Tag / Las Vegas

by Frank Maduri

Raiders Relocation: From Oakland to Vegas – Two Cities Two Different Approaches

The Raiders filed paperwork with the NFL on Thursday to relocate to Las Vegas which means that the final step is the formal approval of 24 of 32 owners to clear the path to the desert for this wayward franchise. The team has called Oakland home at two different points in their history from 1960 to 1982 and then again from 1995 to the present.

The Raiders have been seeking a new stadium facility to replace the aging Coliseum, which is basically falling apart at this point. The discussions with Oakland officials have been going nowhere for years regarding a new facility, largely because Oakland is still paying off loans for the expansion of the Coliseum which was done in the mid-1990s.

The Raiders attempted to join the Chargers in a joint bid for a new stadium in the suburbs of Los Angeles, but the final proposal was voted down by the league owners in favor of the Rams proposal for the Inglewood stadium development project.

The Las Vegas option for the Raiders came about shortly after the team saw the Los Angeles pathway dry up. The resort city voted aggressively to approve $750 million in public funds (raised through an increase in the hotel tax) towards the development of a 65,000 seat domed stadium. This measure represents the largest amount of public financing approved for a sports stadium in American history.

The Raiders owner, Mark Davis, has been committed to moving the franchise to Las Vegas once the project was given the green light by the Governor of Nevada. The potential for a new stadium with new revenue streams to help grow the Raiders brand just was too enticing for Davis to pass up.

The way this relocation (if it is made official in the March league meetings) has gone is a tale of two cities with two different approaches to the situation. Oakland has been reluctant to use any public money for a stadium, while Las Vegas allocated the most public financing ever.

Oakland has other issues though with the school system in need of upgrades, public safety spending needed, and other necessary infrastructure projects. The city attempted to “save” the Raiders by entering into an agreement to have former Raiders Ronnie Lott and Rodney Peete develop concepts for a new stadium on the Coliseum site.

The issue with that process though has been two-fold: the financing for the construction of the stadium has been unclear, and the Raiders have been left out of the discussions about the potential development of a facility that they are supposed to operate within. It goes without saying that the situation is pretty messy and might have been engineered by officials in Oakland as an effort to play to the public that they at least attempted to keep the team.

Furthermore, there are residents in Oakland that feel strongly that the new stadium should be financed privately and that Davis and his wealthy partners should have moved forward a plan to build a facility on their own. Those same residents feel that the public funds available should be used on other necessary services and improvements to schools and other areas.

There are still others who will blame either Davis for being greedy or the Oakland civic leaders for being too shortsighted if the Raiders end up leaving the city. That is what fascinates me about these situations, the viewpoints are usually so varied about the same fundamental issue.

The Vegas deal looks like a win-win scenario for both the city and the team. The NFL league office is not thrilled about losing a team in a top TV market like the Oakland/Bay Area for a team in Las Vegas which is a much smaller metro area and media market. The factor to offset that is the only other major league team in Las Vegas right now is the NHL’s Vegas Golden Knights who begin play as an expansion team next season. The other factor is the national appeal and following that the Raiders have which will follow the franchise wherever it calls home.

The officials in Las Vegas along with the casino hotel owners were very committed to making this proposal work because they saw a unique opportunity to get a franchise through relocation to their city. I have written previously that this proposal was a hit with those same groups because the NFL season runs in the autumn months which are traditionally the slowest point of the tourism cycle for Las Vegas. The relocation of the Raiders would fill hotel rooms when the demand is usually low and create opportunities for fans to travel for long weekends to see their team play the Raiders in Las Vegas.

The relocation papers have been filed and it is difficult to see a scenario where Oakland retains the Raiders at this point. The NFL owners would be setting a potentially bad precedent for their own self-interest if they voted down the proposal for a stadium with the most public financing ever allocated, in a time where many cities are not willing to put forth public funds for stadiums at all.

