Tuesday, June 30, 2009

Who Are the NHL Fans?

Unlike other professional sports, such as the NFL or Major League Baseball, the NHL does not enjoy the luxury of a large television contract to augment revenues. As Dirk Hoag pointed out in his June 29th post of On the Forecheck, the NFL has an annual television contract worth approximately $4 Billion while Major League Baseball has an annual contract worth $900 million. By contrast, the NHL has an annual television contract worth approximately $72.5 million. The NHL derives the majority of its revenue from fans that come through the turnstiles in the 30 arenas around the League. So who are those fans, from the casual to the season ticket holder? Experian Consumer Research did market research on fans of the NHL, and the findings are interesting and paint a positive picture of the fan base.

Experian looked at several variables regarding fans of the NHL, and compared those with fans of the NFL, Major League Baseball, the NBA, and Major League Soccer. The first was age, and as you can see by the chart, with the exception of MLS, the NHL has the youngest fan base.

This can be attributable to several factors- the often maligned expansion of the NHL into "non-traditional markets" has to account for some of this growth as new fans are introduced to the game; the growth and popularity of youth leagues in markets where there is a franchise; and the entertaining and dynamic environment of a live game, to name a few. A younger fan base bodes well for the League and its franchises as the arena experience is energetic and attuned to their tastes as well as providing the opportunity for each local franchise to develop deep rooted loyalties.
A solid attribute of NHL fans is that compared to the other professional sports surveyed, they have a higher mean household income than fans of all other professional sports. There is concern that the NHL may be pricing itself out of the reach of some fans, and I suspect that is true in some instances. The price of tickets to an NHL game is a constantly discussed matter, both at the League level and with the specific franchises, and that is a discussion for another time. What is important to measure is the ability of the average NHL fan to afford a game ticket and the related costs. Interestingly, according to Team Marketing Report, the League average for tickets last year was up 5.1% to 49.66 (the Predators average ticket price is $47.22). In comparison, the average ticket price for the NFL was up 7.9% in 2008, to $72.20. The Fan Cost Index (FCI), which includes 4 average priced tickets, 2 beers, 4 soft drinks, 4 hot dogs, parking, 2 programs, and 2 caps/hats (?) for the NHL is $288.23. The Predators FCI is $273.38. The FCI for the NFL is $396.36. The average NHL fan has the means to support their favorite team provided they perceive they are receiving fair value for their dollars spent. It is imperative that each team make their fans believe their dollars were well spent- from the on ice product to the arena experience.

Fans that follow hockey know that news about the game is being disseminated differently that perhaps any other major sport. Most dailies have cut back on their coverage of hockey and now no longer send reporters on the road or have a dedicated writer for that sport. Hockey fans have learned to get their news from blogs and web sites, many of which now break major stories and provide the in-depth coverage that many newspapers do not. Look to the right of this post and you will see a list of some of the best hockey bloggers around. Buddy Oakes of Preds on the Glass provided the only local coverage of the NHL Awards where the Predators Steve Sullivan won the first post season award in the history of the franchise. Those that followed the draft were kept up to date by live coverage from attendees using Twitter, and they delivered some great insight into the draft process as well as the events in Montreal this past week. With the rise of the "new media", hockey fans have embraced technology and in turn have used that technology to further the coverage of the game.

The NHL has been at the fore in embracing the "new media" concept and is a very tech savvy League. This plays well with the fan base as they are a younger group that is very comfortable with technology. By taking advantage of these trends, the League and the local teams will further entrench themselves as "first in mind" when it comes to sports and the expenditure of entertainment/sports dollars.
Whether it is a local team or the the League, it is critical to know your fans and tailor the product accordingly. This snapshot of the fan base of the NHL is, I believe, positive for the League and its future. A comparatively younger fan base with high income and comfortable with technology means there are great marketing opportunities for the game, opportunities that have the potential to draw in new fans and build a solid fan base for years to come.

