Puck Battles: Hockey Teams Aren't Charities

UNIONDALE, NY - JUNE 24: Fans looks at a sign for the upcoming county vote for the proposed new arena during the New York Islanders Draft Party on June 24, 2011 at Nassau Coliseum in Uniondale, New York. (Photo by Mike Stobe/Getty Images)

 

Puck Battles is a semi-regular column exploring a few key issues around the NHL. Hopefully you don't agree with the opinion expressed by the author, that way we get to argue more. The only thing that can't be argued is Cam Neely's place in the pantheon of power forwards. He's the Chuck Norris of hockey.

Unless you've been busy catching up on the Bachelorette to free up space on your PVR, you've seen the swarm of tweets, news stories and random opinions on the Islanders arena referendum. Nassau County citizens got the decision right and should be congratulated.

As a fan, the decision seems a little more frustrating. Other people get to decide whether your favourite team sticks around or leaves. To be honest, I feel terrible for hockey fans in Atlanta who saw their team leave and I feel just as gut-wrenched for Isles fans who see the writing on the wall for their own team.

more after the jump

 

However, from a macroeconomic standpoint, it makes absolutely no sense for governments to give handouts to extremely rich sports franchise owners. I don't pretend to know all the minute details of each deal, but I'd like to give our readers a few thoughts the issue.

1.      Economic studies show that the impact is minimal.

Economists find minimal to zero positive impact on the local economies when new stadiums are built.  Here are two such studies.

http://news.illinois.edu/news/04/1117stadiums.html

http://www.cato.org/pubs/regulation/regv23n2/coates.pdf

2.      If it was a good investment to increase property value, owners would want to use all their own money.

It's amazing to me that many of these deals are predicated on the fact that the stadium or arena will "revitalize" an area of the city or raise property values around them. Ask yourself this. If the property around the new developments was about to jump so drastically in value, why haven't the franchise owners already purchased as much of that property as they can get their hands on? Wouldn't the profits from said property value increases be enough to fund the stadium/arena in the first place?

Tyler Dellow (@Mc79Hockey) had some interesting pictures on Twitter showing vacant lots and empty buildings only two blocks from Nationals Park in Washington. That park was built in 2007. So much for that theory.

3.      Subsidies reward poor financial management

By giving wealthy owners a handout to build a venue, we're essentially telling them they don't have to make their business profitable. One of the biggest business expenses owners have is essentially gifted to them. In turn, this delusional business model encourages the owners to continue overspending on player salaries and jacking up ticket prices to make up the shortfall. If they're going to raise ticket prices, it should at least be to fund new stadiums, not to give millionaire athletes raises at several times the rate of the average Canadian or American citizen.

4.      If a team can't survive in a market, it shouldn't be there.

This is the toughest pill to swallow. However, if there is not enough revenue

The venue shouldn't drive attendance and spending on team merchandise, the product should. And the product is the team. Garth Snow isn't the GM of the Islanders because of the building they play in. He's the GM because Charles Wang hired him to do that job. Rick DiPietro doesn't have an ungodly contract because the Isles don't have a modern arena. Wang and his executives have run the on-ice product into the abyss and can't blame this idiocy on the state of the arena.

Joe Louis Arena in Detroit was built in 1979, but it somehow still houses an incredibly successful franchise that had the 4th highest attendance in the NHL last season. Conversely, the Phoenix Coyotes play in Jobing.com Arena, which was built in 2003, and had the second worst attendance in the league last season.

In the end, teams succeed financially based on a variety of factors such as the appetite for hockey in a market and the quality of product on the ice. Owners claiming that the lack of a new arena is the only reason their franchise isn't viable, need to spend their own money to keep their franchise alive or sell it to someone who's willing to make that investment. The taxpayers shouldn't be forced to prop up an industry built on entertainment, not necessity.

The Best Article I Read This Week

If you don't read Kent Wilson's material, you're missing out. He has an uncanny way of relating statistical analysis of hockey to the average fan in a way that's easy to understand. Take a read of his piece on FlamesNation about why possession-based analysis is important to evaluating player and team success.

Best Idea that Hasn't Happened Yet

At this point, it looks like it won't happen at all. However, the rumor that Nikolai Zherdev was interested in playing for the Jets seemed like a perfect match. He needed a place to prove his prodigious talents once again while the Jets needed another Top 6 forward. In this case they had the chance to get the Czar of Relative Corsi. Alas, it seems as if he is headed to the KHL.

Western Canadian Thought of the Week

Dear Edmonton, please re-read my opinions above. Don't sink money into a new arena. If your owner wants a state-of-the-art venue, tell him to buy it himself. He is worth roughly $2B after all. If he won't buck up and spend the cash, it obviously wasn't worth the investment. he just wanted to see what he could squeeze out of your emotional attachment and team loyalty.

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