Posted by John Vrooman on Sunday, July 19, 2015 in National Hockey League.

Interview with USA Today / and CNBC

NHL Expansion/Relocation.

How valuable is the Las Vegas market for any sports league? What do you see as Las Vegas’ strengths and weaknesses as a market

Las Vegas is probably beyond the economic edge for expansion of any of the 4 major NA sports leagues. This is probably from both the internal profit max perspective of the leagues and the external zero-profit welfare max perspective of the fans.  The economic weakness of the market is the disproportionate reliance on a now very competitive gaming industry combined with a fluid fan base. The underlying financial structure of Vegas is fragile. Almost one-half of the home mortgages are still underwater. The secret to success in a marginal edge sports market like Vegas is revenue certainty and the non-traditional demographic is risky business. This is particularly true in the gate revenue reliant (dependent)  NHL and the NBA .

Given the geography of the NHL, how would Las Vegas fit into the league?

Yes the geographical location is great for the Western Conference which needs to get up to 16 clubs for balance scheduling. If the other expansion club was Seattle then the location advantage would be lost unless it was accompanied by the move of the Coyotes to the Central Division or even a relocation to and Eastern market like Quebec City. The general failure of the Sunbelt Strategy of the 1990’s was partially derived from the ill-advised attempt to gain a balanced regional presence to increase TV rights fees in the US. There is more to a successful NHL franchise than simply the geographical balance of its regional location.

Does a tourist city have more potential for attendance problems?

Yes the NHL takes in over half- of its revenue at the gate and so the economic success of the NHL is the most dependent on the size and economic power of its home market. On top of that the corporate client needs to be more than 80 percent of the ticket sales. That model will never fly in Vegas and the attendance will be very volatile, particularly in a non-traditional hockey market very much like the failed snow-bird experiment in Phoenix.

How big of a marketing coup would it be for the NHL to be first into Las Vegas?

Not so much. The NHL is drawing back from its failed sunbelt marketing  strategy and rethinking and retro-locating franchises back in traditional hockey markets. The NBA experimented with the Jazz playing games in Vegas and dropped the plan.

Have leagues been afraid of Las Vegas because of its gambling emphasis?

Yes but there are laws to protect against gambling on games played in Vegas. The major problem is that the economy and politics of Vegas are dominated by the big casinos. The NHL is already embracing daily fantasy gaming; recently the NHL entered a partnership with Draft Kings and the NBA has matched up with Fan Duel daily fantasy gaming (gambling) sites.

Could Las Vegas support both NBA and NHL franchise?

That’s a big no. Vegas is a one-team town at the max. The economic base is too specialized, shallow and limited to support multiple teams. In the previous analysis Las Vegas comes in 6^th or 7^th in the expansion relocation derby that will involve two expansion clubs and 3 relocation clubs at the most. The sluggishness of the economic recovery in Las Vegas has suggested to some that Vegas may become  the next Detroit, except without the Red Wings. Vegas finishes out of the money.

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