*click on the charts to see a larger image

Thursday, June 25, 2009

Draft Numbers

There is a lot of great draft coverage emanating from numerous blogs that provide all kinds of angles regarding the upcoming draft in Montreal. The draft is the life blood of many teams, providing future talent that hopefully will contribute on the NHL level. As we look to tomorrow's draft, I thought it would be informative to look back at past drafts and study how well the Predators have done with their selections. Nicolas Chabot of the Hockey News has compiled some historical statistics about the success of NHL teams, and the numbers are interesting. He looked at first round picks and the percentage of picks that played 200 and 500 games. For the Predators, 45% of their first round selections played at least 200 games; 18% played 500 games. For all other rounds, 6% of their selections have played at least 200 games; 1% have played 500 games. Compare that to Detroit, the reigning Central Division champs and perennial playoff contender. 66% of their first round selections played in 200 games; 47% in 500 games. Where it gets interesting is when you compare all other rounds. 15% of these selections played 200 games; and 8% played at least 500 games. While there is great attention paid to a team's first round selection, real value can be found in the later rounds. When looking at the productivity of first round selections, Nashville ranks in the middle of the pack (17th). However, the Preds are near the bottom of the league with productivity from second round and later selections. This serves to point out the vagaries of the draft, but more importantly, the value of scouting and developing young players. A team like Nashville will obviously continue to need quality selections in the draft, and they will need to develop those players and have them ready to contribute when called upon. These numbers point out that this team has to get better at this to be a contender.

All eyes will focus on the 11th selection tomorrow. We should really focus on what happens with the remaining 12 selections that we have in this draft.

Wednesday, June 24, 2009

Free Agency, Salary Caps, and Competiveness

There is a great post by Dirk Hoag of On the Forecheck (linked on the right) on his blog today asking the question "Can the Nashville Predators ever contend for the Stanley Cup?" The money line in his post is, "The key to competitive success in the NHL these days is to establish a strong core of proven veterans and develop young talent around it. Until they hit unrestricted free agency, many star players provide incredible bang for the buck and that's an area that the Nashville Predators are particularly well positioned to take advantage of."

One of the grumblings that I have heard over the years is that the Preds are not particularly active in free agency, even going so far last year as to not get involved at all in the free agent market, while teams such as Chicago and Detroit have been very active. A high profile signing can provide a shot of adrenaline to a fan base and can serve to boost ticket sales. In the salary cap era, high profile signings can also, depending on structure, serve to cripple a team's ability to maneuver under the the cap; develop, retain, and compensate younger talent; and plug holes where necessary. Teams with little room under the cap will have to shed players that fit well in their organization, and I would watch with interest some of the moves that are made for this reason after July 1st. While the final salary cap number has not been set for the coming season, it is expected to be in the $54-56MM range (it was $56.7MM last season). At the end of the season, the Preds had $11,446,923 of cap room. By contrast, Washington, Philadelphia, and Calgary had spent to the cap; and 9 teams had less than $1MM cap space available (Source: NHLSCAP).

Cap space is not the only consideration when a team is structuring a player contract, the length of the contract is also a major factor. Players looking to free agency are attempting maximize their compensation, and rightfully so; GM's are looking for that "piece" that puts a team over the top and into contention for a Cup. Longer term free agency contracts can potentially be an albatross around the neck of a GM, yet players and their agents are seeking a commitment of not only dollars, but time as well. As history has shown, this can be a delicate balancing act between developing the young players drafted into the organization and the acquisition of a free agent. In an organization such as the Predators, which have judiciously used free agency but tend toward the development of their draft picks, it is imperative that those draft picks be solid, that they develop to be competitive at the NHL level, and that they be productive. Our core group of veterans are mostly the draft picks from the early days of the franchise- homegrown talent that must continue to get better and produce at a higher level for this team to improve offensively and get back to the playoffs.

We have several unrestricted free agents, and the latest news that has been made public is that there has been little to no communication between the Preds and the players agents. We very well could lose a couple of defense men, and, if so, this is where you would see the younger talent have an opportunity to step in to those roles.We could lose some of our 3rd and 4th line forwards, and again, the model that has been employed by the Preds will come in to play as young forwards from Milwaukee will have a chance to stick with the big club. The UFA that is drawing the most attention at the moment is Steve Sullivan. I think there is unanimity in the Pred nation that we would all like to see him wearing a Preds sweater next season. Whether that happens will depend on the amount of money that Steve is looking for and the length of time that he is seeking on his contract. The dilemma that the Preds will face in signing Sully, or any free agent that may become available after July 1, is that there are two (potentially and probably) very large contract negotiations that will occur next season with Pekka Rinne and Dan Hamhuis. GM David Poile will have to balance an offer for Sully or any free agent with these contracts that will be upcoming at the end of next season, and given the philosophy and history of the Preds, it would not surprise me to see little to no activity with the upcoming free agency period- including Sully.

Unless there is a change in tactics, for the Preds to win the Stanley Cup they must draft well; develop the players in the system so that they are NHL calibre within a reasonable time; and retain the solid nucleus of productive and proven players. This approach can be healthier than the attempt to make a huge splash in free agency that can decimate a team for years to come.

