Wednesday, August 06, 2008

The reality of European expansion

Craig Custance had a nice piece in Sporting News Today yesterday that was a brief Q&A with NHLPA executive director Paul Kelly about a variety of things. The most interesting tidbits were all on European expansion, a topic that has always struck me as a ridiculous pipe dream.

Kelly doesn't think so:
Q: When is European expansion feasible?

A: Frankly, in that five- to ten-year range, our sport has to take a hard serious look at that. We would be shortsighted not to seriously explore if that can work. You want to make sure it doesn't do damage to these other hockey leagues — you don't want to damage the Swedish Elite league, we have to make sure we can do something good for the NHL, but also for the harmony of hockey.
Somehow, if the NHL does manage to invade Stockholm, I honestly doubt the Elitserien is going to be at the top of the list of "chief concerns" from a North American perspective.

The rhetoric here actually reminds me of what we're hearing from the NFL these days when it comes to that league's forays into the Toronto market. (For the uninitiated, the Buffalo Bills are playing a series of expansion and regular season games out of the Rogers Centre beginning this season.)

Here's NFL commissioner Roger Goodell last week on the games: "I don't see any reason why one regular season game will impact negatively on the CFL. Having the CFL stay strong is good for all of us. It's good for football. ... We worked hard at the NFL to make sure we have a good relationship with the CFL."

I'm no football aficionado, but having read the tea leaves, it seems to me all but certain that, in that five- to 10-year window, the NFL will look to move to Toronto. The games scheduled have been ridiculously successful in terms of generating revenue — mainly because the Bills can charge more than $200 for an average ticket compared to just $51 at Ralph Wilson Stadium — and that, more than any affinity for the CFL, will be what dictates the league's presence here in the future.

I don't have all of the ticket information, but it's my understanding that NHL-sponsored events this fall in Europe such as the Victoria Cup in Switzerland and the regular season games in Sweden and the Czech Republic sold exceptionally well. Perhaps not "NFL in Toronto" well, but good enough that these forays are almost certain to become the norm.

Down the line, they might even give way to legitimate talks of expansion overseas — regardless of what teams are currently present in those markets.

With expansion, money talks. There's also a curious synergy so far in the games in Europe, what with last year's Ducks-Kings series in London taking place in the O2 arena, and this season's Rangers-Lightning games being played in Prague's O2.

Anyone want to guess the chances the games head to Berlin in 2009-10 when Germany's O2 is up and ready?

We've heard plenty about how the Kings owner, the Anschutz Entertainment Group, has led the charge to get NHL rinks (and potentially teams) in Kansas City and Las Vegas, but what of all of these European games in AEG-operated rinks?

It's probably time to rethink the idea of European expansion as a pipe dream. If AEG can put a bankrupt owner into the Nashville group without anyone saying boo, who's to say what's next?

If there are buildings, fans and a league willing to jump, what's to stop them?

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At 6:37 a.m., August 06, 2008, Anonymous Anonymous said...

So, I guess they are unhappy with their low travel budgets when dealing with just one continent, then?

Companies are reconsidering their out-sourcing practices because of the growing cost of fuel - it would be just like the NHL to go in reverse. :(

At 9:04 a.m., August 06, 2008, Blogger Doogie2K said...

And this is to say nothing of jet lag. And really, how the hell would this work, exactly? A division in Europe? The logistics would be a nightmare. You'd need to have Europe be the AL to the NHL's NL, and I don't think anyone's going to be too keen on moving half, or even a third, of the NHL's teams over to Europe to avoid having sixty Goddamn teams in the League. There's nothing about this idea that strikes me as workable.

At 9:43 a.m., August 06, 2008, Anonymous Anonymous said...

Expansion is nothing more than a pipe dream due to the geography problems cited by others above.

The best locations in Europe for franchises already have them in other European leagues. If the KHL is successful at what they want to build, how long will it take for a UEFA-style champions league to be arranged for the teams with the 20 biggest buildings? That to me is the more likely evolution of NHL-level hockey in Europe.

