compensates? Also, new arena!

If nothing else, all this means that Glendale should probably feel relatively secure in playing hardball with the Coyotes owners over their lease, since the NHL is unlikely to encourage the team to move to a new city if that would jeopardize a half-billion dollars in expansion fees. And with that, let’s go look as some photos of the under-construction Las Vegas arena:

Yeah, that, um, looks like an arena. With two levels of luxury suites, which I guess is standard these days, but makes for just awful views from the top deck. But hey, not like anyone’s likely to be sitting up there anyway, amirite?


37 comments on “NHL to take expansion bids from Vegas, Quebec, Seattle, etc. because MONEYYYYYY

  1. This is probably like the expansion for 1992-93, where whoever can get the cash fastest gets it no matter what the market.

    Also, don’t believe the division thing, that’s easily fixable.

    My handicapping:
    Las Vegas
    Quebec
    Portland
    Seattle
    Vaughan/Toronto II (put in Western Conference/wherever Chicago is)
    Kansas City

    I would not put it past them to go for 4.

  2. The only reason I think they might not want to do four is that then it reduces the bidding war for these two.

    Speaking of which, has it been reported whether they’re setting a fee and then taking applicants, or actually asking ownership groups to offer up how much they’re willing to pay? I’m kind of hoping for the latter, if only because it would be hilarious mayhem.

  3. My understanding of how NHL business has worked in the past (which isn’t a precedent, of course) is that they include any indemnity fees in the price to avoid anti-trust scrutiny. So variability could either be “how much you’re willing to pay” or “what team is going to get either a few mil (Vancouver) a decent chunk (Montreal) or possibly double the planned fee (Toronto)”

  4. I think that’s only one deck of boxes at the LV arena. It looks like the space below the boxes is a concourse, like in Pittsburgh. We’ll know soon enough.

  5. That $500M price tag does make relocating a franchise seem a lot more preferable. The ATL to WPG relocation fee was $65M I believe.

    If Quebec doesn’t get an expansion franchise (Vegas is a lock), they’ll probably seek out a franchise that’s bleeding money for relocation (ARZ, FLA, CBJ).

  6. Quebec City & 2nd Toronto, just to get the Red Wings back into the Western Conference. But of course it’ll end up being Columbus & like Carolina.
    Cue all the caws that say the NHL will never go east because of the precious divisions, and that it will expand in the west. How many times has the NHL re-aligned? About 35?
    Seriously, Bettman, just…stop. The Las Vegas fans probably thought the $150 was the actual season ticket cost. Hockey doesn’t work in the desert.

  7. Real, actual logic says Quebec, Hamilton/Markham/GTA, and that’s it. NHL Logic says Vegas and KCMO, and keep trying in Metro Phoenix and Metro Miami. Conclusion: Never trust NHL Logic.

    Hell, you could put a team in Halifax and it’ll probably draw better than one in Vegas.

    Oh, and if Seattle, then the Seattle SODO arena idea is deader than dogcrap, and they’ll have to go all-in with Tukwila. So suck it, Chris Hansen.

  8. Obviously Vegas is a lock (as absurd as that is) with the presence of an owner willing to pay the $500 million, new arena and season ticket numbers. I do think either Quebec or GTA have real opportunities with as much of a cash grab as this is. KC hasn’t made any play for a tenant in the Sprint Center since they were used by the Penguins years ago, and even then they didn’t have local ownership, they were trying to woo Lemieux & Co. So I don’t see someone coming up with half a billion dollars for an expansion team. Likewise, for all the talk of Seattle, where Bettman clearly wants to be, there has been speculation that the $500 million is out of any of the proposed owners’ price ranges, particularly with the primarily private contribution that is going to be necessary for an arena. Quebecor has a ton of money and specifically built an arena for this, so they’ve got motivation to spend. The situation in GTA is different than it used to be; for years the Leafs majority owner (primary investor in MLSE) was the Ontario Teachers’ Pension Board, who were going to scream about anything that could even momentarily devalue their richest asset. Now the primary ownership of MLSE is Rogers Communications and Bell (Bell’s stake is split up between the company and their pension fund, but they exercise equal ownership with Rogers). Obviously two massive communications companies who right now share broadcast rights of the Leafs would potentially have incentive to add 82 more games to their channels, and may even reach a deal where one sells their stake in the Leafs and purchases an expansion team (total speculation on my part but I think it’d make sense). And with it looking more and more likely that there could be a second team in GTA within 10 or 15 years, the owners of the ACC would be smart to get the extra 41 games for themselves and prevent a new arena somewhere in the suburbs from popping up and providing competition.

