Blog Entry

Fixing the NHL--2. Fix the weak teams

Posted on: May 28, 2009 11:43 pm
 

One of the critical problems facing the NHL today is the instability of certain franchises, the vast majority of which are teams that were part of the late-90s expansion or relocated during that era.  The biggest issue facing the NHL right now in this area is the Phoenix Coyotes.

The Coyotes were born as the Winnipeg Jets, a team in the old World Hockey Association, a rival league that existed in the 1970s.  The WHA folded, but four of their teams--the Jets, Quebec Nordiques (now the Colorado Avalanche), Hartford Whalers (now the Carolina Hurricanes), and Edmonton Oilers--merged with the NHL in 1979.  Despite star players such as Dale Hawerchuk, Teemu Selanne, Alexei Zhamnov, and Keith Tkachuk, the team began to run into severe money problems in the 1990s with the sudden escalation of player salaries.  Winnipeg Arena, home of the Jets, was one of the smallest in the league (matching Winnipeg's status as one of the smallest markets in the league), and several attempts to replace it with a new arena fell through.  Combined with the disastrous effects of the Gary Bettman-driven lockout, which wiped out half of the 1994-95 season, the team could not survive in Winnipeg.  It was sold to a group from Phoenix in early 1996, and the team moved to Phoenix that fall, renaming itself the Coyotes.

The Coyotes made the playoffs in 5 of their first 6 seasons in Phoenix, but were always eliminated in the first round.  The team has struggled ever since, causing a drop in attendance.  The arena problems that forced them to leave Winnipeg followed them to Phoenix, where they spent their first 8 years in America West Arena, which was not suited for hockey.  The team has since moved to Jobing.com Arena in Glendale, which is a much better arena for hockey, but which saddled them with a virtually unbreakable buyout agreement. 

Despite bringing in Wayne Gretzky as a part-owner and head of hockey operations in 2001, the team has struggled.  Since 2003, their average attendance has been 14,827, ranking them 25th in the 30-team NHL in that time (although they have been ranked 29th and 28th the past 2 years).  These struggles led current Coyotes owner Jerry Moyes to seek financial assistance from the league in 2008.  Moyes then declared bankruptcy on May 5th of this year, with Moyes intending to sell the team to Jim Balsillie, Bettman's apparent blood enemy who is the CEO of the company that makes BlackBerry smartphones.  Balsillie plans to move the team to Hamilton, Ontario.

The NHL responded to this by stripping control of the Coyotes from Moyes, and saying that the team could not declare bankruptcy due to an agreement that Moyes signed with the NHL when they gave him financial assistance.  The issue is currently in court, and will be decided in the next few weeks.

Unfortunately for the Coyotes, they appear to be stuck in Phoenix.  Their lease with the city of Glendale calls for a $750 million buyout if the team breaks it.  That puts the buyout amount at over 5 TIMES the $142 million that Forbes magazine valued the team at in their rankings this season.  Combine the buyout with the value of the team, and you're talking almost $900 million, which is twice the value of one of the league's cornerstone franchises, the Toronto Maple Leafs (Forbes' #1 ranked franchise at $448 million).  The only way that the team can get out of the lease is by being allowed to declare bankruptcy, which Moyes apparently gave up the right to do.

But the Coyotes are just the poster child for problem franchises in the NHL.  There are several other franchises in trouble.

The once-proud New York Islanders have been struggling with attendance for the past decade, finishing near or at the bottom of attendance during that time.  They have also been in a struggle to replace Nassau Colisseum with a new arena.  Several plans have been proposed, but nothing has happened as of this point.  The Atlanta Thrashers, one of the late-90s expansion teams, has, with the exception of a few years in the middle of this decade, struggled to produce a winner.  They have also been plagued with ownership problems, to the point where the owners are in court to see who has the right to buy out who.  The troubles of another of the late 90s expansion teams, the Nashville Predators, began before the team even took the ice.  Founding owner Craig Leopold had to deny rumors that the team would be relocated before ever playing a game when they only sold 6000 of the 12,000 season tickets the NHL required.  They even got Nashville to pay over 30% of the $80 million expansion fee to the NHL, as well as cover any operating losses from their arena.  In May 2007, Leopold agreed to sell the team to Balsillie.  This deal fell through when Balsillie, who had told Leopold that he'd keep the team in Nashville, started selling season tickets for the Hamilton Predators.  The team instead was sold to Boots Del Biaggio, a venture capitalist who has since filed for bankruptcy, and a group of buyers based in Nashville.  The team also has a buyout clause in place with Nashville, which allows them to pay a modest (compared to Phoenix's lease) $20 million buyout to Nashville if the team loses at least $20 million and fails to average 14,000 per game attendance by the end of the 2009/10 season.  Del Biaggio's financial problems has led to a federal investigation into his business dealings involving the Predators.  Other teams reportedly losing money are St. Louis, Carolina, Buffalo, Florida, Washington, and Columbus.

