Not Quite a Coup
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.