The Strategy Behind Building Sports Arenas

The conclusion that I have come to over the past four and a half years of writing pieces centered on the topic of sports arenas, is that a strategy exists in getting these deals done that is far more intricate than many would believe. These strategies involve the team ownership, the league office, as well as political and business leaders.

These strategies could involve a real estate developer if they are not already involved as part of the ownership group, and they can involve civic groups or environmental groups depending on the project.

These arena development agreements for sports can be complex and involve tax payer dollars, or they can be privately financed which inherently leads to other issues in that circumstance.

The strategy behind the building of a sports arena was on full display over the past two days with the situation in Seattle. The lack of an updated venue that met current NBA or NHL standards was the main reason why the Sonics moved out of the city about nine years ago. The city had been working with a developer for a proposed new sports arena in the SoDo neighborhood, which was proving to have too many cumbersome hurdles.

The city shifted their priority to the old Key Arena at Seattle Center and fielded development proposals to renovate, expand, or rebuild a new arena on that site. The Oak View Group had the winning proposal, and on Tuesday, the city government announced the agreement of a newly renovated and expanded world class arena on the Seattle Center site built entirely with private funds.

The residents who pined for the return of the Sonics, and the sports fans that dreamed of an NHL expansion hockey team in the Emerald City, rejoiced because they had finally a light at the end of the tunnel with this news. The last, and most important, major hurdle for the city to gain at least one, if not two, new major league teams was seemingly cleared.

The old adage: “you never know what tomorrow will bring” is certainly true in Seattle; where residents woke up the next morning to learn that the Mayor of Seattle announced his resignation amid an alleged sexual misconduct scandal, and that the arena plans for Seattle Center were put on hold indefinitely.

In addition, in a related story, Wednesday brought the news that the Calgary Flames and their new arena negotiations with municipal officials were broken off with no resolution. This situation has been brewing for several months with proposals and counter-proposals being made by both sides, with no substantive progress being made toward a functional plan.

The surprising element of this situation is that the incumbent mayor, Mayor Neshi, was publicly acting as if the new sports and entertainment arena was part of his vision for the future of the city. The Flames management held a Wednesday press conference to refute that vision by stating that Mayor Neshi has not advocated at all for a new arena, and was insinuating to the public another stance in order to win the votes of hockey fans.

The NHL league office sent a strongly worded message to the Mayor, and the components of these arena deals are riled up north of the border. This news that the Flames had put $200 million on the table toward the development of the new facility and then even changed the site from one end of the city to the other, immediately bowed to speculation that the team would relocate to either Seattle or Quebec City.

The Flames management stated that they will continue to play in the second oldest arena in the NHL, while the other teams enjoy the advantages from better revenue streams achieved by playing in a new facility. However, they also insinuated that they will keep the relocation option on the table. The Mayor does not have to change his stance because polling shows that the people in Calgary do not want to use public money on a new arena.

The relocation to Quebec City is always going to be a hot topic, as they took an entirely different approach and pulled out all the stops to build a new arena a few years ago with no guarantee of an NHL team coming there either through expansion or relocation. The NHL passed them over for expansion in this last cycle, choosing Las Vegas to expand the league into, citing the weak Canadian dollar at that point in time.

A group of NHL players were surveyed recently and the majority of them selected Quebec as the place they would like the league to expand to in the future. This was ahead of Seattle and Houston on the list of choices. Quebec will always be a popular spot because of their history in the league with the Nordiques, and the nostalgia that hockey fans have for that team and for the rivalry with Montreal to be reinstituted.

Quebec took the step of making the most difficult hurdle in gaining a new franchise, the arena, the easiest step by building it. The residents, business leaders, and politicians were all on board with getting an NHL team, now they will wait to see if that maneuver will provide the desired end result.

The New York Islanders are involved in a new arena quest as well. The main issue is that when the team moved from Nassau Coliseum to Brooklyn, they underestimated the significance of the Barclays Center being built for basketball and the impact that would have on the hockey fan experience.

