NHL's Place in North America Sports

Headlines today talk about the City of Quebec pushing for a new $400 million hockey arena to lure back NHL hockey. The city has volunteered to put up $50 million and is asking the provincial and federal governments to each contribute $175 million under infrastructure programs. Now let me do some quick calculations here and figure out how much they are expecting from the multi-millionaires that will own the team that plays in the arena. In quick ballpark figures, that number would be zero.

In reading the positioning of their funding request you shake your head when you read that they are requesting the $350 million from the other levels of government under what they term infrastructure payments. Are we to assume that the road, sewage, transit, health and education systems are all up to snuff and do not require any of these funds? Are we to assume that this is the “perfect” time in our economic cycle to ask for this money? Maybe I missed something but I thought that we were in a major economic crisis with unemployment at maximum levels and a deficit that is racing to levels that will result in major inflation even if the current economic crisis is solved. Is this really the time for any rational politician to look for $400 million to fund an arena that will be used by a privately owned hockey team?

This brings me to what else is wrong with this picture. Why is a $400 million hockey arena now considered to be the price of admission the NHL is demanding for a city to qualify for a franchise. It is not enough that a city like Quebec, Hamilton, or Winnipeg may have fans to sell out NHL games? But after meetings with Bettman, it appears that a prerequisite now is that the hosting city find $400 million of taxpayer money to fund an arena that is suitable for the NHL.

Now why does the NHL require a $400 million arena when a 16,000 capacity hockey arena could be built for roughly half that price? The answer of course is luxury boxes. Luxury boxes exist in the NFL, NBA and major league baseball, so the assumption is that of course they must exist for NHL teams. Why? Well, the owners have to find a way to generate the money to fund player salaries that run up to $8 million dollars and pay an average player $2 - $3 million.

Unlike the true major North American sports leagues, the NHL does not have a national television contract in the U.S. to help pay the freight. When the NHL pretends that it is a major league it is putting a financial burden on most cities that they just can not afford. There is only so much money that corporate citizens and fans have to spend. In Canada and some of the major northern US cities there is either enough love for the game, or the city is large enough that it can afford to support an NHL that prices itself as a major league sport. In many US cities this is not the case as we see in Phoenix, Miami, Atlanta, Dallas, Nashville, Tampa, etc.

The NHL sees the abyss that many of their franchises are heading towards in the southern U.S. They are now coming to Canadian cities in the hopes that will find desperate local governments. It is not enough that hard working fans exist in these cities to support the team, but the governments must also cough up $400 million to build the super arena that the NHL demands. Hopefully these cities have the sense to say “No”. The way the league is structured it has priced itself out of any city that does not have a vacant arena lying around, or a government that is willing to sacrifice other priorities for the ego boost of having an NHL team.

If cities refuse to be held for ransom it will not be long before the NHL is faced with two real options that are dictated by the marketplace. One choice will be to contract the league to cities that do consider the NHL to be a major sports league. The other, will be to change their pricing and salary structures to market driven figures. This likely means either the elimination of the salary cap with team salaries being dependant on the money generated by each franchise, or a massive revenue sharing arrangement where the rich franchises share with the poor.

Either way the end result would be that ticket prices and player salaries come down to what the market will truly support. The reality is that in most cities the NHL is B List entertainment and the stars of B List movies do not make what the stars of A List movies make.