The NHL’s expansion to the Sun Belt had many hockey fans screaming penalty during the initial years in these nontraditional markets, as many of these clubs piled up losses on and off the ice. Yet over the last five years, teams in Dallas, Las Vegas, Miami and Tampa have secured seven of the 10 slots in the Stanley Cup Finals, including four titles.
The Original Six has history on its side, but the Sun Belt has become a hockey hotbed.
Tampa is a Harvard case study on how to turn around a franchise in a challenging market, according to one NHL team president. “Go Bolts” marketing papers the growing city, and the club’s sellout streak will top 400 games by season’s end, the longest in the NHL.
Lightning owner Jeff Vinik just sold a majority stake in the team at a $1.8 billion valuation, 14 years after he invested $170 million to buy the franchise. The price is higher than 13 baseball clubs in Sportico’s MLB team valuations.
Overall, the NHL has been on a winning streak. During the last 13 months, it found solutions for its two biggest problem franchises (Arizona and Ottawa), arenas are packed for NHL games and concerts, and competition for the new Canadian TV deal is expected to produce an agreement worth more than double the current pact and even triple if things break right.
The result is the average NHL franchise is worth $1.79 billion, up 37% from 2023 by Sportico’s calculations. The jump follows a 29% gain last year and represents a 92% increase since 2021, when the average team was worth $934 million. Collectively, the NHL’s 32 teams are valued at $57.3 billion, including team-related business and real estate held by owners, based on conversations with 40 bankers, lawyers, team executives, owners and consultants over the last six weeks.
The Toronto Maple Leafs lead the NHL for the fourth straight year at a $3.66 billion valuation, followed by the New York Rangers ($3.25 billion), Montreal Canadiens ($2.93 billion), Boston Bruins ($2.67 billion) and Los Angeles Kings ($2.5 billion).
There have been a handful of team transactions over the last year that showcase the surge in NHL team values. In December, private equity executive Oliver Haarmann reached a deal to buy 9% of the New York Islanders at a roughly $1.7 billion valuation that does not include any path to control. In 2021, the Islanders opened the $1.1 billion UBS Arena, in partnership with Oak View Group.
April brought an end to the NHL’s never-ending saga to secure a new arena in Arizona when Ryan and Ashley Smith bought the Arizona Coyotes and relocated the franchise to Salt Lake City under a temporary moniker, Utah Hockey Club.
The Smiths paid $1.2 billion for the team, with $1 billion going to the Alex Meruelo-led Coyotes ownership and $200 million split with the other 31 franchises as a relocation fee. Ryan Smith had been in talks with NHL commissioner Gary Bettman since early 2022 about why Utah is the ideal market for an NHL franchise. Some owners think the Qualtrics co-founder and Utah Jazz owner got a steal at $1.2 billion, which ranks 28th among NHL team values.
“Whether it is $2 billion or $2.5 billion or $2.7 billion, I think that is the range I believe the owners would want to be in if we were going to consider expansion,” Bettman told The Hockey News in early 2024 on what the next expansion fee might be. Expansion is not currently on the NHL’s immediate to-do list.
Smith’s price might prove to be a bargain, but he alleviated one of the NHL’s biggest headaches with an exit strategy in Arizona. The Coyotes played in a 4,600-seat college hockey arena the past two seasons and were a drain on the NHL’s revenue-sharing system as the league’s lowest revenue generator by a wide margin, pocketing at least $30 million a year through revenue sharing.
Utah sold 8,500 full-season ticket equivalents for the Delta Center, which has just over 11,000 full-view seats for hockey and another 5,000 partially obstructed. Smith Entertainment Group tapped a new fan base, as 92% of the season ticket buyers are not Jazz ticket holders. This month, the Salt Lake City Council approved an agreement that gives SEG the ability to tap up to $900 million in bonds to cover the cost of Delta Center renovations and funding toward a new sports, entertainment and convention district by the arena.
The Maple Leafs’ Stanley Cup drought reached 57 years last season, the longest in league history. Yet Toronto remains the dominant brand in the sport, with the NHL’s highest regular-season revenue year after year.
Rogers Communications has had a front-row seat for the power of the Leafs brand since it bought 75% of Maple Leaf Sports & Entertainment in conjunction with fellow telecom giant BCE in 2012. MLSE is the parent company of the Leafs, the NBA’s Toronto Raptors and MLS’ Toronto FC. Last month, Rogers reached an agreement to acquire BCE’s 37.5% stake in MLSE for CA$4.7 billion ($3.4 billion based on current exchange rates). The transaction values MLSE at $9 billion and is expected to close in mid-2025, subject to league approvals.
The Lightning sold for more than seven times their annual revenue. Bankers and investors have traditionally used revenue multiples to value sports teams. NHL multiples have expanded significantly and are 7.7 on average, per Sportico’s calculations. They still trail the NBA (11), MLS (9.6) and the NFL (9.3), while MLB, the NWSL and the WNBA range from 6.7 to 7.3.
“There has been a strong demand for franchises, and I’m bullish on the NHL,” said longtime sports banker Sal Galatioto, who represented the Melnyk family when it sold the Ottawa Senators last year for $950 million.
NHL franchises have benefited from the overall rising tide in sports valuations that had NFL teams up 15% year-over-year and NBA clubs increasing 33% most recently. But one thing that stands out in the NHL is its collective bargaining agreement.
The NHL has a hard cap at both the league and team level without some of the loopholes found in other leagues. The NHL cap was introduced in 2005 and has transformed the profit profile of owning a team, particularly in conjunction with the NHL’s revenue-sharing system, which transferred roughly $275 million in funds last season to support low-revenue clubs. The NHL had four work stoppages between 1992 and 2013, but relations between the league and players union have rarely been better ahead of the next CBA expiration in 2026. The current economic system is expected to be preserved in the next agreement.
