Back to the Future? On expansion, the NHL is caught between heritage and hard cash

Editor’s note: This article by Mark Norman was originally posted on The All Rounder on March 16, 2016.

As the 2015-16 National Hockey League (NHL) season plays out its final weeks on the ice, one of the major off-ice stories has been whether the league will soon announce the addition of two franchises, which would raise the number of teams to 32. Such a move would certainly be lucrative, with the 30 current NHL owners expected to split around $1 billion in expansion fees if two teams are admitted. The NHL opened a formal expansion process in July 2015 but, despite rumours of a Seattle group placing a bid, potential owners from just two cities entered the fray: Las Vegas and Quebec City.

In terms of their symbolic and historical meaning in hockey, these cities could not be more different. Las Vegas is a flashy, warm weather, entertainment Mecca that has never hosted a “Big 4” professional sports team. Quebec, on the other hand, is a quaint, cold, and relatively small city[1] with deep historical roots in the sport. The Quebec Bulldogs were established in 1878, and the team was one of the four founding members of the NHL in 1917. The Quebec Nordiques competed in the now defunct World Hockey Association from 1972 to 1979, before competing in the NHL from 1979 until 1995. Furthermore, the city is been home to a major junior team, the Quebec Remparts, and annually hosts the world’s largest youth hockey tournament, the Tournoi International de Hockey Pee-Wee de Québec.

The contrasts between Quebec City and Las Vegas, and the combination of hockey’s massive popularity in Canada and the predominance of American teams in the NHL, make the league’s potential expansion particularly fascinating. Canadians’ passion for hockey is well documented, and regularly reflected in a fanatical belief that the NHL should place more teams north of the 49th Parallel. This makes the possibility of an expansion team in Quebec City an exciting prospect for many Canadians. However, it is disingenuous and nativist for Canadians to see NHL hockey as an inherently Canadian cultural product; in fact, for virtually its entire existence, the league has consistently pursued profit in the United States rather than acting, in any meaningful way, as a protector of Canadian hockey interests.

The NHL formed in 1917 with four member teams, all of which were based in the Canadian provinces of Quebec and Ontario. The nascent league remained an all-Canadian affair until 1924, when the lure of American entertainment dollars saw a team added in Boston. More American teams joined the NHL in quick succession, and by 1926 the league had ballooned to 10 franchises, six of which were based in the United States. Thus, in its first decade of existence, the quintessential Canadian sporting pastime had outgrown its modest roots and taken hold as a major entertainment spectacle in the large cities of the northeastern US. After the league contracted in the 1930s and then settled into its much-mythologized “Original Six” structure in 1942, its franchises remained mostly US-based. The Montreal Canadiens and Toronto Maple Leafs dominated on the ice during the 25 years of the “Original Six” era, but they represented the only Canadian teams in the league, with Boston, Chicago, Detroit, and New York comprising the remainder of NHL cities.

In 1967 the NHL doubled its size by adding six new teams to the league. Despite hockey’s popularity in Canada, and the fact that Vancouver entered an expansion bid, all six teams were American-based: California (Oakland), Los Angeles, Minnesota (Minneapolis-St. Paul), Philadelphia, Pittsburgh, and St. Louis each received franchises. The absence of a Canadian team caused consternation amongst some Canadians, including Prime Minister Lester B. Pearson, who had thought Vancouver deserved a franchise (interestingly, it was Canadiens’ and Maple Leafs’ ownership that opposed the bid, fearing competition to their hold on Canadian NHL fandom). Three years later, the league righted this situation by adding the Vancouver Canucks, along with the Buffalo Sabres, for the start of the 1970-71 season. Canada’s three largest cities now had NHL teams, but its southern neighbour still predominated, hosting 11 out of the league’s 14 teams.

The 1970s were a turbulent decade for North American hockey, with the fledgling World Hockey Association challenging the NHL’s grip on the North American market. Although the rival league folded in 1979, its impact on the NHL was huge, including establishing teams in previously untapped pro hockey markets of Edmonton, Quebec City, and Winnipeg. The franchises in these three cities, along with one in Hartford, were absorbed by the NHL after the collapse of the WHA. The following season, the struggling Atlanta Flames relocated to Calgary. While Canadian teams were still in the minority, Canadian boosters were doubtless happy that seven out of 21 NHL teams were now hosted in cities north of the border.

A confluence of factors in the 1990s undid some of the gains that Canada had made in terms of NHL franchises. While Ottawa gained a team in the early part of the decade, so too did Anaheim, Miami, San Jose, and Tampa Bay. These additions were the start of the NHL’s so-called “Sunbelt strategy,” aimed at growing its popularity and profits by expanding or relocating teams into large cities in southern and western states. The NHL denied that the Sunbelt was a particular focus, yet most of the new teams in the 1990s happened to be located in warm weather climates with little tradition of hockey participation or fandom. The Sunbelt strategy also coincided with a struggling Canadian economy and unfavourable exchange rate between the Canadian and US currencies. This placed a heavy burden on the Canadian franchises, whose revenue was earned in Canadian dollars but whose players were paid in US dollars. Furthermore, the 1990s were an era of rapidly escalating player salaries, placing teams with lower budgets at a competitive disadvantage. The Winnipeg Jets and Quebec Nordiques, who played in the two smallest cities in the league, were victims of these circumstances. The Nordiques moved to Denver in 1995, while the Jets moved to Phoenix the following year. The Vancouver Canucks, Calgary Flames, and Edmonton Oilers franchises were all at risk of suffering similar fates – in fact, the Oilers were close to moving to Houston in 1998.

