The more revenues franchises generate, the greater their business valuation. When more franchises make more money, the average value increases throughout the league and that is good news for NHL club owners in the same way rising home prices and growing ownership equity is a boon for home owners.
So when it comes to franchise values, we give NHL commissioner Gary Bettman credit where it’s due. Values have grown under Bettman’s 17-year tenure several fold.
The question for any seasoned business valuator -- or any fan who cares about the game for that mattter -- is, however, what could be?
When one considers where the league could be without the stresses -- both public and private -- surrounding a group of under-performing hockey businesses in the southern U.S., Bettman's record raises red flags and deserves further scrutiny.
That’s because every single one of the NHL’s major business indicators – attendance, ticket prices, box office, merchandise sales, sponsorship sales, television audiences and revenues – would be even higher if the league had less U.S. sunbelt franchises and more Canadian or northern U.S. franchises.
Why Bettman has not pro-actively addressed the issue is one of the big blind spots in his leadership of the NHL. Why the NHL’s governors – the owners of the league’s 30 clubs – have not pushed more aggressively for solutions that would strengthen the league and improve their own lots considerably is an even bigger mystery.
If it’s true that you’re only as strong as your weakest link, the Phoenix Coyotes are a problem for the NHL. So are the Atlanta Thrashers. Throw in the case of the Florida Panthers – where less people are watching on FSN Florida (an average of 13,400 viewers per game) than are attending games in person (15,000 on a good night) – and you have at least three teams mired in red ink in questionable hockey markets.
Why not play to your strength? Why not license your product in markets where it is being gobbled up in record numbers? Why not replace your weak links with solid performers?
“The Case for Canada” report outlines just how bullish the Canadian market is for the NHL brand of hockey, especially in the period since the lockout in 2004-'05.
http://www.vancouversun.com/sports/could+cash+return+roots/3060451/story.html
It suggests that if the NHL relocated three of its weakest southern U.S. franchises to Canada, their individual franchise values would increase by more than 50 per cent and the league’s average team valuation would jump by $11 million US. It also submits that the combined revenues of the three relocated franchises would rise by $100 million per year, average attendance would grow by 6,000 more fans per game per franchise (or 738,000 more per season) and regional television audiences would increase twenty-fold. Yes, twenty-fold.
Yet more than anything, the report by TheSportMarket.biz and The Vancouver Sun makes a compelling case for the landing of at least one more NHL team in Canada. Plain and simple, the numbers clearly show how the NHL, its member franchises, broadcast partners and other corporate stakeholders – not to mention fans of the game in Canada – would be well-served if the NHL shifted its centre of gravity northward.
The proof is in the pudding of the hockey markets themselves. Considering market size, demographics and other attributes including affinity for sports in general and hockey in particular (as Forbes Magazine does in its annual list of NHL franchise values), the average NHL market contributes $84 million to its franchise valuation (out of about $210 million in average overall value).
Sun belt markets are considerably weaker; the market attributes of Phoenix, Atlanta and Florida for hockey average out at only $48.3 million according to Forbes.com. That's about half the average U.S. hockey market value and about 40 per cent that of the average Canadian market.
Those numbers exemplify how the sunbelt teams are dragging down the average value of NHL franchises the way shabby houses devalue entire neighbourhoods.
The Case for Canada is clear. It’s your move commissioner Bettman.
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