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)

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.

Top U.S. TV Markets: An Analysis of American Lifestyle

The practice of watching television is a major part of the American lifestyle. In recent years, the cost for cable television has increased, and Americans will continue to pay for the privilege of watching the programs that they enjoy.

 

The landscape has grown through the expansion of cable and internet streaming services which provide the viewer with the capability to customize their television viewing habits. The cable television space has a plethora of extra specific content channels for sports, music, lifestyle, home shopping, and reality television programming.

 

The demographics of the country have a role in defining the largest TV markets in the US, and those markets drive the ratings to determine the programming options for the smaller markets in other regions of the country.

 

Some other contributing factors in shaping the size of a TV market are climate and local/regional economic issues. In areas of extreme climates either hot or cold, those factors drive residents to be indoors more than in other regions, which tends to have an effect on the consumption of televised content.

 

The economic factors which contribute to the size of a given television market are: high or low unemployment levels, and the types of industries or business makeup of a given city or region.

 

Top U.S. Television Markets

The top TV markets are well known:

  1. New York
  2. Los Angeles
  3. Chicago
  4. Philadelphia
  5. Dallas – Fort Worth
  6. San Francisco – Oakland- San Jose, CA
  7. Boston
  8. Atlanta
  9. Washington D.C.
  10.  Houston

(www.stationindex.com)

 

 

These cities and media markets drive the advertising and the programming choices to a large degree for the rest of the United States. It is also interesting to note that while the Houston metropolitan area is the 5th largest in population, it is the 10th largest TV market (www.census.gov).

 

Now, this ranking for Houston could be determined by many different factors. The weather could lend itself to many outdoor activities especially during the peak TV ratings periods, commonly known as “sweeps” periods in September, February, and May.

 

The prevalence of outdoor activity either for work or recreation is also evidenced in the differential between Houston’s TV ranking (10th) and according to Arbitron, their radio market ranking (6th). Their radio ranking is more in line with their population ranking, and I believe it is a better measurement of the demographic factors involved in that marketplace.

 

In my background research for this article, I found some news stories centered on Houston remaining in the Top 10 TV markets nationally and how important that is given the reasons I detailed earlier. The city of Detroit is currently ranked 11th, and is on a population decline due to a horribly recessionary economy.

 

The marketing and advertising industry players located in Houston are concerned about being pushed from the Top 10 TV markets by Phoenix.

 

Phoenix currently sits at the 12th position in the TV markets rankings, and according to the Office of Management & Budget (O.M.B.) data, that metro area is gaining in population (up 3.26%) from 2010 to 2012, and is on a rapid growth trend.

 

Philadelphia – A Top 5 market

 

The current situation in Philadelphia is also interesting because they are currently ranked the 6th largest U.S. metro area according to the O.M.B., yet the city is ranked as the 4th largest TV market.

 

Furthermore, Philadelphia is the 8th ranked radio market in the U.S. (www.arbitron.com). So, the radio ranking is below their population ranking but their TV ranking is above their population ranking.

Some of this differential can be explained by the demographic areas used by both TV and radio to determine the rankings. The geographic areas are different: the TV market is drawn from a different region of suburbs surrounding the city into southern New Jersey and also includes a large portion of Delaware.

 

This regional area creates a 20 station TV market for Philadelphia and a large population base (www.stationindex.com). The city is also the headquarters of the cable giant, Comcast, which has recently touted the 2.1 million cable subscribers in the Philadelphia TV market (www.comcast.com).

 

Comcast has made it no secret that they want to be the number one cable TV provider in their own home market, so they promote their services very heavily there, and are very active in the community sponsoring a variety of charitable activities. This is a contributing factor to the size of the marketplace as well.

 

Conversely, the radio demographic region is drawn up differently and does not reach the same areas. It has only one station included in the radio market in Delaware, and that is in Dover (www.arbitron.com). So that explains some of the difference in those rankings.

 

I believe that the draw of TV in the Philadelphia market has more to do with the types of industry and commerce located there and the service industries needed to support that commerce. These jobs are around the clock, so when people get home from a long shift of difficult work, they watch TV.

 

The final factor in the scale of the TV market in Philadelphia is the huge viewership numbers that marketplace gets from live sports related programming.

 

San Francisco – The TV mammoth by the Bay

The marketplace in San Francisco is also an interesting case study in that their metro area (which includes Oakland and San Jose) is ranked 11th in population, but they are ranked as the 6th largest TV market.

 

Now, the factors surrounding the San Francisco market are driven by a huge number of TV station outlets (22 stations) for their population level (4.45 million as of 2012 according to the O.M.B.) and the weather is also a contributing factor to ratings there as well.

 

Besides the weather, the number of stations in San Francisco is based on the diverse multicultural population of that market. The high number of Hispanic and Asian residents facilitated the creation of several TV stations which have programming specifically for those audiences.

 

Due to the large sizes of these respective audiences, that programming also draws a very high viewership rating, and provides international companies with direct marketing opportunities via TV advertising.

 

The weather in San Francisco is also a contributing factor to the TV ratings there, it is famous for cool, foggy weather. It is the coolest of all major U.S. cities during the summer months of June (average temp: 68), July (average temp: 69) and August (average temp: 70).

In January, February, and March the average temperature ranges from 57 to 63. Then, the period from November to April is known as “the rainy period”, this information was all gathered courtesy of The National Weather Service and The Weather Channel (www.weather.com).

 

It is pretty clear, that with temperatures and conditions like that, you have many nights in that market that lend themselves to staying indoors and watching television.