I always feel badly for the fans in Oakland who will lose the Raiders in this situation, and some of them may remember losing them in the early 1980s when they first relocated to Los Angeles. It could have all been avoided if Oakland had been more flexible in their approach and if greed did not dominate the motivations of the people involved on both sides.
In the end we will never know if a privately funded stadium would have worked in Oakland or not. The Raiders will most likely be playing in a new domed palatial facility off the Vegas Strip in a couple of years, while Oakland will be paying for an empty Coliseum with mountains of unfilled seats and memories of a team that was once their own.

by Frank Maduri

The Desert Drama: The Battle Between The Arizona Coyotes and Glendale

The Arizona Coyotes hockey franchise and the City of Glendale agreed recently to a new 2 year arena maintenance deal following another round of acrimony in what has been a saga surrounding the team and the city for years. The City of Glendale voted recently to terminate the team’s lease on the Gila River Arena in order to renegotiate the terms of the agreement with the team.

 

I have covered this debacle for a few years now, and if you strip away all of the other minutia to the situation it comes down to money, like any other negotiation. Under the terms of the new agreement, the amount that Glendale will pay to the Coyotes is trimmed from $15 million per year to $6.5 million annually. The team gains $6 million in revenue from parking, ticket sales, and naming rights that originally had gone to Glendale in the prior deal. The team is staying put for now, but the length of the new lease is shorter and raises speculation about the future of the team. Both sides are saying they are committed to making hockey work in Glendale.

 

However, it does raise the distinct possibility that the franchise could be relocated to another city in the near future. The new agreement provides the Coyotes ownership with an out-clause in June 2017, which is a full year earlier than the mechanism that would have triggered that clause in the original lease.

 

The NHL recently opened the process for expansion and groups from Las Vegas and Quebec City submitted formal bids. The now infamous exclusion of the expected Seattle bid from the process made headlines. The NHL has strong interest in the Seattle market and it would help balance the league which has two less franchises in the Western Conference. The main issue though is a lack of an arena suitable to host an NHL team for 41 games a season.

The three groups potentially interested in bringing hockey to Seattle have different plans for getting an arena built in that marketplace. Since none of the proposals were progressed far enough it is the reason given for their absence from the expansion process this past week.

 

I could see a scenario where the Coyotes are potentially relocated in a couple of years to the Seattle market once they have the financing and approval as well as begin construction on a new arena.

 

Valley of the Sun

 

In recent weeks, another potential option has emerged which could resolve this issue between the current ownership group of the team and the City of Glendale while allowing the team to remain in Arizona.

 

That resolution revolves around a proposal which was introduced recently in the state legislature regarding the construction of a new arena in downtown Phoenix. The proposal originally was targeting the use of the arena as an upgraded facility for the NBA’s Phoenix Suns, but now some politicians have floated the idea of including the Coyotes as a co-anchor tenant for the new arena.

 

In the event that this proposal is acceptable to all sides involved and the respective league officials involved this could be a win-win situation for the Valley of the Sun. The State of Arizona would keep both their NBA and NHL franchises, the teams would get a new building to call home, the fans would keep their teams, and the leagues -in particular the NHL- would not lose a top TV market.

 

Phoenix also could solve the attendance problems which have plagued the Coyotes because any area resident will tell you that rush hour traffic issues getting to Glendale coupled with the fact that the area around the arena in Glendale never properly developed, are two main reasons behind the difficulties with drawing fans to NHL games in that market.

 

The downtown arena in Phoenix would solve the issue because it would be far more accessible to fans travelling in from the suburbs or coming from work, especially for weeknight games. The NHL would probably support this move because they have been dogged in their determination to keep the Coyotes in the Phoenix market for years.

 

Alternate Plans

 

The situation surrounding the Coyotes future in Arizona gets far more uncertain if the public funding for a new downtown arena in Phoenix fails to gain passage in the state legislature. The current arena in Phoenix which houses the Suns is not a viable option for hockey because it requires an odd configuration to fit the ice sheet which causes many seats to have obstructed views, it is the reason why the Coyotes moved out to Glendale in the first place.