The sight lines for hockey at Barclays are terrible, the scoreboard is off center in the orientation to the rink, and the ice conditions are awful because the arena does not have the right pipes to adequately keep the water temperature low enough. It is a total debacle and the team is looking at two potential sites in Queens: one near Aqueduct Racetrack, and the other next to Citi Field where the New York Mets play baseball.

The league office has completely shut down any potential for the Islanders to return to Nassau Coliseum (which was renovated completely and is now a smaller seating capacity) and pursuing the Queens options. Many people in recent polling believe that the Islanders arena, another new arena in the NY metro area is unnecessary, so it will be interesting to see how this situation works itself out.

The New York metro area is one of key significance for the NHL and with the Rangers and the New Jersey Devils, the league has three franchises in the region and has a vested interest in making sure that all of them are given the best possible opportunity to remain profitable.

The scenario with the Islanders searching for a new home is similar, yet different, to the Arizona Coyotes and their ongoing struggle to find a new arena closer to the population center of the Phoenix market. The Coyotes have had issues for years on the business side, and the dispute with the Glendale municipal government involving the arena lease terms are just the tip of the iceberg.

The ownership group of the team appeared to have a deal in place with Arizona State University for a new arena being built in Tempe, but that deal fell through in February 2017. The focus now is on a few other sites in the East Valley and this boondoggle for a new arena will continue for the foreseeable future, as will the inevitable relocation rumors.

However, relocation seems unlikely as the NHL is unbalanced and needs more teams in the West, they would not move the Coyotes to Quebec, and the situation in Seattle is murky at best. The league remains bullish on keeping a team in the Phoenix area because they are enamored with the media market size.

The Phoenix Suns are also seeking a new arena to replace their current aging home court, and the NBA league office is, of course, willing to back the team up on getting the public funds squeezed out of the government to get that accomplished.

The state and municipal level governments in Arizona are looking at a scenario where the Coyotes, Suns, and the MLB team, the Arizona Diamondbacks; are all seeking taxpayer funding for public/private arrangements to build new sports venues. The resulting idea within the state assembly there is to build a sports arena in downtown Phoenix that would be shared by both the Suns and the Coyotes in order to save the outlay of total public funds.

However, the reports out of Phoenix are that the Suns ownership is not on board with sharing a facility and want their own facility in the downtown area. The Coyotes are in a different situation, they have stayed publicly mum on the shared arena concept, largely because they would probably play anywhere other than in their current arena in Glendale. It is a situation that is complex, has a ton of moving parts with proposed arena sites on Native American tribal lands, and a host of other issues that merit watching in the weeks ahead.

The Carolina Hurricanes are the final situation with arena management and potential relocation that will be explored in this analysis. The team is about to be sold from Peter Karamanos to Chuck Greenberg but the sale is not completely finalized yet.

The arena lease is key to the sale because the team has been the source of relocation rumors for the past four or five years. Carolina does not have the corporate sponsorship opportunities of other, larger markets. The Hurricanes have not had much on-ice success in recent years which has put a subsequent drag on attendance levels.

The current arena lease between the group that controls the arena and the Hurricanes is seen as one of the most favorable lease agreements from the perspective of the team as far as being a tenant in a building. The PNC Arena is in need of some renovations and improvements which many believe will be done once Mr. Greenberg affirms that the team is staying in North Carolina.

The consensus from some within the NHL circles is that the team could relocate to Quebec, but in many ways that may not make sense from a business perspective. The ownership, in this case Greenberg, would have to pay a steep relocation fee to go to Quebec. In this case, the ownership could use that money as their portion of a public/private agreement to construct a new arena in North Carolina.

The case for a sports arena is dependent upon so many variables and involves many shifting priorities and calculated interest groups from politicians, to team owners, to the league office, and local business leaders. The case studies, individually must be taken on balance, I understand all sides of the situation.

