Winnipeg Free Press - ONLINE EDITION
Scoring with the NHL
Eight steps to getting Winnipeg's team back
RUMOURS and the twits and bloggers who peddle them aren't going to make the NHL come back to Winnipeg. More relevant is the timing of things very much out of Winnipeg's control.
Two things will be most important to fans eager for this outcome: Be ready to wrap both arms around the news and put one credit card on the counter. Step by step, here's precisely how the story will unfold:
1 FIND BACKERS AND PARTNERS
Any Winnipeg transaction for the foreseeable future will involve True North Sports and Entertainment, which controls the MTS Centre, the NHL-capable downtown arena that opened in 2004. It has 15,003 seats and 50 luxury suites.
True North and its partners have the financial wherewithal to acquire an NHL team, so Step 1, though not as simple in every case, appears to be a hurdle passed. The company's main players are the Chipman family, which controls multiple businesses, and Osmington, the personal real estate arm of David Thomson, head of Canada's richest family.
Myths unravelled -- "Thomson owns the large majority of True North." In fact, True North is owned by the Chipman family and Osmington in relatively equal proportion.
2 FIND AN AVAILABLE TEAM
Sounds easy, but it's not. Whatever the reports of attendance and/or bottom-line challenges in the league's 30 markets, almost all NHL teams are tied to leases of varying lengths in their communities and/or buildings.
Florida, for instance, is alleged to be a wreck on financial sheets but is in a lease that still has decades to run at BankAtlantic Center.
Speculation continues to swirl around several struggling franchises, especially Atlanta, Nashville and Phoenix, which are all mired in ownership and fan-support uncertainty. Other franchises are said to be quietly for sale, and one of them -- not so quietly due to the financial troubles of owner Tom Hicks -- is the Dallas Stars. Phoenix appears the most likely candidate to relocate in the short term, given that the NHL, which bought the team out of bankruptcy last fall, believes it can simply walk away from Glendale, Ariz., by mid-year if it needs to. Nashville is tied to Bridgestone Arena until June 2012.
Myths unravelled -- "Thomson will just write a cheque for the NHL franchise." Not going to happen, insiders say. If a suitable deal comes along, though, the True North partners will back the financing.
3 BE AVAILABLE WHEN GARY BETTMAN CALLS
Take this, above all, to the bank. No team is going anywhere unless the NHL commissioner says so. This owner or that may want to sell, but no transaction will even begin until Bettman, who acts on behalf of all owners, lines up the deal. The good news on this front is that Bettman is more than familiar with Chipman, True North and the MTS Centre, and Winnipeg's history. Insiders say that given the right circumstances, the commissioner would jump at the chance to rectify what happened in 1996. They also say Bettman has long moved on to formulating a future plan and pays little regard to his harshest critics, who continue to be stuck in the past by bashing him for his U.S. expansion plan of the '90s.
Despite the spate of rumours and wishful thinking, this call has not yet been made.
Myths unravelled -- "Thomson is throwing his financial weight around and is negotiating this and a few other rumoured deals." All of that is believed to be false because Thomson, a very wealthy but private person, has no interest whatsoever in the limelight or being front and centre in a transaction that would be such major news.
4 NEGOTIATE A DEAL
If and when Bettman calls, the vendor (unknown) and buyer (True North) will be already lined up. Details like the amount, the timing of a move, etc., will fall to teams of lawyers for both sides. Sales can be enacted and closed quite quickly -- earlier this year, Jeff Vinik took the helm of the Tampa Bay Lightning in about eight weeks -- but relocation will be a shade more tricky.
As for price, Chipman is on record saying the sky is not the limit. His breaking-point number is unknown, but he has said the cost of acquisition has to be reasonable in order to make an NHL franchise a viable business in Winnipeg.
Given the wide speculation on the number of troubled NHL franchises, it's entirely possible Chipman will refuse to chase any deal, that he may actually try to drive a hard bargain because of his "instant-playability" location and also because he may feel the NHL needs him more than he needs them. It's our belief, and ours alone, that Chipman starts to go cold on a deal when the number nears $200 million.
5 THE TICKET AND CORPORATE DRIVE
Step 5 will be in conjunction with, not following, the negotiation to purchase a team. When Bettman starts the wheels in motion, expect a quick announcement that phone lines and the MTS Centre ticket windows will be open for fans to make ticket commitments. Credit card numbers and multi-year promises will surely be required from Winnipeg fans.
And the potential franchise's corporate sales team will also be looking for multi-year commitments in many areas. A week to two weeks of those simultaneous "time-to-buck-up" campaigns will provide Chipman and his group with the support and ammunition they will need to make a deal -- or else it will be a major red flag telling them they might be reaching too high.
