The Mayor and Commissioners

The Mayor of Seattle, Ed Murray, visited with Gary Bettman and Adam Silver on Monday to give them an update on the SoDo Arena. As you would expect, King5’s Chris Daniels was on it.

This is obviously great news. Although the Mayor has consistently said he would support the MOU/Arena project in its current form, there were questions about the willingness to support an NHL first scenario. Chris Daniels posted this the next day

These posts and articles from the Chris Daniels created a flurry of articles from the hockey press. There is nothing really new in these articles but here is a sample of some of the more credible ones: puckdaddy, hockey writers, sporting news. Geoff Baker from the Seattle Times covered the the NBA side of the story a little bit deeper. That side of the house is looking a little more pessimistic. The NBA commissioner made it clear that there would not be a team available (for relocation or expansion) in the current term of the MOU. I know Sonics fans don’t like to hear that but I am certain that if an NHL team is awarded to Seattle, the NBA will follow. 

Let’s review

The biggest takeaway from this news is that Murray is open to an NHL first scenario. This is great news but let’s not get carried away and get overly optimistic. A lot still needs to happen and an NHL first financial model will still need to be submitted and structured for the City, County, Hansen and potential NHL owner. No changes to the diagram posted in November.
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2014 in NHL to Seattle news

January 1st Ed Murray is sworn in as the new mayor of Seattle. During his campaign, Murray pledge to support the current arena MOU but he is not as big of an advocate as the prior Mayor Mike McGinn.

January 30th While sitting on a panel and speaking to students, the Winnipeg Jets Chairman says Seattle is a priority for the NHL via expansion or relocation. He also said Greater Toronto Area could probably hold 2 more teams & Quebec would be great, but neither are top priority for NHL. Separately, assistant GM to the Boston Celtics says the NBA expansion (in the US) is unlikely in 5 years. He later qualified the statement as his opinion and not based on any NBA HQ information.

February 1st David Stern retires. Seattle basketball fans rejoice.

February 2nd Seattle Seahawks win the Super Bowl. 3 days later close to 750,000 fans trek downtown Seattle for the parade. #SportsTown.

February 3rd NHL Expansion talk begins to heat up. While talking to TVA Sports, Gary Bettman had some responses to expansion talk: “we aren’t there yet” “lots of places have expressed interest” “we are always listening”. (These would be common quotes over the reminder of the season).

February 12th New NBA commissioner Adam Silver clearly states there are no plans to expand.

February 13th NHL says Seattle would be a “good hockey market”.  Two days later, Former Seattle Junior Hockey Player TJ Oshie wins a big Olympic game for US in a shootout against Russia.

February 26th A Seattle delegation of business folks plus city and county officials visit Vancouver and attend a Canucks game to learn more about what it would look like should Seattle land an NHL team.

March 17th The first reported delay of the current Environmental Impact Statement for the SoDo Arena. IMHO the EIS is not the long pole here but it is part of the process. The city will not kick in any financing without a team. http://www.king5.com/story/local/2014/12/29/13403682/ I posted this image on March 17th…sadly, not much has changed (except for the Ballmer thing).

March 18th Seattle City Council president, Tim Burgess states that they will not change the MOU (for a NHL first scenario) stating that the tax revenues would be 50% less.  It is unclear how those numbers are calculated when the NHL has higher ticket prices and higher attendance than the NBA.

April 26th Seattle Times reports that Ray Bartoszek is looking at options since the SoDo site is tied so heavily to the NBA which doesn’t appear to be headed to Seattle anytime soon.

May 13th In one of the strongest signs of the NHL’s interest in Seattle, it is reported that Gary Bettman and Bill Daly met with City and County officials in Seattle. By all reports, it sounded like a disappointing meeting for the NHL brass as the arena situation was described as “unsettling” by Daly.

May 15th As a follow up to the NHL and mayor meeting, Victor Coleman and Jonathan Glaser emerge as a new ownership group vying for an NHL team in Seattle.  Coleman and Glaser with in the meeting with the Mayor, Bettman and Daly. They appear to be the front runners for owning a team in Seattle.

May 29th Steve Ballmer starts the process of buying the Los Angeles Clippers. This should be seen as a neutral to slightly negative on Seattle’s pursuit of getting an NBA team.

June 2nd Prospective Seattle Supersonics owner and the man leading the SoDoArena, Chris Hansen sits down with Chris Daniels of King5 and says that an NHL first scenario would require a potential NHL owner to put in a combination of more money and more risk. (Sorry, link has changed since I originally posted).

June 9th Posted the results from the 1st NHL to Seattle Survey. ~35% of respondents in King, Pierce or Snohomish county say they would be season ticket holders.

