Why not move NHL teams from the few US cities that don't support hockey to Canadian cities that will?

Question

Why does marketing potential in terms of area population have to be so important? What if they don't care about hockey?

Answer 1

1. There are very few cities in Canada that can afford an NHL team. Currently, 6 of Canada's 7 largest cities have teams (Mississauga has more people than Edmonton).

Only 3 of these teams are making money
Toronto, Montreal, and Vancouver.

Edmonton, Calgary, and Ottawa are all losing money. When you consider that these three teams have had more playoff success (where owners recoup season losses) and still can't make money. You have issues.

Some thoughts for you to consider.
Nationwide sponsors the Columbus Blue Jackets to the tune of $9.6MM a year.
The Ottawa Senators, through all corporate sponsorship earn less than half of that.

While a population will support a team by putting fans into the stands, it is usually not enough to pay the bills.

Let us take a look at Winnipeg. In 1992, Barry Shenkarow asked the city of Winnipeg to help finance an arena (okay, so he asked the city to foot the entire bill). The city said no. The old Winnipeg arena was a small, dated building. IT was not able to be renovated to allow the introduction of luxury boxes. At the same time, people in Winnipeg were balking at the increase in ticket prices and for 4 years in a row, the number of season ticket holders, and attendance declined.

Winnipeg now has a new building. The Canadian dollar is 41% stronger today than on December 31st 1995. But the city of Winnipeg has not increased it's population base (3% between 1991 and 2006 census) nor has the corporate culture of the city changed.

In 1994, the average NHL payroll was $26MM, the average NHL payroll last year was $41MM

In 1995-96, on a payroll of $22M, the Winnipeg Jets lost $8.2$.

So, that is $13.8MM in revenue. The city would need to guarantee that will quadruple in order to meet the current NHL salary requirements. The city of Winnipeg does not have that kind of money.


To put this in perspective. The Montreal Canadiens changed buildings during this timeframe. The amount of revenue has increased 37%, the amount of corporate sponsorship has decreased 6%.

So, if a fabled franchise like Montreal can grow revenue over the last 10 years at only 37%, what makes you think a city like Winnipeg can grow theirs 300%.


Note: As a Canadian, I would love to see NHL hockey in more Canadian cities. I would love to see NHL hockey ONLY in those US cities that can support it (i.e. not Phoenix, Nashville, Atlanta, Miami, Kansas City, Houston, etc). But the economics of the day (Capitalism is more alive in the US than Canada) don't allow that. There aren't enough Eugene Melnyk's and Daryl Katz's in Canada to rescue the entire NHL. And the issue with Katz and Balsillie, neither wants to rescue another Canadian franchise, they either want it in their home city or not at all. Balsillie has the balls to try and buy an American franchise and place it where it belongs. Katz wants the Oilers and only the Oilers, and he wants it all or none (rumour has it they current ownership group is more than happy to take his money as an equal partner).

MightyRighty,

I've owned a home and lived in Chicago since the early 60s, I worked for the Black Hawks until the mid-90s (and still work for the league), and your arguments are so far off base - they aren't even humourous. The attendance at the United Centre is declining because the product on the ice is declining. It's as simple as that. The Bulls had a similar problem for 5 years. When the product gets better, so will attendance. Chicago is the 2nd largest corporate market in North America, and 3rd largest city. The team will be fine. Wirtz is old school and profit comes first, but you can't blame a team owner for the players on the ice when the team is close to the payroll maximum.

Pootsa-Pie
You hit one of the nails on the head. Currently, there is a belief that there is no money to be made in Canada. If you stick a team in Saskatoon, regina, Hamilton, etc you gain no NEW fans. They already spend money on hockey gear. And before anybody says anything, the profits from the same of NHL merchandise is split between the NHLPA and the League. So, if a guy in Winnipeg buy a Leaf jersey, that money is divided 50% to the NHLPA and each team gets 1.67%. If a team is placed in Winnpeg. That same kid will spend his money on a Winnipeg Jersey, but the team doesn't benefit any more than if the same kid bought a Canuck or Panther jersey. So, no new fans. Of course, the fans will buy tickets and the team will earn revenue.

