"Coyotes Cherished Memories" Courtesy Jetsowner.com Forum Member

Now a second group led by Bassano, Alberta’s Daryl Jones is supposedly making a firm offer to the bankruptcy court for the Coyotes.

Several media outlets have asked why anyone would be involved in Phoenix’s NHL money-shredder.

These journalists are Offside if they haven’t looked at this story as an investment story first, sports story second.

These businessmen see the Phoenix Coyotes as a huge potential opportunity, the same way that Boots Del Biaggio viewed the Nashville Predators.

In short, it's all about "Portability"!

All investors know that in the end, the NHL would rather relocate a team than lose them outright to bankruptcy and dispersal drafts. Such an occurrence would heavily de-value the remaining franchises. Teams borrow money against team values. So as they go up, they can borrow more money against it up to a certain percentage. So when values plummet, this in turn causes their lenders to call in their loans on an accelerated basis, making life even tougher for the remaining teams. Such is called the "domino effect" of sports team valuation. The collective weight of the team’s debt load can be become overwhelming should team values be adjusted downwards. Lenders get anxious especially in a downturned economy to begin with.

So then every team has portability value regardless of how bad they are in their present state and locale.

Hockey’s Safe Haven

As long as there are cities that offer a safe haven for these troubled teams, portability value remains. Should the NHL have expanded to 36 teams by now (say to Winnipeg, Quebec City, Toronto II, Houston, Seattle and Las Vegas), then there would be few if any markets remaining to relocate to. At that point then even the portability value of all the troubled teams comes into question. And for this very reason the NHL will never grow to more than 32 teams because portability value is the lenders’ "Plan B" if all goes wrong in the current market. This is the financial backbone of the NHL.

In that way, look back to the Jets situation: The team had quite a bit of debt amassed in the mid 90's due to an ancient arena where the city, not the team, raked in millions in revenue. The team value was realized at $67 million USD when sold to Gluckstein and Burke. They moved it to another market, but that cash went to pay off existing team debt. Now ask yourself how much the Jets would have been worth to anyone if there weren't any potentially successful markets left waiting to get a team? Unbelievable as it now looks but Phoenix in 1995 offered the former Jets that “safe haven” and protected team values across the NHL while doing so. Talk about Kharma!

Prime Properties Soon To Be All Taken?

This is why the NHL has to tread lightly about team relocations. Why? Because say if the 5 weak teams all relocated to these prime cities mentioned above, then where does that leave the next couple of teams that absolutely must relocate in the future? In a sense, the NHL runs out of prime locations to relocate to. And it also runs out of "bridesmaids" like KC who offer sweet arena deals to existing teams like the Penguins, Predators and soon-to-be-offered Islanders, so that they can parlay them into even sweeter deals to remain in their existing city. (Kansas City, whether they know it or not, has single-handedly kept the Predators in Nashville and helped the Stanley Cup Champion Penguins get a new arena.) Once most of these cities get their own teams, the odds lessen greatly of these sorts of enticements in the future.

Now some would say that Denver, Atlanta and Minneapolis all got back into the NHL, so the NHL does go back to where they used to be either through expansion or relocation. Expansion back to a past failed city is a different story though. New owners willingly stepping into a situation where a team once turned bad and learning what went wrong and how to change things. Not to mention writing fat expansion cheques to the NHL owners helped the NHL change its' opinion of the host city.

However, the only time in modern NHL history that a team relocated to a past failed city is Denver via Quebec City. The Colorado Rockies (NHL) were the Colorado Avalanches' predecessors. This is the precedent for Winnipeg (and Quebec City) to learn from.

NHL fans in Manitoba should feel a real sense of hope in Summer of 2009 like no other time since the mid 1990's. Gary Bettman’s recent email could be public relations grandstanding but very unlikely given the circumstances it was revealed under. Firstly, one sees how truthfully negative and dire it was about the Phoenix situation (an about-face from constant Bettman public statements at the time). Secondly, the email was sent only to 2 NHL head office officials, right hand man Daly and Zimmerman who is part of the NHL legal department. And thirdly it was only revealed to the public due to court proceedings for the Phoenix Coyote bankrutpcy case. So it is probably the most sincere statement that Gary Bettman has made in months perhaps years about Winnipeg. And of course the email clearly suggests that Winnipeg is better suited than Hamilton should the Coyotes have to relocate. Hamilton is a terrific spot to place an NHL team. So for Winnipeg to be the NHL Commissioner's choice over it gives Winnipeg nearly the highest compliment one could ever ask for. Also, this email indicates that a relocation to a former NHL city is possible maybe even probable within the NHL braintrust.

If your opinion differs, log into the forum and sound off! www.mbmbforum.com

Chris
Chair, Manitoba Mythbusters
www.ManitobaMythbusters.com
www.myNHLincludesWinnipeg.com

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