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Speculation: Saturation point for markets and franchises

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Old
03-24-2010, 07:37 PM
  #1
Moobles
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Speculation: Saturation point for markets and franchises

This can be moved over to the Main forum if necessary but I was hoping it'd stay here, since this is a bit less chaotic and I appreciate a lot of the posters here more .

This has no article and is meant to be a discussion. I was wondering, as we see so much talk of contraction, expansion, how leagues should work etc. what you thought was the saturation point for markets that can have professional hockey teams in the NHL.

Let your heart out, if you can I guess but it's more of a hypothetical than something with a definite answer. I've left "saturation" deliberately vague and it's up to interpretation. I've just never seen a large discussion specifically about the topic, only about specific markets or specific aspects of the league (talent saturation, etc.) I wonder what it would look like if we aggregate them- probably still Sunbelt v. Northern Canada fans but for the few in here who want to get in their 2 cents on how they think the league should optimally look like, in terms of the number of teams and such.

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03-25-2010, 08:19 AM
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tarheelhockey
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I'm not following the question... what do you mean by "saturation point"? Do you mean saturation within the market (too many teams in once place) or saturation nationwide (teams in too many places)?

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03-25-2010, 08:36 AM
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I would think we're pretty much at equilibrium; 32 teams would be pretty much the maximal number of teams you could have.

As far as saturation, there's no question in my mind that Canada could support, successfully, at least 3-4 more NHL teams in Winnipeg, Quebec City, Southern Ontario (1 or 2 teams here).

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03-25-2010, 10:51 AM
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Originally Posted by metalfoot View Post
I would think we're pretty much at equilibrium; 32 teams would be pretty much the maximal number of teams you could have.

As far as saturation, there's no question in my mind that Canada could support, successfully, at least 3-4 more NHL teams in Winnipeg, Quebec City, Southern Ontario (1 or 2 teams here).
I agree. The question is always a matter of time and money. Right now, Canada can support another two teams because their economy is stronger. But in 10 years left's say the American economy comes back and Canada's is to crash?

By all rights the NHL has two strong countries for holding teams and COULD be a 40 team league. BUT they need to develop the US more and develop US youth hockey more to create their fan base and future players.

BUT as the economy is right now, 32 is the max in my mind and that would be for a Canadian expansion only; Winnepeg, Golden Horseshoe, Quebec City. What matters is finding an owner and getting an arena.

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03-25-2010, 10:55 AM
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Originally Posted by BigFatCat999 View Post
I agree. The question is always a matter of time and money. Right now, Canada can support another two teams because their economy is stronger. But in 10 years left's say the American economy comes back and Canada's is to crash?
Worst case scenario, even if the Canadian dollar dropped down to $0.63, I still feel that markets that previously relocated (Winnipeg and Quebec City) and markets that were in danger of relocated (Edmonton and Ottawa) would still generate greater revenue and higher attendance than we're currently seeing in some struggling markets (ex. Phoenix)

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03-25-2010, 11:07 AM
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The worst case is for both the US and Canadian markets to stagnate. The current US administration is doing it's best to do that. When I was in Canada last week the government sounds like they got themselves on the ball; an actual plan to get into the red in 6 years.

On the microeconomics front, the Preds are getting it together. They are being fiscally responsible and are writing the book on "Moneypuck" as we speak. They will break even or make a slight profit. Nashville's biggest worry is the lack of local government and media support.

Columbus I am worried about, a lot of their moves seem like thrashing about and not very responsible. They also have to fight the big red menace in the room which is Ohio St. U. I also need more information on their lease structure.

Phoenix is in limbo. They were the hardest hit by the American Depression. BUT from what I read in history, the first ones to be hit are usually the first ones to get out. I need about 3-5 years to see what happens to them.

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03-25-2010, 12:16 PM
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Interesting question, and as you say it might almost seem too hypothetical or subjective to be on the Business Board, though again on the Main Board it might likely be too abtract to get any decent attention at all.

As was quickly commented, it seems clear that there are a few Canadian cities in which a "saturation point" for hockey would be at the opposite of the reality spectrum, because those cities would be readily open to accepting and supporting an NHL franchise. The question or doubt in the League I would think is primarily focus on whether there is enough corporate capital to support a team in some of those cities. And perhaps, as some suspect, the NHL also might not be so interested in putting teams in cities where there is a fan following regardless of whether there is a team there or not, and especially small market cities that fall into that category, which all of those potential Canadian NHL cities are. "Small" in terms of population-base, not hockey fan-base.

