The Business of HockeyDiscuss the financial and business aspects of the NHL. Franchise sales, valuations, TV contracts, ratings, expansion, relocation, the CBA and work stoppage discussion goes here.
The financial trouble in Dallas is not related to the bad two seasons. It's related to Hicks being overly extended financially and taking a huge hit throughout his businesses in the recession. All three of his teams - baseball, hockey and soccer - are struggling financially through reasons absolutely unrelated to anything on the field or in the stands. Freaking Liverpool soccer is in financial trouble, if you want to talk about a team with no issues of fan support at any time. Nice try, though.
Found new Forbes numbers. LA is ranked No. 13 (Dallas No. 8). Dallas is ahead of Vancouver, Pittsburgh and Minnesota. LA is ahead of Colorado, Calgary, Ottawa, Washington, Buffalo and Edmonton. From a business sense, franchise value (i.e., money you can make on the sale or borrow against to finance other things) is far more important than TV ratings, year-to-year profit or other related expenses. For example, say Hicks sells the Stars for $250 million (original asking price was $300 million, Forbes most recent value was $246). He bought them in 1995 for $84 million. That's $166 million profit in 15 years, inflation obviously notwithstanding, or $11.07 million profit a year. The Stars made profits most seasons and lost a few hundred thousand when they did not make the playoffs, meaning his average yearly profit is likely around $12 million at the sale of the team.
That type of potential growth is why, from a purely making-money perspective, Sunbelt teams are so attractive. Unless you're an owner like Mark Cuban, who has supposedly lost money on the Mavericks every year, business men care about the bottom line, and the potential bottom line in places like Atlanta and Phoenix is much more attractive than the likely bottom like in somewhere like Winnipeg or Hartford.
I attempted to refrain from talking about Dallas, because I am admittedly not familiar with the financial difficulties there. Isn't their attendance down? I understand why Southern teams can be attractive. No one has been able to realize the potential of most of those markets yet. So of course, people begin to ask, does that potential really exist? My point with the TV ratings was to demonstrate how shallow the fan base is in one of the biggest markets in the world.
I attempted to refrain from talking about Dallas, because I am admittedly not familiar with the financial difficulties there. Isn't their attendance down? I understand why Southern teams can be attractive. No one has been able to realize the potential of most of those markets yet. So of course, people begin to ask, does that potential really exist? My point with the TV ratings was to demonstrate how shallow the fan base is in one of the biggest markets in the world.
Of course they are attractive. Look at the populations in TB, South Florida, Dallas, Phoenix, etc.
Not to continue to echo the pro-north relocators but the question is not if they are large markets but if they are large HOCKEY markets. Sun Belt teams are not!
I'll need to look into how they do their valuations. What's the metro population of Atlanta? That doesn't look great. If a market of the size of Atlanta has a team with a value that low, it's not good. Edmonton and Buffalo make sense their market size puts a definite cap on their profit potential.
I'll need to look into how they do their valuations. What's the metro population of Atlanta? That doesn't look great. If a market of the size of Atlanta has a team with a value that low, it's not good. Edmonton and Buffalo make sense their market size puts a definite cap on their profit potential.
Go to the link I provided and click on each team for their valuations.
Attendance is down slightly in Dallas but not to a concerning level (and nowhere near what Pittsburgh went through during its ownership crisis, albeit that involved potential relocation). I believe it's still in the 90+ percent capacity, which is more meaningful when you consider they lost several big business ticket holders through the recession. Nortell is mentioned on another thread, and I think they lost Ford this year.
You keep mentioning shallow fanbases, but here's where that rub is. Say you can make 1 percent of Atlantans "hockey fans" in time (and I don't know what that frame is). That's 54,000 people. Five percent is 270,000 people. Winnipeg's entire metro population is 670,000 (and that's before you bring in the argument of "many are already fans of some NHL team, therefore you're moving revenue around and not creating new streams), and you'd need 9 percent penetration there to match 1 percent in Atlanta. A relative shallow fanbase in a hugely deep population center can be just as meaningful as incredibly deep market penetration in a much smaller metro area. The vast majority of the Sun Belt franchises fall into this category (and I can buy much more meaningful arguments against teams in the two exceptions I can think of off the top of my head).
You see flashes of this with Sun Belt franchises when they perform well, when Phoenix had it's flash in the pan in the late 1990s, when Tampa and Carolina and Anaheim won their Cups. The problem is most of those teams (Dallas and San Jose being the real exceptions) were immediately mismanaged after those victories and didn't sustain, let alone build, momentum. Tampa additionally had the huge hit of the lockout. Anaheim has had less of a fall out in the past couple years. In areas where you're introducing a brand like a new team, those things hurt a lot more than they do in areas where the brand is established (and they still hurt there, in places like Boston and Pittsburgh).
The thing I find somewhat funny about the "HOCKEY MARKETS" argument is that assumes hockey the sport is simply unattractive and unsellable, that you have to be born into or live in an area where it's popular to understand what a great game it is, that newcomers to it simply will never like it because it's somehow unlikeable to particular groups. Isn't that a huge slam on the sport itself?