    So our only hope for (some) logic in this process depends on the NHL’s greed. Sounds like a decent bet.

  9. Could part of this simply be to gain leverage in their as yet unfiled lawsuit against Glendale? If, for example, these fall flat because no one wants to shell out $500M for a hockey team, they argue it’s really because the Glendale situation is up in the air?

  10. It seems like if anything it loses the Coyotes leverage with Glendale (“Where you gonna go? Not Vegas, they’re already a lock for an expansion team!”), so I’m guessing not.

  11. Is it me, or does the angle of the second deck look so steep that it will require fans to use seatbelts? My vertigo is acting up just looking at it.

  12. Still Maloofs, yes:

    http://www.reviewjournal.com/sports/hockey/foley-maloof-biz-relationship-sparked-las-vegas-nhl-push

  13. Also, I just wrote up a longer piece about this for Vice, for those interested:

    https://sports.vice.com/en_us/article/the-nhls-expansion-options-mostly-suck-but-at-these-prices-who-cares

  14. If they expand again, ten percent of Canada’s male population will be playing in the NHL.

    Can’t be good for their military.

  15. Halifax is a great city but it is a very small area (even counting Trailer Boys country, Cole Harbour and Dartmouth) it is around 400K people. They may go to a lot of games but that is miniscule in terms of media markets. The origins of hockey are in Nova Scotia so it would be great symbolism.

  16. The NHL has seen how successful Winnipeg is and I’m sure Quebec City will do even better.

    Quebecor runs the arena, they own the network the matches will air on, they own large parts of the press, they own the billboards along the highways on which they can advertise, they own radio networks, they own magazines, they own websites and they own their own production company. They are also the biggest providers of cable TV, telephone, mobile phone and internet service in the province. Their ability and expertise at making money and cross-promoting is AMAZING. They would be in the top half of the league in terms of profits, every year. Just on merchandising and ad sales.

  17. The flip side to Quebec is that you’re getting a very, very marginal increase in TV viewers, if any at all. Viewers in QC still watch the Habs/Bruins/NHL, even if they’d rather their own team. It’d be like adding an NFL team to Omaha or San Antonio, they’d just wear a different hat when watching it. A team in Seattle, LV, or Portland comes with at least a theory of more TV viewers.

    That being said, PKP’s “semi blind trust” *eyeroll* in the company is going to come up as an issue, although the return of the Nordiques would be a political bonanza that would probably help bury the mountains of conflicts in this entire situation.

    Pure Speculation, because it’s fun: Accept 4 bids, collapse two teams. New expansion helps pay for the other teams, and keeps the franchise values from suffering because they’ve paid before the folding.

  18. Halifax wouldn’t make sense, sadly. Not near the corporate support or the ability to build an entirely new arena and pay the expansion fee.

    What would make sense would be some sort of CFL-type level down independent league for Halifax and the other big major junior/AHL towns (Saskatoon, London, Quebec, Windsor, Victoria, etc.) Shame it’s never been tried.

  19. Why would these cities trade the AHL for some new independent league? If anything, more of the AHL teams should just go to Canada.

