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.