Has the NHL Priced Itself out of the Best Expansion Possibilities?

Adrian Dater@@adaterNHL National ColumnistJuly 22, 2015

NHL Commissioner Gary Bettman, right, speaks at a news conference before the NHL Awards show Wednesday, June 24, 2015, in Las Vegas. At left is Deputy Commissioner Bill Daly. The NHL is officially exploring expansion. The league is opening a formal expansion review process to consider adding new franchises to its 30-team league, Bettman announced Wednesday, June 24, 2015. Las Vegas, Seattle and Quebec City are the markets that have expressed the most serious interest. (AP Photo/John Locher)
John Locher/Associated Press

No matter which two new cities join the NHL as part of a probable league expansion, it will be financial win for Gary Bettman and the league's current 30 teams. The last two expansion teams, Columbus and Minnesota, paid the league $80 million each in 2000. Now, the barrier of entry is reportedly $500 million. That's a win for the league no matter how you slice it.

But if only Las Vegas and Quebec City get formal consideration for expansion, which the league said was the case for now in a statement Tuesday, could this be more of a Potemkin Village than a long-term victory?

Did that $500 million fee, which includes $10 million up-front for any application, $2 million of which was non-refundable regardless of winning a new team or not, scare away markets that would have made more long-term sense for the league?

Markets like, say, Seattle or a second team in the Toronto area, which many believe would be a huge financial success with more long-term stability than either Las Vegas or Quebec City?

Some believe the answer to that question is yes. NHL Deputy Commissioner Bill Daly disagrees with the overall criticism of the league's big barrier of entry.

"At the end of the day, I don't think either (the $2 million non-refundable fee or the overall $500 million one) was relevant. The groups that want a team don't have confidence in their ability to get access to an arena. That's Seattle's problem," Daly told Bleacher Report.

It's hard to argue with that. If you can't meet the price of poker, you shouldn't whine about not getting a place at the table. With such a high barrier of entry, the league has ensured it will get people who are serious about wanting a team. 

Still, wouldn't it have been nicer for the league to have more than just two options? The league invited 16 cities to apply, after all, but it can always modify its rules for expansion consideration. Maybe it will to allow the desirable Seattle market to get its arena hopes solidified. Votes on approval for expansion could come as soon as Sept. 4, the date of the next NHL Board of Governors meeting. 

Construction of new Las Vegas Arena
Construction of new Las Vegas ArenaJohn Locher/Associated Press

Las Vegas looks like an attractive place for expansion with its glitz and glamour, and an unprecedented foray by a major sports league to locate there makes for a unique and fun story. But can it really work long-term in a city with an economy still largely predicated on the boom-and-bust cycles of the casino business? 

NEWARK, NJ - APRIL 10:  Members of the 'Nordiques Nation' converge on Prudential Center prior to the game between the New Jersey Devils and the Boston Bruins on April 10, 2011 in Newark, New Jersey.  (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

Attendance should not be a problem in Quebec City. When the Nordiques moved to Denver in 1995, games at the Colisee de Quebec averaged an audience at 93 percent of capacity, despite the financial problems faced by ownership. 

But with the Canadian dollar starting to slide again, does the league really want a team in a small-market Canadian city that may start to have real problems because of their currency?

Canadian teams' revenue, one NHL management source told Bleacher Report, is about 85 percent from Canadian funds. But they have to pay players in U.S. dollars, and their travel costs would soar going to any of the league's 23 American cities.

Based on the current U.S-Canadian exchange rate, the $500 million expansion fee translates into about $650 million Canadian. A good deal of would-be Quebec owner Quebecor's business remains in print media. Anyone want to hinge their future profits to newspapers and printed books? According to the Canadian Press, Quebecor had a $50.3 million net loss in the the fourth quarter of 2014.

If Las Vegas and Quebec City are approved for play that reports say won't start until the 2016-17 season, the problem of unbalanced conferences still remains. Assuming Quebec City becomes an Eastern Conference team, there would still be a two-team imbalance between the conferences, with 17 Eastern teams and 15 Western ones.

The league could solve that by moving an Eastern team to the Western Conference (Carolina or Florida maybe), but that would no doubt provoke ill will from the franchise. Or, an Eastern team could relocate somewhere out West. 

The absence of Seattle seems like a sore subject to the league, as exemplified by Daly's quote above. There were as many as three interested groups in the Seattle area that expressed clear interest in getting a team. But with arena plans still not solidified, it wasn't feasible for them to meet the criteria by Monday's official deadline. 

Markets such as Houston, suburban Toronto, Kansas City and Portland—all of which have higher city and suburban populations than Las Vegas or Quebec City—could have been more attractive locations. But until the next round of expansion or a modification of its application requirements occurs, we may never know how well the NHL would have worked in such locations.

You always want to have lots of options in life. Right now, the NHL has two options when it comes to where it might grow its product. 

That's not much.

Adrian Dater covers the NHL for Bleacher Report. Follow him @Adater.


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