Sunday, June 21, 2009

Happy Father's Day

He taught me how to throw a football, and then sat in sweltering heat and freezing cold to watch me play the game I loved. No matter how well or poorly I played, he was always there with an encouraging word. He taught me how to drive, and I am responsible for some of the gray hairs in his head from that process. He showed me how to work with my hands and fix things, a talent I use even to this day. He was the disciplinarian when I needed it, and as much as I hated to face the punishment that I so richly deserved, it taught me right from wrong and built character. He taught me devotion by modeling his love for my mother, even during the difficult times before her death. He was consistent, loving his family no matter what the circumstances. He was a great provider, not only in monetary terms, but with his time and his care for his family. He taught me what it meant to be a man, a man of integrity. He is my hero. Thanks, Dad, for all you have done and still do.

Friday, June 19, 2009

Phoenix Fallout

On Monday, Judge Redfield Baum ruled against Jim Balsillie's motion to relocate the Phoenix Coyotes to Hamilton, citing the June 29th deadline imposed by the Balsillie camp as being inadequate to consider the relocation application that they filed. Winners (the NHL) and losers (Balsillie) have been declared, but the legal battle rages on and this issue is far from resolved. Let's take a look at the players in this drama and try to determine where they stand after the Judge's ruling and speculate on what might happen next.

Jim Balsillie

Look up headstrong, stubborn, and a few other more pejorative adjectives in your dictionary, and you will find Balsillie's picture. Immediately after the ruling, his spokesman Bill Walker declared that he (Balsillie) was "unfazed" and vowed to press on with his quest to get control of the Coyotes. Balsillie is shrewd, because he knows without a doubt that this is the most economical manner in which to acquire an NHL franchise for southern Ontario. The expansion fee for a new Canadian franchise is going to be, in my estimate, well north (pardon the pun) of the $100MM figure that was bandied about in the bankruptcy proceedings. Adam Proteau of the Hockey News speculates that it will be around $400MM. Balsillie has cloaked himself in the Canadian flag and fomented an attitude of "Us against Them" between Canadians, NHL management, and U.S. franchises. Balsillie is driven by the fact that he desperately wants to own a franchise, and he wants to obtain one as cheaply as possible, and the Coyotes are his best current shot at doing so. He will continue his attempt to acquire this franchise. Much like mold in your bathroom, the League shouldn't expect to get rid of him easily.


The positive that came out of Judge Baum's courtroom was that owners (and potential owners) have to abide by the policies and procedures established by the league, and that the league has ownership of franchise rights and territories. Examining the financial information that was on display during the trial indicates that the Phoenix franchise is bleeding red ink, and now the NHL is responsible for those losses that were incurred last season and on an on-going basis. The public perception in Canada of Gary Bettman and league management is that they exhibit a tremendous amount of disrespect and even animosity toward those cities that want an NHL franchise. I don't believe this to be true, but it has become the perception, fueled by the rhetoric that has come from Balsillie and the Make It Seven campaign. League management will have some significant work to do to repair the image of the League, if possible, with hockey fans up north. The League also has to make a critical examination of how to best grow the game with fans across North America. I do believe the League will place a team in southern Ontario- an expansion team. The expansion fees will be too great for the League to ignore for much longer.

The City of Glendale

Possibly the most financially vulnerable entity in this affair, the City of Glendale stands to lose the anchor tenant for Jobing.com Arena. The Coyotes have 24 years remaining on their lease for which the city receives $500MM per year. Losing the Coyotes means that the repayment of the bonds issued to contruct the arena will fall on the taxpayers in Glendale. Should the Coyotes remain in Phoenix, look for significant concessions to made to the team on this lease.

Jerry Moyes

Moyes conspired (in my opinion) with Balsillie to put the franchise in bankruptcy and to structure the bid as it was presented. The reason: Balsillie's bid allowed Moyes to recover most of the $103MM that he had loaned to the franchise. Moyes, as the largest unsecured creditor, has a decided pecuniary interest in seeing that Balsillie wins the bid- at that price. Should the NHL persuade the court to agree to allow only bids for the franchise that will keep the Coyotes in Phoenix, Moyes will receive practically nothing for the sale of the franchise since it is estimated that the bids may come in around $140MM. One cannot fault Moyes (or Balsillie for that matter) for operating in their own economic self interest- we all do. It is how they have operated that has presented the problem that the courts are trying to resolve. My guess is that Moyes will turn out to suffer the greatest financial loss when the dust settles.

The Coyotes Hockey Club

As a player watching this affair unfold, I would think that you would have to feel a great sense of unease. Will more talent leave the club? What will be the operating environment? Will there be any fan support? Professional athletes are like most of us, they want stability in their work environment. The Coyotes work environment is anything but stable, and one has to wonder how this will translate to product on the ice.

