With each passing day, the Carolina Hurricanes are being thrashed around in a storm of rumors and speculation. Ownership problems combined with a looming expansion decision by the NHL have ‘Canes fans biting their nails. Tweets, like this one from yesterday, continue to stir the pot.
Spoke to two NHL executives today that believe the Carolina Hurricanes could be relocated to Las Vegas & expansion put on hold for now.
— MurphysLaw74 (@MurphysLaw74) June 6, 2016
Honestly, Caniacs should be nervous to some degree. The financial issues of the Hurricanes owner Peter Karmanos Jr. could spell some problems down the road. A lawsuit of over 100 million dollars plus is no cake walk to deal with for Karmanos.
Related Story: Peter Karmanos Jr Being Sued By Sons
While the lawsuit doesn’t effect the Hurricanes ability to operate, it does blow the doors wide open of who wants in on Carolina’s NHL franchise. Karmanos has asked for $420 million from a local investor with hopes of retain controlling interest and keeping the ‘Canes in Raleigh. Obviously, that hasn’t happened.
The added twist of the lawsuit makes Karmanos more likely to lower his already high evaluation of his club. It also means he is far more likely to accept, let’s call it, “foreign” ownership (Quebec City, Las Vegas, or Seattle). So far, Karmanos hasn’t given any indication he is going to do this, but that possibility is a frightening prospect for the Hurricanes and their fans.
NHL Commissioner Gary Bettman Backs Carolina Hurricanes
Thankfully, the Carolina Hurricanes have a card up their sleeve. Their secret weapon? NHL Commissioner Gary Bettman. Before you stop reading now, give the commissioner a chance to prove himself as the Hurricanes’ shield.
Bettman is not without controversy. There is a reason he gets booed at every draft and will be booed come the 2016 edition in a few weeks. For many hockey fans, he has wrongly altered the NHL and for some, totally ruined it. Just ask our predecessors up in Connecticut.
Despite rubbing a lot of people the wrong way, Bettman has managed to be a successful commissioner. He understands what the modern American sports are, an entertainment product. Like any other entertainment, access to the product is vital for the continued growth of the business. This business philosophy is what drove Bettman to move to the Sun Belt during the late 90’s.
So why does that effect the Carolina Hurricanes now? Now that NHL has spread its wings across all parts of North America, its about filling in the gaps. In the eyes of the NHL, those gaps in the United States are in Las Vegas and Seattle and in Canada in Quebec.
Carolina Hurricanes Relocation would Leave a Large Gap
If the NHL were to allow the relocation of the Hurricanes franchise, they’d be creating one of these very gaps they’re attempting to fill. In fact, it would be a pretty large one. You could drive down the coast from Washington to Central Florida and not hit a major professional hockey team, passing major markets like the Triangle, Charlotte, and Atlanta.
For Bettman and the rest of the league, this matters a lot. That’s a lot of wasted market space (population) that other sports can come in an assert themselves. That effects television viewership, interest in the league, and, most of all, participation in the sport.
The NHL wants kids playing hockey all over the continent. Would moving to Seattle or Vegas help expand hockey in those areas, of course. However, Raleigh and the greater Triangle is a market that is expanding rapidly, unlike Seattle and especially Vegas.
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In regards to relocation to Quebec City, the tradeoff the NHL would be making isn’t favorable for the league’s growth. The main reason why is that Quebec is in Canada. The children in Quebec are going to play hockey whether the Nordiques are playing or not.
The people of Quebec are going to watch the NHL. The removal of the Carolina Hurricanes from Raleigh would means total loss of interest in the NHL’s product in this whole large geographic area, which would be a step back for the league.
The business model of the NHL depends on the continued sustenance of teams like the ‘Canes. The league is already starting to see the benefits of keeping teams in the Sun Belt. Auston Matthews, a Phoenix, Arizona native, is probably going to go 1st overall in the upcoming draft.
The Carolinas haven’t produced major NHL caliber talent yet, but it’s getting there. Taking the Hurricanes out of the area kills that progress the NHL has made here.
The growth of the league has seen it become a more mainstream sport across the entire United States. With more interest, both at the arena and on TV, the league has seen a rapid increase in the average value of it’s franchises.
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Compared to five years ago, the average value of NHL franchises have increased by about 100% to $505 million. The drastic spike in value has the NHL hoping to cash in. Expansion presents an opportunity for the league to make a lot of money.
Relocation could be Cheaper for Las Vegas than Expansion
Of course, potential owners wanting a piece of the NHL pie know that the cheaper way to acquire a club is via relocation. Teams with relocation rumors, so basically the ‘Canes and Coyotes, are the 28th and 29th most valuable teams respectively, with Forbes estimating the Hurricanes worth at $225 million.
That price point is way more attractive than NHL’s offer of half a billion dollars. Hypothetically, a Las Vegas based investor could purchase the Carolina Hurricanes from Karmanos for $300 million and move the team to Sin City. The NHL would miss out on a $500 million dollar sale. With a lot of money on the table, you can bet that Bettman and crew will do whatever they can to sell those expansion franchises.
Bettman and the NHL have a financial obligation in the short term to keep the Hurricanes in North Carolina. With already 30 teams, the opportunities to expand are likely ending, so those franchises sales are a must. The relocation of the Hurricanes ruins the chance to make a lot of money.
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Rumors are going to continue to fly around, its inevitable with Karmanos’ lawsuit. However, they really shouldn’t be taken seriously unless the current climate around the league changes. As long as the value of expansion franchises are more expensive than the ‘Canes, the NHL are going to keep The Carolina Hurricanes in Carolina.