Tag / hockey

by Frank Maduri

Follow Up: NHL Awards Expansion Team To Seattle

The National Hockey League (NHL) approved the expansion of the league to Seattle on Tuesday, ending months of speculation over the future of the 32nd franchise in the world’s premier hockey circuit.

The decision comes as no surprise, the Seattle bid had an aura of eventuality to it because of their record setting season ticket commitment drive. The city showed their commitment and determination for a major professional hockey team, and it was rewarded yesterday.

The Seattle bid had all the elements needed to succeed: a stable and committed ownership group, favorable market demographics, robust corporate sponsorship potential, large media presence, and a dynamic, ambitious arena plan. The team name has not been decided yet, those details in the marketing of the franchise will be forthcoming. That is a crucial decision that must be carefully weighed.

What is known from the announcement yesterday is that the team and the NHL pushed the inaugural season start date a year to the 2021-22 hockey season. This will provide some much-needed extra time for the arena renovation project to be not rushed to completion as well as allow for the proper marketing and branding of the team in the community.

The Seattle team will play in the Pacific Division, which makes geographic sense and to balance the divisions out, the Arizona Coyotes will move from the Pacific to the Central Division for the 2021-22 season. This part of the announcement has gained significant attention and it is in this portion of the news from the NHL meetings in Georgia that could get interesting.

The realignment of the league to put the Coyotes into the Central either could be just a sensible logistical decision, or the harbinger of things to come for that franchise. The league office was quick to their defense of moving the Coyotes, citing that because most of Arizona (besides the Navajo nation tribal lands) does not recognize Daylight Savings Time – the team spends most of the time of the hockey season in the Mountain Time Zone.

However, the current teams in the Central Division such as Minnesota, Chicago, Nashville, and St. Louis all play in the Central time zone. This will translate into earlier starting times for games on the road for the Coyotes as well as longer travel times for the team and a shift away from their geographic rivals in Las Vegas and Los Angeles respectively.

This shift in divisional alignment has caused rampant speculation about the Coyotes being relocated to another Central time zone city that is angling for an NHL team, Houston, with a billionaire who controls the world class arena in the nation’s fourth largest city.

The move to Houston may be a bit premature even though in my earlier coverage on the failed attempts that the Arizona Coyotes have made to gain an arena in a better location in the Phoenix metro area. The Coyotes ownership has an agreement with the arena management company that allows them to go to a year-to-year lease on their current home, Gila River Arena, for five years until they determine a plan for a future facility.

The Coyotes have no plan or site on the board currently, which only fuels the fire that the team will relocate to Houston. The Houston bid for expansion definitely took a setback because after Seattle enters as the 32nd team, and finally balances out the league from a geographic and conference balance perspective, the league would not expand and add just one team.

The NHL has been clear of their interest in Houston especially to grow TV ratings and reach a more diversified demographic. The owner of the arena in Houston, Tillman Fertitta, also owns the NBA’s Houston Rockets and has been vocal about his desire to bring the NHL to the city. He met with NHL Commissioner, Gary Bettman, earlier this year to discuss very generally, the vision for hockey in Houston.

Some feel that the league does not want to lose the Phoenix market and that the Coyotes will find a way to stay in the desert, where they do have a loyal fan base. The speculation about a move to Houston will continue until the Coyotes find a long-term home for an arena in the East Valley or downtown.

It should also be noted that the Calgary Flames have an issue with plans for a new arena there now looking very dismal. The ownership there has threatened to relocate the team or sell the team to a party in another city. The door for Houston remains open in that relocation scenario as well.

The option to expand to Houston would require the league to expand by two franchises to 34 teams total. The logical other bid would be from Quebec, which has a new arena built and ready, but the expansion fee would be enormous in Canadian dollar figures. The Quebecor group would have to be willing to shell out a huge front-end cost to make that work.

In my view, I do not see the NHL ownership being willing to cut the revenue pie into 34 slices. I think the addition of Seattle is a home run for the league and makes some much sense from so many perspectives to add that city to the hockey landscape.

