As brokers cry into their lattes on Wall Street and politicians spin themselves silly on Capitol Hill, the NHL season is about to begin. The question is: will all the teams still be standing by the end of the season?
In many NHL markets where hockey is not number one, or even number four, will people still pay for tickets and buy jerseys when their credit has dried up and their jobs are in danger?
But most importantly, how will the many U.S.-based NHL franchises, whose owners are reliant on credit to manage huge yearly losses, be able to withstand the coming financial storm?
According to media reports, as many as eight to 10 NHL franchises, mostly U.S.-based, and recent expansion cities, are either seeking new ownership, looking for equity partners, or are even in danger of folding outright.
With the exception of teams owned by billionaires or large corporations, most NHL teams are large business partnerships. The teams are run by people with money, but not enough money to subsidize huge losses without credit.
Absorbing multimillion-dollar losses in order to build a long-term following is a solid business plan when credit is cheap and easy to access. How anxious do you think banks are going to be, however, to hand another $20 million over to Florida or Phoenix to cover their debts during a time of economic instability?
The bottom line is that in the grand hierarchy of things, sports rank pretty low in people's priorities when economic times get tough. The NHL, being an afterthought at best in many U.S. cities, is in the unenviable position of being at the bottom of an already crowded entertainment industry.
Therefore, the NHL is usually the first to feel the economic pinch.
While the NFL and MLB will probably survive just fine, it is pretty hard to imagine that southern U.S. markets, those that are already struggling to fill arenas, can weather this storm.
So what does the future hold?
A report on Rogers Sportsnet here in Canada suggests that the Nashville Predators have already approached RIM CEO Jim Balsillie about taking an ownership stake. It continues to say that several NHL teams are in real danger of going bankrupt and being turned over to the league.
Personally, I think the NHL could stand to contract by about a half-dozen teams, but the nature of the coming situation is probably not the ideal way to achieve that goal.
One thing is for sure, with the U.S. financial meltdown upon us, it is hard to believe hockey tickets are going to be first on American minds.
14 comments Last one added 9 months ago — Leave a Comment
Ken Armer 9 months ago
This situation could put the NHL in a severe bind. As much as I agree that business is business and money is money the only loser here is the fans. Although fans in small markets don't deserve an outright snub, but if teams are to be moved it should be done intelligently. Although moving doesn't appear to be the issue, my concern is folding teams. My only hope is that the NHL (Gary Bettman) doesn't ruin the whole league to only save a few. Great article and great points.
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Andrew Mason 9 months ago
good article but I think the NHL will relatively come out just fine. Although I thoroughly hate the NBA I am more worried about NBA teams where some average less than NHL believe it or not and their tickets are much more expensive in some places. I believe if NHL owners want to keep their teams they should lower ticket prices so people can afford to come again. Whether But it will be a very interesting case if wall street continues to fall. While I don't expect anything to be sunshine and rainbows i also don't see teams contracting. What this will also mean is that the Salary cap will stay pretty much level for now. I believe all of the major sports until wall street recovers will have down numbers and dollars.
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Spencer Callaghan 9 months ago
Some teams are having trouble making the salary floor now, I can only imagine how much worse it might get when credit starts to dry up.
As for contraction, I don't deny their are great fans in every market, but some markets are just not good for hockey and that fact needs to be recognized.
As for the NBA vs. NHL argument, the problem is the NHL doesn't have a decent TV contract to get them through tough times, the NBA gets much more money from broadcast right than NHL teams do.
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Matt Ellenberger 9 months ago
I tend to agree with Ken. There are markets where hockey is literally hanging by a thread the way it is. Florida is a great example. There are already very few fans that see their games as it is, and when it gets to the point when fans can hardly afford the gas to go buy the tickets they maybe can't afford anyways. I think teams like Minnesota, Montreal, Edmonton, Detroit etc. Will be fine whatever happens, the small, non- hockey markets will be in trouble.
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Greg Caggiano 9 months ago
That's exactly what the league needs, 2-4 teams to fold. I'm not even kidding.
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Spencer Callaghan 9 months ago
The irony is that the league was recently talking about expansion to Europe.
Maybe the two aren't mutually exclusive though, perhaps it should just be about going where hockey is wanted rather than where the NHL thinks the ever-elusive TV contract wants them to go.
There is no shame in saying that hockey doesn't work in certain cities, baseball doesn't work too well up here in Canada, it's just a cultural thing.
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Andrew Mason 9 months ago
well if they expand to Europe and if they can get a lot of money there since the Euro is stronger the dollar that can only help the league...
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Greg Caggiano 9 months ago
I don't understand why they need to keep expanding, especially to Europe. Why don't they just expand to 82 teams so we just have to play everyone once...
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james recordan 9 months ago
its possible
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NYI Fan Central 9 months ago
Wall Street Problems effect the corporate teams first that already announced sellouts they clearly do not come close to with empty seats easily available.
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Spencer Callaghan 9 months ago
That's the big issue, many teams have been known to "paper" their arena with free or nearly free tickets.
I hear in Florida you can go into any sports bar in Miami and get Panthers tickets for free that are pinned to a bulletin board.
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Alan Bass 9 months ago
This really seems to be a problem all throughout the country, not just in hockey.
On the bright side, however, maybe this problem will lead to contraction of the league, which I have advocated for years!!! Haha
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Salim Valji 9 months ago
wonder what this means for the Edmonton Oilers and Daryl Katz since the guy just took over
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Spencer Callaghan 9 months ago
Probably nothing.
First off, the meltdown hasn't hit Canada nearly as hard, especially not Alberta where all the oil and gas revenue comes from.
Second, Katz is a billionaire, he can probably handle any market downturn, where you run into problems is with teams owned by groups of millionaires who may seem rich, but once you turn off the tap of cheap, easy credit start to struggle a bit.
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