Market viability?

A few weeks ago, the American City Business Journal (ACBJ) published an article about the most viable sports markets to add a franchise. There methodology was based on US Bureau of Economic Analysis Total Personal Income (TPI) for 2013 and team revenue data and average ticket prices of pro and big 5 college teams sports teams.

(Note: I spent a lot of time looking into the B.E.A. website looking for the TPI data and could not find it anywhere. Additionally, ACBJ did not cite how they came up with the team revenue data and average ticket prices. There are several resources for ticket prices but they vary. The revenue has to be a total S.W.A.G. and probably from Forbes which is not very accurate.)

Long story short, they cited Houston as the best option for NHL expansion/relocation and that Seattle has borderline capacity. When I first read it, I thought it was interesting but not a great piece of analysis if I was looking at buying a $500 Million dollar business.

Houston

First, Houston is an interesting market. It is massive and there is a lot of money in that town. Texas is all about Football and even though the cross over of seasons is not that large, you would need to evaluate if they can get some of the attention and interest for hockey. I have always thought this about Houston so this report did not alter my opinion of it at all. This is a recycled report I did almost a year ago but you can see that Houston ranks high on the Top 40 US TV Markets and the Average Income of the Top 50 Metro areas. (Note that the Houston TV market is being served by Dallas Stars)

TV&Income2Comps

Where the report lost me was when I looked at Seattle comparable markets. I have generally listed Denver, Detroit and Minneapolis-St. Paul as our best comparable markets. They all have the 4 major leagues, Denver has an MLS team and MSP is getting one.

TPIShould we relocate the Minnesota Wild, Detroit Red Wings or Colorado Avalanche to Seattle? Of course not, which is why this report should be taken with a grain of salt. It is a data point and a pretty weak one.

Bottom line is that there is a lot more that goes into analyzing the viability of a market. The more I talk to pro sports executives, the more I hear, each market is different and comparing them all is next to impossible. How do you measure the impact of adding an NHL team to a underserved Major TV market like Seattle vs. adding a team in a small but fast growing city like Las Vegas? Or how can two NHL teams in the same market have the 3rd (Rangers) and 22nd (Islanders) most expensive ticket in the league. This is obviously complex and application of some broad stroke methodology like ACBJ did is borderline ridiculous. If you are still reading, check out this analysis I did in December.

2 thoughts on “Market viability?

  1. Why does Baker write a stroy like this? He continues to always bring up if Seattle can support a NHL team with the likes of Huskies, Mariners, ect, ect. He brought this up at the hockey summit at the Angry Beaver. WHy is it such a concern to him? It’s not his money! I wonder since he covered the Mariners all those years if he has some agenda with them?

  2. He gets paid on clicks. I am relatively ok with the story he wrote but would have expected a little more research and bring up a more robust set factors when evaluating market saturation. Clearly, the formula from the ACBJ does work for a lot of markets.

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