Las Vegas Admission Did Not Solve The NHL’s Expansion Problems

While everyone should be extending a warm welcome to the NHL’s newest franchise, the Las Vegas Golden Knights and wishing them well, let’s not forget that the admission of just Las Vegas represents a serious failure for the NHL. This is not the expansion that the NHL wanted. It is only the expansion the NHL could get.

Before the announcement of expansion last year, there was wild speculation about what would happen. There were newspaper stories and websites all over the Internet that even before expansion was formally announced, Las Vegas, Quebec City, second Toronto, and Seattle were “done deals”. Clearly the NHL expected to move beyond the symmetrical 32 team barrier to which the NFL is committed to and begin expanding to the next symmetrical number of 40 teams.

This implies that not only was expansion on the table, but probably realignment into an NFL structure of 2 conferences with 4 divisions with 4 then 5 teams in each division. Realignment into an NFL structure not only makes things easier for the fans to understand, it also makes it easy to expand the league to 40 teams (5 to a division) and then to 48 teams (6 to a division).

Before the official announcement of the terms of the expansion, there were all kinds of rumors and expectations. Cities were said to be awaiting NHL expansion for years since the last one in 2000 when Nashville, Atlanta, Minnesota, and Columbus were added. During that expansion there were 11 bids submitted including 3 from Houston (who somehow failed to land a team). It was expected to be the same this time.

In 2010, Commissioner Gary Bettman made a tour of the three cities who lost their franchises in the 1990s, Quebec, Winnipeg, and Hartford and offered them terms for readmission, the first sign that the NHL wanted to expand and was probably committed to realignment and becoming a 40 team league. Winnipeg came back by the franchise shift from Atlanta but Bettman was confident that both Quebec and Hartford would seriously consider getting readmitted to the NHL. There was also frustrated Hamilton, fresh from its Phoenix Coyotes misadventure or the second Toronto “done deal”. There was Las Vegas and the other “done deal” Seattle whom the NHL had serious discussions with. There were the failed bidders of 2000, Houston and Oklahoma City. Kansas City had built the Sprint Center in hopes of getting a team. Portland, another hockey hotbed and perhaps the equally good Milwaukee might be induced to submit a bid. And there was the possibility of any surprise bids from other cities. So the NHL announced expansion in rosy expectation.

But the excessive terms, particularly the $500 million expansion fee ruined the NHL’s plans. The terms attracted more public denunciations from investors than bidders. 16 potential applicants were said to be interested, but only fanatical Las Vegas and Quebec stayed to the end. Probably the NHL had wanted an expansion of 4 teams; Quebec and three western cities to made realignment possible, consummate their unofficial commitment to Quebec, and balance up the conferences.

To make matters worse, the Quebec bid was submitted by Pierre Karl Peladeau, who had made many enemies on the NHL Board. The NHL loved the Quebec fan base and the new arena, the Videotron, but could not abide Peladeau, who made public racist statements about one of the NHL Board members, supports a Quebec separatist political party, and is just too untrustworthy to be admitted as an NHL partner. The Quebec bid has been “suspended” indefinitely until Gary Bettman can find a suitable franchise owner.

So the NHL only got Las Vegas in the end, probably the worst expansion in “big 4″ North American sports league history. This may be the only expansion where there was no competition by rival cities for a sports franchise. The NHL is still unbalanced, nor can it realign into an NFL structure. In the end, the Las Vegas expansion is only a baby step.

Still worse is that the Arizona Coyotes are now potentially without a home in the immediate future. A sensible solution would be to shift the team to Quebec but that will only unbalance the league further. And now Hartford, so long dormant has announced plans to upgrade the XL Center and made an open attempt to lure the New York Islanders who have arena problems of their own. The NHL wants Hartford back but does it want to lose the Islanders and their glorious history? And if Hartford is granted an expansion franchise instead, that only makes the conferences more unbalanced.

But the biggest problem is that the business and investor world has said that an NHL franchise currently is not worth a $500 million expansion fee. So what do Gary Bettman and the NHL Board do now? Refund some of the expansion fee money back to Bill Foley and Las Vegas and then announce a new expansion with a smaller admission fee, more in tune with the market value of an NHL franchise, or do they keep their $500 million fee, announce more expansion and wait in vain for bids that may never come?

 

At the awards banquet, Bettman claimed that the NHL is no longer interested in expansion. Obviously they have to revise their strategy. Both options could result in an embarrassing loss of face for the NHL. Refund money back to Bill Foley and set a cheaper expansion fee means a climb down. And holding to a $500 million expansion fee resulted in only two bids by fanatics with no competition between rival cities. That’s humiliating enough. What if expansion were announced and NOBODY bid?

But a 31 team NHL is no more suitable than a 30 team league and this holds true for both the NBA and MLB as well. All three leagues have to get to at least 32 teams and realign into an NFL structure for future development. And in the NHL’s case there is pressure on them to bring back both Quebec and Hartford and balance the conferences. For added spice, there is also the ugly Arizona Coyote situation that could mean a franchise shift.

The admission of Las Vegas is not the end of the NHL expansion but only a transitory phase, further complicated by the situations in Quebec, New York, and Phoenix. The dust has definitely not settled. The admission of Las Vegas is only the end of a bad expansion episode. The real drama has yet to occur.

 

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12 thoughts on “Las Vegas Admission Did Not Solve The NHL’s Expansion Problems

  1. If they had gone for a 250 to 350 mil expansion teams they definitely would’ve gotten a few more cities on board, where spending 500 mil for a team isn’t worth it

  2. Thanks for replying Ki. A few years ago when Jim Balsille tried to move the Coyotes to Hamilton, his offer was around the $250 million mark. Based on Balsille being a true representative from the business world, your estimate would seem to be accurate.