This all-too-brief overview of the history of NHL franchises demonstrates that the beliefs in hockey as “Canada’s game” and the local professional team as true representative of the community were myths already by the 1930s. Yet these myths have grown over the decades and helped create a powerful yearning amongst many Canadians to see more NHL teams in Canada. While a team returned to Winnipeg in 2011, having relocated from Atlanta, just seven of the current 30 NHL teams play out of Canadian cities. Nonetheless, many Canadians – and boosters in the media – still advocate for more teams. Their campaigns are fuelled by myths of Canadian hockey exceptionalism, the initial popularity and box office success of the new Winnipeg Jets franchise, and the fact that Canadian teams create a disproportionate percentage of the NHL’s revenue.

Over the past decade, the perceived underrepresentation of Canadian cities in the NHL has sparked rallies, economic reports, and petitions seeking to sway the league to address this matter. It has also inspired Canadian cities to consider the possibility that they, too, could be world-class NHL cities. Quebec City, in an effort to woo the NHL back to the city, built a new arena using nearly $400 million of public funds. This arena currently hosts the Quebec Remparts junior team in its cavernous 18,000 seat space but waits hopefully for the arrival of a more prestigious NHL tenant. Markham, a fast growing suburb of Toronto, seriously considered investing taxpayer money into a $325 million arena project designed to lure an NHL franchise to its city. Immediately, visions of the Greater Toronto Area hosting a second NHL team for the first time since the Hamilton Tigers left for New York in 1925, danced through the heads of Canadian hockey boosters. Even Saskatoon, a small prairie city of 260,000 people, expressed interest in being the landing spot for a relocated Sunbelt team or a new NHL franchise.

Alas, the NHL does not share the enthusiasm of Canadian hockey boosters. Quebec City certainly remains a possible site for a team, assuming the Canadian economy and exchange rate recover sufficiently from their current woes, but a second team in the Greater Toronto Area or a new team in a smaller Canadian town are distant pipe dreams. Claims about Canadians’ passion and commitment to hockey, appeals to nationalism, and even projections about economic impact are not enough to land another franchise in Canada.

Like other North American sports leagues, the National Hockey League operates like cartel, and ownership of teams can only be achieved through a combination of wealth and social capital. Not only do prospective owners need to have hundreds of millions to purchase an existing team or prospective franchise, they must also prove to the current crop of owners that they “belong.” For evidence of this state of affairs, look no further than the tale of Jim Balsillie, a billionaire tech mogul and avid hockey fan, who in 2009 attempted to purchase the Phoenix (now Arizona) Coyotes and move them to Hamilton, Ontario. Despite Balsillie’s wealth, the well-documented financial struggles of the Coyotes franchise, and the fact that a team in the hockey-crazed Southern Ontario city was all but guaranteed to be hugely popular, the NHL owners refused to allow the sale. While Canadians’ passion for hockey can sometimes manifest itself in unfair accusations against the NHL, it does seem that Balsillie was denied entry into the NHL owners’ club in part because he refused to conform to owners’ expectations of proper business conduct and decorum.

Other issues certainly came into play with Balsillie’s attempted power play, including the fact that expansion into Hamilton, which sits between Toronto and Buffalo, would have met heavy opposition from the teams in those existing NHL markets. Just as they can reject an owner they do not like, NHL owners can (and do) fight to protect their financial interests by preventing competition in the markets over which they hold a monopoly. This places an additional hurdle in the way of any new team in the Greater Toronto Area or Hamilton, areas over which the powerful Maple Leafs have a territorial claim. It may even be an issue for a potential Quebec City franchise, should the Montreal Canadiens argue that they have a monopoly over the entire province of Quebec.

Given the power of NHL owners, the league’s ongoing quest to expand its fan base in the US, and, of course, the overriding focus on the long term financial profitability of the NHL, the prospects for Canada housing another NHL franchise may be far from realization. Certainly, the league’s keen interest in Las Vegas suggests that is still committed to expanding its product into large, untapped American markets rather than pandering to the already hockey-crazed Canadian market. At some time in the next few years, Las Vegas likely will receive an NHL franchise. If Quebec City’s bid also succeeds, that will doubtless tamp down the outcry by Canadian hockey supports over another US Sunbelt city receiving an NHL team. In this sense, by expanding to both cities the NHL might complete the rare feat of simultaneously mollifying Canadians fanatics while also growing its brand and profits in the Southern US.

However, this outcome is far from certain. The NHL is, of course, deeply affected by broader economic forces, and these broader trends do not make either Quebec City or Las Vegas sure bets to receive franchises. In the past six months, the declining Canadian dollar and the effect of the plummeting price of oil on the Canadian economy have both significantly dented Quebec’s expansion hopes – though these hopes stay very much alive. Meanwhile, Las Vegas continues its slow economic recovery from the housing market crash and economic recession that began in 2008. At the same time, the NHL is keeping the door open on placing a franchise in Seattle, a move that could undermine Quebec’s pursuit.

As the NHL continues its slow dance with expansion, history offers us one certainty for predicting the outcome of this process: the league will feel no obligation to place an additional team in Canada, and will continue to place financial motivations – and growing the league’s brand in the United States – at the top of its agenda.

[1] The population of Quebec City’s metro area is approximately 765,000, which would make it the second smallest city in the NHL. Winnipeg is the smallest NHL city, with a metro population of 730,000 – it is also the only NHL city with less than 1 million people in its metro area.

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