Coyotes Fans

The loyal fans of the Coyotes have got to feel like they have been speared in their nether regions by Patrick Kane. To watch your team become a pawn in an end run around league rules and with the swift potential of being uprooted and relocated is disheartening and terrifying.Phoenix fans have been trashed as undeserving of an NHL team and hockey in the Valley has been declared dead. It is a given that there are numerous steps that can be taken to improve fan support, but no fan of a hockey team should be treated as have the fans in Phoenix (sound familiar, Pred fans?). One aspect of this is the parochial attitude of some in the Canadian press about hockey and who "deserves" a team. Frankly, growth of the game will continue to be stunted with the prevalence of this type of thinking.


Speaking of pawns, how is this Make it Seven thing working for you? One can debate the merits of the tactics employed by Balsillie and his hired legal guns, but the frustration level of Hamiltonians from the on again off again dance with a potential NHL franchise must be off the charts. Wrapping the possibility of landing a franchise in a nationalistic fervor only serves to widen the gulf between hockey fans in Canada and those in the U.S. At some point, do you feel used by Balsillie in his quest to own an NHL franchise?

Buffalo Sabres

Relatively quiet in this matter has been the Buffalo Sabres, but I am of the opinion that they stand to suffer greatly with the location of another hockey club in southern Ontario. Buffalo draws a number of fans from that area- hockey fans that can't get a ticket or afford one to see the Maple Leafs play. Another team in southern Ontario will draw from their fan base and has the potential to create financial distress for the Sabres, regardless of any indemnity payment.

MLB, The NFL, and The NBA

It is of some significance that the other professional sports leagues have taken great interest in this case, to the point of filing amicus briefs siding with the NHL. Should the outcome of further legal proceedings undermine the right of the each of these professional leagues to control the location of their franchises, the chaos could be the order of the day in professional sports. The anti-trust claim filed by PSE was put on hold by the court since PSE had not made a formal application for ownership of the Coyotes, and was therefore a moot point. At this time. The court also expressed some reservations about meddling in the operations of a professional sports league as to operating their franchises, specifically the ability to determine their particular location. However, the added considerations of a bankruptcy proceeding cloud what appears to be clearly defined guidelines as it regards the rights of a professional sports league in this regard. This is a complex legal question that will have far reaching implications for all of professional sports if those guidelines are set aside.

This matter is far from over. Balsillie has indicated that he will continue to pursue ownership of the Coyotes with an eye toward relocation to Hamilton. The NHL has indicated that the League has several bidders lined up to bid on the franchise and keep it in Phoenix. The bankruptcy court will supervise this process. And until it is resolved, a number of interested parties will be in limbo.

Thursday, June 18, 2009

Sullivan Wins the Masterson

The Predators Steve Sullivan won the Bill Masterson Award for dedication and perseverance to hockey tonight at the NHL Awards ceremony in Las Vegas. Sully is the first major award winner in Predators history, and this is an honor well deserved. Sully showed remarkable heart and character in coming back from a back injury that sidelined him for two years, and was very productive in his time on the ice. Unseen by most fans was the time Sully spent in rehab and conditioning just to get back on the ice. More amazing is his productivity after his return. This is indicative of the work he put in to bring his game back to the high level it was before his injury. The lonely and painful times conditioning and rehabbing his back were honored by his peers tonight, and it is an honor that acknowledges that effort. Congratulations, Steve!

Wednesday, June 17, 2009

Local Coverage of the NHL Awards

The NHL is getting ready to hand out awards in Las Vegas, and the Predators Steve Sullivan is a finalist for the Masterson Trophy, which is awarded to the player that personifies perseverance, character, and dedication to hockey. Best of luck, Sully. Predators blogger Buddy Oakes of Preds on the Glass will be at the awards and various events and will be blogging about his experiences and impressions of one of hockey's most glamorous events. Follow the link on the right or log on to www.predsontheglass.com to get the always informative perspective of one of our local writers.

Tuesday, June 16, 2009

Martin Gelinas Named Director of Player Development

Martin Gelinas, whose last stint in the NHL was with the Nashville Predators, has been named the Director of Player Development for the Preds. Gelinas, the former 7th round pick of the L.A. Kings in the 1988 entry draft, won a Stanley Cup with the 1989 Edmonton Oilers. He also played for the Vancouver Canucks, the Quebec Nordiques, the Carolina Hurricanes, the Calgary Flames, and the Florida Panthers, in addition to the Predators. A torn ACL ended Gelinas' season with the Predators in 2007, his last in the NHL.

As the Director of Player Development, Gelinas will be responsible for following the prospects drafted by the Predators and will assist them in their development to the NHL. He will work with prospects in North America and Europe.