The owners feel that the municipal governments stand to make a lot of money on the ratable tax revenue from the arena, the public feels that they should not have tax money go toward the construction of a facility of this type, and the cities that do not have a new sports / entertainment venue miss out on the latest acts or could lose a team over it. All of these variables are valid, and all of the scenarios I laid out will continue to develop from Seattle to Phoenix and beyond in the months ahead.

The Politics of Sports: The Seattle Arena

The politics of sports has been on display fully over the past week with the announced plans for the Seattle arena. The city decided that their best option at this point is to move forward with the proposal from Oak View Group (OVG) which involves a complete renovation of the old Key Arena at Seattle Center.

This option was chosen and recommended by the Mayor and other politicians involved over the proposal from Seattle Partners, which also had a plan to renovate “the Key”. However, their plan contained some elements that concerned some key people in the city government. They officially “withdrew” their proposal ahead of not being chosen just before the announcement was made late last week regarding the arena plan for Seattle to gain either an NBA or NHL franchise.

The other option on the table is the SoDo arena concept pushed by Chris Hansen and his group of investors, which he has spent huge sums of his own money obtaining land in that part of the downtown area with the goal of getting the Sonics NBA team back to the city. The plan involves the vacation of a roadway which is very unpopular with the politicians as well as a location that is close to the Port of Seattle and the major outdoor stadiums for their other professional sports teams.

This location coupled with the change to the roadway grid and the potential for traffic congestion near the Port, all are factors that are stacked against the SoDo arena concept. Those factors outweighed the amended proposal from that investment group that stated that they would develop the site and construct the arena completely with private funds.

The renovation of the Key Arena at Seattle Center will be a public/private partnership arrangement for the financing, which is admittedly unpopular with some Seattle residents. The OVG proposal involves keeping the iconic roof structure of the facility intact while essentially gutting and rebuilding the entire existing interior structure. It will reconstruct the entire seating bowl and their plan for the site involves digging below ground to expand the footprint of the building while maintaining structural integrity. It will also be an environmentally friendly building project, with LEED certification processes involved in the various aspects of the construction of the renovated facility.

NHL Response

The NHL was contacted almost immediately after the news that Seattle was moving forward with the OVG renovation project for an arena that would meet NHL standards. The NHL Commissioner, Gary Bettman, issued a statement that essentially stated that the NHL has had no contact with Seattle and has no plans to expand the league at this point.

The politics of sports on the professional stage was in full effect here as well. It is no secret that the NHL has interest in expanding to Seattle. The demographics of that market make so much sense for the league in several metrics, that they would be foolish not to explore the option. The OVG proposal added two partners that are keen on getting professional hockey to Seattle, which was noted in the press release of the announcement.

Bettman is playing his cards here because he does not want to discourage other markets interested in potential expansion from thinking that Seattle has any sort of inside track to what will probably be the last slot available in the NHL for a very long time. The NHL has a conference alignment issue with 16 teams in the East and 14 teams in the West. The league took one step toward correction of that imbalance with the addition of Las Vegas as an expansion franchise beginning next season.

The assumption is that they will add one more team in the West to balance the two conferences and the league for scheduling and other purposes in the somewhat near future. The OVG group stated that the proposal is still pending approval and they will need at least 2 years probably closer to 3 years to get the entire renovation at Key Arena completed.

Design Concerns

Some area residents are not happy because they did not want another major sports team or teams playing in that neighborhood. This is a very political issue and the design of the building and the mass transit plan for light rail access is part of the proposal from the city level to alleviate traffic concerns.

The design of the building was also a point of concern for residents of that neighborhood. Some concerned parties did not want a monstrous new arena going into that Seattle Center site. The trend in sports arenas is for larger footprint buildings packed with amenities for fans and concert attendees.

The OVG plan for Key Arena accomplished providing more amenities without dramatically increasing the overall footprint of the facility by proposing to dig below ground and implementing those amenities in areas below the current street level. The plan for the renovated facility also calls for improvements to the park area around the Seattle Center, which should be viewed favorably by the residents.