June 10th Chris Hansen signs an option for more land in SoDo area near proposed Arena. It is speculated this was done to accommodate some of the EIS feedback received to accommodate more parking.

June 26th NHL Board of Governors meeting comes and goes with no expansion announcement.

 July 31st AHockeyView_SonicLevel3nother reported delay in final EIS.

 August 11th Toronto Blue Jays came to town and out come the Canadians.

 August 26th Report surfaces that the NHL will expand by 4 teams in 2017. NHL would come out to deny it and I had my doubts about the original source.

August 28th In an interview with KJR, Steve Ballmer says, “ there is a guy pushing hard for hockey (in Seattle)”. ~58 minute mark.

September 30th Chris Hansen submits final paper work for EIS.

October 24th Although rumored for months, the first legitimate report of Vegas being a potential NHL mark surfaces.

November 25th Sports Business Journal post their annual reader survey. 43% of readers think Seattle is the most viable market for an NHL team.

December 3rd I wrote this interesting post that sizes up the Seattle Market.

December 8th NHL gives approval to prospective NHL Vegas owners to begin season ticket drive.  No other markets are mentioned.

That leaves us here…which is pretty much where we started the year.

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Parity in the league has never been tighter

From time to time I read something from NHL fans or hockey media types claiming that expansion will ruin the game because of parity or dilution of talent. I get pretty dismissive about their “arguments” as very few of these claims are based on facts or data. I decided to investigate it on my own. This will be the 1st post in a 3 part series that talks about why the league is ready for expansion. As with most of my posts, I tell the story with data.

Margin of Victory

Regular season games are getting tighter. Excluding ties, the margin of victory has declined since 97.

marginofvictory

Standings Distribution

The standings are also getting tighter.

StandingsSome of the expansion efforts in the 90s contributed to the teams with less than 50 points in a season however if you look at the teams with 51 to 60 points between 1990 to 1997, they were well established teams (Leafs, Oilers, Islanders, Jets, Nords).  Now it should also be pointed out that OT, Shootout rules and the rise of the 3 point game is also a contributing factor here.

League Champions

Compared to other leagues, the NHL has produced the most unique champions over the last 15 years.

ChampsLeague parity is not a reason alone to expand as the player pool should also be considered to support the additional teams. I will look at that aspect in my next post.

Wrapping up the Las Vegas News

In case you have been living under a rock, Monday afternoon the NHL gave approval to prospective franchise owner in Las Vegas, Bill Foley, clearance to build a Season Ticket List. Bettman vegascautioned that this should not be seen a s a green light to expansion. Expansion and Las Vegas dominated the news out of the NHL Board of Governors meeting. To help you separate the signal from the noise, I’ve highlighted some of the best articles, podcasts and videos on the topic.

Here is the roundup of the best articles I’ve seen on Las Vegas (even if their opinions differ than mine).

Pre-Announcement

Scott Burnside wrote an excellent article covering the risks and potential of NHL Expansion in Vegas. I’ve seen very few articles go into this length level of depth of any perspective markets. Open, balanced and fair.

On the announcement:

Video of the announcement from Gary Bettman and dialogue with Elliotte Friedman and Nick Kypreos.

One more clip from Sportsnet.ca Interesting quote on this one. (Paraphrasing) Daly said that the owners were briefed on other options for expansion. Those developments are evolving. Nick Kypreos seems to be the most vocal on the concerns.

Post Announcement:

Yahoo Sports’ Greg Wyshynski calls into Seattle’s AM 710 ESPN Radio Show with Michael Grey. Wyshynski says “It’s a matter of when, not if, for the NHL in Seattle”. Wyshynski has a great perspective and most of his comments are in line with a lot of what we have been discussing here.

The Globe and Mail weighs in: Las Vegas season-ticket drive raises more questions about NHL expansion

Great overview on the NHL Las Vegas situation from Stephen Whyno. Stephen’s been on top of this for a while and isn’t just picking up on the news item of the week.

Elliotte Friedman and the Sportsnet team debate the process and credibility of a Season Ticket Drive. There is some good comments and debate. I love Elliotte’s comments. He does comment about the Seattle and thinks the Ballmer purchase of Clippers puts Seattle in flux.

Another good article from highly respected Nicholas Costanika.

Gary Lawless takes the opposite stand: thinks contraction vs. expansion. Needless to say I could not agree with him less. Sure I am biased but people who talk about a watered-down league are old school and can’t point to anything qualitative.

