Render of proposed Las Vegas arena (MGM Resorts International)
The NHL expansion process is underway and it could cost those groups seeking a new franchise upwards of $500 million. On top of the expansion fees, teams will need to pay $1 million simply to apply for a club and it appears one potential expansion city has already been priced out.
There are a few reasons why Las Vegas is at the head of the expansion pack, but one major reason could be they’re the only ownership group that knows a thing or two about gambling.
As the NHL’s expansion process officially opened up Monday, the league began to distribute materials to the groups interested in putting a bid in for a brand new NHL franchise. According to TSN’s Frank Seravalli, the applications are due back by August 10, and it’s going to take a calculated risk to buy in to getting one of the NHL’s expansion clubs. Along with a submitted application comes a $1 million fee – that’s in U.S. dollars, too, so don’t go getting any ideas – with, “only a portion refundable,” writes Seravalli.
That means if you’re not close to a sure thing – like, say, the aforementioned Las Vegas bid – it might be too risky a proposition for some groups to put up a cool million without the promise of getting it all back should they fail to be granted an expansion club.
If the $1 million application fee isn’t enough, various reports have noted that the fee to actually place the franchise in an expansion city, not including costs associated with operating the team, could be upwards of $500 million. So, again, if it’s not a safe bet, there probably won’t be many cities or prospective ownership groups clamoring to get an expansion franchise.
Already it’s become clear that one posited expansion locale, Kansas City, doesn’t have a group willing to fork over the amount of money the NHL is asking. Sam Mellinger of the Kansas City Star reported Saturday that, “there is no real momentum from local groups to woo the NHL for an expansion franchise.” This after Lamar Hunt, Jr., who owns the local ECHL Missouri Mavericks, and Cliff Illig, a billionaire who owns part of the MLS club Sporting Kansas City, said they weren’t interested in putting in an expansion bid and didn’t know anyone in Kansas City who was.
Even with the exorbitant asking price, it’s difficult for the parties interested in expansion franchises to be all that shocked. After all, during a late-June meeting with the media in Las Vegas, Gary Bettman warned about that the process would need a big investment of time, money and energy.
“Participating in the expansion process isn’t easy,” Bettman said, according to Seravalli. “You’ve got to be serious and have serious backing to be able to do it. A series of questions have to be responded to in writing. It’s a serious document.”
Serious document, indeed, with some serious cash to back it up. That said, Bettman added that those interested know about the big-money fees and are standing pat in their interest in an expansion franchise.
Alongside Las Vegas, there are several other prospective bidders, including Quebec City and Seattle. Quebec City is the next most logical step, as the potential home for an expansion franchise is already well on its way to completion. Seattle, however, is still struggling to get an arena in place for NHL hockey.
There’s also the possibility of another club within the Greater Toronto Area, however that could come with a much higher price tag. Deputy commissioner Bill Daly had previously said there could be an indemnification fee on top of the expansion charge to make up for potential lost revenues for the Maple Leafs, much like the $25 million fee Los Angeles received when an expansion group took up in nearby Anaheim in 1992.
The last round of NHL expansion came in 2000 when the Minnesota Wild and Columbus Blue Jackets joined the league. In the last two decades, the NHL has also added teams in Atlanta (1999, since relocated to Winnipeg) and Nashville (1998).