NBA: “Cutting the Pie”
The return of the NBA to Seattle is an entirely different situation. The topic of expansion for hockey has been an active one, with Las Vegas set to join the circuit and with the imbalance of teams alluded to earlier. The NBA is in a different stage in their life cycle as a league. The owners and the league office just agreed recently to a new TV and media rights deal that will reap them significant economic revenue which is divided up among each member franchise.

The NBA owners are currently not eager to “cut the pie” into more pieces by adding more franchises. The amount of the expansion fee would be offset by the amount that the new team gets as their portion of basketball related income. The NBA also has no franchises in a situation where relocation is being discussed.

These factors, when all are taken into account, amount to the fact that the Key Arena renovation, if approved, is going to take approximately three years to complete from the point that permission is given for renovation work to begin. The NBA is not planning to expand any time soon. The NHL has other interested cities in expansion, but they may never expand to Seattle for a variety of reasons.

The politics of sports in this situation leaves the SoDo arena proposal in serious jeopardy. The time, effort, and money spent by that group is going to upset some powerful people in that city if that proposal is rejected by the political groups involved.

Up In Flames

The politics involved in the Seattle arena decision also could become a leverage play for another team: the Calgary Flames. The president of that hockey team, Brian Burke, commented to a group of business leaders at a team function recently that the franchise could move out of Calgary if it does not get a new arena.

He continued his comments reportedly by stating that the Flames had relocation cities under consideration if they were to ultimately decide to move the team out of Calgary. In that scenario, once relocation is brought up, Seattle is not very far behind. It is no secret that Seattle wants an NHL team, and the opportunities for relocating an existing franchise are very unique and infrequent.

The Calgary Flames have presented their vision and plan for a new arena and entertainment district with other real estate development around the new facility that has been deemed “unsustainable” by the political powers that be in that city. This is where the friction between the city and the team began.

The Flames play in the SaddleDome which was built when Calgary hosted the Olympics in 1988. It is among the oldest arenas in the league, a fact that supports the team ownership and their contention that it needs to be replaced. The Mayor and other politicians have stated that they do not support using taxpayer money to fund a new arena. This could get very sticky, and the speculation over the future of the team in that city will follow suit.

It is doubtful that Calgary will leave a city that they have an established fan base within and have over 30 plus years of history. It could be that Seattle is a leverage play, as I mentioned before, or it could become seriously considered for their future. The primary issue is that Seattle lacks a suitable arena for at least three years.

Another option to watch is the Flames using Quebec City as either a chip to secure their own new arena deal, or for a real alternative should the political situation with Calgary become untenable. Quebec is a whole different scenario because they have an NHL ready arena built and fully operational, they just lack a team.

It is all part of the politics of sports and it has played out in two places, Seattle and Calgary, in a week. Those two situations are just a drop in the bucket, wait until next week, and the next potential issue with politics and sports will be right around the next bend.

NJ Devils: West to East Coast – The Road Ahead

The New Jersey Devils lost yet another game on the road last night to the Chicago Blackhawks in overtime. Since the teams reached the extra session, the Devils will earn a point in the standings for the overtime loss, but it still leaves an unsettling feeling for the fans. This 2016-17 Devils team has struggled on the road so far, and the reverse is also true: the team has been very strong on their home ice (7 wins, and only 2 losses – both in overtime) which has buoyed their overall performance.

There are some fans and local “beat” media types that are quick to point out that many of those games where the Devils performance has lacked are in games against top tier teams or teams with winning records, for the most part. They would also be correct in generalizing the effort of New Jersey being very resolute in many of those games, where they have battled to stay in those losing games rather than give up.

However, in my view, the fact that the Devils have played 14 games on the road this season and have won just 3 of those games and lost 11 times (7 in regulation and 4 in overtime), is a concern. I can concede that it is still early, there is a great deal of hockey still left to be played; but the reality is that these trends get entrenched and they are difficult for teams to turn around.

