NHL seriously putting expansion team in Vegas, sports world just shakes its head sadly

Las Vegas Black Knights? Las Vegas Black Knights:

A person with direct knowledge of the NHL’s decision says the league has settled on Las Vegas as its choice for expansion, provided organizers can come up with a $500 million US fee.

The person spoke Tuesday on condition of anonymity because details have not been released by the league ahead of its Board of Governors meeting on June 22 in Las Vegas. Quebec City was also considered for expansion.

A second person who had been briefed on the decision said Las Vegas was a “done deal” following the recommendation of the NHL’s executive committee.

This has been in the works for a while now, though no one could actually believe that the NHL would go ahead with adding just a single team (resulting in continued unbalanced divisions), and that it would be in Las Vegas, of all places. I mean, nothing against Las Vegas, but it’s a very small city, and anything but a hockey hotbed, and — you know what, let’s let Nate Silver tell it, as he did in April 2015 and reprinted yesterday at Fivethirtyeight:

The city has had several professional sports franchises (albeit none from the four or five largest North American sports leagues), and it hasn’t supported them very well.

Consider that the city’s Triple-A baseball franchise, the Las Vegas 51s of the Pacific Coast League, had the lowest attendance in the PCL last year.

Or that the city’s professional hockey franchise, the Las Vegas Wranglers of the ECHL, disbanded earlier this year after years of middling attendance and an inability to find a suitable home arena.

The Las Vegas Gladiators of the Arena Football League were relocated to Cleveland in 2007 after five seasons of attendance well below AFL averages. Las Vegas has a new AFL team this season, the Las Vegas Outlaws, but their attendance was poor in their first two games…

If the city has some positives, it also has some negatives, like irregular working hours, middling public transit and abundant competition for the entertainment dollar, which may depress sports attendance.

To their credit, the backers of the Las Vegas NHL franchise, after a monthslong campaign, have gotten commitments from about 11,000 would-be season ticket holders. That sounds impressive until you consider that the Winnipeg Jets sold out their entire allotment of 13,000 season tickets in 17 minutes after the Atlanta Thrashers were relocated there in 2011. Hockey’s a bit more popular on the frozen tundra than in the middle of the desert.

Gary Bettman has spent his entire career as NHL commissioner devoted to the idea that he can increase the value of the league by expanding to areas where people traditionally don’t like hockey, and despite all signs that this was a terrible idea, he’s doubling down on it with this move. At least the other 30 NHL owners will get to pocket half a billion dollars in expansion fees, I guess, but running a league as a Ponzi scheme is … actually, a long NHL tradition, so forget I said anything.

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52 comments on “NHL seriously putting expansion team in Vegas, sports world just shakes its head sadly

  1. So someone’s paying $500mil (apparently all cash, no notes or deferrals) for a team when Atlanta was worth $110,000,000 5 years ago, and when there’s been no solid US growth in that time period? And the Canadian revenue is tickling off?

    1. Call me skeptical, but I have a hard time believing the actual franchise fee will be $500 million.

    2. I agree Steve. And the 11k season ticket depositers took a long time to scare up, comparatively speaking.

      I doubt the other owners will agree to split the pie unless there is a tangible expansion fee, but it won’t surprise me if the actual number is closer to $300m and a hearty promise for the rest (which, I suppose, could be recouped from revenue sharing over the next 20 years… but that leaves the new team in a possible cashflow bind should attendance and other local revenues be even lower than expected).

      Bettman may be blind to what is a largely failed sunbelt strategy (with some successes, it must be said), but the value of each owner’s franchise had dramatically increased during Bettman’s tenure. Whether that remains the case 20 years from now I don’t know, but for the time being he has made the owners a great deal of money. It’s just too bad he has done so much damage to the actual game itself in the process… still, he works for the owners and not hockey fans.

  2. I can appreciate the commissioner’s dilemma. Another hockey team in the desert is crazy, but leaving a $500 million dollar check on the table is eyes-wide-open-dollar-signs-for-pupils-tongue-rolling-out-like-a-cash-drawer-steam-whistles-out-the-ears-coo-coo-for-Cocca-Puffs crazy.

    1. It’s about having events, 41 events a year sandwiched between half a dozen casinos. LV is just a different animal, anyone who never actually lived there wouldn’t understand it.

