Talking TV and the Las Vegas Hockey Territory

By the time next September rolls around, there will be a television station that will carry games for Las Vegas’ first professional sports team. As pre-season games kick off, there will a local avenue for fans to watch outside of T-Mobile Arena. It is not yet known exactly how it will be rolled out, nor does anyone know if there will be any partnerships with current professional or collegiate teams on a regional sports network (RSN), but there have been some interesting articles published at Awful Announcing recently that are points of interest for Las Vegas residents as the team eyes a network partner.

The first article makes mention that the Las Vegas franchise could partner with one of the four Major League Baseball teams that can claim Las Vegas as part of their viewership area. The reason Vegas is so important to those four teams (the Dodgers, Angels, Padres, and Diamondbacks) is the same reason that Vegas was such a strong candidate for expansion, there is a market of more than 2 million people. Whether those fans watch or not, their local television carriers pay for the games on their networks and those costs are passed on to subscribers.

The article has a key flaw, however, in that for any one of those four teams to overtake Las Vegas as a sole provider of baseball (remember that MLB is a federally sponsored monopoly, and that providing baseball is a service in the same vein as electricity or telecommunications), they would have to pay for the right to own the market. The Padres for instance, if they wanted to own the Las Vegas metropolitan area (and make no mistake, it’s about the market as a whole, not just Las Vegas proper), they would need to make restitution payments to the other three clubs, if such a deal was approved by the other league’s owners. The Oakland A’s tried to do something similar with possibly moving to San Jose, which was in the territory of the San Francisco Giants, however that deal was squashed by Commissioner Selig quickly. So in short, that avenue won’t happen. Las Vegas will continue to be serviced by multiple MLB teams.

Another article published Monday explains of dire times coming for RSNs. The subject is nothing new, and the topic recently gained steam shortly after the SEC and ESPN agreed on their most recent rights deal, in which ESPN paid an estimated $2 BILLION over 15 years to basically become the Nationwide Leader of SEC Football (including the SEC Network). At the time, it was viewed as ESPN maintaining it’s perch as the leader in sports programming. Since then however as more and more cable subscribers have left traditional cable/satellite providers in “cutting the cord”, which has significantly impacted not only ESPN but their parent company Disney as well. Since 2013 it has been estimated that ESPN has lost 10 million subscribers.

Based on these numbers over the past four months ESPN lost an average of 10,400 subscribers a day.  – Neilsen data May 2016

ESPN and Disney have a multi-national profit infrastructure in place that allows them some coverage on these losses, however the trend is in motion that traditional television is in a regressive pattern thanks to internet-based avenues to watch events and programs. With all of this in mind, at this writing, it has just been announced that ESPN and the ACC have just penned a 20-year agreement.

To what do these have to do with Las Vegas hockey? How will the new team be able to keep its head above water, given the recent market shifts?

Part of a RSN for Las Vegas will need to borrow live events from another entity. UNLV, Minor Legaue Baseball, and maybe the Mountain West Conference seem to be the only opportunities. It could be also that a Sin City sports network would be able to partner with Major League Baseball in a way that it would allow for the channel to schedule all of the teams that claim Las Vegas (though highly unlikely). The partnerships involved in the network would would allow a better revenue stream for Bill Foley as he could own the channel outright in the same manner than in Chicago with their RSN, Comcast, is owned by the Blackhawks, Bulls, White Sox, and Bears. It is what the NHL did to assist the expansion team though that in my mind shows just how dedicated the league is to Las Vegas’ success.

Like other sports, the NHL has its own map of what teams claim as their home-team territories, and at the GMGM press conference last week, Bill Foley gave information about what the Las Vegas territory would look like. Areas of eastern California (and the LV metro area) will be given to the new team via the Kings and Ducks, northwest Arizona will be obtained via the Coyotes, and the Avalanche will lose areas in Idaho, Montana, and Utah (according to a quick peek at estimated census data, this area includes about  7+ million people).

To monetized this market, let’s assume that the Las Vegas RSN would command a reasonable $.40 per subscriber, and that would net about $2.8 million PER MONTH. That hypothetical total would not include the fees paid for the teams to broadcast (which is the part would go towards Vegas’ addition to hockey related revenue). Could such a network, even in Moody’s bearish forecast be a business move Foley would undertake on his own? Most likely he could, if for no other reason that it would provide control over content, and the costs could be off-set by the manner in which his team would charge his network via book-keeping slight-of-hand. In any case, the network would be able to provide a profitable enterprise and a key impact to the community in growing the sport. 

