If you caught last night’s “Hot Stove” on HNIC, you heard the words “dispersal draft” associated with the Phoenix Coyotes. Also: the belief articulated by the Ron MacLean-led roundtable that other NHL franchises are also seriously hurting. And why not? American businesses by the thousands are contracting and consolidating and going out of business altogether in these remarkably depressed economic times. Which are expected to last some while. Why should NHL hockey be immune from the forces of global economic correction?
When I was in Toronto last month I picked up a copy of the Globe and Mail on Saturday morning and found the first detailed account of the duress in the Arizona desert:
“The Phoenix Coyotes are expected to lose between $25- and $35-million this year, and with
his primary business under financial duress, the question is whether
owner Jerry Moyes is able to continue underwriting the NHL franchise’s
losses.
After an encouraging spike in paid attendance over the first five games
this season, thanks to a young and exciting hockey team, the crowds
have decreased as the Coyotes faltered on the ice. But even with the small increase in attendance, the Coyotes are still near the bottom of the NHL in revenue. Consequently, Moyes
may be looking to sell the team or he could be forced to put it into
bankruptcy if he cannot persuade the city to alter leasing terms on
Jobing.com Arena.
The Coyotes signed a 30-year lease with the City of Glendale when they moved into
the arena in December of 2003. The lease calls for large financial
penalties if the agreement is broken, but if the club is placed into
bankruptcy, it can break the lease through U.S. bankruptcy laws.”
To illustrate the extent of the potential plight the league could be staring at, consider that the NHL’s flagship franchise, the Detroit Red Wings, resides in a state that’s endured five straight years of economic constriction. 2009 will be its sixth. A big headline this past week was national unemployment figures reaching 7.2 percent, the highest in 16 years. In Michigan unemployment is approaching 9.5 percent. And growing.
It’s inconceivable to imagine a Wings-less NHL, but there were scores of empty seats in the Joe during the playoffs last spring. Meanwhile, it’s much more plausible to imagine a handful of non-traditional NHL markets — particularly some in the Southeast — relocating to greener pastures, and specifically to northern markets that have a track record of supporting hockey while weathering tough economic times.
Our good friend Lyle Richardson has been following the macro-economic story and its potential impact on the NHL. Last month Richardson quoted the Toronto Star’s Kevin McGran and his claim that NHL owners were looking to “the game’s hotbeds as an economic salve,” which front and center includes the specter of struggling U.S. clubs moving way north, over the border.
“Hockey is the most vulnerable and that’s
primarily because of the lack of a TV contract in the United States,”
said Richard Powers, associate dean of Rotman School of Business at the
University of Toronto. “I really do think we’re going to see some
contraction and/or relocation. And it’s very likely we’re going to see
another franchise in Canada.“
You can make a compelling argument that there aren’t just one or two seriously struggling franchises in the Southeast but indeed three. The third-place Florida Panthers, Richardson points out, “have been staging ticket giveaways for some time and this season cut some of their business services.” They are also staring at the looming unrestricted free agency for their best player, Jay Boumeester, after dumping their best forward and captain, Olli Jokinen, last season. Tampa’s attendance, Richardson notes, “is currently in free fall.” On HNIC last night the Hot Stovers were prattling about ‘Bolts’ ownership trying to move Vinny Lecavalier and his new mega-deal.
With their best players still here, the Southeast’s bottom feeders can’t seem to make much of a go at it. What will the gates for those teams look like if their rosters get star-gutted?
And we aren’t talking moderate belt-tightening with the present economic recession. This one is global in scope and therefore, many economists believe, far longer in duration. At the heart of the American economic misery is credit malfeasance, and specifically with home lending. Guess which state ranks among the hardest hit? Try one with two clubs in the NHL’s Southeast division: “Florida has consistently been among the Top 5 states with the highest foreclosure rates ever since the sub prime mortgage mess exploded.”
The story in last month’s Toronto Star sagely noted the revenue reality confronting the NHL:
“The NHL is much more dependent on gate revenue than TV revenue,” said
Phillip Miller, an associate professor of economics at Minnesota State
University. “That makes it more susceptible to the ups and downs of the
economy . . .”“The Florida Panthers have laid off staff, the Tampa Bay Lightning
are said to be a financial basket case, the Phoenix Coyotes are
believed to be hanging on by a thread.“I don’t see how you can
build long-term support for an ice hockey team when you are located in
markets where your fan base can’t play hockey,” said one broker who
arranges the sale of sports franchises. “I would say all of the
southern teams are somewhat at risk.”
18 Comments
Knee jerk. Given some time, these teams will be successful. While there may be a short-term downswing, the overall projection is still positive.
