Why you should care
Because you should play to your constituency and minimize risk.
There wasn’t a no in the house. In June, the NHL announced that its Board of Governors had unanimously voted to add a new franchise for the 2017–18 season, bringing the total to a lopsided 31 teams. Did the new team set up shop in a hockey-starved market like Quebec City or an untapped area like Seattle? Nope! Instead, the NHL set its hooks into an outpost that other major sports leagues have avoided like a bad case of athlete’s foot — Las Vegas.
On the surface, Vegas might look like a good idea. The 623,000 residents of Sin City are relatively prosperous, and the population is growing at an annual rate of 8 percent. The tourism industry is booming: 42 million visitors arrive each year to unload more than $6 billion of their hard-earned pay. Hockey is the first sport to set up shop in the last major U.S. metropolitan area without a pro franchise. “We think this is a tremendously exciting opportunity,” NHL commissioner Gary Bettman told the media at a press conference to announce the unholy alliance, “not only for Las Vegas, but for the league as well.” The league and the as-yet-unnamed new franchise did not respond to requests for comment.
But there’s one glaring negative that’s making hockey heads spin all over North America: the dismal legacy of another NHL attempt 300 miles southeast of Vegas. The Arizona Coyotes is a fine hockey team oozing with young talent and the youngest general manager in professional sports, the well-respected 27-year-old John Chayka. But the positives end there. In 2015, despite finishing in the middle of the pack in the Pacific Division, the Coyotes reported a loss of nearly $35 million. The franchise is worth $220 million, making it the second least valuable team in the NHL.
The league has had to pay the price for the Coyotes’ worst failings. When former owner Jerry Moyes filed for bankruptcy in 2009, the league had to take over the team’s daily operations for four years. During that time, the NHL refused to sell the Coyotes to Canadian billionaire Jim Balsillie because the former CEO of BlackBerry’s parent company planned to relocate the club to hockey-crazy Hamilton, Ontario, which occupies a road-trip-friendly location between the Toronto Maple Leafs and the Buffalo Sabres. The Coyotes declined to comment.
Why is the NHL so adamant about keeping the Arizona Coyotes in Glendale and doubling down on its pursuit of frozen glory in the desert Southwest? One explanation may be the decreased value of the Canadian dollar, which makes it tough for franchises to succeed north of the border. (NHL salaries are paid in U.S. funds or indexed to the U.S. dollar.) Maybe it’s Canuckophobia — the fear of having too many Canadian teams that nobody in the American TV market gives a rat’s ass about. But if the Arizona Coyotes are any indication of the kind of profits the league can expect from another desert team, what’s the point? “There is no evidence that Las Vegas can support any major league–level team, let alone an NHL team in a nontraditional hockey market,” says Joel Maxcy, associate professor of sports management at Drexel.
Already, it’s difficult for any new franchise to make money. Even the Minnesota Wild, which joined the NHL in 2000 through expansion, wasn’t profitable for the first nine years — and that was in one of the best American hockey markets. The only certainty in this scenario is that the 30 current franchises get to split Las Vegas’ $500 million expansion fee. At the news conference, Bettman claimed, “This expansion comes at a time when our game is more competitive than ever … and the business and future opportunities for the business are greater than ever.” Opportunity is one thing; a viable market is another. Watching how the NHL has handled the Coyotes, it won’t be surprising to see the league rescuing the Las Vegas team in a few years from a metaphorical sandstorm.