Why Keep Teams Where They Have to Win to Merely Survive?

With the ongoing Phoenix Coyotes soap opera in mind, comments from the NHL commissioner Gary Bettman and commentator Phil Esposito, who is supporting the commissioner, go like this: "The team hasn't had a chance, you've got to win to get fans."

In Esposito's case, on the May 28th "In the Slot" program, the thought also applies to the Tampa Bay Lightning, where, Espo notes, when the Canadiens come to town it is a 'sea of red' in the stands.

In the markets of Phoenix and Tampa, it seems to be accepted wisdom that the team has to win to 'put down roots' and get the fans. The recent success of Carolina, where the team won the Stanley Cup recently, and the struggles of Columbus and Nashville where the teams have struggled are further examples. The Atlanta franchise, struggling with internal ownership issues is likely the same.

While the league has become more competitive than ever, the struggle for teams to survive in certain markets remains the same. Win or fans won't go. This attitude, which borders on gospel from the commish on down, presents several problems for the league. How do teams survive down-periods? Are they too dependent on playoff revenues? Is the league providing enough support for individual teams? Is the league in several markets where the appeal and fan base is border-line for success? Has the league grown too big for the talent supply? Can the league hold on in towns when the TV revenue is not good?

Let's start with Phoenix. A large city with potentially enough people to sustain a franchise. In this city, the Coyotes have made the playoffs, although they have not advanced past the first round. The team has not made the playoffs since 2002. Today, the team is in a new arena in a prosperous area, although the recession has hit the franchise hard.

The team has made tickets the cheapest in the league. Good indications of a base of support would be a reasonable season-ticket base. Although the league keeps these figures under wraps, by the minimum attendence of about 10,000 this season you can guess it is under 10,000. Compare this with the city of Toronto, a city of comparable size, where the last Cup win was 1967 and the last series win was in 2004. The team is still very profitable, ranked the most valuable NHL franchise by Forbes magazine. Compare this with most cities in the league and the Coyotes fan base is definitely small.

Even in the playoff years, the Coyotes were not profitable. There is not a base of support in a place where the competition of other sports is strong. The Senators' management have been quoted as stating that every playoff game has meant $1 million to the bottom line of the Club. The Coyotes could not have covered their operating losses with a playoff run, as their loss is $30 million this year. The league advanced some television revenues to the team to get it through the season.

Historically, the league has not provided much support for teams in trouble. From the failures in the 1930s of Pittsburgh, the Montreal Maroons, and the Ottawa Senators to the closure of the New York Americans, there is a limit to the support of other teams. The league basically has kept teams afloat for up to a year in several cases, such as Buffalo and Ottawa, where there is a core fan base and the team can be profitable and not make the playoffs. In both cases the bankruptcy was not due to the hockey club (Ottawa won the President's Trophy the year it filed for bankruptcy).

The case of the Oakland Seals/Cleveland Barons/Minnesota North Stars shows how far the league will go. If there is no arena, either publicly-owned or privately-owned, the league will bail out. New Jersey used to be in Kansas City and in Denver before landing in New Jersey and the New York metropolitan area. And there are no funds for teams to relocate and the support any team in trouble gets is purely an 'advance' on their share of league business revenues. If the league was strong, then they would be able to support a team like the MLB did with the Expos for several years. The NHL is not that strong and it would be stronger without some weaker teams.

One criticism made of several cities such as Miami, Tampa, Atlanta, Nashville, Phoenix, Columbus and Phoenix is that those cities are going to be difficult to be profitable. Miami and Tampa have very profitable concert business in their arenas. The hockey team needs not be a big loss leader. In the other cities, the picture is darker. The game is a 'hard sell'. The NFL is the number one game in town, and it is hard to get into the local media.

The local media will assign people based on the level of interest in a team and in many NHL towns, the number of hockey reporters is countable on one hand. If the team can't get attention with a championship run, then they will not get attention. They will not get fan interest. If you don't really know if your team's talent is good, you don't assume that they are. Does that sound like a place where the top-level of a sport should be?

The talent pool for the NHL to draw on has expanded. But a lot of that expansion has come from Europe and Russia after the fall of the Soviet Union. A new level of base has been reached, but is it expanding? American players are increasing in number, but any true increase in American players is probably a decade away if more American teams become successful.

Looking at the minor leagues, the AHL has succeeded through this period, but the other minor leagues have struggled. Although it must be said that minor league hockey without NHL support is a tough business to be in. In Canada, the number of players of NHL calibre is at best constant, with some concerns coming up about the violence of hockey compared to other sports. In Europe and in Russia, there is interest in building the business and that will be a more viable option for more players of NHL-calibre. The NHL certainly expanded beyond the growth rate of whatever grassroots hockey is providing. Would the league be better without four or more teams? Certainly.

Are we wasting top talent like Vinny Lecavalier when he plays in Tampa? Sure the team gets a sizable chunk of its ticket revenues, but the league is probably losing the maximum impact he could be making for the league. Similarly for Steven Stamkos. Is Wayne Gretzky's name worth much in Phoenix? I think the league could build a better case for TV coverage if top players would be more visible. The players in some ways like the anonymity of living in some cities. But is that good for the league? The top players are getting seen less and less nationally. Have more of them on any one team and the battle during the game and the intensity and rivalry will be increased. You get weaker fan interest the way things are now.

The NHL moved to Versus and NBC. Although the move was criticized, the intent was to grow the coverage with a network that needs hockey and gives it good coverage. From the point of view of a Canadian in Canada, the coverage of hockey in the US is disappointing. It is not a difficult game to grasp, has lots of action and is well-suited to television.

Yet the leagues over time have not been able to cover it well in many cases. The NHL has partly addressed this with their own network, but this is not going to create much revenue. It is intended to build interest. The coverage and ratings on television have improved, but the revenues are in a slow growth curve, and may not be growing at all this season. So the side revenues of television are not going to make it or break it for any one team. Sports merchandising does help, however. Splitting the revenues with weaker teams means less for teams with 'more of a chance'.

So, with all of these problems, is it a viable strategy to have teams in the weaker US markets? From the point of view of building interest on TV, it must help. However, it must be said that much of the growth on US television has not been from the southern teams, but from established markets like Chicago and Boston where teams have improved. The north of the US and Canada are solid in terms of regional television revenues, but that does not help Phoenix or the other southern teams. While millionaires are sports fans like many of us, they only have so much to give. The NHL is not strong at 30 teams. The NHL is over-extended at 30 teams. The NHL's quality of play is suffering at 30 teams. The NHL is alienating some of its core fan base extending itself to cities without hockey traditions.

Contraction would be difficult. Several cities have strong lease agreements and the NHL does not want to retrench. Bettman can't fathom even expanding to Hamilton, where interest would be strong. That is a good indication that the NHL is not strong and it would be best served by strengthening itself by contraction and the benefits it does bring.