Look at Atlanta: maybe instead of talking contraction, someone would write an article about getting rid of their horrible ownership. It’s a fickle sports town, but there are so many transplants with so many kids playing youth hockey.
Winning certainly helps, too. It’s a bit of a chicken-egg problem. They don’t have the money to spend on another difference maker or two b/c they don’t draw crowds. They don’t draw crowds b/c they don’t have the talent to win.
Sorry, Canada. Wish you had a team in Saskatoon, too. But a downturn in the economy isn’t going to help you poach our teams. If PHX moves, they’re not heading north of the border. Next.
yeah a little bit of a knee jerk reaction. but otherwise a great post.
This mite be the last major change the NHL need to secure its stability while more change will bring a frown to some peoples faces it would be for the better. Putting franchises in non hockey markets was a mistake. Relocation will work for the NHL. Seattle Kansas even Salt Lake City could keep a healthy hockey product in their already strong hockey markets. The Southeast division teams had a major challenge and have come as far as they can go popularity wise, maybe if the thrashers won a couple cups they might get up to page 8 in the sports section of the paper.
Take heart, hockey fans. We are one faltering-franchise away from reforming the Patrick Division! I wish the Panthers and Lightning best of luck in Chapter 11. You will LOVE Hamilton, Ontario (the thinking man’s Buffalo, NY). The Penguins are the only major league franchise I know of that have declared bankruptcy TWICE.
PLENTY of people can play hockey down in florida…they just don’t do it in ice rinks. They play outdoors in the beautiful weather on roller rinks. Too bad all of you [guys] in Canada freezing what’s left of your balls off are jealous that we have a team and you don’t.
About the Coyotes, there’s something I don’t quite understand. Why do they want to change their 30 years lease only 6 years after signing it?
Were they in a much better situation back in 2003 when they signed their lease?
And what do they want to change about their lease by the way?
And about relocation of struggling team to Canada, there’s something that must not be forgotten: the relative strengh of the two currencies remains one of the most important factor if you want to have successful franchises in Canada. Sure, the fans will be there no matter what, but remember a few ears ago, when a weaker Canadian dollar was hurting all of the Canadian franchises, including the biggest ones. If the Canadian $ gets in trouble a few years from now, any Canadian franchise would hurt again.
@ #5, Duffman,
Oooooh, a veiled insult from a “roller hockey” player, ooooh.
FYI, real hockey is played on ice, on ice skates, and it involves actual physical contact, not that a roller skater would understand that. Or be able to hang.
Guess you are basing your imagined internet bravado on the long history of professional hockey players hailing from Florida. Oh wait, never mind.
For Phoenix in particular, they want the lease restructured because of the parking clause. Most teams make money when people park at the rink for hockey games. The Coyotes actually pay the city for parking.
I forget the exact numbers, but it was something like most teams make $10M a year on parking but the Coyotes lose $2M. That’s a pretty hefty swing. Why they agreed to those terms in 2003 is beyond me, and part of me wants to see it get stuck to them for being dumb and agreeing to it, but realistically that $12M/year swing might just cause them to go bankrupt and leave the city which is likely not what Phoenix wants.
As the son of a die-hard Red Wings fan, I can tell you one reason the Joe was empty: it might possibly be the worst buidling to see a game in the world. Its old, its dirty, and more critically, its a very wide, squat building. The result is that the seats get very far away from the ice very quickly. Even relatively low seats are about as far away from the ice as the Verizon Center hallway. Higher seats are actually physically located in Windsor. (Ok, I made that part up.) In short, aside from the atmosphere (which is fantastic), you can actually get better views of the game from your sofa.
Not all roller hockey players are figure skaters with sticks. Up north the roller players play inline to avoid the contact, but down here in the south we play roller because it is the only cheap option of “ice time”. I have played many a pick up and hosted many a pick up that was checking. The main problem we have down here is we want playing real hockey accessible to everyone (which involves strapping on inlines to play outside) but at the same time we are in a constant fight with the insurance company for them to insure checking inline, hence we have only checking pick up games and not a checking league. We are working on it though. Although I agree roller hockey is not real hockey (it is just basketball on skates), not every roller player plays traditional roller style hockey, some of us are just looking for cheap “ice time” and want to play checking and we are trying to go through the process of formalizing checking in inline. I live down here in Texas and for the last 2 years I have been trying to arrange a checking roller league but I have been stuck with the insurance company balking at the risk.
It’s extremely naive to think that teams like Phoenix, Tampa, and Florida would not contract or relocate, whether north of the border or otherwise.