In addition, I am in the minority of people I have talked to in recent days on this subject that thinks that Houston would be an excellent destination for hockey as well. The city is much more diverse than many Americans realize and they have passionate sports fans and many transplanted people from around the entire country that now call Houston home that would fuel the appetite for the game.

It remains to be seen what happens with the Coyotes, the Houston bid for a hockey team, and if Quebec will finally get a seat back at the league table. However, what we do know is that Seattle will be joining the league to play in a state-of-the-art renovated Key Arena in the center of that great American city. The league took a bold step forward with Seattle and hockey in North America will be the beneficiary of those efforts.

(some background courtesy of ESPN, NBC Sports)

by Frank Maduri

Follow Up: NHL Expansion To Seattle Takes Crucial Step

In a follow up to earlier posts on this topic, the bid by Seattle to become the 32nd franchise in the National Hockey League (NHL) took a crucial step forward on Tuesday.

The Seattle ownership group partners and Mayor Durkan met with a nine-member committee of NHL governors (owners) and other top league executives in New York to make a presentation essentially framing why the NHL should expand into the Seattle market.

The news comes as no real surprise because the Seattle group set records for season ticket commitments and blew away the number that Las Vegas did a couple of years ago in their respective season ticket drive. The region in the Pacific Northwest is untapped in the U.S. by the NHL, and the prospective Seattle team would have a built-in rivalry with the Vancouver Canucks about a two hour drive away to the north.

The committee yesterday voted 9-0 in favor of the Seattle bid moving forward in the expansion process. The financing of the team and the arena renovations to Key Arena at Seattle Center (which was the center of my last article on this topic) were not seen as a deterring factor.

The next step is for the NHL to vote on the formal expansion to Seattle in early December at the league meetings in Georgia. The expansion fee is expected to be (and widely reported) around $650 million. It should also be noted, for those who did not read my earlier coverage, that Seattle is the largest metro area in the United States without a major winter pro sports team.

The city is known for their passionate support of their current teams: the Seahawks in the NFL, the Sounders of MLS, the Mariners of MLB, and the Seattle Storm in the WNBA. The Seattle group used that as part of their pitch to the NHL committee on Tuesday and noted the excitement of the city, as evidenced by the season ticket drive results which were outstanding.

The addition of Seattle (it looks like a mere formality at this point) means that Quebec has no realistic prospect of entering the league unless one of the current teams decides to relocate to their city. The league, once it adds Seattle, will be balanced with 16 teams in each conference for the first time in several years. The NHL will not be looking to expand and “cut the pie” of revenue sharing again for quite some time.

The relocation targets for Quebec of the Carolina Hurricanes or Florida Panthers moving north of the border both look more unlikely. The Carolina team changes owners but the lease agreement on the arena is very friendly to the ownership. The Florida club got better, younger, and they saw their attendance improve somewhat. It seems less likely they will move or that the NHL would allow them to exit the South Florida market.

The last remaining hope is the Arizona Coyotes, but they are looking at a new arena site in The Valley and are also linked to Portland, OR if they were to relocate. I think the NHL, which wants desperately to remain in Phoenix, would more likely approve a move to Portland to keep the conferences balanced before it would vote to move the team to Quebec.

Seattle is going to be an intriguing market for the sport and for visiting teams and their respective fans. The Key Arena renovation is very ambitious and is the mitigating factor on whether the new team begins play in 2020 or 2021. That facility is going to combine the old with the new. The iconic roof will remain in place, the green space around the arena will be kept as well. The modern amenities and wider concourses will be added and the design of the new seating will provide hockey fans with great angles to view all of the action.

The talk in Seattle is that now that the NHL looks like a lock to come to the Emerald City, where is the NBA in all of this? When can the Sonics return to the hardwood? That looks rather unlikely from the standpoint and tone of the NBA and their Commissioner, Adam Silver, in recent statements.

Some people do not understand it, but in my earlier coverage of this topic and the NBA expansion bid to Seattle, it makes sense. The NBA preferred the “SoDo arena” proposal as it was known with Chris Hansen investing in all of that land downtown to build a brand-new arena for the Sonics to return. That agreement with the city was for an NBA-first facility. It would be designed with hockey as a secondary tenant.