  20. Because they’d be standalone squads with an identity instead of a rotating door of goons and 4th liners. Canadian markets have tended to show a preference for major junior over the AHL, and my inkling is that’s the reason.

    In any event, It’s idle imagining, not a concrete proposal.

  21. Quebecor might be able to get some regional games (like the Leafs/TSN deal), but they will not get most of the “new” Nords games.

    Rogers owns those rights for the next decade plus.

    I agree that Quebec can work better now than it did 20 years ago, but that is as much because of the new revenue sharing model as anything (ditto Wpg, Nashville, Tampa etc). It used to be very difficult for small and mid sized markets to do anything but lose money unless they had deep playoff runs each year. Now, thanks to RS, a significant portion of all the playoff revenue is divided up amongst the RS receivers.

    One of the paradoxes of NHL expansion is that the once exorbitant fees (like $75m, $90m, even $110m for some of the more recent additions) look relatively meaningless in hindsight. Sure, the Leafs, Rangers, Red Wings, Canadiens etc earned $3-5m a piece from each of those expansions. But they now pay tens of millions annually into the revenue sharing pool (either directly or through reduced playoff retained revenue).

    The owners of the Jackets, Wild, Thrashers and Predators have received several times their original expansion fees in rebates over the years.

    The big clubs might well ask, why are we doing this again?

  22. Quebecor already has French language rights to national broadcasts of the Canadian teams (Saturday, Sunday & Wednesday) so they’d run plenty of new Nords games.

    http://www.theglobeandmail.com/report-on-business/hockeys-french-connection/article15642270/

  23. Joe: They would, but their ‘national’ market en francais is smaller than the population of most NHL host cities… and even that number will be split as a significant percentage of the francophone audience have always and will always follow the Canadiens, not the Nordiques.

    In general terms, their ‘national’ broadcast can potentially reach about 2m francophones (unless the Nords are playing the Habs, of course, in which case that number nearly triples).

    It’s not nothing, but it ain’t New York City either.

  24. JC: “Is it me, or does the angle of the second deck look so steep that it will require fans to use seatbelts? My vertigo is acting up just looking at it.”

    The mountain goats looked at that and thought, “Man, that’s too steep.”

  25. Living in Las Vegas I can tell you firsthand the only professional team sport that will thrive here is basketball. This city is a hard-core basketball town that hosts the NBA Summer League, 4 post-season NCAA conference tournaments (3 at the same time), and several AAU summer tournaments. When the NBA Summer League is in town, it regularly sells out (no secret why its team participation has skyrocketed from 8 teams to 24). I believe if the NBA All-Star Game wasn’t such a cluster, the NBA would have seriously considered expanding here.

    I know only a handful of people who are remotely interested in hockey. Plus, the mere presence of the Maloofs in any ownership capacity is laughable here. Bill Floey is a well-respected businessman here, but aligning himself with the Maloofs wasn’t the smartest thing for him to do. Perhaps the Boyds would have been a better choice.

    What makes the arena situation interesting here is it the lack of dependency it has for an anchor. One would have to wonder how much Foley is willing to pay to lease it, as you know AEG/MGM is going to charge market-rate in using their facility. What about naming rights, sponsorships, etc? How valuable would those truly be? Do fans from other cities travel to Vegas just to see their team play mid-week (if games are held Thursday-Sunday, I believe attendance would spike significantly)? Another thing that hasn’t been addressed is the parking. Hard to use existing parking structures at the hotels when they are already filled by gamblers and hotel guests.

    In my humble opinion, hockey is the wrong sport for Las Vegas, which will adversely affect any chance of the correct one (pro basketball) coming here. Not to mention, there is way too many entertainment options in this city. Every venue is offering some form of entertainment every single night. The competition for the discretionary dollar is beyond fierce, not only in Vegas, but nationwide. Also, the new AEG/MGM arena would make it 4 arenas with a capacity exceeding 12,000 in a 3-mile radius from each other, 3 of which owned by the same company. This doesn’t even include the 9,000 seat Orleans arena, which is literally down the street. What other city has that much indoor arena clutter?