If it happens, it will severely limit the appeal of playing in the AHL to get to the NHL for young European players.

At 10:11 a.m., August 06, 2008, Blogger YzermanZetterberg said...

I don't know if it will happen or not, but I can definitely see the possibilities...

If the KHL succeeds and expands into Sweden, Finland, etc., I would watch down the road for a merger into a global league. The NHL would be the North American conference and the KHL would be the European/Russian conference. As doogie2k noted, this would be similar to the AL and NL in baseball (there could even be brief sessions of "interleague" play during the regular season).

As doogie2k also pointed out, a 60-team league would be ridiculous. Therefore, a relegation system would be needed, with maybe 16 NHL teams forming Tier A and 14 comprising Tier B. After each season, the bottom two teams in Tier A would move down and the top two teams in Tier B would move up. The European/Russan conference would have a similar arrangement, perhaps with top non-KHL teams in Russia, Sweden, Finland, Czech Republic, Slovakia, etc. making up their Tier B.

To help reduce travel costs, teams could play two- (or three-) game series in each city.

The playoffs would culminate in a global final series between the champion of the North American and European/Russian conferences. (While a "crossover" playoff format could probably be used, I don't think fans on either side of the Atlantic would especially appreciate an all-NA or all-Euro/Russo final.) The prize?
Lord Stanley's Cup! (GASP!)

Yes, travel issues would be huge and the teams/fans who get placed in Tier B will be very unhappy for a good while. Strong player transfer agreements between all participants would also be essential (but if the teams involved are "partners," this seems much more achievable). There would also be complications due to players not wanting to play overseas ("no intercontinental trade" clauses?). However, with hockey's weird combination of global and niche interest, I can definitely see it working in the end.

At 10:44 a.m., August 06, 2008, Blogger S - Rho said...

Here are a few of thoughts. If the NHL makes a habit of opening the season abroad, I think there will always be some kind of demand for TWO games. But how can you create a new branch of the league based on two games? My guess is that there would be a large amount of band wagon fans that will drop off eventually, making it less profitable even though there will be diehards as well.

Secondly, I know how bad it is when I watch the Cup finals and although I know the players names and a little about them, I am simply not in tune with the Western Conference. Are people going to be concerned about another league? And if the only time the teams meet is in the finals, that doesn't seem to make a lot of sense. Forget quality of competition and travel logistics.

I think there are many things that need to be remedied in the game right now before we even think about expansion. But I do appreciate the NHL's entertaining the option, even if it isn't viable.

At 10:47 a.m., August 06, 2008, Blogger saskhab said...

I think one of the greatest impediments to expansion would be moving from the North American major league system to a tier system with relegation and a champions league. I can only see this as workable if there were 20 or so teams per continent... 30 teams just seems like a nightmare. Why? How can the NHL work to get 30 teams up and going in Europe to give any sense of competitive balance to the league?

I think just plopping 10 franchises in Europe would be a hell of a challenge. I can't imagine the problems of 20 franchises (and Euros won't like that terminology either, they'd be clubs not franchises). They'd have to admit some KHL teams for starters, and maybe some SM-Liga and SEL clubs as well if they're financially viable in the NHL.

Speaking of AL/NL comparisons, it'd be cool if the Euro division was played on Olympic sized ice.

At 10:49 a.m., August 06, 2008, Blogger saskhab said...

Also, James, is the Stockholm arena an O2 facility? You seem to be neglecting the Pittsburgh/Ottawa opening series in your article.

At 10:55 a.m., August 06, 2008, Blogger Dennis Prouse said...

There is clearly money to be made by placing franchises in Europe, so the NHL would be crazy to not at least consider it. If you think there is backlash over having the Bills play in Toronto, though, just wait until the NHL tries to invade the turf currently occupied by European club teams. That fight will get very political in a hurry.

At 11:32 a.m., August 06, 2008, Anonymous Anonymous said...