The Key Arena proposal which the city ended up going forward with, is an NHL-first agreement which means that the NHL team will be the primary tenant and will get the better end of the revenue and gate sharing agreements in the building. The NBA expansion to that market under those conditions would limit the profitability of the Sonics. The NBA also has no imminent plans to expand and has other markets that will promise and are in better position to deliver, better profitability for the NBA in the long term than Seattle at this point.

The fans of hockey in Seattle should be thrilled, it is an exciting time for them and for hockey fans in general; especially given the success of the Golden Knights in their inaugural season last year. The next big decision once the vote comes through in December is to determine a team name. The NHL is coming to Seattle and the excitement has only just begun.

(thanks to The Seattle Times for some background information and to NHL.com as well)

by Frank Maduri

NHL Expansion To Seattle Looks Inevitable

The recent news that the Seattle ownership group has filed an application with the NHL for an official expansion bid and included a $10 million deposit has been at the top of the news surrounding hockey in the past week.

The group can now begin a season ticket sales drive (begins March 1st) in a similar process to how the NHL proceeded with the Las Vegas expansion bid a couple of years ago. The ticket sales results will then be submitted to the league office so they can more adequately gauge the level of interest in the sport in the Seattle market.

The major sports media outlets as well as the local Seattle media are all essentially positioning the Seattle NHL expansion bid as a “done deal”. In my research I found one article that acknowledges that the process has some hurdles that should potentially temper the expectations for a future hockey team in Seattle.

Conversely, the fact that the NHL has coveted the Seattle market is among the worst kept secrets in the sports business news for a couple of years now. The league would benefit greatly from the geographic location, TV market/media market size, the natural regional rivalry with the Vancouver Canucks, and the noted passion of the fans of that city for their sports teams.

In fact, there are some within the sports media and sports business experts that maintain that Seattle would have been awarded an expansion franchise with Las Vegas in that last expansion cycle. Seattle did not submit a bid because they did not have an agreement on an adequate arena that was up to NHL standards.

The lack of a modern sports arena has derailed the progress of Seattle gaining an NHL or NBA franchise to replace the departed and beloved Supersonics for several years. The arena issue was the reason why the NBA bolted the city about ten years ago and it has taken all of that time to get a comprehensive plan put into action.

My earlier piece on the Seattle arena renovation of the Key Arena at Seattle Center provides the context of the details of the deal that will provide the city with a state of the art arena by 2020 or 2021. That is the earliest we can expect a hockey team to start playing in the Emerald City.

The potential approval of Seattle’s bid fixes the West-East conference imbalance the NHL has been dealing with for several years. The league would have sixteen teams in each conference, and the scheduling would be much smoother, and travel would be improved for the players as well.

The successful bid for Seattle does present some questions regarding the other cities that have been in the mix for an expansion team such as Portland, Houston, and Quebec City. Those cities are now potentially on the outside looking in, with regard to an expansion team because it is unlikely that the league will expand again beyond the 32 member franchises it will have given Seattle is successful with their bid.

The most likely logistical solution for at least two of those three cities would be to gain a team via relocation. The current situations for two or three current NHL franchises are tenuous at best at this point and that could provide the ability for one or more of those hopeful cities to gain “a seat at the table”.

The Calgary Flames, the Arizona Coyotes, and some feel the Florida Panthers all have some instability in their current markets. The relocation of an NHL team is certainly a long shot because the league prefers to keep teams in their markets unless a move is absolutely the last resort left to pursue. In fact, there are some within the hockey media that maintain that having Houston and Quebec City out there as possible alternative markets is exactly what the league office wants because it provides them leverage with the current markets in getting a favorable deal.

The league could “strong arm” a city like Calgary or Phoenix into a real estate deal with a publicly subsidy for a new hockey arena in terms that blatantly benefit the NHL because they can threaten the relocation of the team to Houston or Quebec. Those two markets, Calgary and Arizona, have been a total debacle for a while. It is becoming a major problem for the league that those cities are in limbo, and the exertion of pressure with regard to relocation is one of the few cards that the respective ownership groups of the Flames and Coyotes have left to play.