What are the causes behind these problems?  The economy, to a degree, although that won't be really felt until the 2009-10 season.  I blame it more on NHL leadership: Poorly executed expansion and relocation plans.  Lack of television revenue and exposure.  The NHL apparently spending less time doing background checks on potential owners than diners do on the high school kids they hire as busboys.  The fact that the salary cap which was supposed to provide "cost-certainty" to teams (and which caused the league to lose an entire season of play) has failed.  I know that some people have suggested contracting these teams, not only due to their financial problems, but also due to a watered-down talent pool.  I don't think that's necessary, and I don't buy the talent pool argument.  Up until the past 25 years or so, when the league was mainly Canadian players, I could see that argument; however, with the huge improvement in the quality of American players in that time, as well as the influx of European and Russian players, I think the talent pool has grown with the league.

I also think that every effort should be taken to keep these teams from relocating.  Franchise relocation a sign of instability for a league.  Also, I agree with the reasoning behind the NHL's "Southern Strategy", as I call it (but I disagree with the way they've executed it--which I'll get to in a future post).  Moving a struggling team like the Coyotes to Canada might be good for that team short-term, but bad for the NHL long-term.  I have to admit though, that personally, I'm torn on the issue.  I'm an American, but I sympathise with the Canadian fans who feel that the NHL under Bettman has spit in their faces.  I would like to see more teams in Canada (although I'd be worried about the effect on the Maple Leafs and Sabres if a team was placed in Hamilton), but I really don't want to see teams taken out of cities and away from their fans.

So what can be done to fix these teams?  I suggest the following solutions:

1.  Fire Bettman (the root cause of SO many problems in the league);
2.  Institute a system where potential owners go through a thorough background check involving their finances and any criminal past;
3.  Start an "NHL Bank" so that teams that are in financial trouble can borrow money from a league-maintained pool (which they would pay back with interest when they are out of trouble).  This is different from the league's existing revenue-sharing program;
4.  In cases where a new arena is the issue, the league and team must work together to provide financing for it (again, this is another area where the NHL Bank would work);
5.  If a team needs an influx of cash that exceeds what a loan or line of credit provides them, or is in search of a buyer, sell stock in the team to the fans.  This will provide cash for the team, allow fans to have some say in how the team is run (which should generate more interest in the team since the fans would have more than just an emotional stake), and help provide stability for the league by removing the fear that teams will leave if they're struggling or are trying to extort money from taxpayers through a new arena or other means.  This will most likely require changes in the rules governing NHL ownership, but it should be done.

In any case, this is an issue that needs to be addressed ASAP, or these teams could act as an anchor and drag the rest of the league down with them.

Category: NHL
Comments

Since: Jun 8, 2008
Posted on: May 31, 2009 4:43 pm
 

Fixing the NHL--2. Fix the weak teams

all of which i'll address in my next post...

the ironic thing is, the Flyers didn't start out as the Broad Street Bullies...after getting beaten up by the Blues in the playoffs in 1969, Ed Snider told GM Bud Poile to get bigger, tougher players, and that his team would never be pushed around like that again...thus the Bullies were born...



Since: Oct 22, 2006
Posted on: May 31, 2009 4:21 pm
 

Fixing the NHL--2. Fix the weak teams

and talking about the Flyers and Islanders, did i detect a little love for the fighting and physicality of the game?

