Stadium deals - what, how, when - why we need a new one and the SA footy paradigm shift happening

[finbarr]

Considering everyone wanted to ship us off to Tasmania a couple of years ago I can't believe some of you would like to see other clubs folded or merged.

Melbourne has too many teams. It's ridiculously obvious.

 

[Andre]

Considering everyone wanted to ship us off to Tasmania a couple of years ago I can't believe some of you would like to see other clubs folded or merged.

Don't make us bring out the treatises on how an over crowded market and self-inflicted wounds differ from a hostile owner, antagonistic media and worst stadium deal in the country. There are two too many teams in Melbourne. GC I think has a future with the Gold Coast remaining a haven for Southerners going north. GWS I'd piss off in place of a Tasmanian side.

So you'd get 8 Vic (7 in Melbourne, plus Geelong), 2 SA, 2 WA, 2 QLD, 1 NSW, 1 Tasmania for 16 teams.

 

[AdsGoNads]

I want 2 less Vic teams. I've never thought GWS or Gold Coast was a good idea. I think Tasmania should have a team. A league of 8,2,2,1,1,1. Is what the league should be.

Tassie need two teams!

The whole world needs to witness the Hobart & Launceston rivalry!

 

[NTRabbit]

Tassie need two teams!

The whole world needs to witness the Hobart & Launceston rivalry!

I would pay real money to watch the Hatfield-McCoy Cup twice a year.

 

[SgtSchulz]

Tassie need two teams!

The whole world needs to witness the Hobart & Launceston rivalry!

the one positive about holding off creating a Tasmanian team is allowing Launceston and Hobart to grow to the point that it would be possible. However by that time I'd say the A-League would give the state a team.

 

[TeeKray]

Melbourne has too many teams. It's ridiculously obvious.

So does Sydney.

 

[Portology]

the one positive about holding off creating a Tasmanian team is allowing Launceston and Hobart to grow to the point that it would be possible. However by that time I'd say the A-League would give the state a team.

To support an AFL license they'd need an economy able to support ~750k people and the population is declining.

Never mind two licenses.

Unless the AFL feel the need to invest very directly in an existing AFL heartland market for a very long term I can't see it happening for at least 20 years.

My guess is it could be tied to a trigger for reducing Melbourne clubs by 1 some point after the AFL get Jihad. But even then Perth #3 in 20 years time is likely to be a higher AFL priority than TAS #1.

I see the AFL ignoring any moves by A-League in Tassie, not seeing soccer as a threat in TAS as it is in SYD and QLD.



Sent from my iPhone using Tapatalk

 

[SgtSchulz]

To support an AFL license they'd need an economy able to support ~750k people and the population is declining.

Never mind two licenses.

Unless the AFL feel the need to invest very directly in an existing AFL heartland market for a very long term I can't see it happening for at least 20 years.

My guess is it could be tied to a trigger for reducing Melbourne clubs by 1 some point after the AFL get Jihad. But even then Perth #3 in 20 years time is likely to be a higher AFL priority than TAS #1.

I see the AFL ignoring any moves by A-League in Tassie, not seeing soccer as a threat in TAS as it is in SYD and QLD.



Sent from my iPhone using Tapatalk

500k would be enough to support one team easy...especially an already football fanatic 500k.

 

[Papa G]

To support an AFL license they'd need an economy able to support ~750k people and the population is declining.

Never mind two licenses.

Unless the AFL feel the need to invest very directly in an existing AFL heartland market for a very long term I can't see it happening for at least 20 years.

My guess is it could be tied to a trigger for reducing Melbourne clubs by 1 some point after the AFL get Jihad. But even then Perth #3 in 20 years time is likely to be a higher AFL priority than TAS #1.

I see the AFL ignoring any moves by A-League in Tassie, not seeing soccer as a threat in TAS as it is in SYD and QLD.



Sent from my iPhone using Tapatalk

Whilst what you say is probably in line with the way the AFL thinks, it doesn't make it right. The AFL's treatment of Tasmania has been nothing short of disgusting. All take, no give.

