NHL Expansion

Wade Poplawski and Michael O’Hara have a paper “The Feasibility of Potential NHL Markets Under the New Collective Bargaining Agreement” in the recent Journal of Sports Economics. Here is a link to the paper (gated): http://jse.sagepub.com/content/15/1/64.abstract and here is the abstract:

Changes in the National Hockey League (NHL) since the lost 2004-2005 season have led to speculation about the feasibility of smaller market teams under the new structure. Recently, the NHL announced the move of the Atlanta Thrashers to Winnipeg to resurrect the Jets franchise lost in 1996. But is there any evidence that small market teams can survive where they were previously unviable? The authors address this question using data for the seasons since the structural changes. The results suggest that the Winnipeg move is likely to be successful and that other small markets may be viable under the current setup.

Poplawski and O’Hara use data from 2005-2009 to examine the factors that lead to franchise financial viability, and the neat part is they then predict the quality (in terms of the probability of positive operating income) of existing and potential NHL markets. An interesting finding is that with all the talk recently of Seattle as a potential NHL favourite for expansion, they actually perform worst of the markets considered in this study (below other commonly mentioned markets such as Houston, Kansas City and Quebec City, and highly questionable markets such as Orlando or Salt Lake City). As well they find that smaller markets (in particular Canadian markets) became more viable after the 2005-2012 Collective Bargaining Agreement.

With the recent collective bargaining agreement and the strong US and Canadian TV contracts the NHL has signed, I suspect the probability of success is now even higher in many expansion markets and existing NHL markets.



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