In addition, the team has been without star forward Taylor Hall who was out with an injury until his return last night to the action in Chicago. Hall does significantly impact the manner in which the team approaches the strategy to a given game. His ability to use his speed and skating ability to push the puck forward puts pressure on the opposing team and changes the way in which the Devils hold the zone offensively and transition the puck as well. That type of impact cannot be underscored. It obviously remains to be seen how a healthy and effective Taylor Hall as well as the health of other key players impacts the performance of the team on the road as the season moves forward.

The silver lining in the case of a tough team like Chicago is that the Devils will not have to play there again this season. The Devils also dealt with a trip to the West Coast already and subjected themselves to that gauntlet. The point being that they have put some of the more difficult road trips behind them.

It should also be noted that the Devils schedule is “back loaded” with home games in the second half, which if they play to their potential and are in the mix for a wild card playoff spot, they should be able to win several of those home games, so they figure to be well positioned in the long term.

Conversely, they have not played many Metropolitan Division opponents so far this season, so New Jersey has some difficult games ahead against teams in the top of the standings such as the New York Rangers, Pittsburgh Penguins, and the surprising Columbus Blue Jackets.

In addition, the Devils have several games remaining with the top teams from the Atlantic Division such as the Montreal Canadiens, Ottawa Senators, and Boston Bruins. It is going to be “tough sledding” until February where they have nine of their eleven games that month are at home at Prudential Center.

In the meantime, we will learn if Travis Zajac has found his scoring touch again after the hat trick last night. We will see how the new defensive pairings for this season hold up under the crucible of Metropolitan divisional rivalry games. We will see if the young Devils prospects can continue to contribute in the various facets of the game on a consistent basis.

The Devils have areas to improve and they have areas where they have been surprisingly better than anticipated, but that is not unlike many other teams at this point in a hockey season. It remains to be seen how the road ahead will treat New Jersey, but I know one thing: they have to figure out a way to win games away from Prudential Center, or else this season will be over before we know it.

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.

 

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)

 

 

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).

Phoenix Coyotes Update: Team Staying in the Desert

In a follow up to an earlier entry about the Phoenix Coyotes hockey team, it was announced late last night that the City of Glendale voted to accept the arena management deal with the new Coyotes ownership group. This all but seals the future of the team in the Valley of the Sun, for at least the next five years.

 

The NHL will sell the Coyotes franchise to Renaissance Sports & Entertainment (RSE) shortly now that the lease agreement has been ratified, according to ESPN and other sports sources.

 

The RSE group will purchase the Coyotes, a moribund franchise which the NHL had to take control of during the bankruptcy of former owner Jerry Moyes in 2009.

 

The vote was very close though in the Glendale City Council meeting last night 4-3 in favor of ratification of the arena lease deal (www.espn.com) with the dissenting members of the council having misgivings about the length of the deal and the money the City is putting toward an arena and a hockey team. One city council member quoted by ESPN said that she would have rather had this money go toward education improvements.

 

Sticky Situation

 

The City of Glendale though was in a sticky situation because they chose to build the arena with the intent of the Coyotes being the anchor tenant. According to ESPN and other sources, the arena cost $220 million to build in 2003 of which the city put in $180 million from tax revenue. The arena would have almost certainly failed without the anchor tenant, the Coyotes, taking 41 dates per year for hockey games.

 

The arena management deal is for 15 years and Glendale will pay RSE $225 million to manage the operations of the arena. That was seen by the City Council as a huge expenditure of funds without any insulation for losses if the team leaves.

 

The other big issue is that the team can still leave, there is an out clause in the deal that allows RSE to relocate the team after 5 years or if the group takes $50 million in losses on the team. Either scenario is possible given, as I detailed in my earlier coverage of this situation, the fact that the Coyotes are dead last in attendance in the NHL.

 

The City of Glendale essentially built their own out clause in the deal which has RSE paying the city for any losses in revenue above $6 million if the team should relocate at any point in the course of the deal (www.espn.com).

 

The Key for RSE

 

Many reporters and others who have followed this story closely believe that the announcement by RSE that they had agreed to a partnership deal with Global Spectrum, the huge arena and stadium management company, was the key for them winning the vote last night.