Las Vegas GM Announcement Thoughts

George McPhee was named as the Las Vegas franchise earlier today, and as McPhee himself stated that he is going to get to work immediately following the conclusion of the presser, we instantly have a number of items to chew on as the organization begins to develop.

Team name – Foley called this topic the next issue he is going to tackle now that the team has a GM. The Creator also mentioned that the holdup thus far in naming the team is that there are trademark issues with other sports organizations. One could easily point to the Black Knights name and that Army Military Academy is a Nike school (whereas the Vegas hockey team will be an Adidas/Reebok brand) for the answer to that issue. It shouldn’t be a surprise to see a name and logo released sometime prior to the beginning of training camps. The NHL (as all leagues do) enjoy a re-setting of websites and other forms of media prior to the beginning of new season. This timing would give the NHL PR, and television rights holders and opportunity to include them in the conversation and coverage without the embarrassment of calling them the “Las Vegas Whatchamacallits”.

Will be cap team – Brian Blessing tried a few times to get a clear-cut answer from McPhee and Foley on where they would be looking to set up the team in relation to the salary cap floor/ceiling. What I took away from those exchanges was that both of them are willing (and planning) on utilizing the free agency period next summer to bolster the roster. Assuming that the expansion draft will be focused on filling goaltender and defensemen for the future (and using aging and expensive players to fill forward roles), the team will need offense for the long haul. That is where one could look for the team to make their hay. With that said, however, the team will not be leaning on free agents to build the team., so there is little to suspect that they are going to go bonkers in front loading the roster in their first season.

Looking to build via the entry draft – Speaking of the upcoming roster drafts, it was interesting to hear McPhee mention the entry draft many more times than he did the expansion draft. While the expansion draft will get the most headlines, it will be the entry draft that fans should focus on more (the team certainly is). This is what you wanted to hear from this news conference. Organizations that try to lead by the expansion draft will start out no better than relocation teams. You need to build with youth. McPhee speaking about how important the entry draft is shows that his team’s focus will be on the growth of a culture, not on trying to maximize output in the infancy stages. Study what Toronto is currently undertaking with their rebuild (or what Chicago did with the drafting of Keith, Seabrook, Toews, Kane, Crawford, Shaw, Saad, etc.) to see that a team that is focused on long-term success will do it beginning with the draft. I would also point out that such an approach is one where you could see a lot of deals being made that will reward Las Vegas with draft picks for the 2017 and 2018 drafts. Those are far more important right now to the team than say a 3^rd line center in an expansion draft in June.

Vegas Television Market and Salt Lake City – What a coup this was for the organization! Their territory for TV rights extends from areas in California to the west, northwest Arizona to the south, Utah and parts of Montana out east, and to Idaho north. It is not surprising that Idaho/Montana were given (but that the Northwest corner of the country was left alone screams SEATTLE!!!), but the eastern borders take some market share from the Avalanche, while the area in California will slightly effect the Sharks, Kings, and Ducks. These were obvious concessions those teams made that will be minor losses in order to give Vegas a larger viewership…helping their negotiations with whomever the provider shall be. Lastly, and most surprising is that north west Arizona was also included. In the last few years the NHL has bent over backwards to support the Coyotes (including owning them outright for a number of seasons). While the loss of Kingman will be a small sting, it again shows just how much the league wants Las Vegas’ team to succeed, but more importantly HOW BADLY they need it to (not to mention that they need these areas to grow the game and hockey related revenue). Salt Lake City was named specifically by Foley as a key spot that is being discussed for the AHL affiliate. An empty city for hockey, and one that Foley himself seems smitten with due to the proximity and volume of flights to and from the Valley. Lastly, a team in Salt Lake City would assist the AHL in its western expansion that was geared to helping the NHL teams get their AHL teams closer to the parent clubs.

Foley can now focus on the business side – The last of my notes comes from the response to Ken’s Boehlke’s (creator of SinBin.Vegas) last question to The Creator, in regards to how the last three weeks since the announcement have been for him. Foley responded eventually that he was relieved that he could now spend his time on building the organization’s business side. Including the issues with the team name and logo, he can begin to really get into the media angles of the team, as well as the practice facility to name a few items. One would imagine as well that he would start dipping his toes into more community outreach tasks that were mentioned on this site just last week.