 

[Portology]

the one positive about holding off creating a Tasmanian team is allowing Launceston and Hobart to grow to the point that it would be possible. However by that time I'd say the A-League would give the state a team.

500k would be enough to support one team easy...especially an already football fanatic 500k.

I suggested "an economy capable of supporting 750k people". Per license. Rough number per fellow dodgy economy state SA. It's true I pulled it out of my ****, but it's the lowest # outside of Melbourne 'metro', where 9 teams share the economic output of ~4.5 million people. All SA (1.6m) is barely bigger than what you can call "Vic Country" or "Vic excluding MEL" (1.4m) but at least we've in one place with a big central stadium.

Between State and local govt TAS could keep stadium costs low like a Geelong model, and favours for Hobart usually become political necessity in Launceston. OK for one big cost but the top line needs sponsorships, crowds and certainly long term AFL funding. The avg crowd in Hobart is ~12k and for Launceston ~16k. Currently relatively low drawing games are 'sent' to TAS (hawks would still make more @MCG from their big games). The avg would increase a bit if Collingwood, Carlton & Essendon ever visited - Richmond @ Bellerive drew a record 17k and @ York Park a record ~21k, so there are your high water marks. Still it's not enough, Geelong get an avg of 22k-25k for their home games, with lowest costs of all. You're not going to support 2x licenses with a 500k population and two venues 3-4 hour drive apart - *Melbourne* has only two venues FFS.

A TAS AFL license does not stack up unless AFL wants it to stack up - per GWS & GC, for other reasons, never mind two of the things. PER #3 will probably stack up far sooner.

Whilst what you say is probably in line with the way the AFL thinks, it doesn't make it right. The AFL's treatment of Tasmania has been nothing short of disgusting. All take, no give.

They helped reform a fractured, broke local (as in three regional) competitions, that each practiced a model of parochialism and pettiness that would make the SANFL look like professionals. They brought AFL to both major cities, admittedly as a solution to a different problem (MEL stadium deals and small drawing games). Not sure the AFL's behaviour could really be called "disgusting" in TAS, it's a bit better than that IMO!

 

[SgtSchulz]

Sponsors more important then crowds.

 

[The_Wookie]

Sponsors more important then crowds.

But not neccesarily more important than crowds, reserved seating and memberships. Gate takings and memberships generally exceed sponsorship income at many clubs.

 

[RussellEbertHandball]

I suggested "an economy capable of supporting 750k people". Per license. Rough number per fellow dodgy economy state SA. It's true I pulled it out of my ****, but it's the lowest # outside of Melbourne 'metro', where 9 teams share the economic output of ~4.5 million people. All SA (1.6m) is barely bigger than what you can call "Vic Country" or "Vic excluding MEL" (1.4m) but at least we've in one place with a big central stadium.

Between State and local govt TAS could keep stadium costs low like a Geelong model, and favours for Hobart usually become political necessity in Launceston. OK for one big cost but the top line needs sponsorships, crowds and certainly long term AFL funding. The avg crowd in Hobart is ~12k and for Launceston ~16k. Currently relatively low drawing games are 'sent' to TAS (hawks would still make more @MCG from their big games). The avg would increase a bit if Collingwood, Carlton & Essendon ever visited - Richmond @ Bellerive drew a record 17k and @ York Park a record ~21k, so there are your high water marks. Still it's not enough, Geelong get an avg of 22k-25k for their home games, with lowest costs of all. You're not going to support 2x licenses with a 500k population and two venues 3-4 hour drive apart - *Melbourne* has only two venues FFS.

A TAS AFL license does not stack up unless AFL wants it to stack up - per GWS & GC, for other reasons, never mind two of the things. PER #3 will probably stack up far sooner.

They helped reform a fractured, broke local (as in three regional) competitions, that each practiced a model of parochialism and pettiness that would make the SANFL look like professionals. They brought AFL to both major cities, admittedly as a solution to a different problem (MEL stadium deals and small drawing games). Not sure the AFL's behaviour could really be called "disgusting" in TAS, it's a bit better than that IMO!

