Team Relocation And Why The NHL Should Pass On Winnipeg, Quebec City

It seems as if though every week brings a new call for a new NHL team in Winnipeg or Quebec City. The old Jets and Nordiques are remembered with reverence, so much so that people like Steve Yzerman, Kerry Fraser, and Gary Bettman are talking about bringing a franchise back to both places.

Yzerman was quoted recently as saying "I don't know the details of it all, but I think Winnipeg could be a good option for the NHL to put a team into."  In other words, whether it can work or not, I have no idea, but wouldn't it be nifty to bring the Jets back?

The calls for relocation to these two fair cities are cliche these days. Just last week, the Edmonton Oilers' management team used a visit to Quebec City to make a not-so-overt threat to the people of Alberta, much like Mario Lemieux did with Kansas City during negotiations with state and local government officials in Pennsylvania. 

The notion has fan support as well. SB Nation ran a mock expansion draft and asked fans to award franchises to two cities -- the fans selected Winnipeg and Quebec, of course.

While the nostalgia surrounding the Jets and Nordiques is a heart-warming, romantic nod to both the WHA and the golden era of hockey in the 1980s, the NHL has already failed in both places and things haven't changed enough to overcome the underlying problems in both markets.

Two keys to the success of a hockey team are the financial size of the market and the relative affluence of the people within that market.  Below is a table listing both the total size of the market (Metro GDP) and the affluence of the market (Per Capita GDP)

(Click header to sort table)

The total size of the economy, as well as the per capita GDP per market varies wildly in the twenty seven NHL markets. Four Canadian markets -- Vancouver, Calgary, Edmonton and Ottawa -- are in among the ten smallest markets in the league. Curiously, three of the rest of the bottom ten markets were added during the Bettman-era expansion and relocation binge of the nineties. The five poorest markets per capita are St. Louis, Montreal, Ottawa, Tampa Bay, and Buffalo.

Now look at the market size of the two nostalgic cities.

Not only would either city immediately become the smallest market in the league, it would be by an enormous margin. Quebec City is 60 percent and Winnipeg only 53 percent of the size of Ottawa, the current smallest market in the NHL. On a per capita basis, Quebec would be the fifth-poorest market and Winnipeg would be the poorest market in the league.

For a size comparison, here are the fifteen largest metropolitan areas in North American not currently served by an NHL team, plus Hartford for the American hockey nostalgic.

The Houston market is sixteen times larger than Quebec City while Seattle is nearly nine times larger. Even a place like Kansas City, used as a threat most recently by Isles' owner Charles Wang, is four times larger than Quebec City. While market size isn't everything, the size of an economy and available corporate and entertainment dollars works to create a base from which an NHL team can be built. Teams in large American markets like Phoenix and Atlanta have struggled with attendance, though management is to blame for a significant portion of problems in most of those cities. While the passion for the game can overcome many of the market deficiencies, the Senators struggle to sell out on a nightly basis and the Ottawa market is much larger than either Quebec City or Winnipeg, as demonstrated above.

The above list doesn't even contain the best market for a second team -- Southern Ontario. Hamilton alone has a GDP equal to approximately 80 percent of Winnipeg's GDP, and Hamilton is surrounded by similar municipalities in the Greater Toronto Area.  I wrote last week about the market conditions that make Southern Ontario ideal for the next NHL relocation. The area combines the seventh largest market in the league with a passion for hockey as great or greater than Manitoba or Quebec City. 

Proponents of teams in Quebec City and Winnipeg like to point to the cost-certainty of the salary cap as prescribed by the CBA, an agreement signed after both the Nordiques and Jets left for good.  But even though salaries are now capped, they've still grown at a staggering rate. In 1996, the average NHL salary was $984,000. In 2009, the average NHL salary was $2,283,000. That's growth of 132 percent. If salaries tracked to inflation, the average player salary would have been $1,331,000. For a comparison, Winnipeg's GDP has grown 53 percent since 1996. In other words, player salaries are outpacing GDP growth in a market that couldn't afford player salaries in the first place.

Prior to the fall of the U.S. dollar relative to the Canadian dollar, teams now considered to be financially stable struggled mightily to compete. Edmonton, Calgary and Vancouver were all taking in Canadian dollars of less relative worth and paying out U.S. dollars. And while the short-term market outlook doesn't lend itself to the recovery of the U.S. dollar, the possibility exists that a recovery can and may happen. If that were to happen, the already hamstrung markets of Quebec City and Winnipeg would find themselves facing the exact situation they faced in the early 1990s.

It's fun to think about the possibilities of the Quebec Nordiques and Winnipeg Jets skating once again. Giving those fans a chance to root for their teams is a noble sentiment. But sending teams into markets that cannot support a franchise is what got Gary Bettman into this mess in the first place. Relocation should be considered in the framework of what is best for the long-term fiscal health of the league and future growth of the game, not governed by nostalgia for what once was untenable.