Last week, when NHL commissioner Gary Bettman put the fee for an expansion franchise at $500 million, I considered Seattle’s dearth of winter pro sports action and thought: There goes that.
An arena suitable for hockey will cost $500 million. Between the arena — I’m assuming it’d be privately funded — and the absurd expansion fee, the ownership group would be required to invest $1 billion before a puck is dropped.
A billion bucks is a lot to fork over to obtain an expansion franchise that poses questions without answers. Such as: Do we even know if the NHL will succeed in a market where many fans equate icing with cake and penalty killing with capital punishment?
But a billionaire’s ambition to own a $1 billion toy should never be underestimated. Six days after Bettman established $500 million as the ante, the Seattle Times reported that Connecticut investment banker Ray Bartoszek has plans to file a formal expansion franchise application to the NHL on behalf of Tukwila.
Bartoszek’s group is not associated with Chris Hansen, whose drive for a public-private arena partnership is predicated on the return of an NBA team to downtown Seattle. As Hansen awaits news on the relocation front — expansion is not an option — Bartoszek is moving and shaking at full speed, undeterred by the probability he’ll be fortunate to break even.
That’s not a guess of mine, merely the opinion of University of Chicago economics professor Allen Sanderson.
“To buy an NHL franchise for $500 million, it’s more a vanity issue,” Sanderson told the Canadian Broadcasting Corporation’s website. “You know, ‘I’m not planning on making any money. I’ve got a lot of money to spend and I want a new toy.’
“It’s unlikely — not impossible, but unlikely — to generate a huge rate of return at that price.”
According to Forbes, 19 of 30 franchises began the recently concluded NHL season worth less than $500 million. Although three franchises — the Toronto Maple Leafs, Montreal Canadiens and New York Rangers — were worth at least $1 billion, the Florida Panthers appeared to be bleeding money faster than a parent of four at an amusement park.
Original Panthers owner Wayne Huizenga bought his way into the NHL by paying a $50 million expansion fee. Since the Panthers inaugural 1993-94 season, they’ve been sold three times.
Because the team is losing more than $20 million annually on the arena, it will need the help of tourism taxes to remain in south Florida. Forbes has estimated that the Panthers are worth less than $190 million, which might help explain Bettman’s yearning for a league-wide cash infusion through expansion fees.
Comparing a potential NHL team in Washington state with the struggling franchise in Florida is like comparing, well, apples and oranges. We’ve got some hockey tradition — the 1917 Seattle Metropolitans were the first American team to win the Stanley Cup — and are geographically positioned for a feisty rivalry with the Vancouver Canucks.
And while snow and ice are not wintertime weather staples in the Seattle area, there are about 28 days a month when enjoying a fast-paced game played indoors is preferable to doing anything outside.
The Panthers make their home in the Miami suburb of Sunrise, founded as a retirement community nominally known as “Sunset.” Oops. Bad salesmanship.
The Sunrise Golf Village was reincorporated as Sunrise in 1971. I am presuming there are less suitable NHL markets in America than a Miami suburb once envisioned as a golf mecca — Palm Springs, Padre Island, Maui, places like that — but the list is short.
Here’s something else intriguing about Seattle: The demographic of fans is consistent with the NHL’s demographic. The league holds a particular appeal with 18-to-34-year-old college graduates who are tech savvy.
I’m sure Bartoszek has devoted some research on the perks of playing to a fan base that has not so much embraced pro soccer as hugged it with a smooch reminiscent of the Times Square kiss between the sailor and the nurse in 1945. I assume, too, he’s done homework on the challenge of converting a $1 billion expansion franchise investment into a profit.
But he’s all in for now, and pay attention to the timing. An NHL expansion team showing up on the coattails of an NBA team that’s been relocated to Seattle might be too much, too soon to foist on a market associated with only two major pro sports.
For somebody with ambitions of bringing big-time hockey to a metropolitan area still bitter about the departure of the SuperSonics, making the first strike was an essential business decision in a business whose owners must treat franchises as billion-dollar toys.