Would MLSE add a second team in their territory, NHL constitution allowing?
Here's the question:
If the NHL allowed full/majority ownership in more than one franchise, would MLSE add a second team in their territory?
We don't often see polls in the business forum, but I wanted to see what people think about MLSE and what might be holding them back from fully exploiting the most lucrative hockey territory in North America-- roughly defined as the GTA, and I'll add the core of The Golden Horseshoe. I realize the latter would fall into the Leafs' broadcast territory, if some portion isn't technically within the 50 mile limit from the center of the universe.
The Greater Toronto Area is the 8th largest metropolitan area in North America. In addition to the City of Toronto, it includes the Regional Municipalities of York, Halton, Peel and Durham. The term GTA only came into usage in the mid-1990s, after it was used in a widely discussed report on municipal governance restructuring in the region.
The core of the region starts from Niagara Falls at the eastern end of the Niagara Peninsula and extends west, wrapping around the western end of Lake Ontario at Hamilton and then turning northeast to its anchor city Toronto (on the northwestern shore of Lake Ontario), before finally terminating at Oshawa, just east of Toronto.
[Need: The population of the GTA and core Golden Horseshoe, as the extended or Greater Golden Horseshoe + GTA exceeds 8 million.]
Please vote, and add your reasoning. Please consider if such a move hurts the franchise in any way (and what that might be), helps MLSE, is a good/bad business model, etc.
(Disclaimer: I'm not interested in the likelihood of the NHL changing its ownership rules, just the hypothetical situation that if it were allowed, would MLSE think it was a good idea in your opinion.)
As I've said before, if there was some way that MLSEL could purchase Copps Coliseum from HECFI they would probably allow a team in Hamilton because there would be money to be made. That's all MLSEL looks at... the bottom line.
Im talking about a situation where MLSEL owns the building, rents it out to a team they have zero ownership in, and of course collect revenue from all the other events that happen at Copps.
MLSE will put all it's force and influence behind trying to block another NHL team from being put in any part of southern Ontario that it believes it can control, unless there is some way that MLSE itself can have significant control over the potential new team. I don't believe there's any real fear that another team would significantly hurt MLSE, at least not a reasonable fear, there's only the desire not to let anyone else have any piece of that southern Ontario pie that MLSE claims for its sole use.
What a strange question to ask. The NHL will never and would never in a million zillion years allow an entity to own two teams. Can you imagine the abuses that could be wrought? One team trades all its draft picks to the other? One favored above the other?
No matter what, if one had anything better than the other, a single seat in the arena, five bucks difference in payroll, anything, someone would claim favoritism.
So, regardless of whether MLSE would do it, the league wouldn't. Ever. Eveeeer!
But, since you say you aren't interested in that part (/boggle), the answer is: yes, they probably would do it. They'd see it like different campuses of the same university. The money still comes to them.
What a strange question to ask. The NHL will never and would never in a million zillion years allow an entity to own two teams. Can you imagine the abuses that could be wrought? One team trades all its draft picks to the other? One favored above the other?
No matter what, if one had anything better than the other, a single seat in the arena, five bucks difference in payroll, anything, someone would claim favoritism.
So, regardless of whether MLSE would do it, the league wouldn't. Ever. Eveeeer!
But, since you say you aren't interested in that part (/boggle), the answer is: yes, they probably would do it. They'd see it like different campuses of the same university. The money still comes to them.
Had to get all that in there, dintcha? Yes, I can imagine the abuses ~since~ the reason it hasn't been allowed kinda/sorta rose out of those abuses.
It's one of those 'unintended consequences' thought experiments. While one set of bigger concerns is precluded by limiting controlling ownership to just one club, it does create a scenario that does push an owner into a protectionist mode within their territory.
Consider all the leagues that do have more than one team in a given market/territory. They all seem to function, and to actually remain in business. Some have done so for decades (Cubs/Sox, NYC MLB, for example. Were it not necessary to worry about abuses in tampering with on-ice product, player personnel, etc., would more owners in super-large markets [per metric of population below] attempt to fully exploit their region? Since we have this arcane definition for territory simply based on geography, does it force a league to protect that which should need no protection?
Thus the argument that only one team per given city can/should survive seems to be in fact without support based on very large cities supporting multiple teams.
Does it not appear that a sports team can be sustainable for every say 3-5 MM of population? (The exact number can be argued, but I think there is a magic number.)