This is a great move by the Predators and David Poile. Marty was a great locker room presence, solid on the ice, and is a class act. Having someone of this caliber that can share his on and off ice expertise and experience bodes well for the prospects in the Predators system.

Monday, June 15, 2009

Court Rules Against Balsillie

Judge Redfield Baum issued a ruling tonight from his Phoenix bankruptcy court that denied the request of the Balsillie camp to allow relocation of the Phoenix Coyotes to Hamilton, ON by the requested June 29th deadline that was imposed by Balsillie's attorneys. Judge Baum ruled that the June 29th date was a deal breaker because it did not allow the court sufficient time to decide the anti-trust claim raised by Balsillie's attorneys. In reading the ruling, the Judge also came back to a point he raised earlier in the hearings with Thomas Salerno, an attorney for Balsillie that questioned the desire of the Balsillie camp to "excise" the assign and assumption clause of the bankruptcy code. Specifically, he referenced existing contracts that Balsillie wanted to omit from consideration in his attempt to purchase and relocate the Coyotes. His ruling stated that as long as the contracts were valid and enforceable, which he believed the were, that said contracts should be honored. He specifically referenced the contract with the City of Glendale and with Aramark, the concessions vendor for the Coyotes. Judge Baum stated in his ruling that he did not believe that Balsillie could legally excise, or remove from consideration those valid contracts. He also noted that Balsillie had not made formal application to the NHL for the purchase and subsequent relocation of the Coyotes. This fact also weighed in his consideration. He referenced as well the rights of sports leagues to control their franchises and the rights of leagues to control relocations and receive compensation for relocating to certain markets. This case, at the outset, did not take those rights into consideration, an issue that was raised by Judge Baum in the hearings.

The ruling against Balsillie hangs on the tight deadline of June 29th, which the court has, rightfully so, said does not give it adequate time to sort out the complex anti-trust issues that have been raised. The ruling does indicate that the anti-trust provisions are not the sole issue that must be resolved, and their is serious consideration that must be given to existing contracts and the rights of the League to control franchises and their location, or relocation. I expect that we have not heard the last of this case or of Jim Balsillie and his attempts to procure an NHL franchise.

Sunday, June 14, 2009

A Look at Hamilton

The fate of the Phoenix Coyotes continues to play out in Judge Redfield Baum's bankruptcy courtroom, and the focus of the many of the arguments has been the viability of Phoenix as a hockey market. Potential acquirer Jim Balsillie has proposed to purchase the club and move it to Hamilton, assumed as fact by those that want to relocate the club that the city and surrounding areas will be a solid and profitable hockey market. Perhaps so, but it is interesting to look at Hamilton the city as a potential hockey town from an economic, demographic, and quality of life standpoint to determine the validity of that argument.

Hamilton is geographically located on the western end of the Niagara Peninsula in southern Ontario, and is almost equidistant between Toronto and Buffalo (approximately 70 miles from each city). Hamilton has a population of 504,559; its metropolitan area has 692,911 residents. The area from Oshawa, ON to Niagara Falls is known as the "Golden Horseshoe", and has 8.1MM residents in that region. Hamilton sits at the geographic center of the Golden Horseshoe. The major industries in this area have traditionally been steel and manufacturing, and the Toronto-Hamilton area is the most industrialized area in Canada. 60% of the steel produced in Canada is produced in Hamilton, primarily by Stelco (owned by U.S. Steel) and Dofasco (an subsidiary of Arcel Mittal, the largest steel producer in the world). With the global recession, the Hamilton area has suffered economically, with 20% of the local populace below the poverty line as established by the Canadian government. According to the latest numbers I could obtain, which were for year end 2007, the unemployment rate in Hamilton was 6%, although that number is continuing to grow according to a news story form the National Post. The local government has made a concerted effort to broaden the economic base of the city into health care and entertainment. The Hamilton Health Sciences Corporation now employs 10,000 and the Hamilton Film and Television Office has been successful in drawing film and television crews to the area for filming and production. The average income in Hamilton is $57,664, although the suburban community of Oakville has an average income of $101,675. This compares to an average income in the entire province of Ontario of $66,836. 61% of Hamilton's labor force commutes to a job outside of the City of Hamilton.

Interestingly, the fastest growing demographic group in Hamilton is the cohort aged 75 and over, which grew by 21% according to the last census. The group that was in greatest decline was the 25-34 age group. The population of the entire province of Ontario grew 9.9%, while the population in Hamilton grew 4.6% (data as of 2001 census numbers). The city projects a population of 532,380 in 2011, a growth rate of 5%. There are 135,985 family households and 55,525 non-family households in Hamilton.

Hamilton is home to a number of colleges and universities, prominent among them McMaster University with an enrollment of 22,000. Mohawk College, a college of applied arts and technology, has 10,000 full time students; 40,000 part time students, and 3,000 apprentices. Also, Hamilton is home to the Royal Botanical Gardens; the Canadian Warplane Heritage Museum and the Canadian Football Hall of Fame. The other professional teams in Hamilton are the Tiger-Cats of the CFL and the Bulldogs of the AHL.

As compared to Hamilton, Nashville has 619,626 in Davidson County and 1,521,437 in the metropolitan area. The largest population cohort in Nashville is the 35-54 age group, comprising 29.6% of the populace. Population growth in the metro Nashville area has averaged a growth rate of 25% annually. The median income in Nashville was $49,317 for a family, and 13% of the population was below the poverty line. Health care is by far and away the biggest engine of the economy in Nashville, with entertainment, state government, and printing and publishing predominant. Nashville and the metro area is home to 21 colleges and universities.

One of the arguments for a franchise in Hamilton is that the average ticket price will be lower than the league leading average price of a ticket to see the Maple Leafs, which is $76.15. Even at the League average of $49.66 per ticket, it remains to be seen how attractive a ticket will be to the average Hamiltonian. The Balsillie camp has not been willing to comment on ticket prices. Given the economic and demographic make up of Hamilton, it becomes apparent that the team will have to draw extensively from surrounding areas like Kitchner and Waterloo to support the team, much like many teams, such as the Predators, draw from surrounding communities in their Metro area. This is where the attraction of hockey to most Canadians works in the favor of a team in Hamilton.

Unknown is the appetite for the City of Hamilton to fund improvements to the existing Copps Coliseum or construct a new facility. Balsillie has said that he is willing to fund an immediate $20MM to bring Copps up to minimum NHL standards. He has asked the city to fund an additional $120MM through the issuance of bonds for additional improvements. The mayor of Hamilton has expressed his support for this, but it still has to go through the legislative process for final approval.

Whether the Coyotes remain in Phoenix or relocate to Hamilton is in the hands of the bankruptcy court. The success of an NHL team in Hamilton depends upon the ability to attract fans not only from Hamilton, but especially the surrounding areas around the city. A hockey mad market bolsters those efforts.

*Sources: City of Hamilton statistical abstract
National Post
City of Nashville statistical abstract

Saturday, June 13, 2009

The Improbable Hap-Pens

Down 2-0 in the Stanley Cup Finals, the Pittsburgh Penguins certainly looked as if they would be watching the Detroit Red Wings hoist the Cup one more time as Stanley Cup champions. This series turned as the Pens held serve on their home ice and proceeded to win 4 of the next five games against the Wings and became the first team since the 1971 Montreal Canadiens to win the Cup on the road. There were many unsung heroes for the Pens, no more than Max Talbot, who scored the two goals in game 7 to clinch the Cup. Kudos have to be given to Marc-Andre Fleury, who exorcised his demons at the Joe and was solid in net in game 7 with 23 saves, none bigger than the save on Nic Lidstrom with 5 seconds remaining in the game. The Pens got solid play from their supporting cast of players- Kris Letang, Brooks Orpik, Bill Geurin, and others who stepped up their game in the finals. Sidney Crosby was not the scoring machine many expected, but was incredible in the face off circle and was solid in the defensive zone. Evgeni Malkin won the Conn Smythe trophy as the playoff MVP, and his play was certainly elevated as compared to last year's finals. And what can be said about the coaching job of Dan Bylsma? He shepherded this squad through the playoffs by keeping them focused and confident. He knew which buttons to push with this squad, both in their sprint through the last quarter of the regular season and throughout the playoffs. It was apparent the Pens responded to his coaching and translated it to exceptional play on the ice. It was good to see assistant coach Tom Fitzgerald, a former Preds player, rewarded for his efforts behind the bench.

The SCF was an amazing exhibition of hockey, and hopefully will draw more casual fans in to the game. Congratulations to both teams for the effort they put on the ice.

The View picked the Pens in 6. They won it in 7. Even blind hogs do find an acorn every now and then.