50 odd years ago the American Football League took the National Football League to court in the USA about anti-trust rules and whether the whole country was considered The Market for anti trust purposes. The AFL argued that each metropolitan area was a market in its own right and that the NFL could ruin the AFL's business by placing teams in that city/market. The court rejected the AFL's argument and the NFL didn't have to surrender any rights by being in that city first.

The court ruled that each individual city was part of a national market and that the only factor which the relevant market for professional sports that is local, is local spectators in the metro area large enough to support a team. The figure of 500,000-700,000 people was considered back then as the minimum sized metro area to support a professional team in a nationwide sport.

Now a lot of things have changed in 50 odd years in US sports market but in 1960 the US did have a population of 180 million people and you had a lot of cities bigger than 1,000,000 people in the greater metro area and if you adjusted the top salaries of Baseball and Football to 2015 dollars for CPI and purchasing power parity they probably got paid more than the best of today's OZ AFL players. The 500,000 figure has been a rule of thumb ever since, but that is for metro area not state wide population.

 

[Portology]

50 odd years ago the American Football League took the National Football League to court in the USA about anti-trust rules and whether the whole country was considered The Market for anti trust purposes. The AFL argued that each metropolitan area was a market in its own right and that the NFL could ruin the AFL's business by placing teams in that city/market. The court rejected the AFL's argument and the NFL didn't have to surrender any rights by being in that city first.

The court ruled that each individual city was part of a national market and that the only factor which the relevant market for professional sports that is local, is local spectators in the metro area large enough to support a team. The figure of 500,000-700,000 people was considered back then as the minimum sized metro area to support a professional team in a nationwide sport.

Now a lot of things have changed in 50 odd years in US sports market but in 1960 the US did have a population of 180 million people and you had a lot of cities bigger than 1,000,000 people in the greater metro area and if you adjusted the top salaries of Baseball and Football to 2015 dollars for CPI and purchasing power parity they probably got paid more than the best of today's OZ AFL players. The 500,000 figure has been a rule of thumb ever since, but that is for metro area not state wide population.

ok so assuming nothing has changed in 50 years it's reassuring to know we should have just enough ppl in ADL to support two professional "AFL" teams... allowing for inflation sadly not a great data point for TAS advocates though.

 

[Papa G]

Whilst s**t heaps like North Melbourne, Footscray, GWS and Gold Coast exist, denying Tasmania a team based on "economics" is disingenuous. A Tasmanian team, split between Hobart and Launceston would work in my opinion. Some relatively low cost upgrades could bring both grounds capacities up to 25k, which incidentally is the same size as Metricon and Skoda. Difference being Tasmanians, who have a real passion for the game would actually fill it. North consistently prove they don't even have 25,000 supporters in Melbourne.

I have argued this adnauseum on the Industry Board, although have been given a holiday as I have disagreed with a moderators pro VFL stance. The government cash given to the 2 FIFO teams is bigger than any sponsorship in the league. Couple this with what you'd expect to be better than Geelong type stadium deals and your 3 Quarters of the way there already.

The AFL has failed Tasmania in a massive way and I think it is despicable.

 

[Jim Dixon]

Now a lot of things have changed in 50 odd years in US sports market but in 1960 the US did have a population of 180 million people and you had a lot of cities bigger than 1,000,000 people in the greater metro area and if you adjusted the top salaries of Baseball and Football to 2015 dollars for CPI and purchasing power parity they probably got paid more than the best of today's OZ AFL players. The 500,000 figure has been a rule of thumb ever since, but that is for metro area not state wide population.

The NHL is open to hear bids for expansion teams at the moment as they wish to expand from 30 teams to 32. They have two serious bids in so far, from Las Vegas and Quebec City. The Quebec City case is pretty close to Tasmania. Tasmania's population is about 500,000 and Quebec City metro area is about 765,000.

Difference being is the NHL charged $10 million just for hearing a bid and are going to charge $500,000,000 for a licence.

Max Basheer can eat his heart out.

