Have you heard the one about the Finn, Swede, and Norwegian walking into a bar?
Each is a multibillionaire tech magnate wanting an NHL franchise for Helsinki, Stockholm, and Oslo. They foresee fellow investors wanting teams in Bergen (Norway), Gothenburg (Sweden) and Riga (Latvia).
If those three don't pan out, they know peers who would form syndicates in Berlin, London, and Zurich determined to create a new NHL division with six European clubs.
The big question for them (debated while quaffing Norrlands Guld, Ringnes and Olvi), is what price the 32 NHL owners would charge and whether, as investors, they can proactively articulate how expansion into hockey-crazed Scandinavia and Western Europe makes sense. Would European franchise fees outweigh the travel issue and the initial absence of NHL-caliber stadiums? Could a six-team expansion concept work in venues with just 10,000 to 12,000 seats?
We think there's a viable business case here.
Let's start by skipping over the traditional airline and venue challenges. Instead, ponder just how much franchise fee money could be generated circa 2025. Could it approach $1 billion per club? That's seven years of pent-up demand since the Seattle Kraken reportedly paid $650 million in 2018.
Would a collective lump sum of $6 billion cause NHL Commissioner Gary Bettman to advise his board of governors that adding a division in Europe, ahead of the NBA or NFL, globalizes the game and, in one gigantic swoop, makes everyone wealthier?
The first evidence of how this might work is on display in Las Vegas, where the NHL's first-mover act benefited the league enormously ... so much so that the NFL quickly went to Sin City and the NBA and MLB will soon follow.
So, why shouldn't the NHL emerge as the first mover into Europe?
For the owners, playing fewer games (by expanding) is a non-starter. They're set on 41 regular-season events filling their North American arenas. Likewise, adding games for the NHLPA is a no-fly zone as well.
But as former NHL player and Canadian media personality Jeff O'Neill told us recently in Toronto, more teams mean more players making more money at the highest pro level. It means journeymen getting to hang around and cash one more contract. It means more draft picks make 'the show.' It means new (or more) members for the NHLPA, which translates into not fighting the NHL on European expansion.
Doing some back-of-the-envelope math, we'd guess six new NHL franchises would produce at least 150 new jobs for hockey players. So, let's ask: Is international expansion feasible for the NHL? Well, here are some points to consider:
NHL Europe must be a complete division and not one or two teams. The only way this idea works is if there is a sufficient number of stops for a travel swing through Europe. This is a must.
Domestic travel is an ongoing challenge and, yes, there is an ocean to cross, but the NHL already features seven teams in Canada and plays from Ottawa to Los Angeles and Vancouver to Sunrise (Miami). The tyranny of distance (given private charters) and time zones is not the real issue. It's meaningful rest for the players and the generation of big wealth for the risk-taking owners or at least the avoidance of a major financial mistake (think NFL Europe and that financial bloodbath).
Don't forget that during the pandemic, when players couldn't cross country borders, the NHL successfully created two distinct divisions: Canada and the U.S. It's not impossible imagining five future divisions: Canada, Europe, U.S. East, U.S. Central, and U.S. West.
We need those three tech billionaires (sitting in that Scandinavian bar) to stay interested. They would've already crunched the numbers, and found multiple scenarios showing short-term financial losses, not to mention the upfront cash outlay for the franchise fee. These investors must envision a profitable long game given the billion-dollar entrance/initiation fee. The NHL broke $5.2 billion in revenue last year -- a strong indicator $6 billion is not far off.
A global move will drive benefits far beyond ticket sales and new TV markets. It's a sports/tech/media play. Any new owner will start by calculating how streaming, video games, mixed reality (augmented and virtual), digital sponsorship, sport wagering and more will drive acceptable multiples.
The war in Ukraine has hurt the KHL but not dampened Europeans' love for hockey. Is there a market consolidation opportunity here? Very possibly.
Will the NHL add Europe? If we were using a magic 8-ball, we'd guess the answer might come up as 'Reply hazy -- try again' or 'Ask again later.'
But Sports Business Journal recently reported the NHL's European social media channels generated 175 million total video views during 2021-22 season (up 100 million vs. YAG) and nearly +30% readership on NHL international websites.
If the Finn, Swede and Norwegian send their investment bankers to meet with league officials anytime soon, the lure of $6 billion in entry fees (which coincidentally would match the NHL's total revenue) might get the NHL's 32 owners out of bed to consider approximately $187 million each. That initiation fee windfall should carry some weight with the board of governors.
Rick Burton is the David B. Falk Professor of Sport Management at Syracuse University. Norm O'Reilly is the dean of the University of Maine's Graduate School of Business. Their new book, 'Business the NHL Way: Lessons from the Fastest Game on Ice,' was published by the University of Toronto Press in October.