Crossing Our T's & Dotting Our I's (part II)

Today the flood gates opened! Deputy Commishioner, Bill Daley, finally gave the hockey world some details for the expansion process at least with regards to the draft. I will touch on that in-depth shortly, but it is important to note two key statements. First, Bill Foley claims that he expects an announcement within the month. Secondly, at the longest-case scenario, Daley expects a decision no later than June. This roughly 3 month window is made even more enticing with the news from many of the Canadian media that almost everyone seems to believe 1) the NHL will award at least one team and 2) Las Vegas is the only one that will be added.

With that speculation out of the way, we can dive into what the current 30 teams are now gnawing over with the news that broke today. As the GM meetings wrapped up, today’s discussion was on the possible aspects of the expansion draft. The details leaked include:

-          Teams can protect up to 3 defensemen, 7 forwards, (or some combination of 8 skaters) and 1 goalie and each of the current teams can only lose 1 player (if one team is awarded) 

-          Players on their first or second year of an entry-level contract are ineligible to be drafted.

-          Teams must expose at least 25% of the previous year’s payroll.

-          The expectation is that players with no-move clauses/no-trade clauses will not be eligible, and further its possible those players must be included in a teams protected players list (as reported by Elliotte Friedman on yesterday’s Hockey Central at Noon on Sportsnet).

-          There was no scenario presented where teams are allowed to keep more than 1 goaltender.

Of interest past these nuggets are multiple opinions that teams this off-season will execute free agent deals with the strict intent to make those players available for an expansion draft, or that Vegas could select upcoming unrestricted free agents in the draft in order for them to receive any forthcoming compensatory picks in the next entry-level draft. Finally, all of these pieces need to be voted on by the NHL Player’s Association. The rumor that players with no-movement clauses  will be eligible is a two-front preposition; firstly, it means that that league is willing to stay on a positive relationship with the PA (which bodes well for a new CBA in 2018 without a lockout), and secondly it gives this process no foreseeable reason for it not to be approved by the players.

Now, if we take all of that into account, where does that leave us? For an example, let’s take the Stanley Cup Champion, Chicago Blackhawks, and see how Stan Bowman has to work with. In this exercise, let’s presume that the expansion draft will take place this June prior to the entry level draft. Also, let’s work within a system where any player with a no-movement clause will be eligible, and will count against the 11 players Chicago will be able to protect. Lastly, the Blackhawks currently has a cap hit of $71.234 million, meaning they need to expose at least $17.81 million for Las Vegas to select from.

Lets begin by removing those no-movement clause players. Bryan Bickell, Brent Seabrook, Corey Crawford, Nick Hjalmmarsson, Patrick Kane, Duncan Keith, and Jonathan Toews are safe. Second, we remove any player who is a 1^st or 2^nd year professional. Kyle Baun, Vincent Hinostroza, Tanner Kero, Artemni Panarin, Dillon Fournier, Erik Gustafsson, and Ville Pokka are also safe. Because Chicago has 7 players locked with NMCs, they are only allowed to protect 4 more (and all must be skaters since Crawford is already a protected goaltender). Those players I would suspect would be Artem Anisimov, Marian Hossa, Markus Kruger, and Teuvo Teravainen. Finally, we have our list of players which will be eligible for Las Vegas to select from (the total salary made available is $11.4175 million):

Player	2015-16 Salary	Contract
Desjardins	0.8
Fraser	0.65	RFA
Haggerty	0.925	ELC-3
McNeill	0.863333	ELC-3
Panik	0.975	RFA
Rasmussen	0.575	RFA
Ross	0.636667	ELC-3
Shaw	2	RFA
Brisebois	0.655	ELC-3
Rundblad	0.1
Schilling	0.575
Svedberg	0.575
Van Riemsdyk	0.925	ELC-3
Carruth	0.575	RFA
Darling	0.5875

With this group of players, you’ll notice that Chicago is roughly $6.4 million short of the minimum 25% rule, meaning that they will need to unprotect either 1) Marian Hossa AND Markus Kruger or 2) Anisimov AND Kruger in order to comply. That is where this is going to be extremely fun for Las Vegas’ fans, and will be as equally annoying for the other 30 teams and their fans. 

Crossing Our T's & Dotting Our I's (part I)

[This is the first piece in a two-part column on the expansion front. In Part 1, I give you a reset as to what has transpired thus far. In Part 2, I will provide the insides to what is being leaked from the GM meetings and how it will affect the process.]