Quote:
Originally Posted by Fourier
I'd probably vote "maybe" on this one.
I think that it would be a money maker, but it could be a difficult entity to eventually shed. I am not sure if Teachers would want this complication.
I disagree, simply because any franchise that might rank in the top five, or even in the top ten [top quartile to a third, to account for league size variances], of its league in franchise value and revenues should be highly valued relative to the other teams in that league.
Simply put, you are selling a team that might be worth $300-400 MM, with revenues as high as $110--120 MM. (2009 and +5 yrs)
But due to the concept of trading between the two franchises, that can't happen.
What COULD happen, would be MLSE expanding their TV presence and having the TV rights of a Hamilton franchise on their network, paying no fees to the team and adding additional revenue in the forms of advertising on TV for Hamilton broadcasts.
That's probably the end result if Hamilton EVER gets a team.
Had to get all that in there, dintcha? Yes, I can imagine the abuses ~since~ the reason it hasn't been allowed kinda/sorta rose out of those abuses.
It's one of those 'unintended consequences' thought experiments. While one set of bigger concerns is precluded by limiting controlling ownership to just one club, it does create a scenario that does push an owner into a protectionist mode within their territory.
Consider all the leagues that do have more than one team in a given market/territory. They all seem to function, and to actually remain in business. Some have done so for decades (Cubs/Sox, NYC MLB, for example. Were it not necessary to worry about abuses in tampering with on-ice product, player personnel, etc., would more owners in super-large markets [per metric of population below] attempt to fully exploit their region? Since we have this arcane definition for territory simply based on geography, does it force a league to protect that which should need no protection?
Thus the argument that only one team per given city can/should survive seems to be in fact without support based on very large cities supporting multiple teams.
Does it not appear that a sports team can be sustainable for every say 3-5 MM of population? (The exact number can be argued, but I think there is a magic number.)
I disagree, simply because any franchise that might rank in the top five, or even in the top ten [top quartile to a third, to account for league size variances], of its league in franchise value and revenues should be highly valued relative to the other teams in that league.
Simply put, you are selling a team that might be worth $300-400 MM, with revenues as high as $110--120 MM. (2009 and +5 yrs)
But here's the catch. The hook for MLSE is that they control the revenue stream of both franchises, including building revenues. So if they did sell would this continue? If so then the potential revenue for a team in SO that is still at the mercy of the Leafs is potentially much less than you would expect for an independent franchise. If not then you have created exactly the scenario that the Leafs are now threatening to sue over. Moreover, this new rival would have benefitted from the power of the Leaf's marketing scheme to have more fully established itself within the area. That is, from the Leaf's perspective, they have created a monster.
But here's the catch. The hook for MLSE is that they control the revenue stream of both franchises, including building revenues. So if they did sell would this continue? If so then the potential revenue for a team in SO that is still at the mercy of the Leafs is potentially much less than you would expect for an independent franchise. If not then you have created exactly the scenario that the Leafs are now threatening to sue over. Moreover, this new rival would have benefitted from the power of the Leaf's marketing scheme to have more fully established itself within the area. That is, from the Leaf's perspective, they have created a monster.
Ah, you're assuming both would play in the same arena. I suppose that makes a lot of sense in filling an arena, but if it were already doing well, that may not be necessary. Is there a part of TO where it would make sense to manage another one with its own team, say Mississuaga or even Hamilton? What then?
(I'll note that most of the multi-team cities whether NFL, NBA, MLB or NHL... do not share facilities.)
I think the more logical question is more along the lines of what I stated. Could MLSEL own an arena in southern Ontario that another NHL club played out of?
Understanding that MLSEL has zero ownership of the hockey team, just the building.
I can't vote on this because I don't know. I tried to speak with Richard Peddie to find out. His admin asked who I was, and I told her I post on HFboards. She sent me to voice mail and oddly enough he didn't call me back.
But here's the catch. The hook for MLSE is that they control the revenue stream of both franchises, including building revenues. So if they did sell would this continue? If so then the potential revenue for a team in SO that is still at the mercy of the Leafs is potentially much less than you would expect for an independent franchise. If not then you have created exactly the scenario that the Leafs are now threatening to sue over. Moreover, this new rival would have benefitted from the power of the Leaf's marketing scheme to have more fully established itself within the area. That is, from the Leaf's perspective, they have created a monster.
