On November 2, Judge Redfield T. Baum approved the sale of the Phoenix Coyotes from Swift Tansportation Corp. founder Jerry Moyes to the National Hockey League for the sum of $140 million US. This decision ended the months-long dispute over the earlier agreement whereby Moyes agreed to sell the franchise to Research in Motion co-founder Jim Balsillie, who agreed to the sale contingent on moving the Coyotes to Hamilton, Ontario. Now that the NHL owns and operates the team, it will try to find a new ownership group who will attempt to keep the team in Phoenix, even though it is losing money, has poor attendance, and its viability is severely doubtful.
The entire case was closely watched by all in North American professional sports, as there could have been a new legal precedent set whereby leagues could have no legal control over the location of their franchises. Never mind that Balsillie's $242.5 million US bid (rejected on September 30) was better than the NHL's or that the NHL only stepped in when it became clear that Balsillie was the only bidder after Judge Baum ruled that the auction had to take place; the issue was whether an owner could arbitrarily relocate a franchise to another market without the approval of the league. It would have been a daring decision that opened up a can of worms, but Baum ruled in favour of the NHL, which had already lent $36 million US to the struggling franchise to keep it operating.
Now, what business person would purchase a franchise that is bleeding red in a non-traditional market and has no track record of making money with the intent of keeping it there? The dream is clearly over for Phoenix. They gave it a good shot in one of the largest television markets in North America, but the people running the NHL cannot be unrealistic enough to favour keeping a team in the desert over adding a franchise in southern Ontario, no matter how they spin it. They obviously did not want Balsille as an owner because of his unwillingness to follow their rules, and they were able to cement their position in court. When a new ownership group is found, relocation will unquestionably follow.
The Consequences of the Ruling
What remains to be seen is if this will trigger a domino effect in the National Hockey League. After spending so much money to protect its interests in Phoenix, and thwarting past attempts made by Balsille to purchase (and relocate to Canada) the Nashville Predators and Pittsburgh Penguins, we could see the NHL green-lighting a return to as many as three Canadian markets, as well as other major US cities. Besides the Coyotes, several other American teams have been hit hard economically. This situation may have been exacerbated by the recent economic crisis, but the truth is that all of them have been losing money even when times have been good. These include:
On Life Support
- Nashville Predators: The Predators have enjoyed recent success on the ice, but suffer from a lack of corporate sponsorship and fan support. As mentioned, Balsillie tried to bail the old owners out and set up shop in Hamilton before the NHL intervened and the old owners changed their minds.
- Florida Panthers: What started out as a promising franchise has suffered from fan apathy and mismanagement on and off the ice ever since they banned the throwing of plastic rats on the ice whenever a goal was scored. They have to give away tickets in Miami this season.
- Atlanta Thrashers: This team has never made money and never won, even though management enjoys premium draft slots every year. NHL hockey remains a poor cousin to the other major sports in Atlanta.
Headed for Trouble
- Tampa Bay Lightning: Five years ago, the Lightning were the toast of the NHL and proved that an expansion team in the Sun Belt could have on-ice success. Unfortunately, the team got hit hard by the new salary cap rules and had to dump its key role players in favour of cheap minor-leaguers in order to keep its high-priced stars. The team started losing, and the fans stopped coming.
- Carolina Hurricanes: Another 'Deep South' Stanley Cup champion in 2006, the Hurricanes may have peaked in the land of tobacco and NASCAR. They are suffering through a terrible season, but people have largely stayed away for most of their existence. Also, they have lost money almost every year they have been in operation.
- New York Islanders: What was once a model franchise and league powerhouse has been largely a laughing stock for 15 years, due to extremely poor management. Current owner Charles Wang has recently been throwing around the idea of either moving the team to another city or selling to a group who would move it if he could not work out a deal to get funding in order to renovate or replace the Islanders' Nassau Coliseum.
- Columbus Blue Jackets: Attempting to replicate the success of the San Jose Sharks in the 1990s, the NHL approved Columbus as an expansion team in 1997. A mid-sized American city with no other major sports franchises to compete with, the Bluejackets were very successful off the ice in their early days despite not making the playoffs until 2009. Sellouts were the norm despite their abysmal record. Nevertheless, ownership has publicly stated that they have not made money for a few years now and cannot afford to lose any more. So, despite having a brand-new arena and being the only game in town, there is a real possibility that the Blue Jackets may hang up their coats for good in Ohio's capital.
Now that we have established the candidates for re-location, we can look on the other side at potential destinations both in Canada and the United States. An interesting side note is that despite all of the NHL's efforts to make the NHL a hit south of the border and beyond, Canada is a no-brainer for the future of the league. Currently, 6 of the 30 franchises are based in Canadian cities, but these franchises are responsible for a third of the league's revenue from items such as merchandising, advertising, and television contracts.
The Sentimental Favourites
- Quebec City: Even one of the co-founders of the Russian-based Kontinental Hockey League thinks that it is ludicrous that the NHL does not have a team in the Quebec capital. Municipal and business leaders recently met with NHL officials to discuss the terms that would be have to be met for the NHL to return to Quebec City in the near future, including arena specifications to replace the outdated Pepsi Colisee. Even during their leanest years, the old Nordiques never had attendance problems.