 

The alternative plan some have suggested of relocating the Coyotes to Las Vegas in two years certainly makes some degree of sense especially given the geography of the move. The team could stay in the same division and play within driving distance of their former home territory which could translate into a crossover fan base.

 

Conversely, the NHL would not be too keen on this idea because they would stand to gain a lot less revenue from this maneuver. The difference between a current team relocating and the addition of an expansion team is that the NHL can charge a new expansion team with an entrance fee. The entrance fee if the NHL expands into Las Vegas with a new franchise is said to be around $500 million which would then be split between the league and the owners.

 

A relocation of the Coyotes to Las Vegas would translate into a forfeiture of the entrance fee, and therefore, would probably not receive league approval. The same could be said for a relocation to Quebec City, which the NHL plans to ask for a potentially larger expansion fee based on the popularity of the sport in Canada.

 

I know someone who recently mentioned to me that the relocation of the Coyotes could be to a second team in the Toronto market. The issue with that move though is the outlandish fee that the NHL will make that team pay to the Maple Leafs to be able to share the market with them. That has been cost prohibitive to other efforts to add a second team to hockey’s largest market in the past. That scenario could work if they were to share the arena because the owners would save on that cost, but I think the NHL would prefer to have a team expand into that market for the same reasons I outlined earlier: the expansion fee would be much larger than a relocation of an existing team.

 

Therefore, if the Phoenix plan falters, the remaining move on the board, at least at this point is for the Coyotes to move their operation to the Seattle market. I think it will take two to three years for the Coyotes to make a determination on whether a move to downtown Phoenix is enough to save hockey in the desert. In that same vein, it will take Seattle two or three years to get their arena situation squared away.

 

The more information that comes out about the Seattle groups and the arena plans they have, it seems more improbable that it will get done unless something changes along the way. The Tukwila proposal would cost $500 million total financed privately by the business community and the potential ownership group. The Coleman group bid is connected to the downtown arena proposed to be built for an NBA team that may not ever happen (see my article on the new Bucks arena which was the best chance for Seattle to get a relocated NBA team and now is vanquished) because any change to make the arena project for a hockey team would require a change in the MOU between the city and the investors who own the land which is not happening.

 

The third ownership group has a plan for an arena in Bellevue but the issue is quite simple, they do not own the land to build it. The land in that suburb is not readily available and is not cheap. It could take four or five years to get the project done. The NHL is said through sources to prefer the downtown arena option over the suburban plans, but they all have issues on one level or another.

 

In the end analysis, as I wrote in the beginning this is all about money. The future of the Coyotes franchise will be wherever they can maximize revenues, if that is in Arizona they will stay. The more likely scenario is that in a few years this team and hockey in the American desert will be gone, and I feel terribly for their fans, it will be reduced to nothing but memories.

 

by Frank Maduri

Critical Condition: Lake Mead At Drought Level – Follow Up

In a follow up to an earlier story I wrote on this issue, the news out West is rather daunting: Lake Mead is at the lowest water level since the Hoover Dam was finished and the Colorado River reservoir was established back in the 1930s.

 

This vital reservoir which provides water to about 40 million people in its service area, is according to the AP, currently 39 percent full and 1,082 feet above sea level. These figures are alarming, they are even lower than the data recorded in November 2010 during that terrible drought, which I covered in my earlier piece on this issue. Lake Mead is at the lowest point since 1937.

 

In contrast, Lake Powell is 52% full and through the process known as control management, which I detailed in my original article, the two lakes can have water shifted from one to the other to balance out any deficiencies in the water level. The U.S. Bureau of Reclamation is considering utilizing both control management and conservation protocols in order to address the plummeting water level in Lake Mead.

 

Multi-faceted Cause for Concern

 

The current state of Lake Mead leaves a multi-faceted cause for concern at this point because not only is Lake Mead a popular recreational area and attached to the Hoover Dam which is a huge tourist attraction; the lake is also the main source of water supply for Las Vegas and the millions of visitors that resort city attracts each year.