Ah, you're assuming both would play in the same arena. I suppose that makes a lot of sense in filling an arena, but if it were already doing well, that may not be necessary. Is there a part of TO where it would make sense to manage another one with its own team, say Mississuaga or even Hamilton? What then?
(I'll note that most of the multi-team cities whether NFL, NBA, MLB or NHL... do not share facilities.)
Even if the ACC is doing fine with just the Leafs and Raptors (plus concerts, etc) , it would do even better with the Leafs and Raptors and a 2nd NHL ream (plus concerts, etc). A small number of other events may be displaced, but that would be MUCH more than made up with by 41+ NHL dates.
Here's a comparison between the ACC and the Staples Center:
Quote:
Originally Posted by kdb209
Quote:
Originally Posted by GHOST
True, ACC could host a second NHL team, but it would have to sacrifice some key dates for concerts and the ACC is already one of the busiest venues in the world for non-sporting events according to Pollstar.
2008 YEAR END TICKET SALES
1. O2 Arena London, UNITED KINGDOM 1,806,447
2. Madison Square Garden Arena New York, NY 1,161,035
3. Manchester Evening News Arena Manchester, UNITED KINGDOM 1,157,892
4. Sportpaleis Antwerpen Merksem, BELGIUM 889,137
5. Air Canada Centre Toronto, CANADA 723,469
6. Bell Centre Montreal, CANADA 723,256
7. Arena Monterrey Monterrey, MEXICO 633,635
8. Staples Center Los Angeles, CA 534,278
9. Acer Arena Sydney, AUSTRALIA 522,696
10. Philips Arena Atlanta, GA 521,958
All figures are for tickets sold worldwide as reported to POLLSTAR for shows played between 1/1/08 and 12/31/08.
The ACC currently draws ~189K more non-sporting tickets sold than the Staples Center (723K vs 534K) - a number that would be dwarfed by another 40+ NHL games (41 regular season games @ ACC = 41 x 18.8K = 770K tickets). A second team in the ACC would likely sell more tickets than all of the current non-sporting events combined. For comparison, the lowly Clippers sold ~647K tickets at the Staples center in '08-'09.
Given that the league will NEVER again allow multiple ownership due to conflicts of interest - if the Leafs see the writing on the wall that eventually a second team will come to So Ontario (be it Hamilton, KW, N of Toronto, Toronto proper), it may be in their best interest for the team to play in the ACC. They capture an ongoing chunk of that teams revenues, they boost ACC revenues for Luxury Boxes and advertising, they block any potential new venue/arena in the GTA that would compete with the ACC, and by attaching a portion of the revenue streams that would go to the new club they may be able to guarantee that it remains second banana - the Clippers to their Lakers.
I can't vote on this because I don't know. I tried to speak with Richard Peddie to find out. His admin asked who I was, and I told her I post on HFboards. She sent me to voice mail and oddly enough he didn't call me back.
I'm interested in outside the box opinions. I already know the party line that's being toed.
Even if the ACC is doing fine with just the Leafs and Raptors (plus concerts, etc) , it would do even better with the Leafs and Raptors and a 2nd NHL ream (plus concerts, etc). A small number of other events may be displaced, but that would be MUCH more than made up with by 41+ NHL dates.
Here's a comparison between the ACC and the Staples Center:
Given that the league will NEVER again allow multiple ownership due to conflicts of interest - if the Leafs see the writing on the wall that eventually a second team will come to So Ontario (be it Hamilton, KW, N of Toronto, Toronto proper), it may be in their best interest for the team to play in the ACC. They capture an ongoing chunk of that teams revenues, they boost ACC revenues for Luxury Boxes and advertising, they block any potential new venue/arena in the GTA that would compete with the ACC, and by attaching a portion of the revenue streams that would go to the new club they may be able to guarantee that it remains second banana - the Clippers to their Lakers.
Let me review:
1. If it indeed were possible to own two teams, it would be in MLSE's interest to house both teams in the same arena. (I agree it's not going to happen, but do like my unintended consequences blurb above.)
2. (Knowing it will never happen), it still makes financial sense for them to "court" a second team for the ACC.
I suspect there really is only one answer to this poll and that is, "Yes, they'd see it as a chance to own 2 of the top 5-10 valuated teams in the NHL."