If the kept the leagues 'seperate' (say, as the MLB does for the NL and AL) except for a few interleague games a year, then I think the travel issue is (mostly) solved.... Hell, the NHL only had each team playing a total of 15 games in the opposite conference over the last 3 years....

Balancing the number of teams, and skill level, would be the hard part... absorbing some of the european teams, and maybe contracting the north american teams, would help.

And parity would definitely be an issue, as it was in the first few years after Expansion '67....

It's a pretty extreme idea, to be sure, but not completely unworkable, in my opinion.

At 11:36 a.m., August 06, 2008, Blogger itchit said...

Speaking of "That fight will get very political in a hurry.", I also think the politics of fighting will be up for discussion. I can't see the enlightened politicians of Sweden or Switzerland for example being pleased with the spectacle of NHL goonery on their home ice. Let's not forget also about the real problems of hooliganism in the stands of international soccer in Russia, Germany, etc...
Outside of these issues and fuel costs I think putting the NHL in cities where fans love the sport can't be a bad starting point (Stockholm, Helsinki, Berlin, Moscow, HAMILTON, WINNIPEG, etc...).

At 11:58 a.m., August 06, 2008, Anonymous jkrdevil said...

There is a huge obstacle with any North American sports league expanding into Europe and it's not travel. It's the EU laws which would make it difficult for the NHL or any NA league to operate over there in the same fashion (with strict regulation) that they do over here.

There is a big reason why despite all the revenue European soccer brings in hardly any teams are actually profitable and many of the big clubs are carrying around hundreds of million dollars of debt. It's not the sole reason but the laws over there are a big reason. Teams in EU countries such as Sweden, Finland, Germany, or Czech Republic may present problems.

The players would love European expansion because of the freedom of movement laws over there would help give them the upper hand. If I was NHL management I would be cautious on expanding into Europe. Play games over there, sell TV rights, and merchandise but don't expand unless the view on how professional sports should be run changes.

At 1:20 p.m., August 06, 2008, Blogger Big Picture Guy said...

Why would the NHL want to expand into continental Europe where the population is declining steeply, aging rapidly, and where people spend much less of their discretionary income on attending sports events than North Americans do? The growth areas are all in Eastern Europe but they present problems with language, standards of living, and lack of sports infrastructure that are insurmountable for the forseeable future.
A European division of the NHL would have to have a sizeable tv contract to survive. A pan-European contract is unlikely given that three of the four biggest countries in Europe (France, Italy, Spain) have minimal interest in hockey. TV contracts for hockey in Germany and Scandinavia are miniscule, even by Versus standards. The Russian KHL just signed a contract with Sport TV: its a state-controlled, free network. No figures were released but the contract amount is likely laughable by North American standards.

At 1:42 p.m., August 06, 2008, Anonymous SabreMark said...

Taxation would also be a major issue, especially if there ended up being portability of players between the European side and the North American side.

Imagine between traded from the Florida Panthers, with a tax rate of 28% (Florida has no state income tax) to the Stockholm Tre Kronors, with taxation in the 60%+ range.

I would think that the NHLPA would never agree to players being forced to play in socialist Europe against their will.

At 2:02 p.m., August 06, 2008, Blogger James Mirtle said...

Also, James, is the Stockholm arena an O2 facility? You seem to be neglecting the Pittsburgh/Ottawa opening series in your article.

No, but there's an AEG connection. It's my understanding that Stockholm doesn't exactly need a brand new rink, but the Djurgardens SEL team that plays in the city is partially owned by AEG.

Let's say they need a new rink within the next few years — who would be the top candidate to build it?

At 2:06 p.m., August 06, 2008, Anonymous Alec said...

The question is how do you put together a division of cities that will somehow overcome cultural inertia.

In Germany only Cologne and Mannheim broke 10,000 in average attendance and Cologne was at 70% capacity. A team in London only works if it gets elite competition consistently and the British league is nowhere near that level.

