Which American Cities Can Support NHL Franchises? Part 1
A case study on recent successful NHL expansion teams.
If you’re a follower of our Instagram page, you’d know that we did a mini case study on which Canada cities could support NHL franchises, and why the NHL hasn’t expanded in Canada. I will save all of that for another article so that people can share it and refer to it more easily, for now, let’s go over which potential American cities could support franchises and the methodology behind it.
With recent successful expansion teams, the NHL has done a great job in their two most recent additions to the league. Seattle may be a little soon to make a judgment on, but they sold out all of their season tickets in a matter of minutes, and have made all the right moves management/employee wise. All of this gives me very little doubt they’ll be among the top NHL teams in the league in terms of revenue.
Vegas is already ranked 15th in the NHL in terms of revenue, and that’s just 3 years into their existence. According to Forbes, they are valued at $580M, so Vegas has created additional value since joining already. To start off with how to determine which cities could potentially be successful, I think it’s important to look at Vegas and Seattle to see if those cities can match up against them in terms of their economic metrics.
Here’s the issue with American cities, they are much less reliable than Canadian cities. When doing our Canadian expansion list, we did not need to worry too heavily on gate revenue, which is the most important metric for NHL teams. NHL teams cannot rely on huge TV deals as the NFL does. Gate revenue on average makes up 37% of NHL team’s revenue, and that is only including tickets. the NFL is all the way down at 15% and the NBA is at 22%. Since the NHL is an attendance-based league, population metrics are super important.
The relationship between Canadian cities and gate revenue is much stronger than American markets, and this makes sense intuitively because Canada is dominated by Hockey. Canadian cities can almost guarantee attendance in the upper echelon of the NHL, as long as you aren’t a disaster like the Senators. Even Edmonton who has suffered for years still brings in more gate revenue than many American markets that have been more successful.
Here are some of the metrics we’ll be using for determining which cities can work:
Local Population
Regional Population
Population Growth
Median Household Income
High Income Households
Corporate Environment
Arena
These are the same metrics that we used for Canadian cities, except in that case our baseline was Edmonton, with the extremely low end being Calgary. For American teams, our baseline will be Vegas, with the low end being Tampa Bay who is 20th in revenue, right beside Calgary. The potential for American cities in my opinion is less than those of Canada but American dollars are also a huge influence, and growing the game is very important in the NHL’s eyes. Without further ado, here’s a list of potential cities:
Houston
Portland
Chicago(2nd team)
San Francisco
Indianapolis
Atlanta
Mexico City
Salt Lake City
Cleveland
Oklahoma City
Austin
Baltimore
Cincinnati
Hartford
Kansas City
Milwaukee
I want to add that these are the cities that we will be exploring in this series, not all of these cities will necessarily make our final list of potential destinations. Who knows, I may even add a city in through all my research into this.
Now that I’ve mentioned all of those teams, let us look at the metrics for Seattle and Vegas for potential comparisons.
Seattle- Local population of 3.4M people, one of the bigger metropolitan areas in the US. Seattle has been one of the fastest-growing cities in the US over the last 5 years. Three-quarters of Seattle Residents are between 19-64 years old, meaning they have a fairly young and active population. The fastest-growing segment is the 25-34 age demographic, which is one of the most important demographics for the NHL to attract. Young people spend the most money, and set trends, making them the ideal sports fans for NHL franchises.
Household Median Income is 84K, with family median income at almost $120K. It’s a wealthy area already, and Seattle is expected to grow another 115,000 jobs by 2035, and most of these people will be highly educated residents with bachelor or graduate degrees. This is a thriving city and will be a cornerstone for NHL growth over the next decade.
Vegas- The metro population of Las Vegas is around 2.7M, increasing almost 3% from the previous year. It’s a growing area while being one of the biggest tourist destinations in the US. Yes, people actually live there, though many people rely on the services industry, with almost 400K people in hospitality and leisure. Vegas was one of the ideal places for an NHL team because of the lack of an existing sports franchise there, the gambling opportunities, and the ability to make NHL games a potential tourist attraction.
Vegas also has a great age demographic, with 88% of the city being under 64. It’s a young area which is attractive. The median household income for the city was $53K, much lower than Seattle, while the median income for a family was 60K, also much lower than Seattle. Vegas is a much cheaper place to live which offsets this discrepancy, but the lack of a high median income is overturned by a ton of high-income earners, both from people who live there, and those who visit the city. The top 20% of earners make more than 100K every year, so the inequality might be high, but there is a lot of high-income earners to support a team.
Our next article will cover the first portion of potential NHL cities. Please consider subscribing to our Substack, this will be the only way to reach all of you guys if our page ever gets taken down, deleted, hacked, or anything else. I plan on writing multiple articles a week, so I’d appreciate it if you could all subscribe!