 

I detailed in my earlier piece that Las Vegas already has multiple conservation methods in place and is very environmentally conscious with their reuse of water and other natural resources. Any type of water supply delivery cuts would have a significant impact on Las Vegas and both the residential population as well as the tourism industry which is the backbone of the entire state of Nevada’s economy.

 

The U.S. Bureau of Reclamation asserts that through the control management and other conservation methods they plan to employ, they should be able to stave off any water delivery cuts for a full year. The summer of 2015 though could be a very different scenario, and if these drought conditions continue, then delivery cuts to the water supply will have a detrimental impact on the Las Vegas area during the crucial summer vacation travel period.

 

In addition, a water supply cut during the summer months where the hottest temperatures will be experienced in the Lake Mead service area will create massive public health concerns.

 

Keeping Watch

 

The government entities involved will continue to monitor the water levels in Lake Mead and the other Colorado River based reservoirs to insure water supply deliveries are not altered in the coming weeks and months.

 

However, this drought raises concerns again over the demographic shifts in population growth to the American West, and whether the infrastructure can adequately sustain the new burdens placed on those systems.

 

This situation also raises more questions about climate change and the impact that it has had on the supply of water to the Colorado River, which then supplies Lake Mead and Lake Powell.

 

The unfortunate conclusion here is that this drought raises more questions that we do not have answers for at this point. It also points to the need for a longer term solution as these factors which drive the potential for water supply interruption are not going away any time soon.

 

(Statistics and some background information courtesy of AP )

 

 

by Frank Maduri

Lake Mead: Crisis or Climate Change?

The conditions at Lake Mead seem to get worse each year. It is the largest reservoir in the United States and it supplies water to 20 million people living in 3 states in the Southwest.

 

The water level in the lake is dangerously low and is anticipated to drop another 20 feet this year, which would place the water level perilously close to drought stage levels. This change in water levels would require the implementation of water conservation protocols throughout the region.

 

Lake Mead is the largest reservoir in the United States and the 16th largest man-made lake in the entire world. It is located 24 miles southeast of Las Vegas, and it is responsible for supplying 90% of the water supply for the internationally renowned tourist resort.

 

The reservoir is supplied water through the Hoover Dam and the adjoining Lake Powell via the Colorado River through snow melt in the Rocky Mountains and rainfall as well. The water level decrease is due to less snow fall in those mountain areas and shifts in rainfall patterns.

 

An Ongoing Problem

 

The water level decrease has been a consistent and ongoing problem over the past several years at Lake Mead. Since the year 2000, the reservoir has lost 4 trillion gallons of water. The Southern Nevada Water Authority which oversees the site, has significant concerns about the disruption in the water supply to Las Vegas and the surrounding areas served by Lake Mead.

Any disruption in the water supply would have a negative effect on tourism and for the residents of the resort city. The tourism dollars generated by Las Vegas and the other resort areas, fuel the economy for the entire state of Nevada, so the consequences here are steep.

 

The Southern Nevada Water Authority concedes that they have moved dangerously close to the drought stage water level before, but the weather pattern shifts have them very concerned at this juncture for the potential of a drought this summer.

 

Therefore, all of this data presents a central question: is this shift in water levels tied to climate change or is it a crisis? What steps can be taken to avert the potential for drought or water supply disruption? What role can technology or advancements in engineering play in this situation?

 

Las Vegas Misconception

 

The misconception about Las Vegas with regard to water use is that the city is excessive and wasteful when, in fact, the city recycles 93% of their water supply. The government also offers incentives for residents who remove their lawns to reduce the consumption of water.

 

These steps towards conservation leave very little more that the resort city can do to decrease their burden on the water supply system. In fact, the Las Vegas metropolitan area actually grew in population and decreased their overall use of water according to a report from CBS News.

 

In California, the government has placed restrictions on water use in several regions which are supplied by the reservoir in Lake Mead. So the effort toward water conservation is unified throughout the multi-state area supplied by this important reservoir.

