NHL takes first step towards possible expansion team in 'unique market' Las Vegas

BOCA RATON, Fla. — NHL commissioner Gary Bettman announced Monday that the board of governors had no objection to a potential owner of a Las Vegas expansion team conducting a season-ticket drive to help gauge the viability of the market.

Bettman emphasized the board had not voted on expansion. It had not even voted on the season-ticket drive. It simply had no objection to the season-ticket drive.

He said the NHL didn’t know how the potential owner would run the season-ticket drive yet, or what would be enough to help show the market was viable, or whether the board would approve a Las Vegas franchise even if the market was viable.

“Please,” he told reporters, “do not make more out of this than it is.”

Here is what this is: a first step.

The temptation is to joke about the NHL gambling on Las Vegas – about Bettman the betting man, keeping a poker face, holding his cards close to the vest, going all-in on expansion.

But expansion is no joke, and Bettman is wise enough to know that if the NHL is to become the first major pro sports league to put a franchise in Las Vegas, it can’t be a roll of the dice on the ice, a doubling down on hockey in the desert not far from Phoenix, a desperate pull for a jackpot.

It must be a sober business decision.

Vegas?

“We haven’t studied it yet,” Bettman said.

Not at all?

“Not really,” Bettman said. “I mean, we’ve seen surveys people have shared with us. But again, I think in a whole host of ways, some of them very good and extraordinary, it’s a unique market. It’s not like some of the other markets.”

There is money in Vegas. Lots and lots of money. There is a $350 million arena being built essentially right on the Strip by AEG, the owner of the Los Angeles Kings, and deputy commissioner Bill Daly has visited the site. There is an ownership group that has been expressing interest in an NHL franchise for more than a year – William Foley and the Maloof family. These are the same Maloofs who hosted the NHL Awards at the Palms when the show first moved to Vegas.

The NHL’s owners would not have to share any expansion fee – say, $450 million – with the players.

But there are good reasons why no major pro sports league has put a team in Las Vegas, and they go beyond gambling itself. There is the gaming culture – all the entertainment options, all the people working at night. There is the transient, transplanted population. There is the relatively small corporate base.

A $450 million expansion fee divided by 30 equals $15 million per team – a nice payday in the short term, but a relative pittance in the long term. If the franchise struggles and needs to be propped up by revenue sharing, that won’t be worth it. And the franchise won’t have a chance without a strong season-ticket base. Tourists and casino comps would not be enough.

“People do have questions about the market because it is a unique market,” Bettman said.

Bettman said Foley asked him about the season-ticket drive last week. So Bettman asked the board about it Monday.

Why would anyone object?

There is no rush. The Las Vegas arena isn’t scheduled to be done until the spring of 2016. The arena in Quebec City is still being built. An arena in Seattle is still being debated.

This way, Foley can gauge the viability of the market for himself and the NHL. He can decide if he is still interested in a franchise, and the NHL can decide what it wants to do – without a commitment. It might also spur other interested parties in other potential markets to get to work.

“If the market is as strong as some people believe, obviously Mr. Foley will continue to be interested, and we’ll have to figure it out from there,” Bettman said. “It may be that we’re in the same position we’re in now but he’ll hang in there until at whatever point we decide we want to do an expansion, and it may be that the board decides that they still don’t want to expand at all.”

It seems doubtful the board will decide it doesn’t want to expand at all, if it has a market – or markets – with an arena, an owner and a potential fan base.

The NHL grew from 21 to 30 teams and stretched its geographical footprint southward from 1991 to 2000, adding nine teams, relocating three others. But it has not expanded – and has relocated one team – since then. It has a new labor agreement with a hard salary cap. It has a 50-50 split of hockey-related revenue with the players, and HRR is approaching $4 billion. It has 16 teams in the East and 14 in the West since realigning in 2013-14.

“We’re getting lots of expressions of interest in places that don’t have teams, which is very gratifying,” Bettman said.

Personally, I wouldn’t have 30 teams, let alone 31 or 32, let alone 33 or 34. A higher concentration of talent means a higher level of play. I wouldn’t expand until the Arizona Coyotes and the Florida Panthers solved their problems, either.

But there seems to be little concern about talent supply, and the league insists the Coyotes and the Panthers aren’t relocating. There seems to be plenty of support for expansion in general.

“The league’s never been healthier, it’s growing like crazy,” said Peter Karmanos, the owner of the Carolina Hurricanes. “I think time has proven that the league certainly has enough talent for expansion. I think we should continue to expand, even though there’s not a formal process.”

The informal process, at least, has begun.

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