NHL adding 4 teams- including Las Vegas and Seattle?

[Vegas]

Perhaps that new arena that is currently being built behind the New York New York might have a fulltime tenant as some major media including Sport Illustrtaed reportedly are calling the NHL's plan to expand to Las Vegas "a done deal."

Four new NHL expansion teams? Vegas, Seattle, Toronto and Quebec by 2017: Report

There are few topics in the NHL that get people buzzing like expansion and relocation do. Drop some morsel of news in the dead of August, and it’s like tossing the last bite of a Shake Shack burger to a flock of pigeons in Central Park.

On Tuesday, Tony Gallagher and Howard Bloom chucked their meat and the flock went crazy. Gallagher said that NHL expansion to Las Vegas was a “done deal,” and then Bloom upped the ante by claiming that the NHL will add Vegas, Seattle, a second Toronto franchise and Quebec City by 2017, the 100th anniversary of the League.

(No word on whether the League will begin an aggressive cloning program to fill out those rosters with NHL-level talent. Protect your comb, Jonathan Toews, they’re coming for DNA samples!)

Bill Daly of the NHL said the four-team expansion is "not in" the NHL's plans. Because what else is he supposed to say...

Gallagher of The Province wrote with finality that the NHL was coming to Las Vegas through expansion:

Sources close to the situation have indicated Las Vegas is a done deal, the only thing to be determined being which owner will be entitled to proclaim that he brought the first major league sports franchise to Sin City.

And given how dead set against a team in the gambling haven the commissioner was 10 years ago, this move into another player friendly state-tax-free zone represents a considerable about-face indeed.

You know, we started getting an inkling that Bettman had changed his tune on Las Vegas when he moved one of the league’s signature promotional events there in 2009, but yes, this is a considerable about-face indeed!

So, in summary, expansion to Las Vegas is a “done deal” except for the fact that there isn’t an ownership group that’s been approved by the Board of Governors; nor is there an expansion fee established for the market that would, in theory, determine who’s willing to buy-in (oooh, Vegas parlance!).

Look, we’re all in total squee-mode for a team in Vegas. Or really any declaration that expansion is going to happen. But the proliferation of this “done deal” report – by Tony Gallagher, no less – is the most Hockey August moment in the history of Hockey August.

For the love of Balsillie, he actually writes “the only thing to be determined” is the group actually owning the team. That’s like writing, “The Penguins are going to trade for a first-line winger. They just need to find a team that will trade them one.”

Is Vegas a done deal? Of course not.

Is it likely? Connecting the dots, one could draw that conclusion.

MGM Grand and AEG aren’t building a $375 million arena to house a Carrot Top repertoire. The NHL didn’t structure its realigned conferences with 16 in the East and 14 in the West to make things easier for Winnipeg. And with the NHL pulling in record revenue, attendance and ratings, the iron hasn’t been hotter to strike for expansion.

But as we’ve noted previously about Vegas: It’s unlike any other market in professional sports. There’s unrivaled competition for entertainment dollars. Many of the people who would attend the games as local fans are working while the games are being played. The largest target audience for the team would be the casinos who fill the considerable luxury box space in the new arena and tourists who pop in to see a game while in Sin City – or, perhaps, get comp’d for one.

It wouldn’t surprise us in the least to see the NHL dive into the market, despite those mysteries, just to be first ones in and because Bettman obviously believes an association with Vegas brings some level of prestige to the League.

But what about the other three teams?
Bloom, of Sports Business News, reported later on Tuesday that the NHL was going full-on expansiongasm by adding every city that it’s considering adding for the last several years. Four new franchises, none through relocation:

“NHL expansion – four teams added by 2017, Quebec City, Toronto, Seattle, and Las Vegas $1.4b in expansion fees”

If you’ve been following the Seattle angle, you know the situation: Chris Hansen – the billionaire, not the predator catcher – has an arena construction deal with the city that hangs on attracting an NBA team; the only hope for an NHL team there first is if Hansen has a change of heart, and Vancouver billionaire Victor Coleman is working with him to that end.

Then comes the real fight: Convincing a city council that has otherwise been apathetic to hockey to turn on the funding faucet for an NHL team’s arena.