As the NHLs general managers glad-hand this week down in Florida, there has been an uptick of discussions regarding expansion. This time it isn’t due to a softly-veiled comment (Foley’s January/February interview), but an itemized meeting topic in which the GMs around the league can begin to get a feeling for what is to come should the league finally come around and award a franchise to Las Vegas.

For the sake of this piece, if not simplistic honesty, I will only be including one expansion team in the discussion. It’s been clear that Quebec is a second option to expand, but for many reasons it won’t happen. For those nuggets I would extend an invitation to the numerous podcasts and articles detailing why they are not going to be selected. For Vegas, their ticket was punched as the main items have been checked off the list in recent years; an owner willing to pony up a rumored $500 million for a team, a stadium that is state-of-the-art and ready to house a team, and 14,000 season ticket commitments. At issue now for Foley and for the league are two large points that have been discussed for months; when will the team take to the ice, and how the rules will be structured for them to field a team.

Through the last 6 months, it has been made clear that the 100^th anniversary of the NHL would be the key season to expand, which would keep with the tradition of making large moves at important milestones (the league’s Original Six, the Western Expansion at its 50^th Anniversary). So the next question that I had was how soon a team would be able to drop the puck after getting a seat at the table. With that in mind, I was able to find an outlier in the 1990s expansion process whereas Nashville was able to enter the league only a year after being awarded a franchise. In January, I spoke with their play-by-play announcer, Pete Weber, who was able to give me a first-hand account of how the process played out. What I learned was that first off, the ownership was willing to get into the league as fast as possible to grab market share (this was to be the season prior to the Titans moving to Nashville, so they wanted to be the first franchise), and secondly that a quick turnaround is possible. Both of these items are mirrored to Las Vegas’ situation and desires.

As the dog days of winter set in, there was a significant lull in any expansion discussion. This lead many to pile on that the process had stalled. The Executive Committee met on a couple of occasions to discuss the bid, but there was very little that became public. We were led to believe that the sure thing that was the Las Vegas Rat Pack was over (maybe until Seattle joined the process?). With this week’s GM meeting, however the rational thinking returned. The conversation is now much more real with the team’s roster-builders knowing that they need to be involved in the process prior to the end of the season, free-agency, etc. How are they going to prepare for 2016-17 and beyond when they know they are going to have a wide-ranging change in the run-up to 2017-18?

“We have a general sense of what it’s going to be just by having been part of past expansion drafts,” said Edmonton Oilers GM Peter Chiarelli. “I think we’re all planning already, it would be nice if we could have it by this June.” (http://sports.yahoo.com/blogs/nhl-puck-daddy/nhl-gms-thrilled-with-3-on-3-all-star-game--gms-meetings-notebook-191927469.html)

As Chiarelli rightly expresses, and to a bigger point, what made the lull around the trade deadline so significant is that how can the current 30 GMs be expected to go about business as usual without having the rules governing expansion? Quite simply they can’t, and further, without knowing they are unable to fully exploit the up-coming changes. In the expansion period during the 90s, teams were allotted a certain number of players that could be protected from an expansion draft. What they were offer little to us now, and even less to anyone else who is being paid millions of dollars to win a Stanley Cup. The NHL now is much different from 16+ years ago. The league is younger, faster, and of course there is a salary cap.

So what is next? The GMs are most likely going to get the full monty in terms of what the Executive Committee has already shared with the Board of Governors. The inclusion of the GMs in this circle of information is a key step to the expansion process because it now shows there is enough of an understanding in the process to widen the depth of knowledge already collected.  When details start to fly, I will return with a comprehensive look at what it all means for the formation of a new expansion team in year 1.

A New Kind of Player “Rental”

It has been my belief that when the NHL finally releases the rules for the upcoming expansion draft that players with no-trade and no-movement clauses will be available to be selected if not protected by their current teams. This is something to keep in mind as trades are made prior to the deadline.  Today’s news that Dion Phaneuf was traded to Ottawa is a prime example of why. While this is a fantastic trade for Toronto (as they are full-go on a rebuild), this isn’t a zero-sum trade, as it makes sense for Ottawa to take on some salary (in the short-term) to get back into the playoff hunt.

Phaneuf, who turns 31 in April, has a $7 million AAV for the next 5 seasons ending in 2020-21, and he hasn’t played up to the contract to this point. That contract has looked bad for Toronto NOW, but Ottawa took a chance today to see what he can provide in a 2^nd line role. Looking up in the standings, they are behind 4 teams for the last wild card spot in the East (including the Islanders, who currently hold that last wild card position, and have 3 games in hand), so a move had to be made. With a -13 goal differential, and giving up the most goals in the conference, this move will assist in shoring up the blue line pairings.