  26. The NHL is unlikely to expand to an eastern city. They want to even out the conferences. The east has 16 and the west has only 14. IF they expand, Vegas is almost a certainty. Whether I think that’s a good idea or not doesn’t really matter, they have the money and they’re supposedly selling tickets. Personally, I think the team would be lucky to last five seasons but perhaps I’m just a cynic. The most obvious choice after that is Seattle. Seattle is a little more complicated because their arena deal is currently tied to them getting an NBA team, which isn’t going to happen any time soon (I quite frankly was pretty stunned the Kings stayed in Sacramento). If Seattle is going to get an NHL team, they’ll have to negotiate an NHL-first deal, with an option for the NBA in the future. Whether they can do that or not, I have no idea, but Seattle is a much better market than Vegas and the NHL is more likely to succeed there.

    I think Quebec would be a great market, I really do, but they’re in a tough spot right now being an eastern team. It’s hard for me to see them getting an expansion franchise unless Seattle falls through. Quebec makes more sense as a relocation spot for either the Coyotes or the Panthers (hockey in Miami is one of the biggest jokes in sports to me, but hey, Tampa’s made it work).

    I honestly believe Hamilton or a second Toronto team is a complete non-starter. It’s simply not going to happen. Buffalo has already raised Cain about Hamilton and I imagine the Leafs aren’t too excited about it either. They already have a pretty good rivalry with both the Red Wings and the Sabres. Saskatoon may also bid, but has virtually no shot because of the small size and the isolation of the market.

    I think there’s a decent chance the Coyotes go back to Phoenix, though I’d be pretty shocked if Glendale doesn’t get their tail handed to them in court. The Suns and the city of Phoenix have been talking about a new arena closer to downtown, and there’s strong interest in luring the Coyotes back, which would be a much better situation for them. I have to admit, I’ve got a bit of a soft spot for the Coyotes and don’t really want them to move. It would be easier to move the Panthers to Quebec because it wouldn’t require realignment, but they’re ensnarled in a crappy lease agreement right now. So hence why I say Quebec is in a tough spot.

    Houston is an interesting market to me. The Aeros were super popular back in the day. I think the NHL could succeed there. Kansas City is another. The Sprint Center is a great venue. The NHL has played preseason games there to sold-out crowds. The strength of both of those cities makes me think Quebec is the only Canadian city with a shot, IMO.

  27. “The NHL is unlikely to expand to an eastern city. They want to even out the conferences. The east has 16 and the west has only 14”
    Conferences are not set in stone. NHL has realigned many, many times. Please go by arena availability & lease deal.

  28. Assuming the NHL does expand, Quebec is an absolute lock to get a team. I will give you 500 million reasons why. They have a first class ownership group (Quebecor — the premier french language media company in North America), a new arena designed for hockey, a fan-base that will (like Winnipeg) sell out every game for the next three years, and THEY ARE WILLING AND ABLE TO WRITE A CHECK FOR $500 MILLION TO THE NHL. Unless they get more 4 new cities bidding for a team, the NHL simply is not going to turn down $500 million from any serious ownership group in a market that can obviously support hockey. If you think the NHL is going to turn down that amount of money, you have not been paying attention to the NHL the past 50 years.

  29. I should have also noted — the NHL makes far more money in Canadian TV rights (with only 7 teams) than they do in America (with 23 teams). I spend a couple of months each year in Montreal and the first time a hockey fan visits Canada it is like a twilight zone episode where you visit an alternate reality where hockey is everywhere and football and baseball are a sidenote. Given that NHL Commissioner Bettman’s whole “hockey in the sunbelt” goal was to build an American TV contract, when the latest Canadian TV rights deal got inked with Rogers at that absurd dollar figure, I figured that would build financial pressure on the NHL to expand north of the border.

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