Then there’s Quebec City, which will have an NHL-ready arena next year and has no shortage of financial powerhouses ready to step up for an expansion franchise. It’s also been the most public and hubristic bid for a team, otherwise known as the opposite of how Gary Bettman likes to operate.

Then there’s a second team in Toronto, which remains the best idea out of all of these options. Then again, what media conglomerates are left to own a team there? The Score app?

And what level of bribery to the Leafs would it take to even crack that market?

Bloom believes this will happen because the NHL won’t be able to keep itself from collecting that expansion franchise windfall, and that’s as solid a theory as any. It makes sense that the League would expand quickly before losing that expansion money to another relocation (/casts an eye at Florida and Arizona).

All of this makes sense from a timing perspective and, of course, because we understand the League’s avarice. There are still significant obstacles in a couple of these markets, but it’s not outrageous to think it could happen.

[Crimson Cross]

I remember hearing and reading about the second Toronto team, having one can give those who can't get into a Leafs game a new option. The Leaf fans pretty much buy up all the tickets down here in Buffalo when Toronto play the Sabres and getting tickets in Toronto is tough. It'll be interesting to see if these expansions truly happen...

[Sinclair Promotions]

Whoever is looking to move into Toronto (the new Arena being built in Markham if I remember what I read earlier) is going to end up paying SOOOOOO much in Expansion & Territorial fees that those owners/owner will probably never see the black for as long as the franchise is there.

It would make more economical sense to move a struggling franchise to Markham/Toronto (Florida or Tampa Bay anyone) than to add an expansion team. Hell both Florida teams & Buffalo struggle to turn a profit (same with the Islander, but they are moving to Brooklyn following this season) and all three teams would be a great fit for either Toronto or Quebec City.

Adding teams two teams in the western conference makes sense as that conference only has 14 teams to the 16 Teams in the East. It will even the playing field for teams looking to get into the post season. Sadly a 34 team NHL won't help the league in the long run. Already high end players are heading to the KHL and other leagues which really lowers players available or willing to wait through 7 years playing in the NHL before they get their "Big payday"

Honestly I would love to see the NHL expand into Las Vegas and another city that hasn't had the NHL before. Both Kansas City (which has been talked about before) and Seattle have both failed to jump onto the NHL bandwagon. Didn't the league learn ANYTHING from their second attempt at a team in Atlanta? First the Atlanta Flames ended up in Calgary and now the Thrashers are the reborn Jets (The original team should never have moved to Pheonix [that is a WHOLE other mess])

Basically I think the NHL is already pushing the talent pool to the limit with 30 teams and teams are already overpaying for mid level talent players, an Expansion, while good for the players will ultimately dilute the talent pool to a level where we will probably be lucky if a games doesn't end in shoot out.

[guiltyparty]

I'd get pretty excited to see NHL expansion, particularly a second Toronto team (which feels like it should already exist) and the West getting evened out.

[guiltyparty]

TSN has a good article on the potential second Toronto franchise:

The National Hockey League would likely command a record expansion fee worth as much as $1.2 billion for a second franchise in Toronto, sources tell TSN - a sum that would eclipse the previous North American sports record of $700 million that the Houston Texans paid to join the National Football League back in 1999.

While NHL commissioner Gary Bettman has insisted the league in not currently considering expansion or relocation, several senior NHL team sources said expansion - along with the league's strategy to grow international revenue - would be key topics during the NHL board of governors meetings on Sept. 30 in New York.

Five investment bankers who advise NHL team owners on the sales of franchises said it would only be a matter of time before the league entertains offers for another team in Toronto.

The bankers, who collectively have advised both buyers and sellers of NHL teams, as well as owners who have sought new limited partners, said bidding for a new team in Toronto would begin around $800 million. Opinion was split on how high the bidding might go. Three of the bankers said they could see the auction reach $1.2 billion. The other two doubted the bidding would eclipse $1 billion.

"In an auction situation, I could see it getting to $1 billion or even $1.2 billion," said Drew Dorweiler, a Montreal economist who has been hired by the owners of the Toronto Maple Leafs, Vancouver Canucks, Manchester United and other sports teams to estimate their franchise values. "An NHL team in Toronto is a marquee property."

