The NHL and the Recession

From Kevin McGran of the Toronto Star.

The economic slowdown is hitting NHL cities hard. Detroit – self-described Hockeytown USA and home of the Stanley Cup champs – is selling some tickets at $9 a game. The city is the epicentre of the manufacturing decline led by the automakers.

The U.S. housing market crunch has hurt Florida, Arizona, Texas and California – home to seven NHL teams – the so-called "non-traditional markets" in the league's bid to build a wide base in the U.S.

"This is Gary Bettman's wacky national footprint strategy, which put teams in places where people don't know hockey," said one U.S. financier who specializes in sport teams.

The Florida Panthers have laid off staff, the Tampa Bay Lightning are said to be a financial basket case, the Phoenix Coyotes are believed to be hanging on by a thread.

"I don't see how you can build long-term support for an ice hockey team when you are located in markets where your fan base can't play hockey," said one broker who arranges the sale of sports franchises. "I would say all of the southern teams are somewhat at risk.

The article includes a quote from yours truly.

"The NHL is much more dependent on gate revenue than TV revenue," said Phillip Miller, an associate professor of economics at Minnesota State University. "That makes it more susceptible to the ups and downs of the economy."

My thought here was that with television revenue, at least in the short term, the league would be somewhat locked in with a contract. 

The biggest thing with the NHL, I think, is the fact that the NHL has expanded into warmer climates.  Hockey is a regional sport and hasn't probably had time to set down roots in LA, Phoenix, Miami, etc.  Yes, some southern clubs have been very successful, but it's still a cold weather, regional sport and a distant fourth in popularity in the US.  At least with a loyal fan base, demand for tickets can at least be supported with some "habit persistence."  I'm not sure the fan base is all that loyal in Phoenix, LA, etc.

And as McGran notes, the recession has hit Florida and the Southwest, not to mention hockey-stalwart states like Michigan and New York, particularly hard.  In the worst of times, even habits can be broken.

That said, I doubt that many, if any, clubs in the four major sports will fold.  This is just a hunch, but my sense is that if an NHL club could credibly convince fellow owners and the players' union that it would fold, something would get done internally to help that club stay afloat. 

I certainly don't think any of the four major leagues is in danger of folding.  What you're most-likely to see is teams folding from the least popular leagues (like the Houston Comets of the WNBA or teams NASCAR's truck series).