  3. I have heard 100 different reasons why expansion to Las Vegas is a bad idea, but there is only one reason that matters: $$$$$ Expansion dollars and the value of franchises. I strongly suspect that a bad team like the Carolina Hurricanes or Florida Panthers will be heading to Quebec soon enough and the owners will be collecting a pretty penny for their franchise.

    1. Most likely the case, David, yes.

      The problem with franchise values is that they won’t increase forever. The last 25 years is not necessarily indicative of the next 25.

      And if any league keeps adding franchises in marginal or bad markets just to create a footprint and the illusion of strong demand, they will eventually have too many marginal markets to be supported by the fans in the strong markets, no matter how they work revenue sharing math.

      At some point sports franchise cartels will collapse if they keep expanding to marginal markets. Since all the solid markets are pretty well taken, and since leagues don’t seem to be able to stop expanding… well, it becomes a microcosm of our economy in general doesn’t it?

      1. Every sports league as well as the NCAA know where the problems are and what is the Optimal Number of Teams in each League ( or in the case of the NCAA Conferences), they spend millions on such things as Marketing Research. For example: In the NHL, they knew the Atlana Thrashers were a bigger problem then the Arizona Coyotes, which is why they pushed Mark Chipman ( one of the richest men in Canada) to buy the Thrashers instead of the Coyotes, and move them to Winnipeg. As it turned out they were correct, the growth opportunities in Arizona are greater then in Georgia. The presence of the Coyotes, certainly played a role in ASU picking up Division One Hockey, and UNLV ( University Of Nevada Las Vegas) is looking at it as well. That is certainly a plus for hockey growth in the USA. The NHL is thinking ahead by going with 31 teams ( even if it takes a Decade, when Seattle is ready Seattle will be 32 ( 16 East and 16 West))). As I mentioned before, Quebec City will be the next location for a problem child franchise (like Carolina or Florida). As long as there are Mark Chipman’s and Bill Foley’s ( the owner of the Las Vegas Franchise) willing to buy, things will be okay.

    2. Mark Chipman is nowhere near one of the wealthiest men in Canada. I think you are referring to David Thompson (one of the Thompsons of Thompson-Reuters).

      There is little to no growth in NHL hockey in Arizona – hence the Coyotes ongoing problems. The difference between the Atlanta and Glendale situations are simply that there were no willing owners for the franchise in Atlanta, and the city was not willing to subsidize the Thrashers operation to keep them there. If the Glendale council had been elected in Atlanta instead of Glendale, you can rest assured that the Thrashers would be being paid to play Atlanta to this day.

      The subsidies in Glendale are running out. We’ll see if the Coyotes are still playing there once the subsidies end. I am quite sure they won’t be, and that the league will move them to another location the minute taxpayers stop covering their losses.

      Their continued existence has absolutely nothing to do with “growth” in the Arizona hockey market, unless you count ever increasing subsidies as growth of course.

  4. Wow. This team will lose more money than the Coyotes. I guess the NHL will worry about operating subsidies after the check clears.

  5. The one thing working in the NHLs favour is that the arena is on The Strip so even if half of every games attendance is locals there should be plenty of tourists to fill up the rest.

    And let’s face it – if the Coyotes played in a better location (not suggesting taxpayer funded arena) they’d probably see a boost of a few thousand tickets every night.

    I’m not excited about Vegas and wish the NHL wasn’t expanding but I’m cautiously optimistic for Vegas.

    1. What tourist is going to go to a hockey game in Las Vegas? They could go to a hockey game at home.

  6. As usual, Silver is clueless. None of what he wrote relates to NHL HOCKEY in a STATE OF THE ART ARENA. The Las Vegas area is hardly small, with over two million people, and it’s a huge sports town. And public transit means nothing in the age of Uber, especially in a forward thinking city like Las Vegas.

    As usual, a great idea that will work for everyone gets hammered on this site. Already, the arena has sold every suite but one (including seven “bunker suites” for ONE MILLION dollars per year). They’ll sell out every game vs. every Canadian team except Ottawa and every weekend game as well, all at higher ticket prices than most American NHL teams.

    For the NHL, it really comes down to this: Do you accept being a niche, largely regional sport, or do you think the game can be embraced everywhere. There are sincere arguments for both points of view, but if you believe the latter then expanding to Las Vegas is a no-brainer.

    1. The problem is that nobody with an ounce of knowledge of the business model details of hockey thinks Vegas is a good idea for the long term health of a franchise there. Owners just want free money now and if (i.e. when) the team/market fails later, it’s not really any skin off their noses.