Another sports banker who has consulted on more than a dozen NHL team sales said the Leafs' profit eclipses $80 million a year. "They are making more profit annually than many NFL teams," he said. "You can't stand in the way of the tide of history. There are more hockey fans in Toronto than in New York or Los Angeles combined, cities that have five NHL teams between them (Anaheim - a 30-minute drive south of Los Angeles)."

Some of the bankers would not agree to speak for attribution because they said it might negatively affect their business relationship with the league.

A decade ago, it would have been ridiculous for anyone to muse about a billion-dollar price tag for an NHL team. In 2004, a league-commissioned report by securities and exchange commission official Arthur Levitt claimed that 19 of the NHL's 30 teams were losing money. But today, the NHL has a labour agreement with players that include revenue sharing and more importantly, has strong national TV contracts in both Canada and the U.S. Increasingly, skyrocketing media rights are influencing the purchase price of sports franchises.

The NBA's Los Angeles Clippers recently sold for $2 billion, largely because the NBA's national TV contract in the U.S. is up for renewal in two years and is widely expected to double in value to $15 billion over eight years.

To put a possible $1.2 billion Toronto expansion fee into context, the NHL's last two expansion teams Columbus and Minnesota joined the league in 1997, paying $80 million apiece (The Blue Jackets and Wild began play in 2000).

The bankers said they expect the NHL would probably announce at some point over the next year that its officials are accepting bids for expansion franchises. Toronto and Quebec would be the most coveted markets, the bankers said.

Often, when the subject of expansion or relocation to Toronto is raised, media reports suggest Maple Leaf Sports & Entertainment, the parent company of the Maple Leafs, might manage to block an expansion team in North America's biggest hockey market.

It's unclear whether that might happen.

Bettman told TSN that the NHL's owners collectively decide where to expand or move teams. That means a second team can be added in Toronto with the support of the majority of the 30 NHL owners - even if the Leafs oppose the move. Bettman wouldn't say why the league has not already added a second team in Toronto.

TSN owner Bell Media is a part owner of the Leafs' parent company, along with Rogers Communications and Larry Tanenbaum.

In 1992, when the Mighty Ducks joined the NHL, the Los Angeles Kings were given half of the Ducks' $50 million expansion fee. But today, according to terms of the NHL's constitution cited by the bankers and Bettman, the Leafs have no right to demand a fee if their local territory is encroached on by another NHL team.

"The only way MLSE gets money for an expansion team in Toronto is by the good grace of other owners and why would the new team owners to the league, with debts of their own and no longstanding relationship with MLSE, say to MLSE 'here, take this $100 million, money that would have been shared between all of us,'" one banker said.

"Maybe a new owner makes an offer to MLSE to keep them as good neighbours," added Dorweiler, who has worked for six NHL teams.

A source close to the MLSE board said that both Bell and Rogers did due diligence when they partnered to buy the interest in the Canada's largest sports company for $1.4 billion. Both companies believe they have a legal challenge if the NHL's other teams owners pushed forward with a second Toronto team and declined to compensate MLSE.

It's unclear how a successful bidder might finance such a massive NHL purchase and there are certainly significant hurdles for any new owner.

The league allows team owners to borrow 50 cents for every dollar worth of equity. That means a buyer might borrow $600 million, based on a $1.2-billion purchase price.

Bank of America and Citibank are currently expand a league-wide credit facility to give each team a $100 million line of credit at low interest rates. An expansion team owner could borrow $100 million through that credit line and another $500 million from a bank. Assuming an interest rate of about 6 per cent, a buyer might have about $30 million worth of annual debt payments on the expansion fee alone.

If a new arena did not receive public funding, a further $24 million a year would be required to pay the interest on financing a $400 million facility. Then there are player costs of perhaps $70 million a year and coaches salaries, travel and other administration costs of as much as $15 million, giving a new owner some $140 million a year worth of expenses.

Still, one banker said there would be a huge buzz around a new Toronto team, and annual ticket sales could generate $80 million, with another $20 million coming from corporate sponsorships. The NHL's national TV deal in Canada pays each franchise $13 million, and its contract with NBC in the U.S. pays another $7 million.

The biggest challenge may be in generating local broadcast revenue.