If they place a team in new Orleans, they gain new fans. So, a fan who spent $0.00, is now spending $150.00. That is NEW money, that is what the league wants

Answer 2

The Halifax Metro Centre was actually built in the seventies with the intention of attracting a NHL/WHA team. It's now too small for that by 2007 standards. The fact is the Vees and the other AHL clubs in Halifax never did that well, so there's no reason to think the NHL would be interested. One of the most likely prospects on your list is Kitchener-Waterloo just because it's in south Ontario, but outside the area where the Leafs could have anything to say about it. Winnipeg has the building, but it's just not a head-office town. NHL teams are dependant on their corporate box seats nowadays; so teams going to go where the suits are, which is not Victoria, Saskatoon, etc. But when your town has a CHL team that draws 6000 a game at ten bucks a ticket and the players get 50 bucks a week, who needs the bloated NHL?

Answer 3

Well, the key is future growth. in Canada, there's no room to grow if a team isn't drawing that large a crowd (exactly what would happen because most people up there already root for a team- remember the nords?

also, the NHL cannot move teams! that's the biggest bonehead mistake. in order for a team to be moved, the owner of the team must do so, and it has o be approved by the NHL board of governors, not the other way around! And lots of US cities do support hockey, you just don't hear about them. Tampa is currently the third largest team in attendace, but they operated at a loss until recently. What happened? growth. They won the cup and the sport caught on. Carolina had great attendance last season even with the season they had (which should never be mentioned in polite conversation)

but in a business sense, it is better to be a small draw in a large market then a big draw in a small market.

Answer 4

Simple economics over national sentimentality.

If you were to set up a lemonade stand in a town of 200 and felt that your business needed to grow, would you move to a town of 100 or a town of 1,000?

Yes, that's very simple an explanation, but it says a lot of the NHL at this time. They want to grow the game and there will be a period of time - like it is now - when the game is in a state of flux. That is, teams in non-traditional markets will need time to attract and educate fans. They aren't going to abandon ship.

Even if they were going to move, the lemonade stand example still applies. The Flames moved to Calgary in 1980 and have done well, but that isn't to say it would happen everywhere. Do you really believe that a team in Hamilton can be profitable and competitive? Do you think the Maple Leafs - even if they didn't oppose the existence of a team in Hamilton - would try to make it easy for a team to flourish so nearby?

Yeah, it would be nice to have more Canadian teams in the NHL, but economics and earning potential will be the first reason why a team will spring up in the US. If anything other than that were the most important thing, then Hamilton would have a team.

It's too bad that the NHL has teams in two countries. The NFL and CFL (despite the USA experiment) both enjoy success because they stay within their countries.

ADDENDUM: Kudo's to "Like I'm Telling You"

Answer 5

The NHL cities that don't get a lot of support make great sacrificial lambs for the US cities that get marginal support from fringe fans. Name recognition. For example; a guy in San Jose is thinking about going to see his first game. He is more likely to buy a ticket to see Tampa Bay Lighting because he remembers the name Tampa from the Buccaneers. He's not likely going to buy a ticket to see Hamilton or Winnipeg since he's probably never heard of the place. While those two cities would draw huge at home, the NHL would lose overall sales in when one of those teams plays in a nontraditional market. Next problem is, say Tampa moves to Hamilton. Florida Panthers lose their biggest draw as does Carolina and Atlanta. Now you have three teams struggling instead of just one. The problem snowballs. On the other side of the coin, people in Hamilton and Winnipeg are already hockey fans. From a league perspective it doesn't matter which team they support as long as they support a team and they are. Leafs and Sabres in the case of Hamilton people. The league doesn't gain new fans it would just be re-arranging current fans. Kinda sucks if you live in Hamilton or any other worthy city in Canada but that's the way I see it.