 

Despite all of these efforts, the increasingly likely event of a drought persists to the south at Lake Mead, and the Colorado River which feeds the reservoir also shows signs of drying up. These are alarming events and the government is looking to take measures to avoid this situation.

 

Evasive Action

 

The way that the reservoir surrounding the Hoover Dam is constructed allows for the diversion of water from Lake Powell over to Lake Mead, so that is the first evasive action that will take place in order to avert a drought level event from occurring.

 

The water levels in Lake Mead coupled with the choked supply of resources from the Colorado River have left the water plummeting toward falling below the intake tunnels, which would be a disastrous situation.

 

In response to these shifts in water level, climate patterns, and “snow pack” in the Rockies, the government is drilling a new intake tunnel to feed Lake Mead which is further down below the surface than the other intake system.

 

According to a report by CBS News and information provided by the Southern Nevada Water Authority, they have a massive drill working on the new intake which will be completed in 2015 at a total cost of approximately $800 million.

 

Climate Change

 

What if this situation is driven solely by climate change? What if the levels of snow continue to vary and the rainfall patterns continue to shift? How will these factors impact the future of Lake Mead, and thereby the future of Las Vegas?

 

The National Park Service estimates that 96% of the water in Lake Mead is supplied by melting snow from the Upper Rockies region. What if the snow fall amounts in that region decrease over a sustained period of years? That would spell a catastrophe for the water supply in those areas of the American West.

 

The flow of the Colorado River has been slowing down over the course of several years. It is obvious that warmer temperatures will lead to more evaporation and a decrease in flow from the river. In the area of water management that decrease in water flow from the river is a big problem because the water is already over allocated.

 

Therefore, any decrease in water flow will have drastic consequences and result in some form of disruption to the water supply. Climate change in the form of rising air temperatures will result in higher ozone levels which will impact power plant emissions which would be limited by the government to comply with ozone level regulations.

 

Higher air temperatures and drought conditions would cause increased health problems such as asthma, stroke, heart attack, and other respiratory or cardiovascular issues throughout Nevada. That would put the elderly population there at high risk and also drive up the cost of health care.

 

Uncertainty

 

The future of Lake Mead and consequently, the water supply for people living in three states in the region, is uncertain. The experts admit they have no idea what impact this new intake will yield in 2015.

 

Many groups have suggested solutions to the water supply issues with the Colorado River and the reservoir at Lake Mead. It remains to be seen whether this situation will be isolated or if it is a crisis that will plague the region in the future.

 

Some people have called for the building of more dams, others have suggested the implementation of other systems to retain more water flow from the Rockies and contain the amount currently lost in runoff.

 

However, still other groups believe that the world is changing and that water conservation and other steps will only take the region so far; that life with water restrictions is going to be the rule rather than the exception. The future will be a lifestyle where the limitations on water will be an everyday part of living in that region.

 

I was struck by the amount of information that predicts a very bleak future for the water supply in Nevada and parts of Southern California. I have worked in the past with the Southern Nevada Water Authority, and they are very open minded about solutions and highly committed to providing the best quality water that they can in the conditions they are functioning within.

 

The future of this matter may be uncertain, but some aspects remain clear. A solution to this water level problem is needed before it reaches a crisis level. I hope that solution is found before it reaches that point. The future of Las Vegas depends upon it.   

 

(Statistics and background information courtesy of CBS News, Science World Report, Las Vegas Sun, National Park Service, Sierra Club, Southern Nevada Water Authority,  and NBC News)

by Frank Maduri

TV Markets and the Expansion of Sports – Part 4

The demographics of a city or metropolitan area, their media market size, the support of the political leadership in the city and the support of the business community are important aspects in determining the expansion of a professional sports league.

 

In this fourth installment of this series, the focus will be on the National Hockey League (NHL) and the potential expansion opportunities for a league which is rapidly growing in popularity. The NHL has witnessed some outstanding revenue growth in recent years which enabled them to obtain a huge television and media rights deal with Comcast/NBC (www.nbcsports.com).