 

[The_Wookie]

I have argued this adnauseum on the Industry Board, although have been given a holiday as I have disagreed with a moderators pro VFL stance..

Thats not why you were given a holiday, and you know it.

 

[chiwigi]

Thats not why you were given a holiday, and you know it.

Was it because he looked tired or did he win a raffle?

 

[Portology]

Whilst s**t heaps like North Melbourne, Footscray, GWS and Gold Coast exist, denying Tasmania a team based on "economics" is disingenuous. A Tasmanian team, split between Hobart and Launceston would work in my opinion. Some relatively low cost upgrades could bring both grounds capacities up to 25k, which incidentally is the same size as Metricon and Skoda. Difference being Tasmanians, who have a real passion for the game would actually fill it. North consistently prove they don't even have 25,000 supporters in Melbourne.

I have argued this adnauseum on the Industry Board, although have been given a holiday as I have disagreed with a moderators pro VFL stance. The government cash given to the 2 FIFO teams is bigger than any sponsorship in the league. Couple this with what you'd expect to be better than Geelong type stadium deals and your 3 Quarters of the way there already.

The AFL has failed Tasmania in a massive way and I think it is despicable.

How is it despicable that TAS are stupid enough to help prop North up when its North's license they ought to target?

So the TAS givernment pays two "VFL" teams to fly in fly, one for each of the two major regions, pays them more than any other club sponsorship across the comp, helping them make money on games they normally lose money on.

Which Taswegian idiot negotiated that deal, and why would the AFL ever want to change the arrangement?

How can the stadium deal possibly be "better than Geelong" when crowds would likely be 30% lower (look at Richmond in 2 games there for rough maxima) and there are still 2 stadiums to maintain with 2 workforces? Not sure what you've been smoking on this point.

Playing a home final in TAS is never going to be an attractive idea to the AFL, and no matter how you choose the venue one town will be bitter.

The second licenses are "Tasmanian", some locals will bemoan the expense and the free ride. There is no local industry to make up the sponsorship difference when government inevitably steps out, even now the only reason this happens is the subsidy you and me send to TAS via our GST (payed via CBR).

Come to think of it, why do TAS keep paying for it?

Surely subsidizing even further the high cost of exports to grow their bloody economy and slow the brain drain and youth drain out of the state would be a better, more popular investment. Hell why not just pay Cadbury to keep the chocolate factory open, they might want to sponsor the Tasmanian Tim Tams.

But yeah (mimicking Tribey-style sarcasm here, because I do appreciate it even when it's directed at me lol)... lets just throw words like "despicable" and "massive" around instead of running even some basic numbers.




Sent from my iPhone using Tapatalk

 

[Papa G]

Bellerive has a capacity of 16,200. York Park has a capacity of 21,000. If you read what I said ".....Some relatively low cost upgrades could bring both grounds capacities up to 25k..." Do you not think Tasmanian's would flock more to see their own team than they would FIFO teams?

No doubt what has happened in Tasmania with the FIFO teams has been due to political expediency. Madmug has written a lot about it on the Industry board. I won't pretend to be an expert on the inner workings of Tasmanian politics, but particularly with the Hawthorn deal was all about the federal seat of Bass.

They've had finals in Geelong and no doubt there will be finals in Gold Coast and GWS. Will they fill those grounds with paying customers?

Wouldn't a team Tasmania call their own galvanise the community? Isn't the money the govt spend better staying within the state instead of going back across Bass Straight? I was fortunate enough to be living out of the country in 97/98, but I'm told the Crows Premierships did a lot to lift this state and the spirits of it's citizens in a time of economic doldrums? There is literally nothing else in Tasmania. No other teams or sports. Footy is it. The people will get behind it.

The AFL's treatment of Tasmania is scurrilous, preposterous and downright risible I tell you my good man!

 

[Portology]

Bellerive has a capacity of 16,200. York Park has a capacity of 21,000. If you read what I said ".....Some relatively low cost upgrades could bring both grounds capacities up to 25k..." Do you not think Tasmanian's would flock more to see their own team than they would FIFO teams?