- Winnipeg: The city got a head start on Quebec in 2004 when it built the NHL-ready MTS Centre to replace the old Winnipeg Arena. For now, the American Hockey League's Manitoba Moose draw respectable crowds, but the city is looking to redeem itself as a viable major sports market after losing the Jets to Phoenix in 1996 and seeing how that turned out.
- Hamilton: Recent rumours have had three existing NHL teams relocating here, getting everyone in southern Ontario's hopes up, only to have the kibosh put on the plans. Copps Coliseum was built in the 1980s to host an NHL team, but lost out on the expansion rounds of the early and late 1990s. There are several interests in the city who would welcome an NHL team, and blueprints have been drawn up to renovate the arena to modern NHL standards.
The NHL's Rumoured Choices
- Las Vegas: Having endured one disaster in the desert in Phoenix, it appears that the NHL would like to give it another go in the entertainment capital of North America. It is no coincidence that the NHL awards were held in Vegas this year, as the league has been speaking with Hollywood hit-maker Jerry Bruckheimer regarding his interest in getting involved with a team, though in what capacity is unknown. The problem here is that Sin City has been harshly affected by the economic crisis, with several casinos and hotels closing, and pro hockey has never been a draw here, even when the International Hockey League's Thunder iced star-studded lineups in the 1990s.
- Kansas City: This market is of interest to the NHL ever since the Sprint Center was opened in 2007. Officials have even offered a favourable lease agreement to any NHL team that would relocate there. Being centrally located, the team would also have a good travel schedule. Even so, the NHL tested the water here in the 1970s and bailed out after two terrible years, and minor league hockey has never enjoyed solid attendance here either. The one promising aspect of Kansas City is that NHL exhibition games have done well here.
- Toronto: The NHL publicly plays it down, but the possibility of another team in southern Ontario and the potential for expansion income must have the Board of Governors chomping at the bit. A group has emerged that has the funding and the plans for a 30,000 seat arena in the North York area and a business plan for an expansion franchise called the Toronto Legacy. This move would be heaven for all the hockey fans in Toronto who either cannot afford or have to overpay for Maple Leaf tickets. Since there would only be room enough in the market for one new franchise, either this plan or Hamilton's chance would be snuffed out.
- Houston: Houston has a brand-spanking new arena, a huge market size, and the history to host a solid NHL franchise, and nearly did in the 1970s. Houston would have an immediate rivalry with the Dallas Stars, and its AHL team, the Aeros, have good attendance figures as well. Yet for some reason, Houston does not get much mention as a relocation or expansion possibility. As a side note, the state of Texas has more professional hockey teams than all of Canada.
- Oklahoma City: The idea of an NHL expansion team in Oklahoma City was bandied about before the last round of expansion. Several times the Blazers of the Central League led all of the minor leagues in average attendance and sometimes outdrew some NHL teams. Like San Jose, there are those who think that an NHL team here could be a small-town success story. In the meantime, the city is attempting to court an AHL team.
- Portland, OR: Portland has an NHL-ready arena in the Rose Garden, natural rivals in the west, and a long tradition of high-level hockey. The local junior team, the Winterhawks, have been one of the top draws in junior hockey for many years, and for this reason, Portland is seen as a better option for the NHL over Seattle when the Pacific Northwest is explored as a relocation site. The downside to this is that several Western Hockey League teams in the area would undoubtedly suffer.
- Halifax: It is the most far-fetched idea bandied about, but then again, who would have thought that a second team in Los Angeles would be successful? Halifax is a market full of rabid hockey fans, but professional hockey just has not done well there. Building an NHL-size arena there would be a huge risk, but some think that having an NHL team in Halifax would be viable if all of Atlantic Canada embraced it and busloads of people from PEI, Cape Breton, and southern New Brunswick would come to every home game. If not, the flip side would mean a huge flop.
The relocation of professional sports franchises is nothing new, but the ruling in the Arizona court could have had serious implications on the ways in which sports leagues are run in the future. If, per chance, Judge Baum had ruled that an owner could move anywhere they wanted and the league had no say, the decision would have had repercussions throughout the sports world and also the business world. Imagine if you bought a franchise from a major restaurant corporation and were able to move wherever you wanted, including right beside another franchisee. That would be a really bad business move for the corporation as it wants to have healthy franchises in order to build its brand. Hence, they have the right to grant franchises when certain conditions are met.
Now the NHL's continued attempts to block Mr. Balsille may appear baffling, as he certainly has long-term plans and both the willingness and wherewithal to operate a viable franchise in a solid market, but the NHL has the right to determine who its franchisees are and where they are located. The decision only reinforced what sports leagues have been doing all along, and if the NHL wants to keep teams in Pittsburgh, Nashville, and Phoenix, then it can do so by finding ownership that meets its qualifications. The track record in that aspect in recent years has been questionable, but as long as the Board of Governors places its trust in Gary Bettman, Bill Daly and co., that is how things will be.