        1. What a great reply. Oh wait… it’s useless. Doesn’t do you any good to ignore the objective and observable struggles Vegas has in being able to build a sustainable market for top level pro sports.

      1. … and probably will. When does the “what you say is what you are” game begin?

        Las Vegas is the 40th largest media market in the nation. It is the 30th largest metro area, if you count it’s surrounding communities (CMA). If we count surrounding areas, though, we also have to count Phoenix, Scottsdale and Mesa in with Glendale, which some commenters declare as unreasonable.

        Here are just some of the US media markets without current NHL teams that are larger than LV:

        Houston, Seattle, San Diego, Portland, Salt Lake, Orlando, Sacramento, Charlotte and Indianapolis.

        Here’s three more who have had NHL hockey in the past: Cleveland, Kansas City and Atlanta (twice). It failed in all three markets, badly.

        Other CMA areas similar in size to LV without teams include Cincinnatti, Milwaukee and San Antonio. Vegas is no slam dunk, in other words.

        The fundamental problems Vegas will have are that – even though it qualifies as a CMA of 2.2m people – it actually operates like a city barely half that size because it is a 24 hour town. At any given time 70% of the population is either working or sleeping – no matter what time you schedule games. Even New York, the city that allegedly never sleeps, doesn’t have that problem.

        The second problem has already been mentioned in this thread: There are staggering entertainment options in Vegas (it is what brings the tourists, obviously). I’m sure there are some people who will like hockey and be willing to pay NHL prices to watch it with some regularity. Just not enough of them, as in Glendale, Carolina, Miami and a few other markets. The idea of marketing this team mainly to tourists is unlikely to work. Tourists may buy tickets when they are in town. They will not buy season tickets or merchandise.

        From a taxpayer perspective though, I am fine with this. It’s a privately funded arena, and the owner has not (so far as I know) sought any taxpayer subsidy to obtain or operate the team. So this business will sink or swim on it’s own merits… just like all businesses should.

    2. Inflation-adjusted median household income has declined 20% in the last 8 years. They were ahead of US average and are now 5% below. Before ACA they had 30% uninsured rate (using the ACA they have made improvement) and poorly ranked health care services (in the bottom quartile of US metro areas).

      So by “forward-thinking” city do you mean things probably cannot get any worse?

    3. The problem with these markets isn’t year one or year two, it is year five or ten–after the sheen has worn off the team and it’s just another entertainment option.

      Las Vegas has a tradition of banding together for these sorts of “civic projects” and there are probably enough “investors” out there to cobble together the franchise fee. But, as stated, the overall fundamentals of the market aren’t good for long term ticket sales. The TV ratings have been very poor PARTICULARLY when teams from big Sun Belt make the Stanley Cup finals–and “we have a team that people from Canada love to watch when they gamble here” isn’t much of a pitch. So outside the cash infusion, this is really more of the same for the NHL.

      It really is unlikely that the NHL will ever be a national sport, which I think most of its fans are fine with.

      Ben, not sure what the Uber thing is about. Typically what public transit does is maximize the number of people per square foot of road. So the idea that 15k or more people show up for an event at the same time in their own vehicle is not a recipe for being able to show up at all.

      1. Then again too….assuming the Las Vegas team REALLY tanks, they could always move to…..wait for it…..QUEBEC!!!!

        By the way, the most successful sports team to grace the strip was a college program. That being UNLV under the auspices of Jerry Tarkanian. Otherwise…barring the team is really competitive, give it 5 years, the novelty will be gone and Le Nordiques will be back on the ice.

      2. Uber’s ultimate goal is self-driving cars, which fit on roads at higher densities while avoiding the threats of terrorism, disease and other types of mass deaths that are inherent in public transportation.

      3. That’s hilarious.

        Only Mr. Miller (if he actually exists) could raise a point about the dangers of disease being communicated via shared use of public transportation while ignoring the fact that the fans on public transportation will be “sharing” the same sporting arena for some three hours plus after their ten minute public transportation commute.

        They say laughter is the best medicine…

        1. Ben Miller undeniably exists, because I have met him. Or *a* Ben Miller exists. I have not definitively ruled out “Ben Miller” being a parody account of Ben Miller, run by Ben Miller.

          1. I stand, corrected.

            BTW, the architect who did Ratner’s arena wasn’t in that class with you, was he Neil?