Answer 6

The biggest problem with that is that the hockey players want to be paid in U.S. dollars and opposed to Canadian Dollars. The U.S. Dollar is stronger than the Canadian Dollar. Also the Taxes in Canada are way more than what they are in the U.S. So running a business like an NHL Hockey team will end up costing more to operate in Canada than in the U.S. Team owners who are always counting the pennies take that stuff into consideration especially the tax thing. I agree though that cities that don't appreciate their hockey teams should move. I live in Chicago so obviously we have the Blackhawks. Last year was one of the worst years in Blackhawk history for fan attendance. Perhaps if they moved the hocky team to a large city that didn't have ANY professional sports. A city like Chicago is soooo saturated with professional sports that sometimes it is hard to compete with one another. Hockey is competing in Chicago with the NBA team the Bulls and the NFL team the Bears. I know that they are all different sports but, the fact is that going to a game of any sort is costing the fan more and more every year. So instead like before were the athletes weren't making ridiculous amounts of money, you could go to the games for cheap and you could support each team. Now with upper deck Bears tix going for $65 and 300 level seats to see the Bulls or the Hawks going for $50 each plus it cost $20 to park, plus, it cost $6.00 for a beer plus it cost $4.00 for a hotdog taking a family to a game even in the cheap seats cost over $300. That is an expensive night out for your average family of 4. So if I am going to spend that type of money on a game then I am going to see the team that is playing the best. In Chicago that usually means you are going to see the Bears or the Bulls. That is why Hockey is suffering here in Chicago. Perhaps Hockey teams would be better off in Cities that don't have a lot of competion from other pro teams. Anyway, I hope this helps a little in why Hockey teams don't relocate to Canada that often and why Hockey does bad especially in the larger markets i.e Chicago, New York, Philly, L.A. Take care and go Hawks!!!

Answer 7

Because they want to expand hockey in the states which is the right thing to do. But I agree that we could have at least 2 more teams in Canada. Places like Florida and Phoenix don't need a hockey team. Who in Florida thinks of hockey when there is a nice beach beside you. However this may not happen for a while sadly.

Answer 8

There was recently an attempt to move the Predators to Hamilton. Winnipeg also has an arena suitable for a team and is interested in having a franchise move.

The failure of the Canadian clubs in the past was a foreign currency issue, salaries were paid in US dollars and income was in Canadian dollars, so everytime there was a hit to the loonie, there was trouble. There was also the salary inflation due to the richer teams.

Now, with cost certainty and the parity of the dollar, I think the issue now isn't for the want of the teams in Canada or the willingness of owners to move to Canada, it's politics. Bettman's mandate has been expansion into the US to some questionable hockey markets. So a retreat to Canada would look like a failure of his strategy. Also, if these Canadian markets are as 'hot' as they seem, which owner (or prospective owner) should be granted the right to relocate? It would be unfair for some owners to suffer in poor markets while one owner gets the golden goose. It would make it difficult for enough owners to approve the move with this in mind.

Answer 9

BILL! where ya been man?
Yes, unfortunately you're preaching to the choir in this forum.

56% of the players in the NHL are Canadian and they for the most part have no issue with staying in Canada, earning Canadian money and paying Canadian taxes as well as raising their families there as well. And the difference between the two currencies is not that great. Plus, an owner makes more money from a rabid fan base who fills his arena, watches on TV and buys his logo on everything from blankets to sweaters than he ever will in a market full of apathy where the seats are half empty and there's no tv contract.

Answer 10

The thing about these people is that their businesses are centered where their teams are, and they can't bear to leave their businesses for the good of their teams. I see your point. However, quite a few people believed that San Jose and Dallas didn't care about hockey. Those two teams rank consistently near the top in percentage of seats sold. Some cities don't care abou hockey, but Bettman and the owners are too lazy to move. Bettman=Americanize a great Canadian sport. Owners=stay near businesses. These are the two major problems.