Quantifying the Seattle market

When people ask me why Seattle will make a good market for the NHL, I often cite that Seattle is the 13 biggest TV market in the US and the second biggest market without a team. Or I might reference the strong corporate support we have here with big companies like Boeing, Amazon, Microsoft, Nordstrom, Costco, Starbucks or the countless mid-size tech companies like Expedia, Bungie, F5 Networks, Tableau Software, Zillow or Zuilily. There is also one of the largest adult hockey leagues in the US. I’ve already shown that Seattle has the 7th highest average income of the top 50 biggest metropolitan areas but I’ve always had an issue with the average. The disparity, wage gap or whatever else you want to call it, could distort that number….but over the weekend I was finally able to find some census data that I’ve been trying to find for a couple years.

Earlier this year, Nielsen published the Year in Sports Media Report: 2013. In it, there was a little profile on the NHL Fan Demographic.

NielsenReport

53% of NHL Fans have a household income of over $75K a year. That number is the largest % in that bracket of all big 5 leagues. When business owners or potential business owners are looking to expand, they will look at these key figures to determine the potential of the market. According to the Census data, King and the surround counties, 63% of households have income over $75K a year. I then pulled data for a couple other metropolitan areas to see how we stack up.

householdsThis shows why most of the NHL brass is high on Seattle (if we can get that darn arena thing figured out). This does not mean that hockey will grip this city like the Sounders where their attendance is more than double the league average. It also speaks to the potential of the market and exposing hockey to people that might not get exposed to it any other way.

To be clear, I am not saying Las Vegas will not work. It is a totally different market and will be very unconventional. I simply do not know the business model and strategy of that owners for the market. Oklahoma City Thunder has been wildly successful being the first and only pro sports franchise in the area and Vegas might be able to pull off something similar. (OKC also benefits from a winning product on the court which will help any market.)

Disclosures on how I collected the data:

Long story short, It was a tedious manual exercise. I pulled data by county that would be considered in market. Denver had several counties near by where Las Vegas only had one (Clark). To determine which counties to include, I based it on the biggest city in the county being 45 minutes from the City. I wish I could have pulled data for every NHL Team and every potential market but I simply did not have the time. If you have feedback, issues, questions or requests don’t hesitate to contact me or leave a comment here. Here is a list of the counties I used for each market. 

table

SoDo Arena current state of an NHL first scenario: A little refresher

It is commonly known that the NHL must have assurances of a new Arena in Seattle before awarding the city an NHL franchise. The blocking issue is not as simple as rewriting the current MOU to enable an NHL-first scenario.

For those that don’t know, the current Memorandum of Understanding (MOU) with the City of Seattle and King County requires an NBA franchise before construction can begin on the SoDo site. As much as we would like to do a “find & replace” on NBA, it isn’t remotely that simple. First off, Chris Hansen, who signed the MOU with the City & County owns $60Million worth of land on the site wants an NBA team and an NHL ownership group as a partner. The prospective NHL Ownership Group will need to work with Chris Hansen on the nature of their partnership while Hansen still needs to protect his interest/investment should the NBA never come back to Seattle. Of course, Hansen will need to know who the NHL will be selecting before he signs anything binding. If the City & County is going to change the MOU to an NHL first scenario, they must also perform some due diligence on prospective NHL owner (assuming they will be named on the MOU). Oh and we are still waiting for the Final Environmental Impact Study to be completed. So yes…this is complex. There is no one to blame here and based on the one time we have heard from Victor Coleman, he has a “clear path” to getting resolution.

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Sin City and the NHL

As you may have seen, Michael Russo wrote an excellent article about the prospects of putting an NHL team in Vegas. The difference between this report and earlier 2012+NHL+Entry+Draft+Rounds+2+7+lyfx4JlSpv9lrumors circulating on Vegas are the quotes and confirmation from the NHL’s own Bill Daly.

When the reports started surfacing of Vegas being the location of an NHL team, I certainly had my doubts. Small city, lack of local support, lower income etc.Vegas doesn’t rank in the top 40 for TV markets and is ranked 34th in Average Income of US Cities with more than a million people.

However, Las Vegas is like no other market in the NHL and predicting the success based exclusively on conventional metrics is not realistic.Ad dollars will be huge and entertainment revenues are exceeding gaming revenue for several major hotel properties. Yes, the NHL is more dependent on Gate Revenue than any other professional sports league but does that mean it must be so for all franchises? Could being the only Pro Sports team in city be the ticket to success? I don’t know the answers. By the sounds of Daly’s quotes in the article it doesn’t sound like he is convinced either and that will be part of the due diligence. Airing it out so publicly could be a way to see how much local interest is out there.

The more important takeaways from the article is that Daly and the NHL are at least acknowledging expansion and imply that expansion will need to happen in the west. This could be off the cuff remarks or could even be negotiating tactics to extract more expansion $ out of some eastern Canadian city that is well positioned with an arena.

This certainly will not be the last we hear about Vegas and the optimist would say Vegas needs a dancing partner. My advice, don’t get let this news get you too high or too low, it’s going to be a long and bumpy road.

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