Thursday, May 21, 2009

Gary Bettman: Happiness is watching franchise bingo

Forget the Stanley Cup playoffs. With the NHL these days, it's all about atrophy.

There is not enough hours on the day to keep up with all the minutia of the Duel in the Desert over the Phoenix Coyotes, unless you are employed to cover the NHL. However, it bears noting Chris Botta at has spelled out that Johnny Tavares' betrothed, the New York Islanders, have one, maybe two years left on Long Island before they'll have to relocate. Most of you know full well that the Atlanta Thrashers and Tampa Bay Lightning have a licence to hemorrhage money. All one can really do is try to understand why Gary Bettman is fighting like a drowning muskrat against the interest of most fans. It has less to do with creating anarchy where anyone could move any team. It's a house of cards scenario that basically parallels the financial crisis, which is really about unravelling the economic lies that have become accepted fact since the early 1980s.

There have been enough rumblings to suggest that keeping Jim Balsillie (at this point, just hearing the words "ball" or "silly" is enough to bring on fatigue) from moving a team to Southern Ontario is about preserving a market for future expansion. People pooh-poohed the idea when it was brought up the other day, but Tom Benjamin, who has more hockey geek cred (he's been on Hockey Night in Canada!) said as much earlier this week:
"Bettman's priority is clearly not about saving hockey in the desert. It is about keeping any hockey team from relocating to Southern Ontario. This is a about protecting a territory the league can sell. (And that’s the worst thing about a failed Balsillie bid. The league will expand in response to the fallout in Canada.)"
-- Tom Benjamin
Essentially, Bettman is fighting to hang on so the league can repeat what it did in the 1990s. Most of you know the NHL went into a period of expansion, from 21 to 30 teams, not long after the 1990-91 recession. It's now known as the Southern strategy.

The problem is that these markets only work - both in real economies and the NHL itself - if there's an ability to sustain it. The NHL during the 1990s succeeded for a time in convincing enough people in places such as Miami, Florida, that they needed to buy hockey tickets. Like the original Florida Panthers owner, Wayne Huizenga, told Sports Illustrated back in 1993, "We want this arena to be a happening place when the Panthers are playing, a place to see and be seen. We've got to get people here for all the wrong reasons, then turn them into hockey fans so they'll come back for the right reasons."

That worked, for a time. At a certain point, though, either there is a market for something or there isn't. It goes bust if there's an artificial market. Imposing demand on sports fans fits in with the same kind of consumption for its own sake that ran rampant in North America during the back half of the 1990s and early part of this decade. It's the same as convincing people to buy a third car, when they only need two, or a McMansion (according to Chris Turner's book Planet Simpson, the size of the average American home increased 17 per cent during the '90s). It's like extolling the virtues of (to quote a commercial that was in heavy rotation during hockey broadcasts a while back) having "fifty-two inches of glorious HD" when you can watch DVDs of your favourite shows on a four-inch high window on your laptop.

At some point, the NHL has to pay the bills. Their economic model is broken because it was short-sighted. A friend who knows about such things says this is pretty much a microcosm of the way the U.S. economy has gone since 1981.

You have probably read at some point that Gary Bettman has shepherded the NHL from being a $400-million business to a $2.2-billion one, and that's why the owners like him. The big but is this assumes as long every member franchise was healthy on its own. It assumed there was infinite amount of goodwill towards pro hockey in markets, just as there was an assumed infinite amount of cheap credit.

It's the same kind of thinking that as recently as 12 months ago, meant any number of idiots believed they, too, could be CFO for a hedge fund. As long as there were not en masse bankruptcies and no one lost arenas (which are sub-prime homes in our analogy), it was all good.

In a further irony, as Bob McCown noted on Prime Time Sports last night, there's not an idea how Phoenix could be saved. The NHL has about as many fresh ideas for keeping hockey in Phoenix as Arizona Sen. John McCain had for fixing the U.S. economy. All both could muster is, "Well, that won't work," and try to hold on to the carcass.

All it takes for one franchise to crater and the whole thing collapses. There was no fallback, no bailout, no nothing. Like Benjamin said with regard to the court-mediated tussle over the Coyotes, the longer it goes, "the bigger the league's black eye gets." The Islanders, the Coyotes, who's next, eh?

You can still block it out and watch the rest of the playoffs, which should be wrapping up sometime in June. It would be silly to use the league's idiotic business practices to justify non-interest in what happens on the ice. Be grateful for the ability to compartmentalize.


Greg said...

Neate, couple of things to add:

1) The fact the league would be expanding to Southern Ontario instead of being realistic about the Coyotes and letting them move shows the NHL hasn't absorbed the economic realities of not only their own league, but of the Great Recession we're currently in (have Bettman, Bill Daly and his cronies spent anytime at all in Phoenix lately? It's one of the hardest hit areas in the housing crisis for God's sake!).

2) Just to clarify: I think it's important to point out that parallels between the Phoenix situation and the financial crisis are such because they've both been perpetuated on lies about markets and consumer behaviours.

If you think about it, both situations have been created by a) artificial creations of wealth that were based on false assumptions about markets and revenue streams, and b) short-sighted expansion of markets to areas/consumers that had no ability or business to support them in the long-term.

Sooner or later, reality's going to hit you hard when the bills need to be paid and the debts you're incurring to support that artificial lifestyle/team outweigh your ability to finance that debt. That's what happening in the World Economy today and starting to happen in the NHL.

The smartest thing the NHL could do at this point is let someone from the outside -- Mr.Blackberry himself -- impose their own bailout and let the realities of the market dictate their strategy. Let the bad market shake-out happen and restructure the league.

Otherwise, it's going to get a lot worse for the NHL. A LOT worse.

Deux fans said...

Just to blow on the fire a bit... Pat Burns was saying on Montreal sports radio that almost all the Tampa Bay (he lives in TB) administrative staff has been fired at the end of this season.

Who's gonna sell season tickets or put up marketing campaign for next year??

sager said...

Well, when you had a season like the Lightning's, I guess you assume season tickets will sell themselves.

The team's previous owners also held a training camp with only 26 players (most teams invite about 50) to hold down costs. Considering that salary-cap hits dictates who plays, that's kind of smart.

Anonymous said...

I think tampa has bigger issues then season ticket sales.First from all accounts they need another owner.

Deux fans said...

The biggest value of a team is probably the number of season tickets you have...

If you want to sell it, at least keep it attractive...

Deux fans said...

*season ticket holder*

Joe Puckster said...

Get rid of Bettman already! dude'd a joke and a disgrace to the sport of hockey.

Anonymous said...

Deux yes and no
If teams sell season ticket at good prices not to cheap then i agree that could be the greatest value.A few years ago there were a couple teams that sold season tickets 2-1 so while they may have said we have sold 12,000 season tickets.In fact they had sold 6,000 season tickets.