After Vegas And Seattle Successes, The NHL Eyes Additional Expansion

Forbes Business SportsMoney After Vegas And Seattle Successes, The NHL Eyes Additional Expansion Carol Schram Senior Contributor Opinions expressed by Forbes Contributors are their own. The business of sports is all part of the game. Following Oct 7, 2023, 04:15pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin The Seattle Kraken and Vegas Golden Knights have been significant revenue drivers for the NHL.

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[+] (Photo by Christopher Mast/NHLI via Getty Images) NHLI via Getty Images Nothing is imminent. But don’t be surprised to see speculation about expansion in the National Hockey League turn into something more concrete within the next few years. The introduction of the Vegas Golden Knights and Seattle Kraken has been a win for the league on many levels.

Existing owners have happily pocketed their share of the expansion fees — $500 million for Vegas and $650 million for Seattle — which were not counted as hockey-related revenue which needs to be shared with the players. But the players have benefitted as well. Two additional teams means up to 64 new jobs at hockey’s top level.

The rabid appetite for tickets and merchandise in both markets has funnelled cash into the HRR pool which is split evenly between players and owners. And the young fanbases are strong enough that the Kraken will host the 2024 Winter Classic outdoors at T-Mobile Park on New Year’s Day — with the Golden Knights as the opponent. Meanwhile, new potential owners are seeing franchise valuations explode across all major sports.

And with the Golden Knights now perched at the top of the NHL mountain as Stanley Cup Champions after just six years in operation and the Kraken having not just reached the playoffs in their second year of existence but also having upset the defending Colorado Avalanche, it’s clear that the league’s current expansion model makes it possible for new franchises not just to make money, but also to quickly compete at the highest level. The Vegas Golden Knights pose with the Stanley Cup on June 13, 2023 at T-Mobile Arena in Las Vegas. .

. . [+] (Photo by Bruce Bennett/Getty Images) Getty Images Even before their Cup win, Vegas was valued by Forbes at $965 million in December of 2022 — a very tidy return on investment for owner Bill Foley.

Seattle, the younger cousin, came in at a whopping $1. 05 billion, 10th highest in the league in just its second year of operation. MORE FOR YOU The NHL s Highest Paid Players 2023 Those numbers will go even higher this year.

In a gate-driven league, hosting playoff games at elevated ticket prices can be a cash cow. The Golden Knights hosted 12 post-season contests, while the Kraken logged six. Captain Brady Tkachuk of the Ottawa Senators.

(Photo by Minas Panagiotakis/Getty Images) Getty Images And the recent sale price of $950 million for the Ottawa Senators, a small-market Canadian team, is an example of a rising tide that will further float all the NHL boats. The Senators were valued at $800 million by Forbes last December, a 52% year-over-year increase. An enthusiastic bidding war among multiple interested parties smashed that number out of the park by the time the deal was complete.

When asked about future expansion at the NHL’s board of governors meetings in New York City last week, commissioner Gary Bettman wasn’t shy about name-checking a number of markets. “We have continuous expressions of interest from places like Houston, Atlanta, Quebec City, Salt Lake City, but expansion isn’t on the agenda,” he told reporters on Oct. 4.

“If something were to progress along where you say, ‘Well, this could be ready to go,’ then I’ll bring it to the owners and we’ll discuss it. But we’re not in a mode where I’m saying, ‘OK, if you’re interested in expansion, submit your applications and we’ll evaluate them,’ like we’ve done previously. We’re not there.

” Of those four markets, the NHL has been in Quebec City before and in Atlanta, twice. The Quebec Nordiques were absorbed from the NHL’s merger with the World Hockey Association in 1979 and lasted until 1995 before relocating to Denver to become the Colorado Avalanche. A new arena, the Videotron Centre, opened in Quebec City in 2015 and expansion applications have been submitted.

But so far, Quebec City has been rebuffed as the league focused its expansion on the Western U. S. The Videotron Centre in Quebec City is an 18,000-seat arena built in 2015 that is waiting for an NHL .

. . [+] expansion team.

(Photo by Minas Panagiotakis/Getty Images) Getty Images In the Peach State, the Atlanta Flames played out of the Omni Coliseum from 1972 to 1980 before relocating to Calgary. Then, the Atlanta Thrashers lasted from 1999 to 2011 before also moving to Canada, becoming Version 2 of the Winnipeg Jets. With a national broadcast deal now in place with Atlanta-based Warner Brothers Discovery and with a demographic shift in the region, “I think times have changed pretty dramatically and the market demographics have changed pretty dramatically since the first time we went there and then again in 1999,” NHL deputy commissioner Bill Daly said at the NHL’s player media tour in September.

He emphasized that a suburban arena might make more sense for the league than what is now known as State Farm Arena downtown, where the Thrashers played and which the NBA’s Atlanta Hawks call home. “I think a lot of bigger businesses are in Atlanta (now). ” The Thrashers’ departure to Winnipeg in 2011 is also the NHL’s most recent franchise relocation — making the last 12 years a period of unprecedented stability.

While the Arizona Coyotes are still in search of their forever home nearly 30 years after the original Jets moved to the desert in 1996, they haven’t left yet. And despite the Coyotes’ failed arena project referendum vote in May, a sense of optimism remains that current owner Alex Meruelo will be able to bring a new plan to fruition before too long. Are there downsides to expansion? Absolutely.

The 32-team grid has finally balanced the NHL’s Eastern and Western Conferences evenly. But the number of teams that make the playoffs has remained steady at 16 — the same as when the league was operating as a 21-team circuit in the late 80s and early 90s. And with the regular-season schedule also steady at 82 games, the number of times that rivals face each other in a year is on the decline.

Even within the same division, some teams will square off just three times. If even more teams are added and the league continues its commitment to all teams playing each other at least twice each season — home and away — the number of divisional and conference matchups will drop further, unless the schedule is expanded. And at some point, does dilution of talent become a concern? That conversation was loud during the last round of expansion in the late 90s, when the Nashville Predators, Minnesota Wild, Columbus Blue Jackets and the Thrashers joined the league and the expansion rules didn’t offer much opportunity for those teams to add top talent right away.

Twenty-five years later, hockey’s grassroots footprint has expanded, especially in the U. S. In 1997-98, USA Hockey had 360,642 players registered nationwide.

By 2022-23, that number had grown to 556,186 — an increase of more than 50%. If anything, the flat salary cap that was caused by the revenue shortfalls during the pandemic seems to have squeezed a number of hockey’s ‘middle-class’ players out of jobs in favor of less-expensive youngsters or journeymen. More teams would mean more jobs and more competition among teams for top players, which should help drive salary increases.

On Wednesday, Bettman also mentioned that the players’ pandemic debt to the league is expected to be paid off this season. The preliminary numbers suggest that the salary cap for the 2024-25 should rise to $87 or $88 million from this season’s ceiling of $83. 5 million.

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