As for cities/places or regions in the US, I would definitely believe that there is still room for "expansion", in the general sense of the word. Certainly even within many of the current NHL cities there is room for growth of the NHL or interest in hockey. Most of the cities that have gotten expansion franchises over the past 20 years probably still have room for growth; I would say definitely places such as Nashville, Atlanta, Raleigh-Durham, and Columbus as well as within their respective states, and also within the state of Texas, though perhaps Dallas-Fort Worth may have already neared it's saturation point.

This thread: http://hfboards.com/showthread.php?t=743715, just posted a short while back, I think definitely has some relevance to the topic, at least with respect to the "market capacity" of cities in the US and Canada for the potential of taking on an NHL (or other) franchise. Market Capacity is certainly an a major element in what would be involved in reaching a "saturation point".

Within that study, it suggests that the following markets have already reached or even passed a saturation point with respect to being able to economically support the current or additional major league sports franchises of any kind:

Calgary $18.01
Ottawa $16.89
Columbus $16.44

Jacksonville $14.33
Oklahoma City $12.96
Edmonton $12.65
San Diego $12.51
Memphis $12.17
Raleigh $5.43
Atlanta $4.73

Baltimore $2.23
Indianapolis -$6.26
Charlotte -$7.41
Salt Lake City -$9.75
Nashville -$13.60
San Francisco-Oakland -$20.50
Detroit -$21.57
New Orleans -$23.66
Green Bay -$26.31
Buffalo -$33.64
Cincinnati -$40.46
Minneapolis-St. Paul -$43.13
St. Louis -$44.90
Phoenix -$49.24
Milwaukee -$56.46
Kansas City -$57.07
Tampa-St. Petersburg -$60.37
Pittsburgh -$60.62
Cleveland -$77.20
Denver -$92.50


In fact, by that it contradicts what I said above about Nashville, Atlanta, and Raleigh-Durham, by suggesting that there may not be much more room for growth in those cities. Or even in the case of Nashville, along with Detroit, Buffalo, Minneapolis-St. Paul, St. Louis, Phoenix, Tampa Bay-St. Petersburg, Pittsburgh, and Denver, that those cities have already passed their major league sports market capacity. I would say then that luckily in the case of Detroit, Buffalo, Minnesota, St. Louis, Pittsburgh, and Colorado, those teams have already quite strongly established themselves. But then that could mean danger for Nashville, Phoenix, and Tampa Bay, especially the last two in going by the numbers above.

On the other hand, at the opposite end of the table in the Porfolio.com study are these cities:

New York City $583.98
Los Angeles $203.84
Chicago $135.46
Riverside-San Bernardino $119.43
Houston $102.13
Washington $91.20
Montreal $90.44
Bridgeport-Stamford $73.63
Las Vegas $73.27
Providence $64.71
Virginia Beach-Norfolk $63.20
Philadelphia $62.55
Austin $62.49
Hartford $58.49
San Jose $55.81
Dallas-Fort Worth $55.47
Richmond $50.28
Louisville $47.42
Sacramento $45.87
Birmingham $45.13

All of which it is suggested could potentially support more major league sports. But realistically, which of those cities would have a fanbase open to supporting an NHL franchise or another NHL franchise. I wouldn't think that the New York City area, nor the Los Angeles area, nor Washington, nor Philadelphia, nor Dallas could reasonably take on another NHL franchise with sufficient support. Perhaps the population numbers are there in some cases, but the fans already have their established allegiances, I would think.

But what does that leave open (realistically):

Houston $102.13
Las Vegas $73.27
Virginia Beach-Norfolk $63.20
Austin $62.49
Hartford $58.49
Richmond $50.28
Louisville $47.42
Sacramento $45.87
Birmingham $45.13

And how many of those are "NHL potential"?