No doubt what has happened in Tasmania with the FIFO teams has been due to political expediency. Madmug has written a lot about it on the Industry board. I won't pretend to be an expert on the inner workings of Tasmanian politics, but particularly with the Hawthorn deal was all about the federal seat of Bass.

They've had finals in Geelong and no doubt there will be finals in Gold Coast and GWS. Will they fill those grounds with paying customers?

Wouldn't a team Tasmania call their own galvanise the community? Isn't the money the govt spend better staying within the state instead of going back across Bass Straight? I was fortunate enough to be living out of the country in 97/98, but I'm told the Crows Premierships did a lot to lift this state and the spirits of it's citizens in a time of economic doldrums? There is literally nothing else in Tasmania. No other teams or sports. Footy is it. The people will get behind it.

The AFL's treatment of Tasmania is scurrilous, preposterous and downright risible I tell you my good man!

Yeah I for one can't wait for the Derwent Dairy Milks to go up against the Tamar Time Outs in the Tasmanian Chowdown.

They'll still be a few biscuits short of a packet.


As for the Crows flags they were like giving dracula a few final hits out of the blood bank for old times sake. allowed the Cows complacent 'virtual state team' club culture to fester on, pumped up the coffers of the sanfl for a few years, overshadowed our entry, delayed the emergence of a natural order of things (at least a 50:50 split of support for us and them) by a number of years, distracted the public from discussions about stadium deals and modern stadiums for years...

 

[chiwigi]

Bellerive has a capacity of 16,200. York Park has a capacity of 21,000. If you read what I said ".....Some relatively low cost upgrades could bring both grounds capacities up to 25k..." Do you not think Tasmanian's would flock more to see their own team than they would FIFO teams?

No doubt what has happened in Tasmania with the FIFO teams has been due to political expediency. Madmug has written a lot about it on the Industry board. I won't pretend to be an expert on the inner workings of Tasmanian politics, but particularly with the Hawthorn deal was all about the federal seat of Bass.

They've had finals in Geelong and no doubt there will be finals in Gold Coast and GWS. Will they fill those grounds with paying customers?

Wouldn't a team Tasmania call their own galvanise the community? Isn't the money the govt spend better staying within the state instead of going back across Bass Straight? I was fortunate enough to be living out of the country in 97/98, but I'm told the Crows Premierships did a lot to lift this state and the spirits of it's citizens in a time of economic doldrums? There is literally nothing else in Tasmania. No other teams or sports. Footy is it. The people will get behind it.

The AFL's treatment of Tasmania is scurrilous, preposterous and downright risible I tell you my good man!

How much do they pay every year for Hawks and North?
Take that money and the takings from the game (as well as the share of the TV revenue which I reckon is the TRUE sticking point) and you have a viable area. However the powerful Hawthorn and desperate North lobbies will fight tooth and nail to prevent a Tassie team, this along woth the other reasons kills it. Tassie needs to say no more and watch things change.

 

[Papa G]

From memory, with Sponsorship and sweetheart ground deals it's around $7 million between the 2 of them per annum.

 

[RussellEbertHandball]

ok so assuming nothing has changed in 50 years it's reassuring to know we should have just enough ppl in ADL to support two professional "AFL" teams... allowing for inflation sadly not a great data point for TAS advocates though.

The NHL is open to hear bids for expansion teams at the moment as they wish to expand from 30 teams to 32. They have two serious bids in so far, from Las Vegas and Quebec City. The Quebec City case is pretty close to Tasmania. Tasmania's population is about 500,000 and Quebec City metro area is about 765,000.

Difference being is the NHL charged $10 million just for hearing a bid and are going to charge $500,000,000 for a licence. Max Basheer can eat his heart out.