 

In 2012 and 2013, every playoff game from every series was televised nationally via the Comcast/NBC for the first time in the history of the league (www.nhl.com). The NHL has long been considered the “fourth league” of the “Big 4” professional sports in the United States, but the ratings are growing exponentially.

 

The 2013 Stanley Cup Final between the Chicago Blackhawks and the Boston Bruins was a ratings record breaking series on NBC (www.nbcsports.com). This was in a year where the league had a lockout shortened season over a revenue dispute between the owners and the players union.

 

Realignment

 

The NHL realigned their divisions for the 2013-14 season into two conferences with two divisions in each conference. However, unlike other sports, the conferences are unbalanced.

The Eastern Conference has two divisions of eight teams each for a total of sixteen teams. The Western Conference consists of two divisions of seven teams each for a total of fourteen teams. That brings the total number of teams to 30, but many reports have indicated that this uneven conference split was done with expansion in mind.

 

The most obvious expansion would be by two teams to a total of 32 and have both of those teams be added in the Western Conference to balance the league. Numerous sources close to the league have reported that the increased revenues from two additional future expansion teams via the league entry fee and the entry into two new markets was part of the discussion during the lockout negotiations (www.cbssports.com).

 

The other rumor circulating throughout the media is that the NHL may expand by four franchises in the near future. If those reports are true, that would mean a significant revenue infusion to the league through the expansion franchise entry fees and subsequent introduction into four new marketplaces in North America.

 

The TV market metrics are probably the least important in hockey than in other sports because the average person and the consensus among the casual sports fan is that hockey does not translate well to the medium of television. Now, NBC has tried to enhance the broadcasts to change some of that perception and offers some unique camera angles and outstanding production value to their hockey telecasts.

 

However, the NHL makes their money with the live game experience. Last season, following a protracted labor stoppage, the hockey arenas in the NHL averaged game attendance levels at 95% of capacity (www.nhl.com). The NHL live game experience is, in my opinion, the best sporting event to attend.

 

The NHL executives and franchise owners know that they will get their die-hard fans in the building for the games and they have proven that, in a recession or otherwise, those fans will spend money at the games. So the addition of four potential new franchises could bring in more revenue through in-game expenditures, season ticket sales, luxury suite sales, and merchandise sales.

 

North of the Border

 

It is important to note that unlike the other major sports, Canada is a legitimate expansion area for the NHL, and a likely area of future expansion. The sport of hockey is so well loved and supported in Canada, that the NHL could put a franchise basically almost anywhere in that country and it would be a successful venture.

 

That type of widespread and virtually assured support cannot be found in the U.S. hockey marketplace, but it is surprising how well the NHL has done in cities such as Nashville, Tampa, Dallas, San Jose, and Anaheim.

 

The list below will also demonstrate that the interest for an NHL franchise in some U.S. markets is very high at this point.

 

Potential Expansion Markets

 

The following cities are potential candidates for expansion franchises in the NHL (all TV markets data courtesy of www.stationindex.com – all Fortune 500 company information courtesy of www.money.cnn.com – and all Metro Population data courtesy of www.census.gov ):

 

  • Seattle, WA – Has emerged as a very strong candidate for expansion based on the plans to build a new arena in the downtown area. The location, and population size and demographics make it a good fit for the NHL.

TV Market Rank: 14th

Metro Area Population Rank: 15th

Fortune 500 Company HQ: 4

Synopsis/ Outlook: The Seattle bid gained traction with the league when the Phoenix Coyotes looked as if they may relocate. The NHL quickly lined up Seattle as a potential alternative site to move the franchise. They even had an ownership group lined up. The location is key for this bid because it addresses a region (Pacific Northwest) where the NHL has no current presence other than the Vancouver Canucks. The population and TV Market sizes are very good, and corporate support would be strong. The population is hockey-savvy as they have several youth hockey and minor league hockey teams in the region. The arena situation would be the murkiest part of the bid today. The team may have to play temporarily at the Key Arena, which would be very small for hockey and has a strange configuration for hockey. The new arena being planned (see Part 1 of this series) is primarily for the NBA expansion team. The hockey team is viewed as the second tenant. I do not know if they would build the arena solely for a hockey team with no assurances from the NBA on a future expansion franchise for the city. Overall a very strong bid.

