Some thoughts on a second GTA team

Those plucky Markhamites.

First, Markham decided that they would like to become a “city” instead of a “town”, and then they decide to go ahead with helping businessman Graeme Roustan’s plan to build a second major arena in the Greater Toronto Area.

This arena, owned by “GTA Sports & Entertainment”, is currently known just as the GTA Centre. Does this mean a second team in Southern Ontario?

That’s the question on everybody’s mind, really, but it isn’t really a guarantee. The facility is planned to cost $325M and seat 20,000 spectators, which would theoretically put Markham in line for an NHL franchise, but as mc79hockey pointed out this morning, people ought to remember that Copps Coliseum failed to do just that. The NHL, as laid out in Bruce Dowbiggin’s Money Players, demanded a flat up-front expansion fee of $50M that brought teams to Ottawa and Tampa.

From mc79hockey:

Building an NHL facility is, of course, no guarantee that a team will come. Just ask Hamilton, where the Copps Coliseum, built for the purpose of attracting an NHL team, is now derided as being out of date and unsuitable for NHL hockey. It is, however, in the NHL’s interest for NHL calibre arenas to be built without any commitment from the NHL because it provides them with a bogeyman to use in negotiations with current landlords. The threat of Hamilton was used in Edmonton to help extract government money for renovations to Northlands Coliseum. The threat of Nashville was used in New Jersey. In effect, when one government builds an arena without a tenant, what it’s really building is a weapon that leagues can then turn around and use against current landlords.

The reality of an expansion team in Southern Ontario is that it won’t work purely because it makes so much sense financially. In Money Players, Marcel Aubut, best known as the owner who moved the Nordiques out of Québec City and into Colorado, is quoted as saying that “I’m 100 per cent for expansion … [but] first choice of sites should be given to existing franchises who wish to move.”

So that leaves the relocation possibility, but Québec City is planning to break ground on an arena next month. So is Las Vegas, too. King County Council approved an arena plan in Seattle last month. The Sprint Centre in Kansas City has no tenant. With the financial troubles of the New Jersey Devils and the Phoenix Coyotes, as well as the move of the Atlanta Thrashers to Winnipeg last season, there is no shortage of places that the NHL could lobby public governments to provide support to keep teams in place.

But keeping teams in their major TV markets makes more sense. Gate receipts drive revenue in the NHL, and the league’s efforts have been about securing that big TV contract. Last season they signed a 10-year deal with NBC rumoured to be about $2-billion.

The Devils and Islanders play in a major market for television, as do the Coyotes and as did the Thrashers. I got at Steve Lepore of Puck the Media about whether there was a clause in the NHL’s deal with NBC as to whether there was any wording about keeping teams in markets:

I agree with Steve here. The NHL wouldn’t want to leave any more big markets without picking up another. The idea is that the Coyotes might contract and then an expansion team is offered to one of the suitor cities—and the NHL gets to pick up the hefty expansion fee in the process.

Not sure if Dowbiggin is going to tackle this story in any way, but this sort of story seems to be right up his alley.

Perhaps this is something the NHLPA might negotiate into the next CBA. All the Canadian franchises were top-half revenue teams in 2010-11 despite averaging just 88 points. I don’t think there’s any debate that there’s a cash cow in Canada, and if players are going to be seeing fewer hockey-related revenues, they could negotiate a concession of an NHL team in the GTA or Québec City that would surely do better than Phoenix or Long Island revenue-wise.

But under the league’s current agreement, I don’t see it.