Besides, the IIHF is already setting up a European Champions league this season with 12 teams, eventually rolling out to 30 teams; the winner plays for the Victoria Cup.

At 2:29 p.m., August 06, 2008, Blogger the soft european said...

I still see the idea of a world nhl (and you'd have to rethink the name, by the way) as a pide dream.
To me, the cultural difference between the way sport is run in North America and the way it works in Europe is a huge problem.

Implementing a relegation system in North America seems pretty difficult to me. This would radically alter the balance of the relationships between teams and players. If you have, let's say 30 teams in Europe, and 30 teams in North America, dispatched in hierarchical divisions based on sporting results, this gives much more options to the players. Because the whole system of how a player gts access to the league is changed: you would have to rework entirely the draft. What this means, is that you would maybe end up with something similar to soccer in Europe: the emerging players are not drafted, they are simply signed by the teams that have the best scouts, the best installations, and the more money.

On the other end, I would be very surprised, as a european myself, to see a non-relegation system work in Europe. The legal problems are certainly a huge issue, as said jrkdevil, but the cultural aspect is pretty important too.

I think the closest we can get to some form of expansion is the Victoria Cup.

At 3:06 p.m., August 06, 2008, Blogger Big Picture Guy said...

James, AEG took over operations of the Globen Arena, which is owned by the city of Stockholm, this month. But Djurgardens no longer plays there, their season schedule lists all games at the smaller, adjoining Hovet Arena. AEG owns 12% of Djurgardens but has a much bigger stake (49%) in the Hammarby IF football team. The plan is to build a football stadium for Hammarby on land adjacent to the hockey arenas, opening is supposed to be in 3 years.

At 3:08 p.m., August 06, 2008, Blogger saskhab said...

I still see the idea of a world nhl (and you'd have to rethink the name, by the way)

The NHL could've changed their name back in 1924 when Boston was brought into what had been an exclusively Canadian league but they never did. The name has brand power, so I say keep it.

At 3:17 p.m., August 06, 2008, Anonymous Anonymous said...

The name has brand power, so I say keep it.

Especially since you rarely see National Hockey League written out in full, almost always NHL.

I don't see the NFL changing their logo if they expand to Toronto - and the CFL was still the CFL when they had a team in Baltimore, Maryland for a while, too.

At 3:56 p.m., August 06, 2008, Anonymous Anonymous said...

Did anyone else notice the logo accompanying this post? The "NHL" is tiny compared to the soccerific PREMIERE.
/NHL = Tab (or maybe Fresca)

At 4:12 p.m., August 06, 2008, Anonymous Ebscer said...

Well, it is going to be hard to ignore Europe, but beyond the few games the NHL has been doing each year, it's hard to see this working. Not only are travel costs high, but the schedule then need to plan for extra travel days, and there is still the significant problem of timezone differences for live broadcasts. What is the timezone difference between Moscow and Anaheim?

Also the NFL game in Toronto actually isn't selling all that well. The tickets are 4 times the normal cost, but sales to this point have been slow.

At 4:26 p.m., August 06, 2008, Blogger James Mirtle said...

That's the exhibition game. There were apparently between 6,000 and 8,000 tickets available as of about a week ago, despite the fact the costs were ridiculous. There won't be a ton of empty seats.

The regular season game will sell out easily at a price per average ticket that is more than double the cost of Patriots tickets, which at $91 a game are the highest priced in the NFL.

At 4:32 p.m., August 06, 2008, Blogger jkrdevil said...

This comment has been removed by the author.

At 5:20 p.m., August 06, 2008, Anonymous Anonymous said...

NHL in Europe will never happen because playing in the same league you have to have same salaries.

Please, somebody tell me how Stockholm, Helsinki and some other places could support a team that pays it's players between 42-56M dollars when they barely survive with 3M payroll?

It's a pipedream and will stay that way. Period.

At 6:29 p.m., September 20, 2008, Anonymous Tim said...

Good Job! :)


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