Shags - Man, were those different days. You had to fight the Bullies. They didn't offer you an option. They didn't call them "Bullies" for nothing. Actually, I think it was part of the Flyers downfall. Once the Islanders could no longer be intimidated AND they got talented, Philly's reign was over and the Islanders reign began. The physicality I have never had any problem with. The two sports I watch are the NHL and the NFL. As I have said earlier, Americans, and more importantly for the survival of the League, advertisers have NO issue with a violent game. The NFL is clearly the number one sport in America. It's the fighting that gets old and turns off advertisers. Again, you can make a very strong case that the violence in the NFL is worse than the fighting in the NHL. Unfortunately, advertisers don't see it that way.



Since: Jun 8, 2008
Posted on: May 31, 2009 11:46 am
 

Fixing the NHL--2. Fix the weak teams

yah dweez, it's criminal how the NHL treats anything pre-Gretzky as almost non-existant...and there's SO much history and tradition in this sport--hats on the ice after a hat trick, octopus on the ice in Detroit (oh wait, Bettman killed THAT too), the fact that 2 teams who beat the crap out of each other in a 7-game playoff series line up and shake hands when it's all over--to name just a few, but it gets ignored...what's even worse is the ONE time that they actually acknowledge the past, they did such a great job at it...im referring to the Cup Raise commercial that aired during the playoffs last year...i think it was one of the best commercials ive seen for ANYTHING over the past few years.....here's a link to it:



and talking about the Flyers and Islanders, did i detect a little love for the fighting and physicality of the game? Tongue out

WarpedMind, gracias...and you might be right about Bettman's feelings about Hamilton...my main concerns about it are cutting into the Sabres' fan base (not worried about Toronto cuz they could support 2 teams in the city easily), and again, i'm not a big fan of relocation...

and i gotta say, i'm digging the Wild a little bit...i bleed orange and black, and the Sharks are my second-favorite team, but a couple of Wild players helped me win my fantasy league last year...Backstrom was great in goal (which i needed since Fleury was so-so most of the regular season, and Brodeur missed most of the season)...and with the scoring in my league, there was another Wild player, a mid-season pickup, who put up huge numbers for me, so big that i started calling him The Scoring Machine...i refer to one Cal Clutterbuck...hell, my team's motto in the second half was "DON'T F*** WITH CLUTTERBUCK!!!"



Since: Aug 13, 2007
Posted on: May 31, 2009 4:51 am
 

Fixing the NHL--2. Fix the weak teams

Wow, Shaggy, this is what I call a hockey blog!!  Wes Goldstein better bookmark this bad boy.  Heck, I'm gonna bookmark it for everything non-Minnesota-Wild related.  Is it just me, or is Bettman the only person on the planet who thinks that a team in Hamilton is a bad thing for the NHL??



Since: Oct 22, 2006
Posted on: May 31, 2009 12:14 am
 

Fixing the NHL--2. Fix the weak teams

Unfortunately, you're right, the early days of hockey are all but ignored. NHL does a horrible job of promoting it's past. The reason you hear so much about the old days of baseball is because of it's sheer dominance back then. It was the only sport filmed and, for all intents and purposes, it was the only sport that the nation watched. There was baseball and then there was everything else - miles behind. It's hard to imagine that kind of dominance today. What always blows me away is that there is all this footage of Babe Ruth, but when Wilt Chamberlain scored 100 points in 1962 (almost forty years AFTER Ruth), there wasn't a TV or film camera there. So, even the NBA and the NFL had their early days overlooked. But the NBA and the NFL embrace their past. The NHL seems to deny their history even exists. Since you're a Flyer fan, sorry you missed the Broad Street Bullies. I will never forget the battles fought between the Flyers and the Islanders when NY was on their way up. Those weren't fights, they were gang wars. Whichever team was wearing their white jerseys, ended up with red ones. Bobby Nystrom could barely even skate when he started with the Islanders. But he could fight and you HAD to have tough guys to get on the ice with the Bullies. It was something watching Clarke whip down the ice with his hair flying and watching him break into that big, toothless grin. As an Islander fan and a kid, I hated that guy! You should try to dig up some of the old games. Some great hockey back then. There was a one game between NY and Edmonton - unbelievable skating and passing, great goalkeeping, brutal hits but almost no penalties. One of the best damn games I've ever seen in any sport. I think it was 1983 when Edmonton was still trying to end the Islander dynasty. I wish I could remember exactly what year it was and track that game down. That was one for the ages. That's another thing the NHL is doing wrong! They need to go through all their old games, pick out the best of the best, and start a NHL Classics channel. Lots of great hockey back then.