My Canadian mate came out to Oz in April 1991 - I took him to a Port v Norwood game at Footy Park and let him experience the old Port women in the front row of the members and then he came again over the 1992/93 Christmas New Years period I took him to the cricket. We talked a lot about sports and the different markets around the world. He told me about the NFL case and the 500,000-700,000 rule of thumb and the National Hockey League back then had many of the Canadian cities that were in that zone and two of the US teams. Calgary was about 700k then, now 1.3mil thanks to the tar sands of northern Alberta, Edmonton about 900k now only 1.1mil as the tar sands haven't helped them as much, Winnipeg about 600k now 750k, Quebec city about 600k now 750k and the Ottawa-Hull metro area had about 900k now about 1.1mil. Buffalo NY state which is up near Niagara Falls border area had/have a team and population was about 800k then but now about 1.0mil. Hartford in upstate Connecticut was about 700k and now is about 1.1mil.

Canada back then had about 27 million people, the NHL paid more money back then to its players than the AFL do to its players now. The average club payroll was around $25mil 1992 dollars. There were 8 Canadian teams and 16 USA teams, 14 in the bigger cities in the 1992-93 with the Ottawa Senators playing its debut season in 1992-93 as did the Tampa Bay Lightning.

The NHL went into expansion mode over the USA and headed to add a few more "sunbelt" teams to go with LA, San Jose and Dallas. But there have been a few strange moves and teams folding and moving around Winnipeg was kicked out in 1996. Atlanta in 1999 got a team and then ended up moving to Winnipeg in 2011 - and just like the Cleveland Browns in the NFL, this is a new Jets team. Hartford Whalers were moved to 2 mil city of Raleigh - Carolina Hurricanes, Quebec was moved to Denver 4 mil and they became Colorado Avalanche.

New teams in the sunbelt were the Florida Panthers based in Miami, Anaheim Ducks in greater LA, Arizona Coyotes in Phoenix all these metro areas are at least 4 million. They went back to Minnesota (Minneapolis-St Paul 4 mil) snow belt who lost the Stars to Dallas in 1994, but got a new team the Wild in 1997, Columbus Ohio pop 2mil in the snow belt got the Blue Jackets and Nashville a city that gets a bit of snow in the heartland of USA, population 1.7 mil got the Predators.

Bottom line, when the NHL (which is closer to the AFL than the NFL because of the Canadian aspect) expanded, they didnt move to the 700k cities but the multi million people cities. The Gold Coast market is 600,000 people with 1.8 million people up the freeway.

Morally I think Tassie deserves a team in the AFL,s**t 4 Australian Football Hall of Fame's 24 legends come from Tassie, but I dont think basing it in a city of 200k vs the alternative 100k is gonna help. The government could move all their dollars from the Hawks and Roos and give it to the team and Cadbury's, Incat and gambling guru and MONA owner/founder David Walsh could pump in a lot of $$$ but it would suck a lot of $$$ out of other sports all across Tassie. Sports fans travelling from Devonport, Burnie etc to Hobart to watch a few games of a Tassie team playing in Hobart will not have as many $$$ for other sports teams in their local area.

But a Tassie team would have to be just like the smaller city Canadian based NHL teams - own their own stadium and make great returns to compete with the teams from the big 3 Canadian cities and big US cities. The Canadian teams dont have to share their stadiums with NBA teams and other events. Tassie would have to find that sort of comparative advantage. I have a copy of a 2011 Uni Toronto business case study/report - The New Economics of the NHL: Why Canada Can Support 12 Teams and it shows that in 2007-08, 6 of the top 7 average revenues earned per game from season tickets and other sales came from the Canadian teams and Edmonton was the smallest market then, because Winnipeg still didnt have a team, did better than 23 of the 24 US teams.

So a Tassie team would have to do something innovative to make sure it sold out every game, so just like the Canadians are hockey mad over their southern cousins and sell out their stadiums, the footy mad Tassie fans would have to sell out their stadium over the 4 northern teams were the market for footy is semi luke warm just like the hockey market is lukewarm in the sunbelt cities of the NHL.

