Is The Las Vegas NHL Bid Viable? Bet On It!

Hello hockey fans, welcome to the blog! Thanks for stopping by to spend some time with us. We always appreciate our listeners and readers all over the world coming by, so leave us a comment or subscribe to the show, and we will get back to you as soon as  we can.

On today’s agenda, we look at the question Is Las Vegas a serious contender when the league presents the expansion question to its Board of Governors at their Las Vegas meetings in June? In addition we explore whether the bid is a financially strong one. How do we compare to other cities clamoring for an NHL team?  Will the city show up to the games if we are awarded a franchise? Good questions all, so let’s have a look!

Las Vegas is a serious contender to land their first major league sports franchise. Let’s get that out-of-the-way right now. Our ownership group, Mr. Bill Foley and The Maloof brothers Joe and Gavin, have brought forward the strongest bid in North America of all cities currently in the running. Make no mistake about it. As revealed by  Mark Prows, Vice President at MGM Resorts in a Montreal Newspaper article, there is already a long term lease agreement in place between the MGM and the ownership group should a franchise be awarded. No other city can make that claim. In fact, the other major player in the west, Seattle can’t even start an arena until an NBA TEAM has committed as a tenant. It is in their City Councils Memorandum of Understanding. According to the NBA, this is not happening any time soon. If it does eventually occur, Seattle will also be forced to fund up to fifty percent of the arena with $200 Million dollars of public funds because no private ownership group has stepped forward to fund the arena one hundred percent in that market.  Without an arena to play in, the question of a Seattle franchise is on hold, at best. We wish them luck because there are some good hockey fans up there, and the NHL does need two teams to balance the number of teams in each conference. The other major player, Quebec City has an arena on schedule to open in the fall, but required one hundred percent public funding to get built. Forgive us, but our opinion is that the more politicians get involved with things, the worse things are. Will Quebecor, the media conglomerate that would be their ownership group be able to negotiate a lease with the city and province that will allow them to be financially stable this time around? The last franchise there, The Nordiques, were forced to move to Colorado in 1995, largely due to the province refusing a request for much needed financial help from ownership, and a weakening Canadian Dollar, much the same as it is now. In fact the  Montreal article  which Google Chrome will translate for you, openly questions whether Las Vegas has moved in front of Quebec City as the front-runner for a team. We know that it has, but coming from Montreal, this says everything.

The Las Vegas Arena is privately funded to the tune of $375 million dollars by MGM Resorts in a partnership with world leader in Arena Management AEG. With not one cent coming from public coffers, Las Vegas has avoided the political quagmire that has stalled the Seattle Arena before it has even started. The ownership group, Mr. Foley and the Maloof Brothers are paying the franchise fee of $500 Million dollars out of their own pockets.  Not one cent coming from public money, and the check is on the table, waiting for the NHL to pick it up and cash it. Again, no other city in North America can say this. One last point on the strength of the financial bid. Do billionaires spend $875-$975 Million dollars of their own money, partnering with the biggest and best Arena Management Company in the world, AEG, and the premiere resort company worldwide, MGM Resorts because they hope that somehow, maybe, the product and marketplace will show a return on that investment? Please. No one could legitimately make that claim. No other city currently in the running for a team can put forward as strong of a financial foundation for their bid. In fact, no other city can claim a privately funded arena, a five hundred million dollar franchise fee on the table, and a favorable long term lease agreement in place and ready to go. No other city can claim even one of these facts. Las Vegas not only has a case, it has the STRONGEST case.

Let’s look at the other factor here, sustainability. It does no good to be awarded a team if five years down the road no one is going to games. They have spent millions on market analysis and research that shows we have an avid hockey fan base in Las Vegas that will support a hockey team. Las Vegas is the largest metropolitan area in North America without a major league sports team, to the tune of 2.2 million people. Seattle has a larger population, but with the Seahawks gathering fans and the Mariners pulling in fans, and the Sounders drawing very well, the disposable income necessary to support two new franchises running simultaneously with the NFL and the MLS  just isn’t there. And, in fact, these teams have recently gone on record as opposing expansion, as has the City of  Portland. Remember, they need an NBA team as primary tenant to begin construction on an arena. This effectively starts the NHL out as the second fiddle team in their own building, hardly ideal conditions, and not what Gary Bettman has in mind for his league. The city is desperate to have their Super Sonics back, but the NBA has nixed the expansion talk. Could the city support a simultaneous start up of the NBA and the NHL? At the same time the twelfth man is in full force? Seattle is a great sports city, but the financial studies say otherwise.

