(Part One here)
When we left our tale, Gary Bettman had just heavily insinuated that Thrashers fans' low attendance numbers are to blame for this relocation to a city I will probably not start referring to as "The 'Peg." So, let's look at those attendance numbers. In my very short search, I was only able to find numbers back as far as 2000-'01, which probably casts the Thrash in a slightly-worse-than-accurate light, since it leaves off their probably-well-attended inaugural season. Across their ten others in Atlanta, the team averaged 14,685 fans per game. Hey, maybe Bettman's right: that sounds kinda low, huh?
Here's the fun fact: the team will be moving to the current home of the Manitoba Moose, the MTS Centre in downtown Winnipeg. Its total sell-out capacity for a hockey game is 15,015. That is to say, the arena, if it sells out every single game for the next decade, will average exactly 330 people more than the average Thrashers game over the last decade. Incidentally, 15,015 is also 378 fewer people than fit in the Winnipeg Arena, previously-mentioned home of the Winnipeg Jets.
And thus, now, a brief list of facts and things we are being asked to believe are facts:
--In 1996, the Winnipeg Jets had to be moved to Phoenix because, among other things, their arena, the Winnipeg Arena, was too small.
--The Winnipeg Arena seated 15,393 for hockey.
--The Atlanta Thrashes have to be moved to Winnipeg because, among other things, their annual attendance has been too low.
--The Thrashers have averaged 14,685 fans per game over the last decade.
--The arena in Winnipeg to which the Thrashers are being moved, the MTS Centre, seats 15,015 for hockey.
Look, yes, obviously, there are other factors than attendance that go into considering an NHL market. For example, it must be cheaper to run a 15,000-seat arena in Winnipeg, MB than it is to run an 18,000-seat house in Atlanta, GA. And surely there are financial advantages to being the only major sports team in the province (as opposed to competing with the Braves, Hawks, and Falcons). But the fact lingers that attendance was specifically mentioned as a major factor in this move, just like arena size was specifically mentioned in the Jets' move to Phoenix, and that's not really adding up to me.
Which brings us back to the inciting question: exactly how did this happen? Surely Gary Bettman isn't just weirdly in love with Arizona. In fact, his seeming inconsistency here is really just smart for the NHL's profit margin. Recall that Bettman has always championed the league making money as its real mark of success. What he's done here is take two very unprofitable franchises and use them both to make profit for the league itself (individual teams' profit margins be damned).
For context, let's take a look at just how unprofitable the Thrashers are. It's hard to find consistent, comparable data across seasons for all NHL teams, but Forbes Magazine has done some profiling of NHL teams over the last few seasons, and I used what data they had here. In 2009-2010, the Thrashers' operating revenue was -$8 million, which is to say they lost $8 million to operate that year. The previous season, they lost $1.8 million; $6.1 million the season before that; and $5.4 million in 2005-2006. That's all the (consistent) data I could find, a scattered four-season average loss of $5.325 million per season. That sounds like a lot, but I'm giving it to you now mostly for context.
True North Sports & Entertainment is spending $170 million on the purchase of the Thrashers. Of that money, $110 goes to the Atlanta Spirit in exchange for the franchise itself. The other $60 million goes to the NHL, as a relocation fee. The franchise loses $5 million a season, and Bettman still makes $60 million off of them.
This is actually a pretty viable business model. It's only reasonable to expect a relocation fee: the NHL wants to make a clear statement that moving franchises is bad. It makes it harder for teams to maintain fans, it's a lot of upkeep, this is all pretty obvious. So we're pretty comfortable with the idea of team ownership being penalized financially, to the tune of a pretty large sum, for moving a team. The message is: don't move teams. Once you've got that fee in place, though, it becomes an emergent strategy to abuse it. The Thrashers are losing a little money every season, and Bettman just lets it go. One day, the owners get tired of losing money, some new owner picks up the team and moves them, paying a tithe to the NHL that surpasses the combined losses of the franchise since it started losing money. Then, in a decade, when the Winnipeg Whatevers have once again lost money every season, and True North gets tired of footing the bill, the whole thing happens again. The NHL keep making money off of perennially awful teams. Pretty good, eh?
There's more. Let's say you have a franchise like the Phoenix Coyotes. According to Forbes, Phoenix lost (in the three seasons Forbes had data for) $9.7 million, $18.5 million, and $20.1 million. Way more than Atlanta was losing. At that rate, a $60 million relocation fee wasn't gonna surpass more than a few seasons' worth of losses. So Bettman steps in and buys the team on behalf of the NHL, for $140 million (no relocation fee, of course). This is an investment Bettman can justify now better than ever: he knows the city of Glendale really wants to keep its NHL team (unlike Atlanta politicians, who have been significantly quieter). This affords him the opportunity to hang relocation over their heads. Bettman blames the monetary losses of the Coyotes on the city itself, claiming that it would be a profitable franchise elsewhere. He threatens to move the franchise, unless the city of Glendale is willing to recoup the NHL's losses. Glendale city council signs a deal to pay the NHL $25 million to keep the franchise in Phoenix for the season, with the NHL holding the right to renew the deal every season for up to 10 more years.
Now Bettman holds all the damn cards. If a buyer comes forward with a good offer on the table, the NHL can sell the team at any given time (the agreement is only renewed one season at a time). If the new owner wants to relocate at that point, Glendale can't do much to stop it, and the NHL collects a relocation fee. If no buyer comes forward, or Bettman doesn't like a buyer's offer, the NHL keeps operating the team for the time being, and as long as he can keep their annual losses under $25 million, he's still making money on them.
And that's how you turn two of the the NHL's three least profitable franchises (sorry, Fish Sticks) into money-makers for the league, without actually putting forward any effort to make them better hockey teams. See? Shitty at understanding hockey, surprisingly competent at business.
I'm not sure what my point was here. I'm not going to claim that Atlanta necessarily deserves an NHL franchise, or that Winnipeg necessarily doesn't. In fact, I'm probably of the opinion that the whole late-90s expansion that brought us Atlanta, Columbus, Minnesota, and Nashville diluted the league too much for its own good, and the state of the NHL might be a little stronger if it were still 26 teams today instead of 30. I just thought it might be useful to look at the real numbers driving what happened in Winnipeg, Phoenix, and Atlanta: the NHL doesn't necessarily like Arizona more than it likes Georgia, and running a franchise in Manitoba isn't necessarily more profitable than running one in Georgia. Rather, it was very profitable for the NHL itself to keep the Coyotes in Phoenix and move the Thrashers to Winnipeg. So, that's where we are.
My sympathy goes out to all Thrashers fans everywhere. It probably won't make you feel a ton better, but remember that adorable ukelele girl who wrote that Puck Bunnies song? She's back, with a message to Winnipeg and Gary Bettman, music courtesy of Cee-Lo Green. And so, here it is, your Moment of Zen:
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