THE BOOK--Playing The Percentages In Baseball

Thursday, June 11, 2009

A backdoor way to expansion

The Toronto market is very valuable in hockey, with Forbes estimating the Maple Leafs value as 450MM$.  Hamilton has long sought an NHL team, which the NHL has never agreed to.

Now though, RIMM chief is making a power grab on the bankrupt Phoenix Coyotes.  Relocation in the NHL is fairly common.  Teams relocate from one failed market to some other small market.  There is never a “relocation fee” because the value of the two market in question would never be so different as to require a fee be paid.  However, the NHL has left one huge market open: Toronto.  It would be like the Yankees would be the only team in NYC, and then the Florida Marlins relocating to NY.  Clearly, MLB would have preferred an expansion franchise instead, so that it could charge a huge ownership fee to get the second NYC team.

The NHL have left the “second Toronto team” option open for so long that someone was about to relocate to that primo spot.  Ballsillie is about to do so.  The judge has gone so far as to say:

The judge suggested Tuesday he wanted the relocation fee settled prior to the proposed June 22 auction, where Balsillie’s offer would stand as the opening bid.

The judge, still not sure that he even has jurisdiction, has asked for a relocation fee in case he finds against the NHL. 

The deputy commish also talked about an indemnity fee (to compensate the Leafs and Sabres for encroachment of territory).  Clearly, the relocation fee is dependent on the indemnity fee.  Indeed, the indemnity fee would be a component of the relocation fee.  The value of Hamilton is dependent on whether the Leafs and Sabres exist.

More discussion at mc79hockey (Tyler).