Does Relocation Help Today’s NHL?

Posted: November 13, 2013 in NHL
Tags: , , , , , ,

Gary Bettman

 

May 16th, 2011. The 2011 NHL Stanley Cup Playoffs were well underway, and most of the hockey world’s focus was on the 4 teams left in the running, the Lightning, Bruins, Canucks and Sharks. But elsewhere in the NHL, a new development was taking form.

The Phoenix Coyotes were in year 3 of their bankruptcy fiasco, and were still struggling mightily to find a buyer to keep the team in the desert. Matthew Hulsizer, a Chicago-based investor, was at the time in negotiations with the NHL, who controlled the Coyotes at the time. During those negotiations, as well as before, the group called True North Sports and Entertainment, run by Mark Chipman and Dave Thomson, were waiting in the wings to try and purchase a team to be moved from financial peril, to Winnipeg, Manitoba, a city rich with hockey-hungry fans. They were looking at the Coyotes (who previously played in Winnipeg as the Jets for over 20 years), but a new opportunity fell into their laps.

The Atlanta Thrashers owners were abandoning ship, after the bucket brigade couldn’t get their sinking financial situation under control.

TNSE saw this opportunity, and within the next few days, TNSE bought the Thrashers, and the team was ready to move north from Atlanta to Winnipeg, hinging on a vote from the NHL Board of Governors, which days later passed, and the Winnipeg Jets as you know it today were born.

The Phoenix situation was solved 2 summers later, when Renaissance Sports & Entertainment, led by George Gosbee, purchased the team, which ended a 5 summer long grind-it-out war of attrition with the city of Glendale, among other legal bodies. However, during those 5 years, rumors about relocation of the Coyotes were rampant. Many suggested and maintained that the NHL was finally going to give in and leave the desert, and that cities like Seattle, Quebec City (former NHL home of the Nordiques), or Kansas City could land the team.

But it never is that simple to just pick up and move.

Both NHL Commissioner Gary Bettman, and Deputy Commissioner (and denier of the sky being blue) Bill Daly firmly maintain that no one is moving, and that the NHL will remain with the current 30 team format (more on that next week). They do have good reason, also.

The process of moving an NHL team, as described by the Thrashers’ demise, is a long and convoluted road, contrary to popular belief.

First, the current owners must have a reason to be leaving either the team itself, or the city as a whole while maintaining control of their team. Examples include fiscal losses of massive quantities (for the Thrashers, they claimed losses north of $120 million dollars), lack of fans in the stands (Thrashers averaged around 13,500 fans per game between 2009-11), or arena troubles (look at the Sacramento Kings situation from the NBA).

Once those claims are made, the owners (current or new) need to find a city who wants a team, and has a venue of NHL quality standards. For example, when the Thrashers were picking up to move, the new owners had Winnipeg and the MTS Centre, which was reviewed and approved fit for NHL hockey. On top of that, the ownership group would have to come up with a relocation fee, that has a case-dependent amount.

Then, after all proposals are made, and after all other options to keep the team where they currently residing are exhausted, the proposal of ownership change (if necessary) and relocation are brought before the NHL Board of Governors.

Most, if not the entire process, serves as a deterrent to relocation, and gives more than ample time for people to step in and attempt to keep the team in it’s location.

The situation in Phoenix wasn’t settled with relocation, because they found new owners who wanted to keep the Coyotes in Phoenix, all other details ignored due to an interest in time. Even though these guys were the last ditch effort, the NHL was going to listen to these guys before they look at the groups from Seattle or Quebec.

If you ask my opinion, should the ‘Yotes have stayed in Glendale or left, I would have had them leave, for the best interest of league finances and hockey fans, to Quebec. The team has reported losses in 8 figures for quite some time now, and also have drawn on average 12,630 fans per game since 2009 (lowest in the league). But I do understand their desire to keep the team there. Are there any other teams that I’d move right now in an ideal NHL? I’d say no. As much as people see teams having financial struggles or attendance struggles, and are quick on the trigger, relocation isn’t a solution that immediately helps bring in more money. It’s a painful process of ripping a team out of it’s roots and hoping (sometimes blindly) for a better turn-up somewhere else.

More importantly,  it’s a last resort by the NHL, a path they never want to see traversed. League executives view relocation of a team as a failure of a market. Bettman’s expansion to the Sun Belt was radical, but the NHL does not want to see that as a failed experiment, especially after one market (Atlanta) collapsed (twice). The NHL wanted to gain coverage throughout the entire United States, and they would lose significant chunks of the country if any of those teams picked up and moved.

Expansion may be on the horizon (not according to Deputy Commish Bill Daly, who, again, denies everything always). But relocation, more often than not, is not the quick fix-it solution that people see it to be. It’s the floor falling through, under a team with nowhere left to turn. The same is true for every other sport, but especially in the NHL, where each team is extremely important in terms of league revenue and national coverage.

I don’t really have much of an explanation of why the Thrashers left all so suddenly, and why the Phoenix situation took 5 years to resolve, outside of a demand of ownership. Each case is different. But they are all the same, that no one wants to see a team pack up the truck and leave a disappointed city behind.

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Comments
  1. […] the NHL can collect a massive expansion fee. This is similar to the relocation fee we discussed last week, but much more lucrative. Again, the amount is usually case specific, but I’ve heard numbers […]

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