In the end, it looks like Seattle will be the next city to be awarded expansion into the NHL, and if it is anything close to the success that hockey has seen already in Las Vegas it is going to further continue the emergence of the league in new markets in the years ahead.

by Frank Maduri

NHL Expansion Follow Up: The Case for Seattle

The NHL is just returning from their Olympic break where game operations were suspended so that the players could represent their respective countries in Sochi.

 

In a relatively slow news cycle for the NHL at this point, one story did gain some traction, and that is the discussion by NHL executives with the media regarding the potential expansion of the league to Seattle.

 

This is not the first time Seattle has been mentioned relative to the NHL, the city was rumored to be a potential relocation target for the struggling Phoenix Coyotes franchise prior to the start of this season. I have covered the situation surrounding the Coyotes ownership changes and potential relocation to Seattle, so this will serve as a follow up story to a situation that I have a great deal of knowledge about.

 

The NHL has discussed the potential for expansion recently especially after the lockout hurt revenues in 2012-13. The expansion fee for a new franchise to enter the league would represent a significant revenue injection for the other owners in the NHL.

 

The western United States is a target area for the league at this point with the realignment causing the Eastern Conference to have two more teams than the Western Conference. The Pacific Northwest is seen as a having significant growth potential for the NHL, and the key market in the region is Seattle.

 

The potential expansion of the NHL to Seattle would add a large TV market (12th largest) which will provide greater leverage for the league in their next television rights contract negotiations, and greater revenue from TV advertising.

 

The addition of an expansion franchise in Seattle would also bring the NHL into another large population center as Seattle has the 15th largest metropolitan area population in the United States. In fact, between the TV market and the metro area population statistics, Seattle would be a larger market for the NHL than 10 other domestic U.S. markets where the league has current franchises in operation.

 

Heading North

 

A group of business, civic, and political leaders from Seattle recently traveled north of the border to Vancouver to meet with the front office and executives from the Vancouver Canucks to learn how the team conducts the business of professional hockey.

 

This trip is another indication that the expansion of the NHL to Seattle is becoming more serious. The business side of an NHL franchise is very unique, and this meeting was a very good idea, especially when members of the Seattle Sports Commission told the local media that some members of the delegation travelling to Vancouver had never seen a live hockey game before.

 

The rumored ownership team for the prospective expansion franchise in Seattle is Ray Bartoszek and Anthony Lanza. These two businessmen were also the principal people involved when the NHL considered relocating the Phoenix Coyotes to Seattle in the summer of 2013. The qualifications of an ownership group represent a huge hurdle in the decision for a league to award an expansion franchise, it appears that Seattle has a well-financed group in place.

 

The other big issue in the case for Seattle to be awarded an NHL expansion franchise is the arena situation, which is another huge piece to consider in this process. The NHL has stated that if it were to expand the league, the added team or teams would begin play in 2015-16. This time frame may give Seattle enough time to gain final approvals and construct the proposed new arena near the other two sports stadiums downtown.

 

However, that brings a new issue to the table, the funding for the arena is based on an agreement between the City of Seattle, King County, and investor Chris Hansen that calls for an NBA team to be the primary tenant of the new arena. Therefore, the public funding agreements would need to be changed should the city be granted an NHL team before they gain an NBA franchise.

 

 

The time frame for expansion is appropriate because it will take a couple of years to hire personnel to staff the front office and the business operations side of the team, organize a marketing campaign, and sell luxury suites or season ticket plans.

 

The expansion fee is expected to be very large with estimates in the media of close to $250 million. Then factor in approximately $500 million for the new arena, and Seattle is poised to make a huge investment in professional hockey.

 

I have reported on the potential expansion of the NHL before, and the league will most likely expand by two teams in 2015-16. The media speculation is that the NHL will most likely select Seattle and then either Quebec City or Kansas City with the other expansion slot.

 

The result of all of this, in the end, it looks like Seattle is going to have an NHL hockey team to cheer for in the near future.

(Credit to NBC Sports.com and Seattle Times for some background information)