Since: Jun 8, 2008
Posted on: May 30, 2009 9:39 pm
 

Fixing the NHL--2. Fix the weak teams

thanks again for the props, dweez...maybe at some point i will start my own site...just sucks that firebettman.com has already been taken...

you're dead-on about the European and Russian Leagues being able to keep the mid-level players by paying more than NHL teams, and they've even been able to get some of the European-born superstars at the end of their careers (Forsberg and Jagr come to mind)...and the KHL and NHL pretty much have a war going on at this point about NHL clubs signing away Russian players...

i know the Islander teams more by rep than actually seeing them; i didnt get into hockey until just after their run, right when the Oilers were in their dynasty (and beat my Flyers a couple of times in the Finals--although i still say that if we were healthy in '87, we would've won)...and salary cap aside, i agree with you that with the 9 teams that have been added in the last 20 years means that the talent will be spread out over more teams...although, i've always wondered about something with that argument...whenever you hear people talk about the greatest teams in NHL history, it's usually the Islanders, Oilers, or maybe the Canadien teams in the 70s...you would think that under the argument of "expansion=worse teams due to spread-out talent pool", that the best teams in NHL history would've come from the Original Six era, when there were only 6 teams...im not saying there weren't great teams back then, and i'll be the first to admit that my kowledge of the early years of the NHL isn't quite to the level of my knowledge of MLB and the NFL in that era, but that always struck me as kind of strange...i mean, you always hear about the '27 Yankees, and their dynasty in the 50s and 60s, or about the Packers' dynasty in the '60s, but not with the NHL...probably another case of the lack of exposure that the league suffers from...

all that being said, i do see the merits of your argument for contraction...i just think that for the league to grow and become a national sport in America, and get the resulting fat TV contract, it needed to expand into new markets; they just did a horrible job of it (which i'll get to in a future post)...i also agree with you about the salary cap, lack of the TV money, and the fact that teams can't survive on attendance alone (all of which i'll get to in future posts)...

next up is a subject i know we disagree on: fighting (although i think i might surprise you by the way i present it)...



Since: Oct 22, 2006
Posted on: May 29, 2009 10:38 pm
 

Fixing the NHL--2. Fix the weak teams

Shaggy - Hats off for once again proving your the only "real" hockey writer on this site. An excellent blog yet again. You really should start your own website. Now that I have paid the proper respects, I have to disagree with you regarding contraction. I do believe the talent pool is watered down. Yes, they are more players from more countries than ever before, but the influx of foreign talent has slowed. The European and Russian Leagues are offering competitive salaries and a player gets to stay at home. Yes, the superstars can make more here for now, but crucial role players and good, but not yet great, talent now has the chance to play close to home. I'm glad you brought up the old Islander teams. When NY and Edmonton where having their classic battles in the early 80s, both teams brought consistent, line after line talent onto the ice that no team can match today. Even Detroit, which is as close to a modern day all star team as we have, isn't as deep and well rounded as either of those teams were (especially in goal!). Those head to head match ups were some of the best hockey I have ever seen. In our modern salary cap world no team could afford a Bossy, Trottier, Gilles, Morrow, Potvin, Smith, etc. However, if there were fewer teams, each team would have more talent and depth than they do now. Frankly, minus a viable television contract, I don't see how the NHL can survive with this many teams. The revenues are just not there. I went to 14 regular season CBJ games this year and all the playoff games. It is insane that the Jackets lost $10 million this year. The second half of season the building was packed and all season long people were readily buying grossly over priced beer and food. Give the NHL a TV contract where the teams all get a piece of pie and Columbus would be making a healthy profit. But, with Bettman at the helm, I doubt TV  can be counted on to come to rescue. I think contraction is inevitable and I believe we will see the salary cap go lower, making the NHL even less attractive to foreign players. I hate to be pessimistic but I think the next five years are absolutely crucial. If a leaner, better led, Bettman free NHL can get on TV, it can grow. If not, I'm afraid the sport we love may end up being just slightly more profitable and popular than WNBA.


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