If awarded a franchise either expansion or relocation, Quebec City would become the second smallest market with a major professional sports team, behind only Green Bay, and that franchise is a publicly owned commodity. The passionate hockey fans there could make things work this time around. We here at Vegas Hockey Podcast are on record many times saying we hope Quebec City and Seattle both get teams, and how great it would be to enter the league with either city. But economically, the Las Vegas population is better suited to support an NHL Team, as this study by the American Business Journal clearly shows. Las Vegas has the larger population with near 2.3 million residents to Quebec Cities 793.500. Las Vegas has the strongest financial analytics to be able to support an NHL team, with a total of 83 Billion dollars in personal income to Quebec Cities 34 billion. Meaning there is 50 billion dollars more in potential revenue in Las Vegas than Quebec City earns total in a year. When the Seattle Personal income numbers are adjusted for the franchises they already posses, their disposable personal income shrinks down to 44 million, also well below the Las Vegas population.In the above referenced study Las Vegas has scored a perfect score of 100 for the NFL, NHL, NBA, and the MLS. Seattle received a “Borderline Capacity” rating of 88 for the NHL, rating higher for an NBA Team than for hockey, and the other major player Quebec City rated as “Inadequate Capacity” with a score of 68, on par with Bakersfield, California. That’s not Las Vegas or the Vegas Hockey Podcast guys talking, that’s what the independent analysis says. 

Las Vegas is the number one ranked city in the United States in the Nielsen TV ratings for combined NBC and NBCSN NHL telecasts for cities with no team. We are ninth when cities with teams are included. Before the current push, we ranked third and thirteenth respectively. That means that for 21 other US-based NHL cities, we watch more hockey than you do. This proves there are good hockey fans that live in Las Vegas, because  someone here is tuning in, and it isn’t tourists. We will not rely on the 41 million visitors a year, many of whom head into town during the long cold winters up north, to “fill the arena”. This has been put forth as both a positive and a negative in different articles based on the agenda of the author. Quite the contrary, we believe they will be lucky to get a ticket. Winnipeg selling out their 13,000 ticket allowance as fast as they did was fantastic. Congratulations. And congratulations on a great season. The Jets did well this year, making the playoffs for the first time in their reincarnated state. However, when their tickets went on sale, they knew they had a team coming, and knew they had a second chance to have a team there. In their first year back in Winnipeg they generated 13.3 million dollars in surplus operating revenue, according to Forbes NHL valuation list. In just three years they have slipped to 3.3 million in operating revenue, even as their on ice performance has increased dramatically in quality. A lot of this is probably based on the weakening Canadian dollar, which continues to be an issue. The latest ticket sale numbers in Las Vegas have now neared 14,000, with 11,500 confirmed to be in the private sector. This was mandated by the NHL to measure the grass-roots viability of a team here. Hockey Vision Las Vegas was not allowed to accept corporate or bulk ticket deposits until the magic number of 10,000 sold was passed. We have sold 11,000 to 12,000 season tickets to the private sector, including completely selling out the P6 section and according to the folks at LV Wants Hockey, are within 20 seats of selling out the P1 section, the most expensive section, with 3 year commitments required. These are full season commitments, as the half and quarter season packages did not go on sale until May 27th. when we add in the corporate sales the total sales figures approach 14,000, and all the luxury boxes have been leased with ten-year commitments. That alone would put Las Vegas 28th in the league in bodies through the door. When the partial season plans are added in the projections say up to 15,500 in deposits could be expected, putting the Las Vegas team 25th in the league before single game tickets and walk ups. Meaning, Las Vegas will have sold more tickets than 5 other franchises to a team that does not exist,  and has no promise of existing, like Winnipeg had. Is it really so hard to fathom that out of the estimated 130,000 “avid” hockey fans that Mr. Foley’s polls and research show live here full-time, another 2,000 will show up on most nights to round things out? This would be akin to announcing this awesome winter concert series in a brand new arena for 41 nights a year and putting tickets on sale but there would be no bands booked. How many tickets would you sell for that? Not as many as Mr. Foley has sold for hockey, that’s for sure.   To compare Las Vegas with either Winnipeg or Arizona to predict attendance is a flawed analysis, but the ticket sale comparison is valid, in our opinion. Those tickets have been sold, and all the projections I have seen show that when the team actually exists, more season tickets will be sold. (DUH)

