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A note on NHL expansion rumors

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A few thoughts about the most recent report regarding NHL expansion.

NHL expansion seems more and more like a question of "when?" than "if." Recent reports have thrown gasoline on the steadily growing flame by suggesting that the NHL could be ready to expand to as many as 34 teams by 2017.

With that in mind, let's smother some flames.

Expansion Destinations

Arizona Coyotes fans are likely more familiar than others with potential landing spots for new NHL franchises. Apart from the usual noise surrounding Quebec City, other cities that the NHL has shown at least some interest in include Seattle, Las Vegas, Kansas City, Houston and Markham, Ontario. The most recent report pegs Quebec, Seattle, Vegas and Markham as the four expansion sites.

The NHL itself seems to have invited some speculation on its own part thanks to a survey it put out about six months ago for fans to complete. The survey asked about fans' willingness to travel to cities like the aforementioned ones, plus San Diego, Louisville, Hartford, Halifax, Kitchener and Cincinnati. Though some of those names are intriguing, they also remain almost entirely off the radar and there is no evidence to suggest there is any interest there.

Challenges of Expansion

Were the NHL to consider expansion, there are a few issues to be considered. The first one, obviously, is the condition of facilities necessary to house an NHL team. Of the four sites labeled as "destinations" for expansion franchises, Las Vegas currently has facilities that have housed an NHL game in the past five years (preseason tilts at the MGM Grand Center are not an uncommon occurrence).

In addition to Vegas, Quebec City is in the process of building a new arena to replace the Colisee (which has also hosted Montreal Canadiens preseason contests recently), while Markham and Seattle could, in theory, begin construction on NHL caliber arenas relatively soon (assuming financing and zoning issues get resolved first). So a 2017 target date for expansion would require some effort, but it is not entirely out of the question, especially given that teams typically begin play a year or two after the franchise is officially created, so an expansion date of 2017 realistically means new teams would begin play in 2018 or 2019.

The next stumbling block has to do with the relative strength of prospective ownership groups. As Arizona fans know all too well, the wrong owners can create a nightmare for the league to clean up. With the memory of the Coyotes debacle still fresh in the minds of the Board of Governors and with the shadow of the Atlanta Thrashers not a tremendously distant memory, it would serve the league well to heavily scrutinize any potential bidder for an expansion team.

Quebecor Media, the rumored group interested in bringing a team back to Quebec City, is a company worth over $9 billion. Though how liquid their assets are is a bit of an unknown, a mere five percent liquidity would be more than enough to pay for the expansion fees and cover any losses in the first few seasons of operation.

In Seattle, hedge fund manager Chris Hansen has been the driving force behind construction of a new NHL/NBA arena. With an estimated net worth of $2.7 billion, he also seems to be more than capable of raising the capital necessary to support a stable franchise.

Las Vegas and Markham would be intriguing destinations, but as of this moment there is no person or group that has expressed public interest in bringing a team to either city. While it is not out of the question that a casino mogul in Vegas or a Canadian entrepreneur could step in to fill the gap, there has not been an aggressive push to move a team to either location.

The final challenge to expansion has to do with competitive balance. The NHL's current imbalance in conference structure would be rectified by adding two western teams (think Seattle and Las Vegas), but even that is more complicated than it looks (would Las Vegas, which is further west than Arizona, enter the Central Division? Would Arizona, Edmonton or Calgary have to be moved out of the Pacific Division?)

Beyond that, adding two additional teams on the East Coast merely restores the existing imbalance. It seems unlikely that the league would have entirely remodeled its conference structure before expansion to be stuck with the same problems after expansion.

Predicting the Future

First, let's consider this possible angle

This makes a lot of sense. When the league expands to 32, more competition for franchises means higher expansion fees for existing clubs. It also promises to make the conference balance problem a non issue; the NHL could award a franchise to Seattle and wait to see how the Florida Panthers situation plays out. If the team appears to be on the cusp of relocation, the league could grant an expansion franchise to Quebec City and relocate the Panthers westward, or vice-versa.

Ultimately adding four teams limits the ability of the NHL to move troubled franchises should the need arise, so expanding to 32 instead of 34 makes the most sense from a competitive, financial and stability standpoint.

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