          1. I took postmodern geometry, where we had to prove that every polygon was congruent with a representation of itself.

          2. Oops…I’m sure your geometry was great, Neil. I was referring to “Ben Miller” and his concept of 10,000 self-driving ubers arriving simultaneously to an arena.

    4. Still wondering if Ben is a parody account.
      One only has to look at Phoenix, Atlanta, Carolina, & Florida to see that NHL does not work in non-traditional markets. NHL needs to be more in Canada where the game is appreciated. I could see the NFL working in Vegas, but not the NHL.
      Just because you can, doesn’t mean you should.

      1. Just to further that some are deluded about hockey in the south, years ago…on another site, had a running chat with someone who was in the tank on the Thrashers. He was talking about how they had oodles of talent…and more in the farm system and that they had a great fanbase in Atlanta. Which of course was BS.

        After the initial honeymoon period, it was found out….these folks could not draw worth jack to the Phillips Arena. Which meant …even if Delta, Coca-Cola, et al were to kick in sponsorships…they were still in the soup. This along with a salary/revenue sharing scheme that would mean some teams would have to have crowds at 120% capacity just to barely break even (this may have changed with the last CBA, but the numbers still were rotten. By the way…the % was mentioned either in Forbes or Fortune years back, as far as what would be needed to cover expenses, etc).

        As bad as the former Thrashers situation was….the Panthers are in EVEN WORSE shape. The pics of a nearly empty arena….in the middle of a match..speak volumes to this point. There are other teams facing this issue, the above are the most obvious examples.

        So again after the novelty…and those in Vegas go back to losing their shirts in the traditional ways they have…we will see a return of Le Nordiques.

    5. I believe this is the first, and likely last, time Las Vegas has been called “forward thinking.”

  7. Outside Tampa & San Jose which I believe break even every NHL team in the south & sun belt has relied on public subsidies and bailouts to stay in business. Just plain Pathetic.

    1. Totally incorrect. Only the Cats and Dogs have required direct public subsidies for team operations.

  8. Isn’t there another desert hockey team just few hours to the south and east, that is flailing and desperate to move? A team that couldn’t scrape up enough fans to make a go of it without large subsidies?

    I know that Glendale and Vegas are two birds of very different feathers, but some comparison seems inevitable.

    1. No comparison between Las Vegas, NV and Some-City-You’d-Never-Heard-Of-Before-They-Got-The-Dogs, AZ is inevitable or, more importantly, relevant.

      1. If the NHL had a really ambitious strategy, they’d go for a championship series or some kind of merger with the KHL in Russia. Adding Las Vegas is only revolutionary because this will be their first poorly supported pro team.

    2. Ralph – it is a good comparison. Phoenix metro is what, 12th, & Las Vegas metro is 29th with half the population size of PM? How many tourists a day are there in LV & how many randomly want to go to a two hour hockey game with so many other competing options? Counting on 6,000+ random tourists to help fill up your arena 41 times a year in a non-traditional hockey market sounds sketchy at best.

  9. I know Bettman only cares about new stadiums being built, public subsidies & expansion fees, but this has the makings of a disaster.
    How is this going to work? 7pm games? Midnight games? 4am games? 41 games a year? Will they get even close to 17,000/ave?
    This totally reeks of beating the Raiders/NFL to the punch.
    This will just be another Phoenix. Such arrogance.

    1. To be fair, the NHL has been looking at this market for some time (as has the NBA, or they did at least, until…) so I don’t think this has anything to do with the Raiders recent dalliance with the community.

      But all your other questions are perfectly valid. They are as likely to get a good crowd at 3am as at 7pm, perhaps more likely at high noon… will they have any “home” fan base or will this be the absolute opposite of the barnstorming team… a home team that expects to rely on the interest of a rotating or ever changing cast of visiting fans?

      Inescapably, people who are watching hockey are not gambling in the casinos and not paying to watch the other events (concerts etc) that casinos put on in their own facilities to lure non-gambling people and non-gambling partners of gamblers specifically.

      I’m just glad that no significant public money has gone into this… there should be no reason to throw good money after bad if/when it does go off the rails.

  10. Sure, give Vegas a shot. If it works, then a few years down the line you’ll be set to move the ‘Yotes to PDX and add an expansion team in Seattle (balanced divisions + Cascadia rivalry like MLS has). If not, then move them to Seattle or Quebec City and go from there.

    But yeah in the meantime this looks like a nutty cash grab.

  11. national hockey leagues expression new team Seattle Portland Milwaukee Kansas city Houston Hartford

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