Bell and Rogers may not want to pursue local broadcast rights with a team that's competing with the Maple Leafs. There could also be scheduling problems since TSN carries NBA games in the winter and Rogers will be dedicated to its national TV package of NHL games.

Brian Cooper, president of S+E Sponsorship Group and a onetime Maple Leaf Sports executive, said an expansion club would get both a large rights fee as well as carriage on cable TV services. "No one is going to give up the rights to an NHL team in the biggest TV marketing the country to the other regardless if it's a new team or not," he explained. "They will get an audience and it's NHL hockey. I think both Rogers and Bell would bid aggressively on the broadcast rights."

There are other solutions to a potential broadcast quandary.

Perhaps one of the two media companies would consider being bought out of its interest in Maple Leaf Sports to take an ownership position with a new franchise.

It's also possible that a new team could start its own regional sports network, or, with the media landscape changing fast, cut a deal with the likes of YouTube, which last year struck a deal for exclusive streaming rights to past episodes of "Saturday Night Live," or one of the many other companies that specialize in Internet video streaming.

Maple Leaf Sports' current TV agreement with Rogers and Bell will pay the club as much as $1 million a game, or $42 million a season (TSN and Sportsnet have 26 and 16 regional Maple Leafs games, respectively, this season). If an expansion franchise several years from now could generate $40 million in broadcast revenue, that would give the team sales of perhaps $160 million, enough to clear a profit.

To be sure, there are also hurdles with a place to play.

While two NBA teams play in the Staples Center in Los Angeles, that might not be so easy in Toronto. Even if Bell and Rogers decided to allow another club to play in the Air Canada Centre to boost their own profits, there might not be enough available dates to accommodate another NHL team because of the contract Maple Leaf Sports has with Live Nation to host concerts.

The most likely solution would involve construction of a new arena, and bankers and NHL team executives are split on whether the most logical place for that is near the Highway 401 corridor or another location.

It's not a investment a billionaire would make based on sound financial judgments. But an NHL team is a trophy investment. Clubs rarely come on the market, and it's even more seldom to have a chance to own a team in a hockey-mad market such as Toronto.

"I know at least a dozen guys who would want to talk about bidding for an expansion team in Toronto, and at least six who have the money to do it," said one investment banker, who said several billionaires have asked him to advise them when the NHL gets serious about a Toronto expansion club. "If the NHL does it right, it would attract interest from investors around the world."

Besides Toronto, Seattle is the strongest untapped U.S. market, the bankers said.

"It's a logical choice for the NHL because of the natural rivalry with Vancouver, Calgary and Edmonton," one banker said. "It cuts down on travel costs."

Las Vegas has long been considered a potential expansion market and it has been said that it would be a feather in the NHL cap to expand there before the NBA does.

Still, a team in Las Vegas is far from a financial sure thing.

At least one-third of Las Vegas residents work at night when NHL games are played. Even with slot machines being added in private suites, it's unclear whether casinos would be willing to encourage visitors to leave the gaming tables for more than three hours to watch a game.

Las Vegas is also not a large U.S. TV market, meaning the team's local broadcast rights would not generate considerable revenue. (Las Vegas is the 42nd largest market, trailing Harrisburg, Pennsylvania; Grand Rapids, Michigan; and Birmingham, Alabama.)

The latest U.S. census showed that in 2010, Nevada had the second highest increase in the U.S. poverty rate behind Florida. Las Vegas's $26,993 per capita income was less than the $27,334 U.S. average.

A recent NBA-commissioned survey found that a team in Las Vegas would not make a profit.

It's also hard to predict what will happen in coming years with the Florida Panthers and Phoenix Coyotes, the league's biggest money losers.

The Panthers, one investment banker said, are locked into a long-term lease with their country and the team's new owner Vincent Viola "loves the team there and has so much money" to fund its losses, an NHL source told TSN.

Even so, if the cash-strapped Panthers do move, it would help the Tampa Bay Lightning become a more financially viable team because the Lightning could then boost revenue with a statewide TV contract.

The Coyotes, meanwhile, continue to lose money under new owner George Gosbee. One banker told TSN that the Coyotes are losing at least $20 million per year, although $15 million worth of those losses are being covered by the city of Glendale.

