Monday, January 26th, 2015

Not Quite a Coup

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David Shoalts thinks Gary Bettman is coming out of relocation fiasco smelling like a rose:

The Phoenix Coyotes and the Atlanta Thrashers caused Gary Bettman much embarrassment over the years but the NHL commissioner is once again poised to emerge unscathed.

Bettman would use the gains from the impending sale of the Atlanta Thrashers to recover losses incurred by NHL owners from buying the Coyotes out of bankruptcy and operating the team in the red for the past two seasons. Bettman should have at least $60-million – the reported relocation fee included in the sale price – and possibly up to $90-million or more to apply to the Coyotes, once the pending sale of the Thrashers is completed.

Gary Bettman may deserve credit for making the best of a very bad situation, but he is not emerging from this fiasco unscathed. (That’s only partly because he played a significant role in creating the very bad situation.) This has been – and will continue to be – a disaster in every respect, including financial.

First, the league is conceding defeat in one of the largest American markets. Second, the Phoenix money pit problem has not been solved, merely kicked down the road for a year. If the ownership problem persists, Bettman will have to solve it then without a Winnipeg escape hatch. Third, the NHL did not want Winnipeg for numerous reasons, not the least of which is the perception that Winnipeg is not major league. The league has traded a failed franchise for one that will, at best, be forever marginal.

Finally, it is wrong to ignore the actual costs of this trade. The Shoalts analysis does not consider the fact that in a different universe (one where the Thrashers and Coyotes were thriving) the league would be planning an expansion. If the league did choose Winnipeg via expansion, NHL owners would get to split the $170 MM from True North. Instead of pocketing the expansion fee windfall, Bettman is apparently buying back the franchise rights in Atlanta – worth $0 – for between $80 MM and $110 MM while pouring the other $60-$90 MM down the Phoenix drain.

Gary may have found an answer, but it isn’t a great answer and it is a very expensive one. It isn’t quite a coup.

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Comments

27 Responses to “Not Quite a Coup”
  1. Magicpie says:

    Finally, it is wrong to ignore the actual costs of this trade. The Shoalts analysis does not consider the fact that in a different universe (one where the Thrashers and Coyotes were thriving) the league would be planning an expansion. If the league did choose Winnipeg via expansion, NHL owners would get to split the $170 MM from True North. Instead of pocketing the expansion fee windfall, Bettman is apparently buying back the franchise rights in Atlanta – worth $0 – for between $80 MM and $110 MM while pouring the other $60-$90 MM down the Phoenix drain.

    Come on, seriously? Yeah I suppose in some bizarre alternate universe all these franchises would be thriving the league could be planning an expansion in the foreseeable future. When than bizarre alternate future materializes, it will be fair to criticize Garry Bettman for losing Winnipeg’s potential expansion fee revenue in this deal. But as long as we’re living in this universe saying something like this makes it seem like you’re bending over backwards to blame Bettman for something

    That said I don’t see why Bettman should get that much credit for all this either. As far as I know he wasn’t instrumental in getting the Winnipeg group together or anything, and he wasn’t the driving force behind convincing the Atlanta ownership to sell. The two groups made a deal among themselves based on their own needs, and he basically rubber stamped it. How is this some huge accomplishment on his part?

  2. pop says:

    “Bettman would use the gains from the impending sale of the Atlanta Thrashers to recover losses incurred by NHL owners from buying the Coyotes out of bankruptcy and operating the team in the red for the past two seasons. ”

    That’s like telling a patient he has cancer, but a side effect of the drugs are easier erections.

  3. Tom says:

    Yeah I suppose in some bizarre alternate universe all these franchises would be thriving the league could be planning an expansion in the foreseeable future.

    I think you miss the point. The NHL sold an asset – the right to present NHL hockey in Winnipeg – for $170 MM. They could have sold that and kept the money last year, the year before or next year. They can’t sell it any more. Whet they chose to do with that money is not relevant to the moneypit that is in Phoenix.

    If Bettman split the money from Winnipeg up among the owners and then later taxed it back to pay for Phoenix would anyone suggest they broke even in Arizona?

    • Magicpie says:

      Maybe some communications wires got crossed. What I was trying to say was that since the league has all these failing franchises that it’s barely able to keep afloat, among other reasons, expansion isn’t a realistic possibility in the foreseeable future so its unfair to criticize Gary Bettman for theoretically losing Winnipeg’s expansion fee revenue when this revenue wasn’t going to exist anyway. I wasn’t saying anything about how/where the NHL spends its money.

  4. ColinM says:

    I think the real Coup was dragging $50 Million out of the City of Glendale. Given that there were at least 2 teams in trouble (possibly a 3rd if the Islanders don’t get their new arena via referendum later this Summer), it would have been tempting to call the League out about moving the team.

    They have more trouble spots than they do cities to relocate to.

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