  • Quebec City – The second most widely regarded bid from NHL insiders is the bid from Quebec, which of course, was home to the Nordiques until they moved to Denver in the mid 1990s. A historic city with a rabid base of hockey fans.

Synopsis/Overview – The TV markets and other data does not apply to this Canadian city. The potential for regaining an NHL franchise is of tremendous importance to this city. The Mayor and the city government in Quebec City approved a new arena without a team or the assurances of an expansion team. In a “if we build it they will come” type of move they are currently in the construction phase of the new arena which is next to the old arena where the Nordiques once played. The NHL was so impressed with the confidence of the government and the people there, that the Quebec bid is thought to be a very strong one among league insiders.

  • Houston, TX – A “dark horse” candidate but a place that has shown interest in the past. It was one of two cities (Hartford was the other) that was used as a bargaining chip by the Penguins ownership to get the new arena in Pittsburgh done.

TV Market Rank: 10th

Metro Population Rank: 5th

Fortune 500 Company HQ: 23

Synopsis/Overview: Houston has some very strong positives for a NHL expansion bid including excellent demographics and TV market rankings. The city has a rapidly growing economy and is home to a whopping 23 Fortune 500 companies – so the right ownership group and strong corporate support would not be an issue. Due to the rapid economic growth the city has a changing population with transplanted residents from across the country. The bid would pitch the fact that the changing demographics mean more hockey fans living within the city metro area. The arena is state of the art and hosts the NBA’s Rockets currently. This bid has potential, and hockey has been successful in Dallas, but the league may be resistant if they are unsure of long term fan support with all the other major sports already having a presence in that market.

  • Markham, Ontario (other Toronto area city) – Toronto is the largest hockey market in the world. It currently has one team, the Maple Leafs, and they have struggled for a long period of time to get back to relevancy.

Synopsis/Overview: Since the other metrics do not apply here in a Canadian market, I will summarize this complicated bid. The issue here is that the league office and ownership had great support behind a bid for a second team in the Toronto market. In the past two years, some of that support has waned. The reports I have read indicate now that the Markham bid, or a bid by another Toronto area city, would very likely not get approved if the league expands by two franchises. It would have a better shot of getting in during the next round of expansion by two teams. The rationale behind this is two-fold: 1. The Maple Leafs are not thrilled about sharing the market with another franchise, especially an expansion franchise that will cut into their revenues directly. 2. The front runners for expansion at this point are not two Western cities which the NHL would need to balance the two conferences. Tim Leiweke who is a top executive with AEG (owner of arenas and sports teams) did a presentation last week and during the Q & A session which followed he stated the second Toronto team may not happen at all. He stated that the meetings he was involved with have Seattle and Quebec as the two front-runners and Kansas City and Las Vegas as very strong contenders for the second round of expansion(www.yahoo.com)  This would make sense because Quebec would bring the Eastern Conference to 17 teams, and Seattle would bring the West to 15 teams, and then the potential additions of two more Western teams would balance the league at 17 teams in each conference (total of 34 teams). Markham just approved financing of $350 million for an NHL caliber arena north of Toronto (www.cbc.ca). It could be very interesting what happens here with this bid. The University of Toronto commissioned a study which was reported by the CBC that the country of Canada could easily support 12 NHL teams (they currently have 9 teams in Canada). However the concentration of wealth in Toronto is what makes that market so attractive to the NHL. It is a risk to build an arena, but Markham decided in a slim margin in their city council vote, that the risk was worth taking.

  • Las Vegas, NV – One of the most popular tourist destinations in the world would provide a very robust stage for the NHL to showcase their international star players.