Then there are still these places, in the mid-range, where the data suggests that sports "dollars" exist but not sufficient to support another franchise:

Tulsa $39.69
Rochester $39.54
Portland $36.76
Oxnard-Thousand Oaks $36.42
Omaha $35.80
Albany $34.93
San Antonio $34.40
Tucson $32.97
Seattle $30.93
Allentown-Bethlehem $30.62
Hamilton $29.34
Dayton $29.05
Albuquerque $28.96
Quebec City $27.77
Baton Rouge $27.60
Grand Rapids $26.90
Winnipeg $26.55
Akron $26.23
Fresno $26.01
Little Rock $25.78
Springfield $25.45
Columbia $25.19

Which among them are areas where at least hockey, if not an NHL franchise, has potential for further growth? "Potential Growth", I would assume, is the positive end of the "saturation" scale; if there is room for growth then a saturation point hasn't been reached. Obviously on this list is where those smaller market Canadian cities lie, and that alone should tell us that the criteria for this Portfolio.com study doesn't take into consideration, logically, the general Canadian leaning towards hockey as a sport. But what about those US cities, which ones still have potential for further growth at least in an interest in hockey or in following the NHL?

But of the current (US) NHL cities that fall into that mid-range and lower, it could be speculated that they have already reached or neared their NHL saturation point:

Miami-Fort Lauderdale $38.96
Boston $37.27
Raleigh $5.43
Atlanta $4.73

Boston stands out on that list as being a long-established NHL city. Which, in combination with the cities mentioned in the first part above (Detroit, Buffalo, Minnesota, St. Louis, Pittsburgh, and Colorado) may be among a group of NHL cities in which further growth in the fanbase is highly unlikely... a saturation point has been reached, but one in which the NHL has established stability.

And of course, all of the speculation considered above is based purely on 'economic market analysis', not on what could potentially be a specific potential for hockey and the NHL.


Last edited by MoreOrr: 05-17-2010 at 12:45 PM. Reason: Bolding
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Old
03-25-2010, 12:22 PM
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Phoenix is in limbo. They were the hardest hit by the American Depression...

Let's not get silly here. A deep recession, worst since the Depression. But calling it a depression is really hyperbole. No widespread shantytowns, Hoovervilles or breadlines. The Depression didn't really end completely until WWII, that's 10+ years. We're already starting to come out of this recession after 1 1/2 years.

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03-25-2010, 12:43 PM
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Originally Posted by tarheelhockey View Post
I'm not following the question... what do you mean by "saturation point"? Do you mean saturation within the market (too many teams in once place) or saturation nationwide (teams in too many places)?
You kind of have to look at both .. you need to know how many teams to have, and where to put them so you're not fighting a losing battle against competing franchises in the same market.

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03-25-2010, 01:19 PM
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Originally Posted by King_Stannis View Post
Let's not get silly here. A deep recession, worst since the Depression. But calling it a depression is really hyperbole. No widespread shantytowns, Hoovervilles or breadlines. The Depression didn't really end completely until WWII, that's 10+ years. We're already starting to come out of this recession after 1 1/2 years.
Semantics aside, I personally do not see this upswing.

As for the topic, I think the NHL wait another 5 years to expand. The conditions are there but they want to make sure things are being repaired with the lower level teams.

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03-25-2010, 01:29 PM
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Originally Posted by BigFatCat999 View Post
Semantics aside, I personally do not see this upswing.
http://en.wikipedia.org/wiki/File:DJ..._%28log%29.svg

We need to bear in mind that much of the American economy pre-2008 consisted of funny-money, assets that had no actual value.

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03-25-2010, 03:43 PM
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I think it's a good question, and it needs to be broad to address things, because I think the underlying question of NHL saturation has to first look at hockey overall. I think there is growth potential for hockey, but an NHL franchise has to be the outcome of that growth, not, as has been the strategy of late, the precursor to growth. I would look at seeing where the AHL, ECHL, college and even high school hockey is not reaching its full potential, the NHL should work to invest in those programs, knowing that 10-20 years down the road they'll have created the demand that will justify an NHL franchise. So that's the long-term plan.

In the short-term, I agree with BigFatCat99, let's first get the 30 teams we have healthy. Until you have 30 franchises that are healthy, I think you work as if you've achieved saturation. So I'd move Phoenix to Winnipeg, and hopefully teams like Atlanta, Florida, and Columbus can keep themselves together, Nashville I think is on the right track and just needs time, and Tampa's got a new owner that seems to have the will and resources to make things right. If these bubble teams do struggle, then, yes, move them to maybe the Golden Horse Shoe or Quebec City, if corporate support and a decent arena can be had, along with an owner with deep pockets.