Of all the steps in the process regarding any return to Winnipeg, this one makes insiders the most nervous.
Myths unravelled -- "Winnipeggers are in for sticker shock, which may scare them away." Most pundits who spout this don't give fans here enough credit. The price of tickets, should they ever be for sale, won't be cheap -- not averaging in the mid-$20s range, as they were 14 years ago -- but most followers of this story are well aware that costs in the NHL have risen dramatically since the league left in 1996.
6 NHL DUE DILIGENCE
Welcome to the lawyers' favourite part, which includes formal applications and a blizzard of paperwork once there is preliminary agreement for a sale and relocation. This step also involves background checks by the NHL of potential owners and their net worth. In the case of a relocation, the league also seeks to examine the market it will enter, including obtaining the likelihood and level of ticket and corporate support. The NHL has been saying it's done little of that kind of background work on Winnipeg to this point, a very convenient way to deflect any questions, but it surely has a book on some elements of a market it once occupied for 17 seasons. The past will count for something, but the present and future are likely the deal-breakers or deal-makers in this step, and the league will want to do much of its own work in this area to feel more certain.
The main question is going to be what level of revenue Winnipeg can contribute to the overall equation. Generating enough revenue is critical -- first, to be able to properly operate a team within the CBA-mandated salary structure (payroll floor of $40.8 million and ceiling of $56.8 million), and second, to actually be a serious step up from the "bottom-rung-revenue" market it will replace.
This stage also includes an interview process and the commissioner assigning some duediligence tasks to league committees, from which will come one or more recommendations.
The league bylaws stipulate that a relocation involving a new owner or ownership group affords that new owner or owners a chance to come before the board of governors to make their case. If matters ever reach this stage, it will be fascinating to see who sits in the chairs on behalf of the relocated franchise. Chipman will surely be the point man and is the person many NHL governors are familiar with, but will the ultra-private Thomson be there with him?
7 NHL BOARD APPROVAL
This is crunch time for any potential relocation. It's when other NHL owners give thumbs-up or thumbs-down to any proposal.
According to the league's bylaws, a majority of other clubs must approve a move, meaning support is required from at least 15 of the other 29 teams. The teams are given a list of criteria with which to judge the application -- several of those are spelled out in the bylaws -- and the league might even ask for a fee for such a relocation. It's not known if the NHL would insist on this with Winnipeg, but the best guess, especially as it relates to the current case in Phoenix, is that the league wouldn't have the clout to demand it and would be more than happy to simply find a landing place for a franchise that is on life-support. The bylaws appear to contain several malleable items, including the requirement that the application for any franchise transfer and relocation be submitted to the league by Jan. 1 of the year preceding the intended move. If the Phoenix option is a real one, we're past that deadline by some 15 months and there are still people who believe this option is do-able for 2010-11. As in the previously mentioned case with Vinik and Tampa Bay, things can happen relatively quickly in the NHL when ducks are in a row and the league is motivated.
Generally speaking, the impression elsewhere of Winnipeg leans towards the favourable for several reasons -- the new arena, the somewhat romantic notion of re-addressing a past situation, and the fact it's got to be some rungs higher than the worst of the U.S. markets on the revenue meter.
8 AN APPROPRIATE FACILITY
In the current case, upgrades to the MTS Centre will be required for an NHL team to call it home. Despite what comes from so many commentators and talking heads, those modifications will not include adding seats.
Whoever spouts the erroneous belief that more seats are a must shows a lack of depth in the economic matters of an NHL franchise, given that extra seats are the worst seats and generate the lowest revenue.
The most important improvement to the arena is surely to make it NHL-media friendly.
Facilities for TV and radio crews need to grow substantially. An expansion has been planned for above the ice if the NHL were to move back to Winnipeg. There are also some behind-thescenes matters like studios, working rooms and crew space required at ice level. The arena has been designed to allow for those expansions and upgrades.
Officials say there is a way a few luxury suites could be added to the building, but those won't be required for the NHL's return date, whenever that might be. Those could be retrofitted at a later time, but the construction cost of those adds won't be small.
Myths unravelled -- "Start adding the seats." Not happening. "We might even lose a few for camera positions," True North chairman Mark Chipman said. "Adding seats can't be done. It's not physically possible. We can't take the roof off. Any building improvements will not include the addition of any seats. The NHL likes the building. In discussions we've had with the league in the past few years, size has never been a concern. We have always thought the building is the right size for the market.
"Our ability to add a couple thousand seats would produce revenue that would not be material, given the ticket prices, and moreover, it would make it more difficult to sell committed season-ticket revenue that will ultimately determine the success of any team."