Wednesday, June 10, 2009

Coyotes Courtroom Confrontation

The continuing drama of the Phoenix Coyotes continues to unfold in Judge Redfield Baum's bankruptcy court, with the NHL, Jerry Moyes, Jim Balsillie, and the City of Glendale filing more than 600 pages in legal briefs with the court yesterday. One of the best lines of the hearings so far was from Judge Baum, who, upon seeing the volume of filings, said "If this is an endurance contest, I'll concede." Balsillie's camp has cited the fact that a protracted consideration of the potential relocation by the NHL would, in essence, veto Balsillie's offer because it would make a relocation scenario unworkable. To bolster the argument about making an expeditious decision on relocation, Balsillie's attorney's have cited the relocation of Major League baseball's Seattle Pilots after the one and only season in Seattle in 1968; and the relocation of the Quebec Nordiques after the 1995 season to Denver. The NHL has countered this argument by stating in their filings that the League controls who owns the clubs and where they are located. The League also argued that they controlled the rights to the southern Ontario market and those rights cannot be unilaterally claimed by any party. Current owner Jerry Moyes has filed a petition that he is an unsecured creditor and should be given consideration as such. The League contends that the additional monies that Moyes has invested in to the club amount to equity and are not debts owed to him as a creditor. This distinction is critical, because Judge Baum will render a decision that will provide the greatest benefit to creditors. Obviously, Moyes is operating with his economic self interest in mind by employing this tactic, and if successful, would reap the greatest return on the dollars he has invested into the Coyotes. Finally, the City of Glendale has filed a motion to protect their interest in the Jobing.com arena, which was constructed by the city at a cost of $183MM and financed with $155MM in bonds. The city estimates that it would lose $565MM in taxes and fee revenue, and has claimed that they should be paid for the remaining value of the lease should the Coyotes relocate. That value is claimed to be $500MM.

There is obviously a tremendous amount of legal maneuvering that is occurring in this process, and the outcome remains undecided. There are several key issues, however, that merit our consideration. It was reported that Judge Baum has stated that the NHL is within its rights to demand a relocation fee should the franchise move to southern Ontario. The numbers that have been publicly discussed are in the $100-150MM range. If so, it is speculated that $50MM would each go to the Maple Leafs and the Sabres for a franchise relocating within the 80 mile radius of their city, and the remaining $50MM would be allocated among the remaining 28 teams. This will change the financial dynamic of Balsillie's bid, and initially, his attorney, Richard Rodier, said that the Balsillie camp has the right to walk away from their bid for the Coyotes if there was the imposition of a relocation fee. Balsillie has since softened his stance on that issue, but there is no denying a fee of that size will force reconsideration of the bid. The last time a franchise was awarded a fee because of the violation of their territorial sovereignty was when the Anaheim Ducks paid the L.A. Kings a fee, which was $25MM to place the franchise in the Anaheim market. In my May 21 post, I proposed that the offer to purchase and relocate the Coyotes by Balsillie was a way to get a franchise in the market he wanted (southern Ontario) "on the cheap" by avoiding the expansion fees that the League would charge. The relocation fee that the League could charge negates some of the financial advantage that Balsillie would gain if this tactic is successful.

While Judge Baum has been unsparing in his criticism of all the attorneys and their arguments when it has been warranted, it was his questioning of Moyes lead attorney, Thomas Salerno, that caught my eye. In an exchange yesterday, the Judge asked Salerno to explain how the proposed buyer, Balsillie, could request the team to be relocated to Hamilton when one of the articles of the bankruptcy code clearly states that a buyer "assign and assume" all contracts, and that the Coyotes have contracts to play in Glendale and honor the bylaws of the NHL. That question, as you can imagine, went unanswered.

The Balsillie camp has cited the relocation of the Pilots from Seattle to Milwaukee as a precedent for allowing the move from Phoenix to Hamilton. Balsillie's lead attorney, the aforementioned Richard Rodier, went so far as to call this case as a "lawyer's wet dream" since it so closely parallels the Coyotes situation, and the move was consummated one week before the 1969 baseball season. According to Rodier, this case negates the NHL's claim to need ample time to consider the relocation issue. The significant difference in these two cases is that the Pilots had filed bankruptcy and neither the City of Seattle nor a local buyer would agree to fund the operation of the club AND neither would Major League Baseball. In the case of the Coyotes, the NHL has committed to fund the operations of the team for the coming season in order to insure an orderly sale and transition. In my non-lawyerly mind, the comparisons become moot for that reason alone.

Balsillie attorney's have also cited the relocation of the Nordiques. When Marcel Aubut, owner of the Nordiques, found himself in financial difficulties in 1995, he went to the provincial government and asked for financial assistance. That request was refused, and he ultimately sold the club to a group of investors in Denver. Again, the substantive difference in my mind is that this was a negotiated sale between Aubut and the Denver buyers. Balsillie's attorneys cite these situations to negate the League's claim that they would need time to review a relocation request. However, I think these two salient points in each of these specific situations invalidate the argument from the Balsillie camp.

