Relocation Roulette: Examining the Ties that Bind in NHL Franchise Movement

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As the month of July wears on, attention surrounding the NHL has changed from being exclusively concerned with player movement in free agency and the trade market to more general anxieties. These include the wrangling over the new Collective Bargaining Agreement, which is already looking to be an area of much chagrin and disagreement, but there is another potential story that is looming on the horizon that could have even bigger impacts on the future of the league than just matters of who plays were.

We are talking, of course, about where a couple of troubled franchises are going to end up playing in the coming years.

The biggest member of that club, three years running, has been the Phoenix Coyotes. They’ve gone from bankruptcy court with old owner Jerry Moyes, to being owned by the NHL, to being nearly sold to Chicago businessman Matthew Hulsizer, to being the subject of serious discussions about moving to Winnipeg, to now being on the threshold of being bought by former San Jose Sharks CEO Greg Jamison.

All the while, the team has been dogged by the watchdog group (we apologize for the redundancy) Goldwater Institute, who have been trying to get anyone with any power to listen to their claims that deals made between the Coyotes and the city of Glendale are conspiring to violate the gift clause of the Arizona State Constitution. This hellacious assault has already scared away one potential owner in Hulsizer, and until Monday, it seemed as though it was derailing the bid of Jamison to buy the team as well.

That all changed in one swoop on Monday, when the City of Glendale rejected an effort spearheaded by the group to put a referendum on the November ballot to allow taxpayers to vote on whether or not a lease deal between the city and Jamison should go forward. The deal will pay Jamison’s group an arena management fee to take care of Jobing.com Arena, and the $17 million annual price tag raised some eyebrows in the group.

The opposition to the deal took a huge hit with the ruling, which was made because the group turned in fewer than the required number of signatures, and it did not, according to the city, turn the petitions in on time. The group had 30 days from the day the lease deal was finalized to file a challenge that would end up putting the agreement on hold until the referendum could be voted upon by taxpayers, and they apparently didn’t meet that deadline.

For now, it would appear that the groups opposing the deal are at a dead end, and it should be a clear shot for Jamison to finish up his dealings with the NHL and get the team under lock and key. Nothing has been easy during this whole Coyotes saga, and should yet another snafu or hiccup occur, the league may finally decide that enough is enough, and that instead of trying to lure names like Hulsizer and Jerry Reinsdorf back into the bidding and trying to get another lease agreement hammered out with Glendale, they may just decide to unload the franchise in a different way.

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Jobing.com Arena, home of the Coyotes

There are two ways that this could happen. The first could be the oft-discussed move of the team, whether it be to Quebec City or some place like Kansas City. This would net the league about $60 million, which is what they made when the Atlanta Thrashers high tailed it to Canada, plus whatever price they can command from a new owner willing to move the team ASAP. Whether they would begin play in their new city right away or next year, playing one last season in the desert, is unclear, but the notion that the NHL may finally have had enough doesn’t require a huge stretch of logic.

If the league decides that it is simply too late to relocate the team, and that they are wanting to be done with this mess once and for all, then they also have what has been termed “the nuclear option” by Yahoo’s Greg Wyshynski. In a piece that he wrote on the subject in early July, Wyshynski discussed how the league could theoretically contract the Coyotes, hold a dispersal draft for the team’s 23 players, and award an expansion franchise in the next two or three years to one of the many cities that have expressed interest in adding an NHL franchise to their towns.

This move would have several significant benefits for the league. The first and most obvious is that they would end up making a heck of a lot more money than they would in a straight relocation. While the Thrashers’ price tag was about $60 million, an expansion fee could be northward of $200 million, and the league would inevitably have to do that in order to restore a 30-team balance to the NHL. That would potentially also mean a bidding war, so the final price tag could end up quite a bit higher than that milestone.

The other benefit would be that it would give several cities who are either building arenas or pondering the notion of building arenas time to get their ducks in a row. Quebec City’s new arena would be done within that time frame, and possible arena projects in cities like Seattle could also have green lights to put machinery to work as well. Add to that the news that Las Vegas is looking at building a new facility to lure either an NBA or NHL team to Sin City, and you have the potential for a massive free-for-all that the league hasn’t had the chance to witness for quite some time.

Even if that dispersal draft and contraction doesn’t happen, and the Coyotes stay put in the Valley, the league has to be looking at the news of all these cities building new arenas and salivating. What is to stop them from expanding the NHL to 32 teams, especially into a quality sports town like Seattle or a hockey-mad place like Quebec? There are many worries about competitive balance being affected, or whether the league as a whole can sustain 32 teams, but when it comes to dollar signs dancing in front of someone’s eyes, especially in a time of economic uncertainty that North America as a whole is experiencing, no option is too drastic if there is a promise of financial gain involved.