Many of these teams have been losing money for years, and their existence is somewhat dependant on their ownership’s willingness to continue losing money. As many of those owners are starting to see their bottom lines threatened, they are going to consider selling the teams, if anyone will buy. There may be no buyers for a massively unprofitable pro sports team these days, and certainly not a lot that will want to keep these teams, who have little to no sense of history where they are currently located, in their current markets.
The point is that for some of these franchises, moving the team may end up being the best-case scenario. The Phoenix Coyotes, after all, exist because the team moved from Winnipeg. The alternative is bankruptcy and contraction, and don’t think it can’t happen. I would much rather see these teams move to Canada than disappear outright, but honestly, the NHL may have a few more teams than it really should at this point.
LOL @ roller “hockey” players.
LOL@ posters named Tiny.
BIG words from a TINY man. I am sorry, I just had to, the door was open.
Haha!
I could counter that the nick “Tiny” actually refers to a large physical stature combined with a body fat percentage that happens to be far below that of your average American, honed via a lifetime of actual skating on ice.
Not that dudes headed out to the local roller skating rink would ever understand.
Cue further insults!
Cheers.
If they can’t handle the cold, they ain’t tough enough to play in the NHL. How long did it take the Rollar-hockey league to fail?
Both Florida franchises can move to Toronto, and even with the Leafs and MArlies in town, all of them can each outsell Tampa Bay’s 3 hockey fans…lol
Ok, this is going to be a long response, but I want to get this off my chest. It’s directed mainly at the argument that teams in Nashville, Florida, etc should be contracted or relocated. (By the way, Ken, no need to be mean towards other hockey fans. Fans in Florida are just as legitimate than fans in Toronto. )
One thing that has consistently irritated me about a certain segment of the hockey community is the utter disdain they seem to have for teams/fans from non-traditional markets. (By the way, anyone care to explain what a non-traditional market is? Define traditional for me. It’s not as easy as it sounds.)
It strikes me that, as far as the NHL goes, everyone is in this together. We all hope to see this league and sport succeed. But not everyone acts this way. When it comes to hockey, it’s the only sport I’ve ever heard of where some fans not only root for other teams to lose, but they root for them to fail. That’s simply not good for the sport. It’s harmful. It’s ignorant. And it needs to stop. This philosophy that everything would be great if we cut out 10 teams and went back to the old days is naive and ignorant. Explain to me how it helps if we expose the sport to fewer people instead of more?
What these backward-looking luddites fail to realize is that if, heaven forbid, a team is Phoenix or Florida fails, it harms the rest of the league. It makes the league look like a joke. It makes our beloved sport look second rate, and we all know that it is anything but. Hockey is one of the greatest sports on earth. It’s tradition is a great strength. But I also think people fall a little bit too in love with tradition and are too resistant to anything new. They look backwards too much and any attempt at growing/updating the league is looked upon with scorn.
When will this notion that Sun Belt teams don’t deserve a team stop? Sure, it’s easy to pick on Nashville, Florida, etc. But what stops us from lumping Washington D.C. in there? How about St. Louis? Is that a ‘hockey city’? Heck, before Philly entered the league, would you have considered Philly a hockey city along the lines of Montreal? No, but a team was put there. It had success over the years, developed a following, grew and now people love it. Do we in the D.C. area deserve a team any less than someone in Winnipeg? (No, of course not.) So lumping together cities that do and don’t deserve teams is garbage.
The argument that Phoenix or Florida can’t support hockey is a canard. Sure, these markets aren’t perfect. But they have had precious little success on, and subsequently, off the ice in the last few years. No wonder fans haven’t come out; the teams have stunk! San Jose and Dallas aren’t exactly traditional hockey markets, yet they draw well and they’ve become solid hockey towns. Why? Because the teams have won. Fans enjoy this. If you want to judge a market, do it when the team is winning. If fans still don’t come out, then maybe the team should be moved. But if the team is losing, give the city a break and hope they start winning.
There are enough fans in these southern cities. The fact that the weather is warmer doesn’t mean that they are unsophisticated fans or that they are any less passionate than some guy up in Ottawa or Edmonton. So for heavens sake, stop rooting for these teams to fail, and start hoping they succeed!
Great site by the way, fellas. I just wanted to get this opinion out there on the internetS.
“What these backward-looking luddites fail to realize is that if, heaven forbid, a team is Phoenix or Florida fails, it harms the rest of the league. It makes the league look like a joke.”
I AGREE! When the NHL pulled out of Winnipeg, Quebec City, Minneapolis and Hartford only to relocate to Phoenix, Colorad, Dallas and Carolina……it definitely DID BECOME A JOKE!
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