The 32 NHL teams generated $7.5 billion in total revenue last season, including non-NHL revenue at arenas where teams own or operate the venue. Hockey-related revenue (HRR), which is used to determine the salary cap, was $6.3 billion, up 8%. HRR is projected to top $7 billion for the 2024-25 season.
NHL teams posted record sponsorship revenue last year. New assets, such as digitally enhanced dasherboards (DED) and home/away jersey patches, have helped sponsor revenue more than double since the 2020-21 season. Attendance hit a record 22.9 million fans, with all but five teams at 94% capacity or higher. Sponsorship and gate receipts, including premium seating, represented nearly 60% of total revenue.
Many of the southern clubs beyond Tampa have posted major increases to their businesses. The Florida Panthers sold out of season tickets for the first time this year after their Cup win. Gate receipts for the Vegas Golden Knights rank in the NHL’s top five. The Dallas Stars just posted the two best years financially in club history and have already sold out American Airlines Center for the season.
NHL teams generate only one-quarter of what NBA teams do via shared national revenue from media, sponsorships and merchandise, but the local economics are similar for ticketing and sponsorships. Most NHL teams also capture either a portion or all of the revenue from concerts and other events at their buildings.
The concert business boomed coming out of COVID-19 and can add $25 million-plus to the bottom line of teams at certain arenas. AEG, which owns LA’s Crypto.com Arena and the Kings, had 56 concerts at the building in its most recent fiscal year. The New Jersey Devils’ home in Newark, Prudential Center, ranked fifth in 2023 among the highest-grossing arenas in the world, according to Billboard. It had 65 concerts and 210 events during the 2023-24 year. In addition to the Philadelphia Flyers, Wells Fargo Center hosted 54 concerts, WWE WrestleMania, the Philadelphia 76ers, Villanova basketball and dozens of other events. The Kings, Devils and Flyers control all of the economics of these buildings.
The NHL playoffs have traditionally been a way for teams to goose the bottom line, as arenas are packed and teams can crank up ticket prices, particularly in the conference finals and Stanley Cup. The Edmonton Oilers set a new mark last year in 12 home playoff games with more than $100 million in gross ticket revenue before the NHL took its cut, which is based on a complicated formula and usually costs teams roughly 35% of their gate. The league’s cut partially funds the revenue-sharing pool.
The Oilers were already one of the NHL’s highest-grossing teams, but the playoff run pushed their estimated revenue after revenue sharing to a league-record $357 million. The Rangers also topped $350 million in net revenue, thanks to their conference finals run. The Oilers lost Game 7 of the Cup Finals to the Panthers, but the club will remain a force in the Western Conference. This summer, they re-signed star Leon Draisaitl and will almost certainly extend Connor McDavid’s contract, which expires after next season.
In addition to Utah, several other teams are planning major arena renovations and/or mixed-use developments outside their venues. After flirting with Virginia, the Washington Capitals reached a deal to stay in Washington, D.C., with $800 million in renovations for Capital One Arena. Last month, the Carolina Hurricanes announced plans for a $1 billion mixed-use district that will envelop the arena it shares with North Carolina State University. The Flyers are planning a $2.5 billion transformation of their South Philadelphia Sports Complex. L.A. Live, Edmonton’s Ice District and Water Street Tampa are models for NHL franchises looking to develop outside their arenas.
The NHL faces the same regional sports network issues that plague MLB and NBA teams. Last season, Bally Sports channels aired games for 11 NHL teams, and most were forced to take a roughly 20% cut on their rights fee after a December agreement between the league and Diamond Sports Group. Eight of those clubs are back on the newly branded FanDuel Sports Network under a variety of terms, including more cuts or even returning to their previous contract terms in the case of the Nashville Predators.
Every U.S.-based NHL team is exploring their options on the local TV level. Many are watching the Dallas Stars this year after the club and DSG parted ways this summer. Dallas signed a seven-year deal with A Parent Media Co. (APMC) to stream all regional Stars games free of charge through a new direct-to-consumer platform, Victory+. It made them the first major men’s sports franchise in the U.S. to move nearly all local broadcasts out of the RSN model and toward a streaming service.
“APMC stepped up, and they gave us a foundation of security that we work off of to really pioneer and go to direct to consumer and stream our games,” Brad Alberts, Stars CEO, said in an interview. “The big question, which I can’t answer today, is how the economics are going to perform for this over time.”
Local TV represented an estimated 10% of NHL revenue last season, and teams in Canada are largely immune from the messiness of the RSN model in the U.S. This spring, the Oilers and Calgary Flames reached new 11-year deals with Sportsnet to carry their respective games. U.S.-based clubs are happy if they can do new deals at the same rate as their previous one. The average annual value of the Oilers and Flames deals is double the previous ones, according to multiple people familiar with the terms who were not authorized to speak publicly.
The must-have nature of airing hockey in Canada has NHL teams and league executives bullish on the next round of Canadian media contracts. The current 12-year, CA$5.2 billion ($3.8 billion) deal with Rogers Communications was signed in 2013 and expires after the 2025-26 season. Rogers’ exclusive negotiating window opens in January, and Rogers CEO Tony Staffieri publicly expressed his interest in retaining the property.
Most people expect the package to be split among multiple parties. Rogers signed a deal for Amazon’s Prime Video to stream games on Monday nights this season and next. The initial streaming viewership was strong and attracted a younger audience to games in the early part of the 2024-25 season. Viewership for the Monday Prime games in the 18-49 demographic are up more than 50% from prior years.
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