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It might seem silly for the NHL, a league in which most of its teams lose money, to expand further. But if it's expanding to markets that will bring in more revenue, it's sort of a no-brainer.
NHL expansion has long been rumored in the Greater Toronto Area, and with $325 million in public financing already approved for a new hockey-ready arena in the town of Markham, Ontario, expansion could certainly come sooner than later.
Meanwhile, 800 kilometers to the northeast in Quebec City, ground has already broken on a new NHL-sized arena. Construction began without the commitment of an NHL team, but both the local and provincial governments have made it no secret that their goal is the triumphant return of the Nordiques.
According to a report by The Hockey News on Tuesday morning, the NHL is ready to announce expansion to both these places as soon as a new collective bargaining agreement is reached. This raises a ton of questions.
How long would it take for these teams to begin playing?
Construction has not yet begun on the Markham arena, but developers hope to break ground as soon as January, with the idea of opening in the fall of 2014. If that optimistic timetable is reached, a second Toronto-area team could presumably begin playing to start the 2014-15 season.
With the ground already broken on the new Quebec City arena and opening scheduled for the fall of 2015, a team could theoretically begin playing there that season.
On the other hand, the government has set aside roughly $7 million as part of the new arena project to bring the Colisee Pepsi, the former home of the Nordiques, up to NHL standards. The plan would be to keep the old barn in use even after a new arena is opened, perhaps with the hopes of luring the Winter Olympics to Quebec City in the future.
But as far as the NHL's concerned, the Colisee could be a temporary home for the team until the new arena is completed. In time for the 2013-14 season? Seems plausible.
Why expansion and not relocation?
The NHL has dropped plenty of hints that it would like to expand to a 32 team league. Most notably, the imbalanced realignment plan outlined by the league in 2011 left room for two more teams, and geographically, a Toronto-area team and a Quebec City team would fall in rather nicely.
But does expansion make sense for this league?
The NHL's biggest economic challenge right now is that about eight teams make all the money. The other 22 teams struggle to break even, and that's clearly bad business. At the core, that's why the league is locked out right now. So why the hell does it make any sense to expand that league?
Well, shockingly, it's about money. While relocation of current teams would be profitable for the league -- think of the $60 million relocation fee the league charged owners of the new Winnipeg Jets last summer -- expansion would be even more of a cash cow. The Columbus Blue Jackets and Minnesota Wild each paid $80 million in expansion fees back in 2000, and the fees will much certainly be higher for these two hockey-starved Canadian cities.
Polarizing agent Allan Walsh said recently that expansion fees could reach $500 million per team. That seems a bit high, but the message is clear: Expansion will bring the league a lot of money, and those fees get divvied up by the 30 existing teams. That's a really great, simple way to make up for revenue lost in a lockout.
The Maple Leafs are also set to make a bunch of money in the event a Markham team enters the league. Toronto holds the territorial rights in the region and, according to the NHL's constitution, they'd have to give written consent to a team that wishes to play within 50 miles of the Toronto city limits. Markham would have to pay for that consent.
Why not Seattle? Or Kansas City or Houston or Las Vegas, etc.?
Again, it mostly comes down to the fees. Expansion fees in Canada will be more than the NHL can charge in any American city. But in addition to the sheer money involved, Markham and Quebec City definitely seem like safer options.
The GTA can support a second team -- if anywhere can, it can -- and a recent study said that Quebec City, while on the small side for an NHL market, could support a team as well. It's worth noting that there are legitimate concerns with expansion to Quebec City (and Winnipeg, for that matter), but those concerns don't seem to be shared by the NHL or locals in either city.
It's not just a matter of big expansion fees, though. While those would boost for the league right from the start, the thought is that two extra Canadian teams would be money makers. Big revenue teams. More of those won't hurt.
That would leave Seattle, close to constructing a new NHL-ready arena of its own, next on the short list of markets ready for hockey. Expansion to 33 teams seems crazy, but with Seattle not dependent on the NHL for their new arena, the city seems like a nice relocation option later in the decade. Kansas City, Houston or anywhere else would fall in line afterward.
It might seem crazy to add teams to the NHL when only eight teams are currently profitable, but if those new teams are going to bring in money for the league, it's hard to say it doesn't make sense.
The next hope, of course, is that the next CBA brings in a more-robust revenue sharing program that would allow that extra revenue to be shared with the 22 teams that need the help, but, well, we won't hold our breath on that one.