 

Global Spectrum is a respected company with a reputation in the industry for successful management of sports and entertainment facilities.

 

It was widely reported yesterday that Global Spectrum is familiar with the market there in Phoenix because they manage the events at the University of Phoenix Stadium across the street from the arena in Glendale (www.espn.com).

 

The help of Global Spectrum gave RSE the confidence to project $8.5 to $11 million in revenue for the City of Glendale as part of the better management of the arena, this is also according to ESPN.

 

Westgate and the Future

 

The reports I read detailed a scene where several people watched on closed circuit TV in overflow areas around the Glendale City Hall building last night for the vote on the future of the team.

 

According to those same reports, some people cheered and others booed as the news came in of the vote to ratify the arena management deal with RSE. It is clearly a divisive issue for the people in the Phoenix area.

 

I also read reports that the city council was being pressured to ratify by the small business owners in Westgate, which is the area of Glendale developed right around the football stadium and the arena. The city had sunk money into developing Westgate, and many small business owners were certain that without the Coyotes the arena would probably close.

 

The ripple effect being that the arena closure would dramatically impact their businesses in Westgate, and mean potential lost jobs and further lost tax revenue.

 

The future of the Coyotes gained some certainty with last night’s vote but it remains to be seen whether RSE can make a very difficult situation work: hockey in the desert. Other owners have tried and failed. I detailed the issues with the location of the arena and the traffic to get to weekday games in rush hour.

 

I also do not think many people care about the team there, I never thought it was a good fit for Phoenix or the NHL. The other big factor there that is not present in many other NHL cities is that the weather in Phoenix is actually really nice during January, February, and March. In many other places the weather is lousy so people go to indoor events like an NHL hockey game.

 

Meanwhile, the saga of the Coyotes is over for now at least, and the media and fans there can move on to the non-business related aspects like talking about the players and the team as they prepare to play a truly “new” season in the history of that franchise.

 

The New Jersey Devils Sign Dainus Zubrus

The New Jersey Devils had big news today: the team agreed to terms with Dainus Zubrus on a new contract. The news was broken by www.nbcsports.com and the deal according to their report, is a 3 year deal worth $3 million per year.

On a personal level, I am very excited about this move because Zubrus is a fan favorite on the Devils roster. I really enjoy watching him play, and I am glad he did not leave via free agency. He has played for 6 years for the Devils and his original deal paid him at a rate of $3.4 million per year (www.nbcsports.com).

A Pay Cut – no big deal

The media has spun the fact that Zubrus took a pay cut today, but he had played overseas for years before joining the Devils. So he is now 35 years old and coming off a bad season in 2013. He had 2 goals and 9 total points in 22 games in 2013 (www.nhl.com) and he also had wrist surgery last season, which I think contributed to the poor performance. A player like Zubrus gets a lot of velocity on his shot and the torque on his passes from his wrists. When that area is injured, then a player can have difficulty adjusting their game.

However, I think Zubrus is going to bounce back and have a very solid year for the Devils in 2013-14. I think he is capable of producing goals for this offensively starved team. I think he wanted to come back to the Devils, and he also knew that other teams probably would not offer him more than a 1 year deal coming off that poor season in 2013. He has been loyal to the Devils, and they showed faith in him by giving him a 3 year deal at 35 years old.

I also do not think it is a big deal that he took a pay cut, he is also thinking about the entire team concept. The Devils have to negotiate with several free agents this offseason including Patrick Elias and David Clarkson.

The NBC Sports.com article I read also mentioned that the timing on the Zubrus deal was deliberate to help persuade David Clarkson that the Devils were willing to bring back veteran players to make a serious playoff run. I also think the timing was deliberate with the Draft approaching this weekend, the Devils wanted to make sure that they had one of their top forwards signed in case they do not get the player they want in the first round.

Impact on the Draft

I still think that the Devils can obtain a top offensive prospect in the Draft, but this pick is a big one for the organization because the Devils do not have a 1st round pick next year. They are forfeiting their first round selection next year as part of the penalty for the Ilya Kovalchuk contract, where the NHL charged the Devils with attempting to circumvent the salary cap.