 

Boston – A Northeast top tier market

 

Boston is similar to San Francisco in that it is the 10th largest metro area by population in the U.S. according to the O.M.B., but it has the 7th largest TV market. Boston is also very similar to San Francisco in total metro area population with 4.64 million based on 2012 statistics given to the O.M.B., and it also has very similar contributing factors for the size of its TV market.

 

Boston has 17 TV outlet stations in their respective marketplace territory, which stretches into Western Massachusetts and parts of New Hampshire. The highly diverse population also contributes to specific TV stations with multicultural programming.

 

The weather in Boston is also a factor in the TV viewership levels overachieving the metro areas’ respective population level. The temperatures in January (average: 35 degrees), February (38 degrees), and March (45 degrees) according to the National Weather Service, coupled with the precipitation provide ideal conditions for a market to consume broadcast television programming.

 

In Boston, July is the hottest month with an average temperature of 73 degrees (www.weather.com). The months of October (average temperature: 61), November (average temp: 51) and December (average temp: 41) are prime TV viewing months from the late fall until the end of the year. Now, couple that with an average of 10 days of precipitation per month in each of those 3 months and that provides an explanation for Boston having such large TV viewership numbers.

 

In a similar way to Philadelphia, Boston also has all of the major professional sports represented in their city, plus a vibrant college sports scene; the fans in Boston are particularly loyal, consequently driving huge ratings for live sports related televised programming.

 

Dallas – Fort Worth

 

The Dallas – Fort Worth TV market is shaped by many factors dealing with demographics, weather, and a strong economy. All of these factors combined with the appeal from a marketing and advertising perspective of having a huge cross section of people to expose to your product or service, have made this market the 5th largest TV marketplace in the country.

 

The ranking is in line with the population because the Dallas- Fort Worth “Metroplex” area is the 4th largest metro area in the U.S. according to the O.M.B., with a population of 6.645 million, and it also has the 6th largest economy in the U.S. as well.

 

Dallas has common factors to the other markets in this article which contribute to the growth of their TV marketplace. The city and metro area surrounding Dallas is very diverse, including a huge Hispanic population.  The market has 18 television outlet stations with some outlets dedicated to multicultural and Hispanic programming.

 

Dallas also has the contributing factor of weather, except unlike the other markets focused upon in this article previously, it is weather which is too hot. Dallas has some of the hottest summer temperatures in the continental U.S. and according to the National Weather Service, it is quiet common for 70 degree days to occur throughout the winter months there as well.

 

The heat and humidity of those summer days’ forces people to have to remain indoors in air conditioning which strongly impacts the prevalence of consuming televised programming. This is particularly evident if you look at the May “sweeps” period, which is critically important in the television industry, and where weather can play a huge role in the viewership levels for Dallas. Those factors combine to make this market very important to advertising companies and large manufacturing companies to market products.

 

The final component to the growth of the Dallas- Fort Worth metro area was an unfortunate one: Hurricane Katrina. When that terrible tragedy struck New Orleans in 2005, many victims were displaced and put on buses to Dallas.

 

In the aftermath of the storm, those former residents of New Orleans found their homes either destroyed or their neighborhoods too drastically changed for them to return there, so aided by the strong economy in Dallas, they were able to get jobs and settle there. This migration of people caused a population surge coupled with population growth in later years due to the recessionary economy in other parts of the country.

 

The recession did not affect Dallas in the same way as many other regions of the country, so the city saw another influx of people from other parts of the country coming to find jobs.

 

They were successful in a short period of time in finding work, so those “transplants” remained in Dallas. One survey I read attributes 50% of the Dallas metro area population to being from outside of Texas. This statistical demographic measurement makes Dallas very attractive from a marketing and advertising perspective.

 

Rise of New Media

 

Any analysis of the television industry would be remiss if it did not include the current trend of new media technologies and their respective subsequent effect on the television landscape.

 

New media is any service which facilitates the delivery of content, in this case television programming, in an immediate “on demand” fashion directly to the consumer. That is how I would define some of these new services and products which have flooded the marketplace in recent months.

 

The rise of “video on demand” services through major cable television and telecom providers as well as other internet providers has created a whole new subsector of the television industry.

 

Some of these services are: Apple TV, Google Play, Amazon streaming video, iTunes, Netflix, Hulu, Ustream, Roku, and Aereo.

 

The obvious reaction to some of the before mentioned services from the major television broadcast companies has been one of resistance. The most recent was a high profile lawsuit, widely reported in the media, regarding the Aereo service by the major American broadcasting companies.

 

A federal court, according to reports, ruled in favor of Aereo stating that the content did not violate copyright infringement laws because they were not “public performances”; the content was being provided to paying subscribers.

 

The decision just solidified that the television and media industry has changed dramatically and will continue to adapt in the months and years ahead. The demand for content will only continue to grow as the number of specialized outlets for that content will expand.

 

The growing prevalence for the ready accessibility of DVR technology forced the first changes to the Nielsen ratings system in many years (www.nielsen.com). The ratings service now uses data to incorporate the replay of a program via DVR on the same day.

 

The future

 

The gold standard for television programming at this point is live sporting events because people can so easily access scores on their smart phones, tablets, or other devices. The need to see that sporting event live while it happens is still a huge draw, which correlates to the massive sums of money the broadcast companies are paying to the major sports leagues for the rights to that precious content.

 

The strongest case for the importance and relevance of sports is the huge ratings numbers that the Super Bowl has garnered in the past few years, setting ratings records for television (www.nielsen.com).

 

In the end, the demand will still remain for the traditional television viewing of certain programs and events. The challenge for the TV broadcasting industry will be to continue to provide content which is highly relevant in an increasingly complex world.

 

That will prove difficult, but not impossible, it remains to be seen how it will be implemented. However, it is clear from this analysis that Americans love watching television, and that trend will not change any time soon.