For the interest of Las Vegas fans, deals like this should be viewed as what it will mean in terms of the expansion draft. Ottawa (if my assumption that trade and movement clauses will not apply to the draft pool), is able to take on the ridiculous cap hit in the short-term just to see where a Phaneuf rental can give them for the rest of this year and through at least a full season next year. If made available to Vegas, he could provide a player with name recognition that would do well in a market with a smaller microscope than that Toronto puts on its players. The Edmonton-native is now a former captain of the most rabid hockey market in the league, and could easily fill the same role with Vegas.

As players move throughout the league prior to the trade deadline, through free agency this summer, and prior to next year’s trade deadline, keep in mind that 2017-18 is in focus for every move.  Make no mistake that the Executive Committee and Board of Directors are sharing every bit of information in regards to expansion with their GMs. There is no secret inside those offices what is going to happen, and it is front and center as deals are being made for players. This thinking provides an interesting side-show in the actions of teams moving forward.

If a team is in on a player, is it worth it to take the risk to mortgage talent in a trade, or salary cap space in hopes that a Vegas team will snag them in a draft? Just because a player is made available to Vegas to select, does not mean that they have to do so. This is not a given that Foley and his GM will pick up every high salary player, but it does allow current teams an excuse to make moves that they wouldn’t normally engage in because they have a situation where they could be freed of fault for taking on such a chance. Further, it will be interesting to see who Foley tags as his GM and if that person has had any actions in some of these deals.

Tying Lesson of Nashville to Las Vegas

The NHL All-Star Game takes place this weekend, and with it, another chance to get some updates from the NHL’s commissioner himself about the status of the expansion process. With two special sessions undertaken by the executive committee regarding Las Vegas and Quebec this month, there should be enough of a foundation for Gary to share with the public. He will most likely echo what has already been written about, but in the off-chance there is big news I reached out the Nashville Predator’s play-by-play announcer Pete Weber on how Nashville got its start to see if we can come to any conclusions.

Nashville was given a conditional franchise in June of 1997 along with Atlanta, Minnesota, and Columbus. The plan was to have Nashville, along with Atlanta join in 1999, with Minnesota and Columbus jumping in for the 2000-01 season. According to Weber, however, Nashville lobbied the league to come in a year earlier than scheduled. “At the time, the plan was for the Predators to join the NHL the same year that the then-Tennessee Oilers were set to move to Nashville themselves.” This move to jump the gun was spear-headed by then owner Craig Leipold and the NHL would grant such a request if they could sell 12,000 season tickets by March of 1998. The early entry was granted and they were able to become the first professional franchise in Nashville without any competition. “In hindsight, Nashville would have liked to have had joined with the Titans at the same time” Weber added, “because that first year for the Titans was when they went to the Super Bowl and that generate a lot of [interest]. It ended up favoring Nashville obviously because they did not have to share [an expansion draft].”

As we stand with the NHL in regards to Vegas, we know there has been no formal recommendation made to move to a vote on expansion. It would be highly suspect that one would occur if there was not enough support for at least one team to be accepted. To round out the next handful of months, there feels as though there are a few chances to get this process completed. It is most likely that in order to have the expansion situation ironed out, there has to be a ton of work behind the scenes with the owners, the league, and the players association being conducted. Intertwined with such back-room talks has to be the input of Bill Foley, and it would be easy to see that given the practice arena is all but ready to go (such an undertaking does not happen on a hunch, and was not part of any multi-structure financing package since T-Mobile Arena stands on its own financially).

Could Foley quietly be leading a charge to entering into a Nashville-esque entry? It’s not probable, but the signs are all there – the least of which is the deafening silence coming from the Foley camp. It’s said throughout sports that whenever it is the quietest, that is when most of the work is being done…and it’s been awful quiet for an awfully long time.

Back to Mr. Weber who had an interesting tidbit as we drew our conversation to a close, “I think it will work in Las Vegas. I’ve always said that whatever of the pro leagues gets to Vegas first would have success.” He likened the situation of Las Vegas to Portland, where a singular pro franchise was able to draw an uninterrupted market for full control. The big item on the table would be television distribution where he added that it would be quite a feat to launch a regional sports network (RSN) in short order, and that most likely Vegas would need to piggy-back off of an established RSN such as Fox Sports’ Arizona or West (Los Angeles).