NHL Expansion Is Not Here… Yet
Just because the NHL says it isn’t planning on expansion soon doesn’t mean it’s not a good time to talk about it.
Sports Illustrated is reporting that the NHL board of governors will discuss the possibility of expansion, but right now it’s only talk, according to NHL Commissioner Gary Bettman. Five investment bankers who actively advise some of the NHL’s owners believe it’s just a matter of time before someone will want to put a second NHL team in Toronto. No one is discussing why expanding into Toronto with a second team would make sense, but the aforementioned investment bankers believe the NHL could command an expansion fee of $1.2 billion, American.
“In an auction situation, I could see it getting to $1 billion or even $1.2 billion,” said Drew Dorweiler, a Montreal economist who has been hired by the owners of the Toronto Maple Leafs, Vancouver Canucks, Manchester United, and other sports teams to estimate their franchise values. “An NHL team in Toronto is a marquee property.”
Again, that’s if the NHL decides to expand.
A November 2013 report from Forbes declared the Toronto Maple Leafs as the most valuable franchise in the league at $1.15 billion.
The $700 million paid by the Houston Texans to join the NFL currently stands as the largest expansion fee in the history of North American pro sports.
The Sporting News is reporting that at the NHL board of governors meeting, expansion and how to increase international revenue will be discussed, but nothing concrete is expected to come from this meeting.
It would have been folly to even consider expansion even ten years ago, much less a billion-dollar expansion fee. In 2004, a league-commissioned report by securities and exchange commission official Arthur Levitt claimed that 19 of the NHL’s 30 teams were losing money. Just 10 years later, the league has a strong labor agreement that includes revenue sharing, and very strong television contracts in the U.S. and Canada. Increasingly, extraordinary media rights are now dictating increased team value.
To put a possible $1.2 billion Toronto expansion fee into context, the NHL’s last two expansion teams Columbus and Minnesota joined the league in 1997, paying $80 million apiece (The Blue Jackets and Wild began play in 2000).
The bankers said they expect the NHL would probably announce at some point over the next year that officials are accepting bids for expansion franchises. Toronto and Quebec would be the most coveted markets, the bankers said.
TSN owner Bell Media is a part owner of the Leafs’ parent company, along with Rogers Communications and Larry Tanenbaum. Rogers Communications and Tanenbaum are also part of a group trying to buy the NFL’s Buffalo Bills.