TV Markets Rank: 42nd

Metro Area Population Rank: 31st

Fortune 500 Company HQ: 4

Synopsis/Overview: The Las Vegas bid is considered within many circles close to the NHL to be a very strong potential contender for a franchise. The TV market ranking is a little low (Buffalo has an NHL team and is 51st) and the TV market as I stated earlier is not looked at in hockey as crucially as it is for other sports. The population is low too, but the league has several current franchises in smaller metro areas currently. The three biggest issues with a potential Las Vegas expansion bid are: the selection of a stable ownership group, the ability of the metro area population to support a team for the long term, and the arena. The NHL offices have expressed issues with the arena situation there numerous times in the past through various media reports. The largest arena in the city, The Thomas & Mack Center, does not have an ice sheet. That means that the temporary home for the team would have to be the MGM Grand Garden Arena which seats about 16,000 for hockey which is small (www.cbssports.com). However, MGM and the before mentioned AEG group recently announced a joint partnership on a brand new 20,000 seat arena to be built between the Monte Carlo and the New York, New York Casino Hotels (www.finance.yahoo.com). Just last week, the first renderings of the new Vegas arena went public. It will immediately be able to host an NBA or NHL team. The project is slated to begin in April 2014 and be finished in 2016. This project addresses the key issue the league had with Las Vegas. The NHL has always talked about wanting to be the first professional league to tap the Vegas market, and one final note, Jerry Bruckheimer is very close with the top executives at AEG. He has openly discussed wanting to own an NHL team in Las Vegas. A very strong bid made stronger by the new arena project.

  • Kansas City, MO – An interesting bid it would open up that part of the Midwest to the NHL and create an instant rivalry with the St. Louis Blues.

TV Markets Rank: 31st

Metro Population Rank: 30th

Fortune 500 Company HQ: 2

Synopsis/ Overview: Kansas City was also included in the NBA potential expansion bids. The strength of the bid is still the arena, Sprint Center, which is world class and has no permanent tenant. The taxpayers want a team for the building since they approved tax money to build it. The political goodwill is very strong here, and the corporate base would be supportive of an NHL team, though that support could be better in other cities with less sports teams already (Kansas City has the Chiefs in the NFL, and the Royals of MLB) and the other issue that may or may not be a mitigating one (depends on what reports you read) is that the NHL was already in Kansas City (the Scouts) and it lasted only a couple of years and the team struggled to get attendance and fans, so they moved to Colorado and rebranded as the Rockies. The Rockies eventually moved to New Jersey and became known as the Devils (www.nhl.com). So much has changed economically and demographically since the time of the Scouts that I think it is an unfair comparison to hold against Kansas City at this point. This city has a solid bid and the NHL brass will have to determine if it is worthy of a team when comparing all the variables as compared to the rest of the cities on this list.

 

The Future

 

The unique aspect about the NHL part of this series on sports expansion is that the league intends to expand. The other leagues talk about expansion as an eventual thing if all goes well, other leagues like the NBA only want to expand by one or two teams to avoid splitting revenue dollars further.

 

The NHL is fairly aggressive in their expansion goals. They have talked at media events in the past about expanding within certain time frames. This list is a very viable list of cities that could very well be hosting an NHL team in the next three to five years.

 

In the event that the reports are true and Seattle and Quebec City are the front runners for the two expansion spots, that would probably create a second round of expansion because of the geography and politics involved.

 

The entry of Quebec into the Eastern Conference would still leave the East with more teams, so the NHL would have to add two more teams in the Western Conference to balance the league. The relocation of one of the current teams in the East being sent to the Western Conference would be highly problematic from a political point of view.

The owners of the Detroit Red Wings and Columbus Blue Jackets fought for years to get moved into the Eastern Conference, and now that they have moved East, then the league will be reticent about moving one of them back to balance the conference sizes.

 

If you are a hockey fan, that is exciting news, and if you are not a hockey fan, but you are a sports fan; then it could give you something else to do while on a long weekend in Las Vegas in the future.

 

The final part of my series will be up next and that is the future expansion of MLS (Major League Soccer).