The signing of Zubrus I think takes the pressure off the Devils front office of having to get an “NHL ready” player in the first round. They could take a guy like Bo Horvat, who is a center that needs more minor league preparation time before making the jump to the NHL.

Fan Favorite – Zubrus

The Devils fan base is loyal to their players, especially guys who came into the league with the team. Zubrus is one of those guys who endeared himself to Devils fans because he is a grinder, he gets in there as a forward and is not afraid to do the dirty work. He can make hits along the boards, and he forechecks well. He is a hard nosed, tough player and Devils fans love that because it embodies New Jersey: strong, tough, resilient, and hard working people.

That is why myself and the many fans in the Devils Army are so happy today. I am thrilled to be able to watch Dainus Zubrus continue his Devils career and I wish him all the success in the world in his new contract.

 

The NHL in Seattle – the Future of the Coyotes Franchise

I have been reading reports all over the internet sports news sites this week regarding the future of the Phoenix Coyotes franchise. In order to fill in any gaps for readers who are not familiar with the saga of the hockey team in Phoenix let me summarize:

  • The NHL took over ownership of the Coyotes in 2009 when the ownership group of the team basically went bankrupt. The league took over the franchise which essentially was on the verge of collapsing into insolvency.
  • The NHL has poured millions of dollars into keeping the team in the desert and is still in financial ownership of the team today
  • The NHL has tried with obviously no success to sell the team to a number of investors, most of them from outside Phoenix who stipulated that they would keep the team in Phoenix as a contingency of the sale.
  • Those deals have all fallen through because the franchise is in such bad financial shape that in order for the operation of the Coyotes from a business perspective to have a chance at “breaking even” the potential future owners need a favorable lease on the arena in Glendale, AZ known as the Jobing.com Arena.
  • The Arena deal essentially consists of the City of Glendale (which owns the arena and used tax money to construct it) to make payments to the future owners of the Coyotes for “arena operational costs”. So the owners of the Coyotes would run all the day to day operations of the arena and manage the upkeep on the arena using payments from the City of Glendale.
  • The NHL had an offer back a couple of years ago from an investment group to buy the team and relocate it to Hamilton, Ontario, Canada. The NHL offices blocked the move because they wanted to keep the team in Phoenix.
  • The NHL has now made it clear that it no longer can afford to dump money into the Coyotes and that they must sell the team as soon as possible. The NHL Commissioner Gary Bettman has stated that if a deal cannot be reached they would even consider the highly unusual step of suspending the operations of the team and putting the Coyotes “on hiatus” for the upcoming NHL season.
  • The current group interested in buying the team has a deal to keep the team in Phoenix for 4 years, if at the end of that time period the team is still losing money, then the group is allowed to relocate the team or to sell the team to a group which will relocate the team to another city.
  • This current potential ownership group has asked the City of Glendale for $15 million per year to operate the Glendale Arena. The City Council has until next Friday, June 28th to decide whether those terms are agreeable.

 

The Current Issue in Glendale

 

The current issue in Glendale, according to media reports, is that the city is broke. Now, they have to decide whether they can afford to pay the new ownership of the Coyotes the money to operate the arena.

 

In the event that they decide that they cannot afford to pay the Coyotes group then they risk losing the main tenant of the arena: the hockey team. The arena was built in Glendale right across the street from where the Arizona Cardinals NFL team plays football.

 

The arena in downtown Phoenix, the US Airways Center, which is home to the NBA’s Phoenix Suns, had an odd configuration for ice hockey, and the fans disliked it because the sight lines were terrible.

 

The arena in Glendale was built specifically for hockey and for the Coyotes to call their home. However, the distance from the downtown center of Phoenix to Glendale made for a brutal trip with traffic patterns in the now bustling and ever expanding Phoenix metro area. So it took fans over an hour in traffic to go a short distance and that turned many people off from going to the games in Glendale.