[Vegas]

Sept 8, 2014 15:39:19 GMT -5 guiltyparty said:

TSN has a good article on the potential second Toronto franchise:

Las Vegas has long been considered a potential expansion market and it has been said that it would be a feather in the NHL cap to expand there before the NBA does.

Still, a team in Las Vegas is far from a financial sure thing.

At least one-third of Las Vegas residents work at night when NHL games are played. Even with slot machines being added in private suites, it's unclear whether casinos would be willing to encourage visitors to leave the gaming tables for more than three hours to watch a game.

Las Vegas is also not a large U.S. TV market, meaning the team's local broadcast rights would not generate considerable revenue. (Las Vegas is the 42nd largest market, trailing Harrisburg, Pennsylvania; Grand Rapids, Michigan; and Birmingham, Alabama.)

The latest U.S. census showed that in 2010, Nevada had the second highest increase in the U.S. poverty rate behind Florida. Las Vegas's $26,993 per capita income was less than the $27,334 U.S. average.

A recent NBA-commissioned survey found that a team in Las Vegas would not make a profit..

I've heard about that survey, but I think that survey is wrong. UNLV ''s Runnin' Rebels routinely sell out the Thomas and Mack and if 18,000 people are already paying nearly NBA ticket prices to see UNLV play teams such as Wyoming and Colorado State, it's not hard to imagine them also turning out for an NBA team.

and while Las Vegas may only be the #42 market, it is still ahead of other markets that have at least 1 pro team such as OKC (#45,) Jacksonville (#47,) Memphis (#48,) Buffalo (#51,) and New Orleans (#53.)

But I am actually not as convinced that an NHL team in Las Vegas would be successful. The minor league Wranglers are not even playing this upcoming season because of a venue issue.

[Sinclair Promotions]

In all honesty Las Vegas would benefit more from a relocation than an expansion. Phoenix/Arizona would probably be the best fit as they are a team that has battled for a playoff spot in the last few seasons.

I don't think the potential fans in Vegas would be willing to sit through numerous seasons before their expansion team would even have a hint of making the playoffs. Expansion teams are made up of rejected players from all the other teams, and unless they were to draft a Sidney Crosby type player in their first year they will be years away from being a quality playoff team.

Sadly the Phoenix/Arizona franchise is years away from making a move, even if they do continue to lose mad revenue. More than likely the Florida Panthers would be better suited to move to Vegas in a couple of years. That will leave Seattle (who I am not convinced is a great idea), Toronto & Quebec looking for expansion teams. With Kansas City being on the outside right now the League could still expand to 34 teams and have 17 teams in each conference.

[TTX]

It seems that the NHL is stretched pretty thin as is now and while I know they just keep seeing those dollar signs for expansion, I don't know how much they can keep diluting the product for a short term cash infusion.

[Sinclair Promotions]

I have to agree with you Troy. Mind you the league should expand to 32 teams, if for no other reason than to even out the conferences.

If I was running the league I would do the following:

1. Move Florida west to Las Vegas - The Panther's can't lose anymore money per year in Vegas than they do in Miami. This move should also help solidify Tampa Bay. Florida fans have a history of only carrying about which ever team was winning that season. By no longer diluting the fans options Tampa Bay should move up and become a more profitable franchise.

2. Move Buffalo out west to either Seattle or Kansas. This will help bring the fans into those cities by giving them a team that should be a year or two away from getting back into the playoffs. Sure Buffalo currently makes some money, but with my next step they should plummet when it comes to my next step.

3. Expand by adding a second Toronto Team (the new Markham arena) and by bringing Quebec City back into the league. These two markets (both of which are building new arena's) would be more open to dealing with an expansion team than any US market that is being considered for expansion. A second Toronto team should also help push the leagues most profitable team in the city into becoming a more competitive on ice team.

When this all done both conferences would have 16 teams, and half the league would make it into the playoffs.

[Vegas]

Tonight's preseason game between the Kings and the Avalanche at MGM Grand is sold out and the new arena being built behind the New York New York which is designed to seat 18,000 for hockey is scheduled to open by Spring 2016.

A friend of mine who works in a managerial capacity here in Las Vegas in the sports book industry told me he thinks the NHL coming to Las Vegas is basically a done deal. I hope he is right!