  3. And like you said now how can you ask for less? Maybe wait 5 years and ask same amount. and with inflation it will work out eventually.

  4. Well Josh you are right. The NHL is caught between a rock and a hard place. They have to hope for fanatics and suckers or hope the business world “sees the light” and accepts a $500 million expansion fee. The problem with waiting is that it holds up realignment and further expansion. For the right price, there is probably lots of interest in getting an NHL team, but the NHL’s greedy terms deflated everything including the fun and anticipation that usually accompanies expansion. If I remember correctly, the last NHL expansion fee in 2000 was $80 million which produced 11 bids so to jump to more than 6 times that figure was very reckless and unrealistic. And according to Forbes list of the most valuable sports franchises in the world, there is no NHL team listed in even the top 50.

    • Another issue is overcoming the idea that it would dilute the talent pool. however i believe that hockey has the great room for expansion other than soccer/football it has more countries that play it. with less high end leagues worldwide. I think that 40 is totally doable however they need to figure out if hockey is going to work in some markets. And some of those teams are out east. They are bringing the rest of the league down. if like 5 teams if moved would help the league make money.

      • Thanks for replying Josh. Obviously you haven’t read the many articles I’ve written on this blog about what I consider the main problem in international hockey, the inability of the NHL and the “big 7” countries to expand the quality of hockey elsewhere, in particular raising the standard of the dozen “B Level” countries (now joined by surprise, surprise South Korea) who have been stuck at that level of play since before the famous Canada- USSR match of 1972. In the four decades since then, virtually nothing significant has been done. Contrast that with international curling where countries who are relatively new to the game like China, Russia, and Japan can now compete credibly with the established countries like Canada and win championships for both men and women. Curling has succeeded where hockey has failed.

        As you have noted in your comment, every time the NHL expands, the critics claim that the quality of play gets watered down. This would not happen if the NHL and the “big 7” did something to raise the standard of play in the “B level” countries. There is a huge glut of hockey talent in them being lost and not developed, probably more than enough with the “big 7” to stock 10 new NHL teams and beyond to 48. If these countries were developed, there is ample enough talent to stock many NHL expansions. So check out these articles if you are interested in this topic.

        As for which cities to choose for NHL expansion, you can check out probably my most popular article I have written on this blog, which is about the 10 cities that should get an NHL franchise in the new 40 team league. All of them love hockey so there is no problem selling the game. Las Vegas was not one of them so my idealized future NHL will not match what will actually happen. To be brief these cities were Quebec, Hamilton, Seattle, Portland, Milwaukee, Hartford, second Montreal, and in the long term Third southern Ontario, Spokane, and Saskatoon. And every Canadian city when it gets big enough is probably a winner.

        And there are other American cities that I would not rank in the top 10 but are good enough to take a chance on with a reasonable shot of success. These include San Francisco, Oklahoma City, Salt Lake City, second Chicago, Baltimore, Houston and Kansas City. So check out these articles if you are interested.

    • Well Planner, if memory serves me correctly, first there were the four cities that got accepted, Nashville, Atlanta, Columbus, and Minnesota. 3 different bids from Houston were rejected as was one from Oklahoma City. I’m not sure who the other 3 bidders were though I have seen Hampton Roads/Norfolk mentioned. It would not surprise me if Hamilton made a bid, but I have not been able to find out exactly who the other rejected cities were.

      • I did read the article you misunderstood me. I was saying not that it would dilute the talent pool but to over come the perception that it would. There are so many countries that play that there plenty of players. And you would likely find more diamonds in the rough. I believe that it can but it does have to go in stages. However the relocating verses the expansion was do to teams that can’t make a buck. Like why Fla and TB are in the same division as Toronto and Montreal not Washington and Carolina. And Carolina has its own issues. my point was that if you fixed the broken teams to better locations you may have more money in the league in general. And that would help the Arizonas of the league. And the would help fuel growth.

      • also i dont a second Toronto or Chicago ever. these are two teams that have been bad for a long time (prior to 2010 for chicago) if you add new teams the franchises will have to be better. plus look at the cubs they were bad for nearly every year of the 108 year drought. white sox could and did win who does the city support the cubs. those franchises want it that way. spend no money but make plenty of it.

  5. Since I come from Toronto, Josh, I have to disagree with you. Southern Ontario is so fanatical about hockey that I believe that it might support 2 new teams. Since the 1980s, Hamilton which is just 40 miles from Toronto has tried to get a team. They bungled their bid in 1990 and the front running city lost its potential NHL team to Ottawa. Hamilton and Quebec are Gary Bettman’s Canadian headaches. Hamilton is so potentially good an NHL franchise that I’ve seen reports where it could be ranked as high as third in value in the whole NHL behind only Toronto and the New York Rangers. Other potential franchises are second Toronto, Kitchener, London, and Oshawa. The only problem is compensating greedy Toronto and Buffalo which do not want to share the rich southern Ontario market. Second and maybe even third southern Ontario teams are guaranteed money makers.

    A second Chicago team would be much more iffy and that is why I don’t rank it in my top ten. But metropolitan Chicago has the population to support two NHL franchises like they support two MLB teams. Adding a second Chicago team is not an automatic winner like second southern Ontario. It’s a 50-50 proposition but it’s an American expansion that I could live with and take a chance on.

    • You didn’t understand the city may support it however the franchises would have to make changes and spend money to win as just making hand over fist.

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