Tuesday, April 28, 2009

Hockey is a business, not a sport


Evan Weiner
Go to Evan's Home Page
Business of Sports Examiner

Hockey is a business, not a sport

April 28, 12:09 PM

Canadian hockey writers, particularly those based in Toronto, have a bizarre conception. Move a financially failing United States-based National Hockey League franchise to Canada, preferably Toronto, and all will be right with the hockey world. The usual hockey writers suspects are the Atlanta Thrashers, Florida Panthers, Phoenix Coyotes, Nashville Predators and now the New York Islanders, particularly if John Tavares ends up with the New York franchise.

But what the Canadian hockey writers, particular those based in what they think is the center of the hockey universe, Toronto, don't understand is the business of hockey is more important than the game of hockey on the NHL level. So as a public service to those in Toronto, here is a primer about the business of hockey in Nassau County and perhaps in the New York boros of Queens and Brooklyn. The New York Islanders franchise has always been more about real estate and cable TV than hockey. The real estate, the Nassau Coliseum, was mighty important to the NHL back in 1971 when the World Hockey Association began making plans to start in 1972-73.

The NHL viewed the WHA as a threat and quickly moved to expand into the new Nassau Coliseum. An expansion franchise was sold to Roy Boe, who ironically owned a team in the upstart American Basketball Association, the same people who started the WHA, Dennis Murphy and his group from Southern California.

The NHL cut off a potentially valuable market from the WHA but created a problem that the then 14-NHL owners didn't see. Boe was financially incapable of running the ABA Nets or the Islanders at the Nassau Coliseum. In 1976 Boe's Nets joined the National Basketball Association but Boe couldn't pay the bills and sold the most marketable basketball player of the day, Julius Erving, to Philadelphia for a reported $3 million. It wasn't enough for Boe to stay financially alive in either the NBA or NHL and Boe eventually had to sell the Nets and the Islanders.

John O. Pickett ended up with the Islanders and got lucky. Charles Dolan was building his Cablevision franchise in the 1970s on Long Island. Dolan had hired Long island politicians to executive posts and went about securing virtually every available cable TV franchise in Nassau and Suffolk County. In the 1970s, local programming was tough to find on local cable, but Dolan had a major league franchise, the Islanders, in his backyard literally as the Nassau Coliseum in Uniondale was located just minutes away from Cablevision's Woodbury headquarters. Dolan signed a long term deal with Pickett and it put millions upon millions of dollars annually into the Islanders till.

What Toronto writers don't understand is just how much Dolan, who now owns the New York Rangers, needs the Islanders and how much Islanders owner Charles Wang needs Dolan's money. Dolan has two valuable assets that other cable competitors don't have on Long Island. The Islanders contract through 2031 and News12, a local news operation that covers Nassau and Suffolk county news. The Islanders are definitely a loss leader for Dolan but in the overall scheme of things, Dolan can walk into any town, village or city on the Island when it comes to renewing his cable systems licenses and say what does Time Warner have locally, what does Comcast have locally? The answer is nothing, he has the Islanders and he has News12. The properties virtually assure Dolan of the renewals in the lucrative multiple cable systems operator business.

Dolan has the same set up in New Jersey, a long term contract with Jeffrey Vanderbeek's Devils hockey team and News12. Dolan is a smart guy, much smarter than the Toronto writers looking at moving the Islanders to Toronto.

The real estate angle cannot be overlooked. Nassau County has dangled to various Islanders owners including Howard Milstein, Steven Gluckstern and Wang the possibility of developing the area surrounding the Nassau Coliseum. In 1997 and 1998 Nassau County Executive Thomas S. Gulotta spent a lot of time negotiating with Milstein and Gluckstern about building a new arena and land development. The sides apparently worked out a deal but there has been an allegation over the years that the agreement fell through of who was going to do the actual construction. Wang is looking to develop the land which would become an arena village complete with a rebuilt Coliseum, sports facilities, commercial ventures and housing.

The Islanders franchise seems secondary to the project as if Wang gets to develop the property as he and his partners stand to make a lot of money if it is built. That is why Wang and NHL Commissioner Gary Bettman are turning the heat up on Hempstead Town Supervisor Kate Murray to get the project approved. The Lighthouse Project has the potential to be the most lucrative deal out there for Wang.

But there are two other New York options that far outweigh Toronto or Kansas City for Wang. The boro of Queens already hosts the Mets and the U. S Open in Flushing Meadows. There is a tract of land that is presently occupied by junkyards just east of the new baseball park and north of the tennis center that New York City has wanted to redevelop for a while. Wang could be interested in the land for an arena if the Nassau proposal falls through. Also, not far from the ballpark and the tennis center there is a tract of land that was once offered to the Jets owner Woody Johnson for a NFL stadium on the old World’s Fair grounds. It is not known if the city would be willing to make Wang the same offer it did to Johnson, but it is possible. That is Wang’s second best option although there might be a compensation package required for the Islanders to move about 15-20 west of Uniondale to Flushing for Wang “invading” New York Rangers territory.

However, Wang and Dolan are partners in a broadband venture and certainly Dolan needs Wang for his cable TV enterprises and Wang technically would not be moving from Long Island.

The third option, which is a lot less valuable, is Wang moving the Islanders to New Jersey Nets owner Bruce Ratner’s proposed Brooklyn arena. Wang would have to work out a deal to grab a portion of the revenue streams from the new place. Ratner’s building has been designed to house not only a basketball team but a hockey franchise as well. Wang would not have to give up his cable TV deal. Wang wanted to buy the Nets in 2003 and move the team back to Long Island. He was beaten out by Ratner who wants to construct an arena village in Brooklyn.

Kansas City is an oversaturated market with the NFL Chiefs, the MLB Royals and NASCAR competing for what few corporate dollars are available in the small market city. The Toronto sportswriters apparently have failed to realize that Maple Leaf Sports and Entertainment enjoys its monopoly status owning the only NHL franchise in Toronto and refused to sell Maple Leaf Gardens to anyone who wanted to use the old building as a sports venue because they didn’t want anyone to compete with the two major indoor sports venues they own in the city. At last look, Maple Leaf Sports and Entertainment was a for profit venture and if someone wanted to move an NHL franchise to the city, Maple Leaf Sports and Entertainment would probably run up a nine figure number as compensation for invading the Toronto territory.

Here is hoping that Toronto hockey scribes enjoyed the primer. Wang’s best three choices are Nassau County, Queens and Brooklyn. His worst choices are Kansas City and Toronto. Hockey is a business not just a game.


No comments: