On other blogs sometimes I have written a series of articles on different topics: NHL Expansion Into Canada, development of the CFL, the World Baseball Classic, etc. On this blog, so far I have written a 2-part article about coronary heart disease and its concealed cure by the health care industry and how it significantly affected the NHL playoffs two years ago. It has come to my attention, especially since I write lots of articles about potential NHL expansion, that a key factor in expansion and development of the NHL is its status in the United States. So from now on from time to time as the topics occur to me, I’ll start writing a new series of articles about the status of professional NHL hockey in the United States and how it is affecting or has affected the league. Here’s the first one.
As mentioned in many articles on this blog, the last NHL expansion was a failure. Before announcing expansion, it was reported in the media and on many websites, that any upcoming NHL expansion was so good, that Seattle, Quebec, second Toronto, and Las Vegas were already considered “done deals” and that all would be admitted to the NHL in 2017 with more expansion to follow. But when the NHL revealed its terms which included a $500 million expansion fee and a $10 million “consideration fee”, interest plunged downward. Of 16 potential applicants, only fanatical Las Vegas and Quebec carried on to the end and Quebec was rejected because the owner was unacceptable.
This may be the worst expansion by a “big 4″ North American sport in history. This may be the first time there was no competitive bidding between rival cities. This may be the first time a major North American sports league had to take what it could get. Even two of its “done deals” failed to bid.
If the “done deal” story was true, the NHL was looking for an expansion of at least 4 teams, with a probable eye to realigning into an NFL-like structure of 2 conferences with 4 divisions of 4 teams, with a probable intention of expanding eventually to a 5 team division of 40 teams. Instead the NHL had to settle for only Las Vegas and could not even realign. Expect more expansion soon to at least 32 teams so that realignment is possible.
So what prompted the NHL to set a $500 million fee which the business world has found unacceptable? The obvious answer is greed. But behind the obvious answer may be status. None of the four major professional sports leagues have expanded for over a decade. The Mortgage Meltdown had dampened enthusiasm for expansion. It seemed inevitable that all four leagues would expand to 40 teams each but the bad economy postponed expansion.
The first tangible sign for a renewed interest in expansion came from the NHL when Commissioner Gary Bettman made a tour in 2010 of the three NHL cities that lost their teams in the 1990s and offered them terms for readmission. Of the four professional leagues, the NHL has shown the most committed interest in expansion.
The long gap between expansions since 2000 when Nashville, Minnesota, Atlanta and Columbus joined the NHL had created loads of rumors of cities desiring an NHL franchise. There were the three teams trying to get back in; Winnipeg was used to solve the Atlanta mess, Quebec is trying to get back in but is stuck at the ownership factor, and now Hartford is trying to get back but by relocation, not expansion. There were the three other “done deals”, Seattle, second Toronto, and Las Vegas. There was frustrated Hamilton and two other failed bidders from 2000, Houston and Oklahoma City. There were potential bids from other markets where hockey is loved; Portland and Milwaukee. There was Kansas City that had built a suitable arena but had no tenant. And any surprise bids from markets not suspected. All were rumored to be just waiting for the NHL to announce expansion.
But the NHL’s greedy terms whittled the last expansion down to just Las Vegas. Only two fanatics were willing to pay the NHL’s $500 million fee. Most of the investment world considers this price unrealistic. And in truth, only the Toronto Maple Leafs, followed by the New York Rangers are considered to be in the price league with the top teams of the NFL, NBA, and MLB. The NHL has always ranked number 4 in terms of status and value in the United States.
It may have been this low status as well as greed that prompted Gary Bettman and the NHL to set this $500 million fee. Since it has been well over a decade since any league has expanded, nobody really knows what the value of a “big 4″ professional sports expansion fee should be. By setting such a high fee, the NHL may well be saying, “We are at least not number 4 any more or the poor cousin compared to the other three sports leagues.” The NHL may be claiming that they have made significant progress in turning hockey into being one of “America’s games” to merit a more expensive expansion fee. Most of the business world does not think so.
Sure hockey has grown in the United States, even in some markets like Nashville that took a while to come around. But the truth is that the NHL is still number 4 and in trying to claim equality with the other 3 leagues by setting a high expansion fee, the NHL cut its own throat as far as expansion is concerned. What to do now? Hold fast to the $500 million fee? But that may mean a long time before the investors accept the league’s expansion fee. That may be a long time before the NHL can collect expansion fees again and realign.
The other alternative is to refund some of the money back to Bill Foley and then set a lower expansion fee. But that is a climb down; it unofficially recognizes that the NHL is still number 4 in the United States.
When Gary Bettman was hired by the NHL to become its first Commissioner, one of his main duties was to raise the status of the NHL in the United States. Bettman has devoted much of his time to this problem. I’ll probably mention some of his other policies in future articles in this series. But at least by the results of the last expansion, while hockey’s status may have grown in the US, except in the hearts of its American fans, it is still number 4.