The decision's coming out of Judge Baum's court have implications not only for the NHL and the Coyotes, but for all of professional sports. The next few weeks will be interesting, not only for hockey fans in Phoenix, but for sports fans everywhere.

Thursday, June 4, 2009

A Non-Mainstream Hockey Award

The annual NHL Awards Show and presentation will be held in Las Vegas on June 18th at the Palms Resort, and Predators and hockey blogger Buddy Oakes of Preds On The Glass will be attending and providing coverage of this glamorous event. Awards such as the Lady Byng (Sportsmanship), Hart (MVP), Calder (Rookie of the Year) and others will be handed out. The Predators own Steve Sullivan is a finalist for the Masterson Trophy, awarded to the player that best exemplifies the qualities of perseverance, sportsmanship, and dedication to hockey. While these awards garner the attention of fans and the press, an award was handed out today that will not make the mainstream of the NHL's annual awards, but one that is vivid in the minds of Predator fans. Today, Hockeyfights.com handed out their awards, and the Joey Kocur KO or TKO of the Year award was given to our own Wade Belak for his March 10th punch out of Donald Brashear of the Washington Capitals. Brashear is renowned for his toughness and fighting skills, and when the two enforcers squared off, I thought Belak was at a disadvantage, but a monstrous left from Belak felled Brashear with one punch.

We will not get into a discussion of fighting and its merits, or lack thereof, right now. Suffice it to say, Wade Belak, who was gaining a reputation as an efficient enforcer, made the hockey world sit up and take notice of his skills. Although we will not hear this award mentioned on June 18th, congratulations to Wade Belak for a job well done.

Tuesday, June 2, 2009

A New Ownership Model

The Florida Panthers have been sold to a publicly traded company, according Ben Klayman reporting for Reuters News. Sports Properties Acquisition Corporation (SPAC) has agreed to buy the Florida Panthers hockey club, its home ice BankAtlantic Center, an arena management company that operates the BankAtlantic Center, and 139 acres of land surrounding the center for $240MM. As reported in my April 27th post A Potential New Owner in the NHL, the money making potential for SPAC is the 139 acres of undeveloped land, which the company plans to develop into a mixed use development called The City of OZ (no pretentiousness there!). Originally, the price was for the purchase was $230MM, but did not include the arena, which is owned by Broward County. The new deal includes the arena. This announcement comes on the heels of the announcement of Jacques Martin leaving his position of GM of the Panthers to move behind the bench of the Montreal Canadiens, and it is unknown if his departure is related to this purchase. SPAC has a high profile management group, including Tony Tavares, former President of the Washington Nationals and CEO of Disney Sports when they launched the Anaheim Ducks; former New York governor Mario Cuomo; Hall of Fame baseball player Henry Aaron; and Richard Mack, a senior partner at Apollo Real Estate Advisors. SPAC was rumored to be interested in acquiring other hockey teams, and their name had recently surfaced as being interested in the Columbus Blue Jackets.

The only other professional sports team with this type of ownership arrangement is the Green Bay Packers, although there are other outside entities that have ownership interests in professional sports team. In hockey, the MLSE, the operating group for the Maple Leafs, is 58% owned by the Ottawa Teachers Pension Plan. Most hockey clubs are owned by individuals or investment groups, and the purchase by SPAC represents the first ownership entity in the NHL that is a publicly traded company.

The issue that I raised in my post on April 27th is the central question about this type of ownership model, and that is who will be calling the shots for the operation of the Panthers? With this type of ownership model, the GM is going to answer to the board of a publicly traded company. Will the product that is put on the ice be affected by the best judgement of the GM or the board of SPAC, and what type of influence will the board of SPAC have on day to day management and operations of the club? Ostensibly, the main return on investment for SPAC will come from the development of the City of Oz, but the real estate market in South Florida has cratered. Suppose development doesn't occur for 3 to 5 years. The return that investors will get from their investment will be from the hockey club and other events at the arena. The Panthers have struggled on the ice and at the gate, failing to make the playoffs since 2000 and ranking 24th in attendance as of the end of the 2008 season, and the arena has not made money from non-hockey related events. What happens if the hockey club continues to struggle and loses money? How much patience will the management of a publicly traded company have in this scenario? I think this makes for a very interesting situation in South Florida, and it will bear watching as to how the club is operated in the coming seasons.

It is no secret that there are teams in the NHL that are struggling financially. Not every franchise is blessed to have local ownership that believes in their franchise and the local market as do the Predators. Jim Balsillie notwithstanding, there are not a lot of individuals that are willing to write a check to buy a franchise right now. It remains to be seen if this type of ownership model will become more prevalent in the NHL.