 

The Coyotes have one of the worst attendance figures in the league. That unfortunate statistic puts greater emphasis on the arena deal than in other sports franchise purchases because the compensation from the city (in this case from Glendale) is needed to offset the loss in attendance revenues.

 

The Coyotes are a good solid playoff caliber team which went deep into the playoffs in 2012 and they still did not sell out the arena in Glendale for those playoff games. The rest of the NHL teams’ average very high in person attendance figures with arenas averaging about 90% of capacity for the season.

 

It has been widely reported that the City of Glendale has some reservations about the potential new ownership group. In particular, the fact that they put down a very low percentage of the actual purchase price to buy the team from the NHL, and are borrowing the rest of the money involved in the transaction. The City Council may think the $15 million per year is too steep a price, and they may risk losing the Coyotes and move forward with a different arena management company to hold other events at the arena.

 

The Backup Plan – Seattle

 

Earlier this week, according to CBS Sports.com who broke the story, the NHL league offices leaked the backup plan in case the Glendale City Council does not agree to the terms of the arena management deal and lease.

 

This same report states that the NHL has been in constant back channel communications with an ownership group that is prepared to pay $220 million for the Coyotes to relocate them to Seattle in time for the upcoming 2013-14 season (www.cbssports.com).  The Mayor of Seattle also confirmed having a conversation with the NHL Commissioner about this relocation of the Coyotes.

 

Seattle is an intriguing market for hockey. In fact this story gained traction when the Vancouver Canucks inquired about relocating their minor league affiliate to Seattle. The Canucks officials were told that the Key Arena in Seattle was already reserved and was not available for the duration of the hockey season.

 

That response prompted media inquiries into what the Key Arena was going to be used for during that time. The Key Arena, as most sports fans know, is a very small venue by today’s professional sports standards. The lack of the city to commit to a new arena was the chief reason that the Supersonics NBA team moved from Seattle to Oklahoma City in 2008.

 

The issue with Key Arena for ice hockey is that the configuration is going to be very odd, and will force some sections of the lower level to be closed off to spectators. The arena in that layout will seat only 10,000 fans, which will be the smallest building in the league.

 

The league sources who leaked the story to CBS Sports.com state that the discussions between Seattle and the NHL office are for the team to be relocated immediately if the Glendale council votes down the arena management deal. The team would play in Key Arena for 3 seasons before moving into a new arena.

 

Now, other people on the sports blogs in Seattle, which I read recently, feel that the NHL is using Seattle and leaked the story to apply pressure to Glendale to approve the deal for the Coyotes to stay in Phoenix because the NHL has spent millions of dollars trying to keep the team in the desert. That could be true, but I think the NHL realizes it is not tenable to continue to own and fund a team which inherently loses money and is ready to “cut bait” on Phoenix.

 

The new arena is of course the project that the other investment group in Seattle has spearheaded to get an NBA team back in the city to be the second version of the Supersonics. They almost had a deal to purchase the Sacramento Kings but the deal fell apart and the team remained in Northern California. The NBA has said it would consider expansion to Seattle once the new TV contracts are negotiated and they have a better idea of the revenue structure moving forward.

 

Seattle and the NHL a good potential fit

 

I think that the move to Seattle would be a good fit for the NHL, it is a big media market they are not yet in, and the people there love sports. The weather there favors indoor activities, so that is a good fit. The team also would have an immediate regional rival with the Vancouver Canucks, which would be great for the NHL.

 

In the case of the Phoenix Coyotes, if the City of Glendale approves the arena deal and the sale moves forward and they remain in the desert, I think the NHL should consider Seattle as an expansion destination in the near future.  The NHL is in need of markets in the West, as I have written about in the past with realignment next year and the unequal balance of the two conferences.

 

In the end, the only component of this messy situation that has any clarity is that the NHL is going to sell the Coyotes franchise to someone in the next two weeks. It will either remain in Phoenix or be relocating to Seattle, either way it will be resolved, and hockey fans will have to stay tuned to see how this unbelievable saga finally concludes.