Do you think the NHL should adopt an alignment plan based upon market size?

Question

I realize there are other aspects to consider but I was wondering if you think it would be better for the league to arrange the teams into divisions where the teams within them will be of similar market potential/sales?

For instance, say Carolina, Ottawa, Calgary, Edmonton, and Buffalo were in a division that didn't have to depend on large cities like Toronto or New York for profit sharing.

This could also be augmented so that all the Canadian cities could be placed in a single division to make the most of their internal economy even if Toronto is much more populous than Calgary.

Here is one scenario based on metropolitan population.

New York Islanders 21,976,244
New York Rangers 21,976,244
Los Angeles Kings 17,775,984
Chicago Blackhawks 9,505,748
Washington Capitals 8,207,040
Dallas Stars 6,003,967
Philadelphia Flyers 5,823,233
Toronto Maple Leafs 5,597,000
Atlanta Thrashers 5,478,667
Florida Panthers 5,463,857

Detroit Red Wings 4,468,966
Boston Bruins 4,455,217
Phoenix Coyotes 4,039,182
Montreal Canadiens 3,635,571
Minnesota Wild 3,502,891
Anaheim Mighty Ducks 2,846,289
St. Louis Blues 2,801,033
Tampa Bay Lightning 2,700,000
Colorado Avalanche 2,408,750
Pittsburgh Penguins 2,370,776

Vancouver Canucks 2,187,721
New Jersey Devils 2,152,895
San Jose Sharks 1,810,560
Columbus Blue Jackets 1,725,570
Nashville Predators 1,498,836
Ottawa Senators 1,300,000
Buffalo Sabres 1,254,066
Calgary Flames 1,079,310
Edmonton Oilers 1,034,945
Carolina Hurricanes 994,551

Sorry that my Excel spreadsheets don't format well when I try to paste the data here.

Thanks. Thumbs up to you all. My understanding of sports marketing has been furthered by your contributions.

Answer 1

Here is the 2006 / 07 season profit numbers as reported by forbes from the finnanical statments of each team. As you can see all the Canadian teams made money and only 8 teams actually lost money last season. The cup champion Ducks basically broke even.

Rank Team Profit
1 Toronto Maple Leafs 41.5
2 New York Rangers 17.7
7 Montreal Canadiens 17.5
19 Edmonton Oilers 10.7
4 Dallas Stars 10.0
9 Los Angeles Kings 7.1
8 Colorado Avalanche 5.9
3 Detroit Red Wings 5.8
11 Tampa Bay Lightning 5.0
6 Boston Bruins 4.8
28 Pittsburgh Penguins 4.8
13 Minnesota Wild 4.7
17 Buffalo Sabres 4.6
30 Washington Capitals 4.6
14 Ottawa Senators 4.2
12 Chicago Blackhawks 3.1
26 Calgary Flames 2.3
20 San Jose Sharks 1.8
10 Vancouver Canucks 1.1
16 St Louis Blues 1.0
5 Philadelphia Flyers 0.9
21 Carolina Hurricanes 0.5
15 Anaheim Ducks -0.2
27 Nashville Predators -1.1
23 Florida Panthers -1.9
25 Columbus Blue Jackets -4.0
29 Atlanta Thrashers -5.4
22 Phoenix Coyotes -6.0
18 New Jersey Devils -6.7
24 New York Islanders -9.2

The Oilers made 10.7 million and the Islanders lost -9.2. What does that tell you about city size as compared to market size. The Flyers (last) made 900,000 last season and the Ducks (first) lost -200,000. What does that tell you about quality of team as compared to market size.

Winnepeg and Hamilton have a market for hockey and could break even or turn a small profit.

Anaheim, Nashville, Florida, Columbus, Atlanta, and Phoenix, will lose money regardless of population or quality of team, because there is no hockey market.

New Jersey, and the Islanders are in trouble because outside of Buffalo, the Rangers have the majority of the NY market share.

I see this question posted and answered all the time with incorrect information. I hope this info opens some eyes to what is happening in the NHL.