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Aside from the potential expansion that could happen with or without the Coyotes becoming a thing of the past, there are a couple of other teams who could add some intrigue to the relocation drama that has captured part of the attention surrounding the NHL. The New York Islanders are unhappy in their home at Nassau Coliseum, and a slew of efforts to build them a new arena or to refurbish the one they are currently playing in have failed. Owner Charles Wang has been lobbying incessantly for a solution to the problem, and he has used the interesting tactic of playing exhibition games in several other arenas to highlight the possibility that the team could leave Long Island for greener pastures.

hockey at the Barclays Center

The Barclay’s Center in Brooklyn

Back in 2010, the Islanders played an exhibition game at Kansas City’s Sprint Center, and this year, they are scheduled to play a game at Brooklyn’s brand new Barclay’s Center. The NBA’s Brooklyn Nets have already moved into the arena, and Monday, news came across that the arena management is considering making a push to get the Islanders to become their newest tenant. John Imossi of The Hockey Writers thinks that it would make sense for the Isles to move in that direction, but while that news may be a welcome sound to the ears of Wang and company, there are a few things working against it.

The franchise’s history on Long Island is going to be hard to walk away from, so the fan base and the league will likely demand that, even though there have been oh so many attempts to build a new arena there, every available step be taken before the decision to relocate is made. It will be a serious pain, and Wang will continue to lose money in the process, but due diligence is going to be required here, as will be a degree of finesse.

Even if the Islanders can’t work out anything with Nassau County, and they want to move to Brooklyn, there is another thing working against them. According to Chris Botta of the Sporting News, the arena isn’t exactly conducive to hockey. The seating for the sport at the arena is around 14,500, which would make it the smallest arena in the league, and the sight lines were developed to be a basketball-only complex.

That kind of issue has happened in the NHL before, with the aforementioned Coyotes having to deal with that when they played at US Airways Center in downtown Phoenix. The arena had been built for the NBA’s Phoenix Suns, and the sight lines were simply horrible for hockey. There were large swaths of the arena that only had one goal within their field of vision, and even though it’s unlikely that Barclay’s Center will have that kind of problem that significant, the fact it wasn’t designed for hockey may give Gary Bettman and his crew pause.

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Meanwhile, the Edmonton Oilers are still encountering issues even as their arena deal seems to be coming together. The team is still considered a dark horse candidate for a move, but Edmonton lawmakers are looking at approving an arena project that would cost nearly $500 million, and would largely be funded by taxpayers of the city. The budget for the project keeps creeping up, however, and Oilers owner Daryl Katz, who would only be on the hook for about 20% of the arena’s cost, is planning on keeping naming rights to the arena, which takes away a potential revenue stream for the city government.

These issues could be worked out in their own time, but it shows that nothing is set in stone yet about this historic franchise remaining in Alberta.

All of these teams have the potential to really shake things up in the NHL, but for the purposes of looking at possible impacts on the next CBA, really only the Coyotes will be a cloud over the negotiations. If the owners decide to come with hat in hand to say that the league isn’t doing as well as revenue figures would suggest it is, all the players really have to do is counter with the fact the league has been fit enough to subsidize a team without a huge financial burden, as they have owned the Coyotes for three years now. The league has also steadfastly refused to sell the team for a loss, so their cries of “we’re poor!” would fall on deaf ears.

If the sale to Jamison does not go through, and the NHL were to actually go through with the nuclear option, then the NHLPA would be galvanized into action, and that could have devastating consequences for the bargaining process. Not only would a slew of players have to find new homes, including all the ones in the Coyotes’ farm system and under their control via the Draft, but the simple math of there being 23 fewer jobs available to players leaguewide, even on a temporary basis, would be more incendiary a proposal than whatever junk the owners decide to toss the players’ way next. The chilling effect that a nuclear option would have would almost certainly ensure a lockout and/or a lengthy legal battle.

Aside from that longshot, there are still relocation issues that could affect the new CBA. As of right now, the players do not get a slice of the pie if an expansion team is added to the league, and with the new arena constructions going on that we discussed earlier, they could demand that expansion fees be included in the hockey revenues that the two sides are arguing about splitting. Lost in all the hubbub about billionaires arguing with millionaires is that an expansion fee is a huge chunk of money, and that the players don’t see dime one of it if the league decides it wants to have 31 or 32 teams. It may not have the doomsday overtones of other issues like free agency changes and possibly adding a luxury tax, but it still could be an issue the two sides discuss, especially if the Phoenix situation swings back to the worse side of the ledger again.

Even though these various relocation dramas are taking place in cities on all sides of the continent, and in at board room negotiating tables, it is pretty clear that they are all connected, and their resolutions will all have serious impacts on the future of the league. The Coyotes will either become a success story for Bettman’s vision of hockey thriving in the Sun Belt, or they will be a cautionary tale of hockey spreading to unfamiliar markets. The Islanders could still end up navigating the treacherous waters of Nassau County politics and get a new arena, or they could be heading west to Brooklyn or further. Finally, the league could decide that 32 teams will make realignment easier, and places like Quebec and Seattle could get hockey teams in a glorious return to sports world relevance.

As outside observers, it will be almost as fun to see how these events turn out as it will be to see the action hit the ice again in October, but if you are a fan of any of these teams, or in any of

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