The AFL is like the NHL in many ways. Its preference is to go to the bigger markets, where the passion isnt really there, but use subsidies to prop them up to try for long term gains in the bigger cities. In the NHL, national TV contracts are shared, but local ones, the local teams keep the revenue. So Canadian broadcasters pay the big $$$ but the monies get equally shared with the poor viewing US teams. The Uni of Toronto business study I have says

"NHL hockey is an attendance business. A high level of local fan support is essential for a team’s success because, unlike the situation in other North American professional sports leagues, ticket sales are by far the largest single source of revenue. According to the 2004 Levitt report ....... gate accounted for 52 per cent of league revenues....... NHL teams also earn significant additional attendance-related money after selling a seat through food sales, other concessions and advertising inside the arena. What the Levitt report termed “in arena revenue”—which included some fees from luxury boxes and premium seats—made up an additional 21 per cent of the average NHL team’s revenue .....In other words, according to the most credible public source
on league finances, tickets to a game, corporate boxes, sponsorships and other attendance-related activities account for nearly three quarters of the average team’s revenue stream. To a much greater extent than teams in the NBA, MLB or NFL—leagues that, unlike the NHL, enjoy extremely lucrative
national US TV contracts—the name of the game in the NHL is “bums in seats.”

So because Tassie doesnt have the corporates of SE Qld and Sydney, that team would need to work its stadium as hard, maybe harder than Geelong does with theirs. That would be bloody hard - not impossible, but bloody hard.

The conclusion the Uni Toronto business study is interesting when comparing Tassie no team v Northern states expansion and the no further Canada NHL expansion vs USA teams expansion. It also is instructive on why 10 teams remain in Victoria.

Canada should have more than six NHL teams. There are several Canadian cities that are clearly much better locations for a team than several current American NHL cities. They have more fans and would generate significantly higher revenues. All other things being equal, a business should want to locate where unsatisfied demand is highest, and where it would have the most customers and generate the highest revenues. If the NHL were a free market, these Canadian sites would be first choices for team movement or expansion, and not treated as last resorts to be avoided at all costs. The economic
case is clear. Canada can almost certainly support 12 NHL teams.

So why does Canada not have more than six NHL teams? The answer lies in the fact that the NHL is a monopoly (or more precisely a cartel), and not a free market. It artificially limits the supply of NHL teams, and controls where they play. The answer also lies in the fact that American local governments,
responding to the cartel’s control over supply, have been willing to use taxpayer dollars to entice one of those scarce teams into locating in their city—something Canadian governments have not traditionally done. The market did not decide that Canada should only have six teams, or that Southern Ontario should only have one—the NHL did. The league has no interest in having supply meet demand, but rather benefits from ensuring that supply always remains below demand. For the NHL, this is an entirely rational strategy: artificial scarcity in the number of teams drives up their value. A team that runs into trouble in one city can be sold to a hopeful owner in another city. In contrast, a failed restaurant in Phoenix is not moved to Winnipeg; it just fails. Artificial scarcity also allows owners of even successful franchises to extract a payoff from local governments in order to move, or to stay put. All of North America’s big professional sports leagues are structured to play this game. Artificial scarcity allows owners to create bidding wars among local
governments, with the city offering the most attractive subsidy package being granted a franchise. These subsidies generally take the form of building a stadium or arena with taxpayer dollars, and then allowing the team to play there at very low rent, or no rent at all. Canadian governments have largely stayed out of this game. Local American governments, in contrast, rarely refuse to play.

The barrier to Canada hosting more NHL teams is not economic. The barrier is legal and political.

I think the Tassie team v too many teams in Victoria v northern expansion arguments are legal, political, ego driven, power and economic.

 

[Jim Dixon]

Just on the Canadian hockey teams in the NHL, the reason that Winnipeg lost their team (became the Phoenix Coyotes) and Quebec lost theirs (became Colorado Avalanche) was the value of the Canadian $. When the C$ is weak, the Canadian NHL teams have to work much harder to pay their US $ demoninated bills.

And with the C$ being weak and the price of oil plummeting that $500 million fee works out to C$650 million. The media conglomerate that is behind the bid must be hoping the price of oil rallies in the next couple of years.

This exchange rate stuff is something that St. Kilda will have to bear in mind with their NZ adventure too.