If you want a player’s perspective of the fan base in Las Vegas, take it from Clint Malarchuk. He played in Quebec City AND Las Vegas in the 90’s for the IHL Las Vegas Thunder.  In 93-94 their first season, they drew over 8,000 fans per game. At a time when the population was around 400,000. They sustained 90-95% of that until it was announced that The Thomas and Mack was not renewing their lease. At VegasHockeyPodcast.Com we spoke with Clint at length about both markets and their fans. The link above is just a small sample of our talk. If we have intrigued you, you can listen to the show on Soundcloud or on ITunes . His candor on the fans here in Las Vegas will probably surprise most traditional hockey fans, especially coming from a good Canadian Son like Clint !!

The reasons most often cited that a team won’t work in Las Vegas are easily debated. Like the tired old “there is so much else to do there”. Locals don’t do the strip, thanks. WE spend our time hiking in Red Rock Canyon, skiing, snowboarding, and camping at Mt. Charleston just 50 minutes from down town or fishing, boating and swimming at Lake Mead just another 50 minutes the other way. You know, like “normal” people. We leave the nonsense on the strip and downtown to the 41 million tourists. Or how about “the locals work odd hours, everyone will be at work” Really? Try driving on any freeway here during a traditional rush hour time and tell me no one is going to work from 9-5. We have seen estimates that a third of our population is at work from 2-10 PM by the anti Vegas crowd. That’s just not true. Over 700,000 people going to work at the casinos every day on Swing Shift? N0. Sure, we have some swing shift workers, but so does Detroit. They managed to sell a couple of tickets to their hockey games, last time I checked. “The warm weather climate doesn’t work for hockey”. With the average low temperature here from November through February at around forty degrees, and plenty of days below freezing, we won’t be running into the hockey rink to cool down, as I have seen written many times. Do these people think it’s a hundred degrees here all year round? It’s misinformed statements like these that make us chuckle and say, “just you wait”. For the financial abilities of warm weather cities to support NHL hockey teams, we will explore that in-depth in an upcoming episode of the podcast, and our usual summary blog. Suffice to say that LA, Anaheim, San Jose, and Tampa Bay and Dallas are selling their fair share of tickets far from the Canadian border while the bottom six in attendance show two New York area teams, and the Winnipeg Jets.  There are as many cold weather, so-called traditional cities that are losing money regularly as well, like the Minnesota Wild. They recently needed the State of Hockey to forgive 32 million dollars in arena debt just to stay viable and they still have had 5 straight years of negative operating revenue, according to Forbes. Climate and geography may play a role, but it is a small one.

So, if anyone has a best argument of, “It’s too far from Canada”, or cute comments about a players stupid actions at a pool here in town, or “there is too much else to do there”, as if locals spend all their time in casinos, hopefully we have presented enough counter points for the reader to consider the probability that Las Vegas is ready for an NHL team, and will support her for years to come. From the strongest financial bid in North America, to the most viable economic marketplace, a freshly researched and verified fan base that is buying up season tickets to a franchise that doesn’t exist, one thing is certain…Las Vegas wants hockey!

Follow us on Twitter @VegasHockeyPod

Mark Warner

Vegas Hockey Podcast

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