NHL Expansion Will Benefit League

The NHL Board of Governors officially gave its approval for NHL expansion and to solicit bids from interested markets for the 2017/18 season. After months of speculation, this approval for possible NHL expansion doesn’t come as a surprise. It is expected bids for franchises in Las Vegas and Toronto, among others, will begin rolling in over the next few months.

NHL expansion makes sense from a business standpoint and it would be foolish for the league to sit idly by and not take advantage of the opportunity to increase the visibility of its game and brand to new markets. Like any successful organization, the NHL must continue to look to ways to grow its product and increase revenue streams. New teams are a new revenue stream. Over the last two decades, the four major North American sport leagues (NHL, MLB, NFL, and NBA) have all expanded to increase the amount of franchises, and despite the protests of some, expansion has benefited each league. Simply put: more teams and more money is good.

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Commissioner Gary Bettman stated that the expansion fee would be at least $500 million. It makes sense for NHL expansion to include two new franchises to bring the league total to 32, allowing the NHL to balance each conference and maximize the amount of expansion dollars. You don’t need to be a MENSA member to realize that two is better than one here, and there is an opportunity for the league to collect $1 billion in expansion fees in the near future…not a bad chunk of change by anyone’s estimation.

Beyond the initial expansion fees, a new franchise (or two) would bring the NHL potentially into a brand new market for the 2017/18 season. The NHL’s United States’ television contract with NBC is set to expire in 2021, and the league could be setting itself for a significant increase in television money if it expands into a large television market. Merchandise sales, licensing fees, and just additional ticket revenue will continue to grow the revenue pie for the NHL and the Players’ Union over time.

The Players’ Union should be begging for NHL expansion as well. More revenue equals a larger salary cap and higher salaries for players. Additionally, two new franchises would give an estimated 40 to 46 players an opportunity to not only play in the NHL, but earn a NHL salary. Everyone wins.

Opponents of NHL expansion will point to dilution of talent if the league expands. I don’t buy this as the talent and quality of play is arguably the best it has been in quite some time. Players such as Sidney Crosby, Steven Stamkos, John Tavares, and Patrick Kane, among others, are leading the way with a better product. Almost every team can legitimately say they have at least one “franchise guy,” and there’s no evidence that an additional team or two will all of a sudden cause the league’s talent to dry up or not be spread around somewhat equally.

Additionally, over the last five seasons, only the Edmonton Oilers and Carolina Hurricanes have not qualified for the playoffs at least once. Teams are doing a better job rebuilding when necessary and bringing themselves back to competitiveness quicker (well, except Edmonton.) Almost every team has quality talent either at the NHL level or in the farm system, and with emphasis on drafting and player development, there is no reason to believe that a new franchise or two wouldn’t be able to stock its organization with talent quickly.

It also helps the NHL expansion bid that the KHL is struggling financially. It would not be surprising if there is a mass return of players from the KHL to the NHL over the next few seasons as the Russian economy is unable to support player salaries that could be had in the NHL.

The big question though with NHL expansion will turn to what city or cities should get a team? Las Vegas appears to be a clear front-runner for a team and has focused its efforts on raising support and season ticket sales for a possible franchise. It would be the first major professional team of the “Big 4 Leagues” in the city and there is reason to believe it would be successful (reportedly the non-existent team has over 13,000 ticket commitments already.) Las Vegas would be an opportunity for the NHL to be a true pioneer in the market and grab a fan base with no allegiance to a professional local team. The success (or failure) of a Las Vegas franchise will have ripple effects throughout the sports industry.

People will point to the turmoil surrounding the Arizona Coyotes as evidence that a Las Vegas franchise would not be a viable option. While a legitimate concern, the NHL has thrived in other “non-traditional” hockey markets such as Los Angeles, Anaheim, and Tampa Bay, and with proper marketing and management, a Las Vegas franchise could follow in those footsteps. Ultimately, like with most teams, once the novelty of a new team dissipates, it will come down to whether the team is winning on the ice that will likely drive it towards being a successful NHL franchise.

Assuming Las Vegas has a leg up for a franchise, that leaves the possibility of one additional expansion team. It will be interesting if the NHL expansion will attempt to put another team in the Toronto area (where it would undoubtedly have support) or try and break into another United States market, perhaps in Seattle or Portland (Seattle is the 14th largest television market, Portland is 22nd.) I like the idea of Seattle or Portland over Toronto (and other cities) as it would be a simple transition to balance the Western Conference with 16 teams without having to shuffle teams in the Eastern Conference around.

Whatever the NHL decides to do, Wednesday’s news was a step in the right direction for the league as it continues to expand its footprint and attempt to grow revenues. It’s been 15 years since the NHL expanded by adding the Minnesota Wild and Columbus Blue Jackets. But 2017/18, I hope they expand by two more.

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