The NHL Is Still Expanding, For Some Reason

Who needs sense when you can have money?
Author:
Publish date:
Updated on

Owning a team in one of North America’s major professional sports leagues is a nice way to make easy money, given that television rights deals generally take care of an entire roster’s payroll before a single ticket is sold, tax breaks on arena deals provide an extra boost, and ticket prices are whatever you want to make them – and that’s not to mention the merchandising, where the real money from the movie is made.

NHL.TaxShelter

But if you really want to cash in, you’ve got to own a team when someone else wants to join the ownership club with an expansion team. That is what happened this week in the NHL, with the announcement that Seattle will become the league’s 32nd franchise, starting play in the fall of 2021. The price: a cool $650 million, to be split evenly among 30 teams – sorry, Vegas, you haven’t been in the club long enough – for a sweet haul of $21.7 million each. That’s in addition to the $500 million expansion fee paid by the Golden Knights to begin play last season, also split among the previous 30 existing teams.

That $38.3 million per team does not count as “hockey-related revenue,” despite its clear relation to hockey, and thus is the owners’ money to keep – they don’t have to share a single dime with the players, whose gain from expansion is an additional 23 jobs to fill out a new roster once Seattle takes the ice.

If you think about it, it’s kind of crazy that there isn’t more expansion in the major sports leagues. The NHL went from 21 teams in 1990 to 30 in 2000 before this latest round to get to, eventually, 32. On the current landscape, the NHL’s expansion is lightning-quick. The NBA stands at 30 teams, with just one addition – New Orleans – since Toronto and Vancouver (now Memphis) entered in 1995. The NFL has added only four teams – Carolina, Jacksonville, Cleveland, and Houston – since the 1970s. Same for Major League Baseball with the only new teams in millennials’ lifetimes being in Colorado, Miami, Arizona, and Tampa Bay.

Baseball’s growth pattern is particularly vexing. The population of the United States has grown 47% since the 1977 expansion to 26 teams, but the league has grown by only 15% in that time, all the while adding continuously more international talent. Meanwhile, there is a competitive reason for Major League Baseball to expand, namely that by getting to 32 teams, there could be 16 in both the American and National Leagues, and thus no need to have interleague play every day of the season, as has been the case since the Astros jumped to the Junior Circuit in 2013, creating two 15-team leagues.

It’s not like MLB hasn’t been talking about expansion – it’s been bandied about pretty frequently for a decade and a half since the Expos moved out of Montreal, and commissioner Rob Manfred often has sounded an enthusiastic tone about getting to 32 teams. The reasons not to do it often revolve around wanting to get settled with stadium situations in Oakland and Tampa, the former of which is on track, and the latter of which now appears like it might be, too. When teams have dicey futures in their current homes, potential expansion cities can be used to tease out the tax breaks that get the new stadiums built on friendly terms to team owners, so you can understand MLB’s attitude, but it also isn’t like only a couple of cities are on the radar as potential homes for baseball teams.

For now, the free money only is being taken by the owners of the NHL but eventually, other leagues also will get back to growing. As they do, it’s only a matter of time before the next cash grab – the biggest teams breaking off, as happened in England with the formation of the Premier League, and creating a super league of the elites of the sport. It already basically exists in the American League, where maybe seven of the 15 teams are even going to try to compete in 2019. And if you want to see promotion and relegation in American sports, the way there isn’t through the entrenched farm systems – it’s from growing the number of teams at the top, then forming a new top league. It’s just a question, like with everything else, of when the free money becomes just too good to pass up. By that measure, it’s surprising we’re not already there.

Related