Only then do you start looking at potential new sites, like Las Vegas, Portland, Kansas, Seattle, Houston, etc.

But start investing in the feeder hockey systems yesterday, fix the teams today, and then think expansion tomorrow.

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03-27-2010, 02:59 AM
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Originally Posted by tarheelhockey View Post
I'm not following the question... what do you mean by "saturation point"? Do you mean saturation within the market (too many teams in once place) or saturation nationwide (teams in too many places)?
Either or, it was deliberately left open because I don't feel I have a good reason to constrain it.

Sorry I didn't get to your PM MoreOrr I've been really caught up with school. You basically answered more than I expected out of this thread and given me quite a bit to think about . It's just idle speculation on my part though I find the topic fairly interesting, given that all major leagues have basically stopped between 30-32 teams. That's what just got me thinking and wondering about questions like market saturation as it pertains to expansion.

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03-27-2010, 10:29 AM
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Either or, it was deliberately left open because I don't feel I have a good reason to constrain it.

Sorry I didn't get to your PM MoreOrr I've been really caught up with school. You basically answered more than I expected out of this thread and given me quite a bit to think about . It's just idle speculation on my part though I find the topic fairly interesting, given that all major leagues have basically stopped between 30-32 teams. That's what just got me thinking and wondering about questions like market saturation as it pertains to expansion.
Two of the other Major leagues only play in 1 Canadian city. The other one doesn't play in Canada at all. Hockey could have at least 36 teams. Especially since in can draw talent fromn all over the world and plays in two countries. Where as NFL only plays in American cities and 99% of it's talent pool comes from the U S.

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03-27-2010, 10:45 AM
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Two of the other Major leagues only play in 1 Canadian city. The other one doesn't play in Canada at all. Hockey could have at least 36 teams. Especially since in can draw talent fromn all over the world and plays in two countries. Where as NFL only plays in American cities and 99% of it's talent pool comes from the U S.
Fully agree. In the best economic conditions the NHL can be a 40 team league. The talent is there. The only problem is potiential owners and arenas. As of now, the max point to me is 32 for the NHL and the next two should be Canadian expansion teams.

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03-27-2010, 02:09 PM
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Two of the other Major leagues only play in 1 Canadian city. The other one doesn't play in Canada at all. Hockey could have at least 36 teams. Especially since in can draw talent fromn all over the world and plays in two countries. Where as NFL only plays in American cities and 99% of it's talent pool comes from the U S.
It's definitely something to consider, though I'm sure if they find it the anti-expansion crowd will come in here roaring their terrible talent-over saturated roars and grinding their teeth bitterly at markets not making millions .

I never meant to sound like I was saying the NHL is cap'd at 30 teams forever, just that the reason why the topic interested me was cause we've stopped at 30 for so long (and maybe 32 within a few years), and I was wondering if there was any argument to be made that it was cause we'd hit a lot of "saturated" markets. I don't think, given what people have posted here, that that is the case .

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03-27-2010, 03:53 PM
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Fully agree. In the best economic conditions the NHL can be a 40 team league. The talent is there. The only problem is potiential owners and arenas. As of now, the max point to me is 32 for the NHL and the next two should be Canadian expansion teams.
Six is more than enough Canadian teams. If Winnipeg and Quebec want teams, maybe we can move Edmonton to Winnipeg and Ottawa to Quebec. Let Toronto and Calgary have Ontario and Alberta, respectively, to themselves.

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03-27-2010, 07:30 PM
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One of my favorite subjects...

If you're thinking how many teams a city could handle, it needs to broken down. NHL and NBA are the most direct competitors. Personally, I don't think MLB really competes with either of them for attention or advertising - there's not much season overlap. The NFL is sort of its own monster because of it's short season, but as Nashville has experienced, it can noticeably cut into NHL (and NBA I'm sure) attendance.

NHL and NBA - Requires a metro area of 750,000 in Canada (NHL only), roughly double that for the US. At least 3 million needed to support both NHL and NBA - Denver is really the smallest that can pull off both.

MLB - needs at least 2 million in a metro

As far as league sizes, I think the NHL and MLB could EVENTUALLY handle 36 team leagues. 32 for sure. The biggest issue is once you pass 32, you have to skip up to 36, and then 40, because 34 and 38 are waaay too hard to divide into sections/divisions/conferences.

The NHL can handle that many teams because it can count on Canada to support 8-9 of them.