Answer 2

That still wouldn't help. Last year, Ottawa, Calgary, and Edmonton combined to lose almost $17MM dollars simply because there is not enough corporate sponsorship in those cities to make them profitable. (and Ottawa made it to the Stanley Cup Final and still lost $3.2MM).

The other thing is that 'market size' is misleading. If we take the NHL's US definition that market size is the area where local television signals reach, than all the regions are much larger than you indicate.

However, 'market' is a hard thing to ascertain. Philadelphia's market is smaller than Toronto's. Too far east, west, or north...and you enter another team's market. Toronto has the entire population of Ontario, and a lot of people in the Maritimes, Manitoba, and Saskatchewan.

The salary cap was a step in the right direction as it levels the playing field for what a team has to dish out for product. There is no effective way to limit how much revenue a team takes in. All merchandising and national television contracts (both CBC and NBC/Versus) are divided equally among the 30 teams as per the 2005 CBA.

But the teams are free to pursue as much corporate sponsorship as they can get, they are free to gouge the local media outlets for local coverage, they are free to gouge the local fans for ticket prices, they are free to negotiate the best arena leases they can get, the best tax deals they can get, etc

One needs to look no further that Research Triangle, North Carolina. The corporate sponsorship of the Charlotte Bobcats is 27MM. The corporate sponsorship of the Carolina Hurricanes is $13.2MM (most of that coming from RBC Centura.....the American retail arm of Canadian banking giant Royal Bank of Canada). yet the amount of corporate profits in that area is billions (and it probably all gets funnelled to the UNC basketball program).

I don't think your plan will work, I think the best plan is to get corporations to spend more on their local teams. That is something that eqach and every club needs to do themselves.




To Coach Scott
You can't use the values that Forbes uses, there is no financial truth to them. During the lockout, there were several independent audits done on the leagues financial statements, all 30 teams, and the NHLPA's. And it was found by all of these independent auditors, that the information reported by Forbes was inaccurate.

In 2003-2004, Forbes stated that the Vancouver Canucks were profitable. The Vancouver Canucks were a publicly traded corporation known as Orca Bay Sports. Their statements filed with the The SEC in the US and the BC Securities both showed a heavy loss. This loss was confirmed in ALL the independent audits done during the lockout.

Under the current CBA, there are independent auditors which are used by the NHLPA, the NHL, and each of it's 30 teams to determine exactly how the equalization payments will be made as well as determination of the salary cap. With the exception of the Philadelphia Flyers, all NHL teams are privately owned and any information obtained by Forbes is an estimation (which Forbes admitted during the lockout)

Answer 3

That kind of sounds like football. In the premiership, Man U, Chelsea, Liverpool and Arsenal all have the best players, because they are the richest. The other teams that are less supported have no standout players. That's not necessarily the way to go for the NHL. The first poster really made a great point.

Answer 4

I think the cap is working, the teams are learning to work within it and I'd actually like them to go with the status quo on this for a while longer at least. Under your system we end up with 3 laegues like English Soccer only the teams move up or down based on population.
The Canadian teams are not struggling so even that move wouldn't be necessary.

Answer 5

Islanders really only account for Long Island which is just over 7 million. Vancouver is all of BC and Northern Washington, it is an extremely big hockey market, maybe even the biggest in all of hockey. Canucks also have one of the biggest fan bases in all of hockey, just visit their message boards on game night for instance.

Answer 6

metro population numbers doesn't actually reflect on the NHL, its' teams or its actual market... I mean Florida in the same category as the Leafs..! Miami's hockey market is NOT bigger then Minnesota, MontrÃ©al or Detriot...


RE: kisconappi
its funny how all Canucks fans thinks like that...

Answer 7

no, this would made NHL divide into 3 groups - high salary, medium salary and low salary. The top tier players will all go to the the group with the most money. Effectively helping the rich to become richer and make the poor to be poorer.

Answer 8

This is what MLB does right now, and as you can tell the Yank's and Sox's are always in the playoff hunt because they have the $$$ to put up for the players to play there, and teams like Texas and KC don't have the $$$ for the talent to win.

Answer 9

The cap system is working as it is arranged now. I see no reason to change it.