No
Not because they wouldn't do what is most profitable but because i think its more profitable to have a monopoly over the most hockey crazed area in the world. having 2 teams could mean the increased ticket supply causes a decrease in ticket prices. plus you have the built in cost of maintaining 2 franchises instead of 1. of course without an economics study its hard to say for sure what is profitable but it is possible just owning 1 team is better for the pocket book.
No
Not because they wouldn't do what is most profitable but because i think its more profitable to have a monopoly over the most hockey crazed area in the world. having 2 teams could mean the increased ticket supply causes a decrease in ticket prices. plus you have the built in cost of maintaining 2 franchises instead of 1. of course without an economics study its hard to say for sure what is profitable but it is possible just owning 1 team is better for the pocket book.
Short term, that wouldn't be a factor due to the popularity of Leafs vs the new team. Long term, that would start to play out. But I hardly think the diminished demand would be so great that it ever affected their bottom line.
You're talking about a city of 6 million people where hockey is the #1 sport. The Leafs draw $78 mil in gate receipts. The Raptors $28m. The second TOR team would probably be about halfway between.
But I'd say no because they have the Raptors already filling that need to keep the building open and sell more beer.
It's funny to me how people can see this concept of arena/TV/team ownership leading to increased revenue, but can't see how Atlanta is a stable franchise for the exact same reason.
Here's some fodder for Leafs ticket pricing and how season ticket holders are on the hook for 4 pre-season games that are essentially watching a bunch of AHL'ers.
TORONTO (Sep. 22) — Imagine going to the Air Canada Centre for tonight’s Maple Leafs-Penguins pre-season game knowing you’ve paid $832.00 for a pair of tickets in the Platinum section. Clearly, you have no choice but to cough up close to that fee as a season-ticket holder, for the meaningless tilt is part of your 45-game package. When you arrive at the rink, you look around and notice that neither Sidney Crosby nor Evgeni Malkin are in the visitors’ line-up. Instead, you have doled out what amounts to a week’s pay for an average family to watch such luminaries as Ben Lovejoy, Dustin Jeffrey, Wyatt Smith, Chris Conner, Tim Wallace and Robert Bortuzzo skate for the “Stanley Cup champions”.
...
The price range for tonight’s exhibition match — though not a surprise — is nonetheless astounding. According to Ticketmaster, individual prices start at $95.00 and increase to $150.00, $165.00, $187.00, $196.00, $203.00, $217.00, $226.00 and $416.00. If you so desire, you can log onto Ticketmaster.ca and purchase a single seat in the very first row of Sec. 107 [right at the glass] for $423.50, all fees included. You can take your wife to the game for $847.00. That’s the equivalent of one week’s salary for a person making $44,000.00 a year. To own a pair of season tickets in the Platinum section costs more than $30,000.00, not including the seat-license fee.
As a comparison to how things have gotten totally out of whack, consider this:
In 1975-76, when I was 16, my dad bought a pair of season tickets in the south-mezzanine Blues at Maple Leaf Gardens. The cost for each ticket was $5.50. The entire season cost $220.00, which means my pop laid out $440.00 for a pair of ducats to see Darryl Sittler, Lanny McDonald, Borje Salming and Co. play 40 regular-season games.
Funny, I was wondering what ticket prices were as I watched tonight. In previous years, the Leafs have offered deep discounts on during a single preseason game. This year, MLSE couldn't help but turn that into a corporate romp as well. The company with arguably the best corporate box in the ACC held a contest where fans could win seats by cashing in their "frequent buyer" points for a CHANCE to win.
This attitude makes me vote a big fat YES, to this thread. Anything for that extra pocket lining.
You'd never know (and I certainly didn't, until I heard it on a broadcast this year) that the league requires each team dress a certain number of players with NHL experience during each preseason match. I think the number was 10, but i could be mistaken.
Here's some fodder for Leafs ticket pricing and how season ticket holders are on the hook for 4 pre-season games that are essentially watching a bunch of AHL'ers.
This is precisely the sort of thing I point to when the viability of a second team in southern Ontario - MLSE ownership aside - is called into question. If a team in Hamilton/Vaughan/Mississauga/Jane-and-friggin'-Finch could ice a competitive team, while adopting a mantra of affordabilty and accessibility, they would have no issue competing with the Leafs.