MLB can because so many large cities have two teams, but even then they would likely have to place two more in Canada (Montreal, Vancouver).

NBA could add two more teams, but first they have to get their financial house in order.

NFL is fairly tapped out for at least another decade

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03-27-2010, 11:23 PM
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Personally, I think you can throw out the NFL in any discussion that compares business structure of leagues. The NFL is a once-a-week schedule. The other leagues are 82 games or double that. Your market for an eight-game schedule is exponentially greater than your market for a 41-game home schedule. Denver has STH from seven different STATES. I guarantee you the Rockies, Nuggets and Avs don't.


On to the NHL....
Realistically, Winnipeg, Quebec, Hamilton and Toronto could easily handle supporting a (or another) team. Houston, Chicago, Las Vegas could as well.

Norfolk-Va Beach or Richmond, Austin/Round Rock, and Louisville probably could as well.

Not that all of them should.

The biggest problem I see with expansion for the NHL, is that expansion leads to massive scheduling issues. You try to do a balance of "fair and balanced schedule to determine a champion" while retaining "rivals need to play so revenue is higher" and that gets harder and harder the more teams you have.

If they expand again (even without expanding) they really need to go to a MLB/NFL model with each conference containing a West, Central and East division, instead of having six total divisions of West, Central, East, East, East, East. Then you schedule only four divisions worth of games, instead of six.

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03-30-2010, 12:56 PM
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I think pratical-wise and saturation-wise, 30-32 would be the max. Expanding beyond that just gets unwieldy. May the AHL could be beefed up a little bit, and turned into more of a "Division 2" instead of cities having both. i know thered be no promotion/relegation, but it'd be a good option for semi-high level hockey for those markets that are close, and "testing ground" for future NHL teams.

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03-30-2010, 02:08 PM
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I don't kow of any hockey market that is 'saturated' when it comes to hockey. The problem with NHL hockey is that the talent is diluted.

There aren't enough quality players being developed to fill the current positions available. The league needs to contract in order to provide a better quality product.

Rather than remove franchises, the league could eliminate the 4 line system and return to three.

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03-30-2010, 04:02 PM
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A three line system is at the very least an intriguing prospect, but where do we get the idea talent is diluted? I'm not necessarily saying that it isn't or is, it's a genuine question of how people justify this position. It seems like this is relevant to the topic because for many people, "expansion" is severely limited by the concept of talent dilution.

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03-30-2010, 05:36 PM
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I don't kow of any hockey market that is 'saturated' when it comes to hockey.
If the NHL existed as a solo major league entity then sure, but that's not the case in most US NHL cities. Giving credit to each major league sport's ability to attract fans, I would definitely say that certain places are currently "saturated" with respect to the NHL.

Quote:
The problem with NHL hockey is that the talent is diluted.

There aren't enough quality players being developed to fill the current positions available. The league needs to contract in order to provide a better quality product.
You definitely need to qualify and perhaps even quantify that declaration. Many won't even agree with you that the NHL talent is diluted, I for one do not. And is the NHL's talent any more diluted than the talent in any of the other major league sports? Where's your evidence?


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03-31-2010, 02:04 AM
  #24
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Six is more than enough Canadian teams. If Winnipeg and Quebec want teams, maybe we can move Edmonton to Winnipeg and Ottawa to Quebec. Let Toronto and Calgary have Ontario and Alberta, respectively, to themselves.
I admit, I like that idea But anyway, the hockey growth in the next 10 years HAS to come from non-traditional hockey markets (NTHMs) and Bettman knows that, as do all the owners. The real questions are how aggressively the NHL goes after it and how long it will take, let's think... Well, USA Hockey got a lot of support last year and look for it to continue. It's working. How long does it take a 10 year old hockey playing kid to become a season ticket holder? My guess is the growth in NTHMs will take off once the recession slows down more and I wouldn't be surprised to see a mid-west expansion team in this decade.

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03-31-2010, 09:56 AM
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I admit, I like that idea But anyway, the hockey growth in the next 10 years HAS to come from non-traditional hockey markets (NTHMs) and Bettman knows that, as do all the owners. The real questions are how aggressively the NHL goes after it and how long it will take,
What better way to support such an intitiative than to make sure you have some more strong, lucrative, revenue generating teams ( like Hamilton ) to help bankroll it.

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