Seattle Awarded 32nd NHL Franchise

NHL

The National Hockey League has awarded the league’s 32nd franchise to David Bonderman, Jerry Bruckheimer and the city of Seattle. The Seattle Partners Hockey group plans to put a team on the ice, for the first time, in October ’21, allowing time for a $800 million (privately financed) renovation of Key Arena to take place and the construction of a $70 million practice facility to be completed. Little else is known about the teams plans as ownership has said they’ll take their time deciding on a team name, logo and color scheme. The club will play in the Western Conference’s Pacific division, Arizona will move to the Central Division to complete the realignment.

Howie Long-Short: Seattle is a logical market for the NHL with a per capita income 2nd to only San Francisco among the Top 25 most populated U.S. cities and there’s certainly no shortage of fan interest, the Bonderman/Bruckheimer Group received more than 33,000 deposits (at $500 or $1,000) for season ticket packages the day they went on sale; the building is only going to seat 17,000 people.

The Seattle Partners Hockey group will pay $650 million to join the league, $150 million more than Bill Foley paid to bring the Golden Knights to Las Vegas in June ‘16. That’s because the league bases its expansion fees on the “value of a team in a specific market” (i.e. Seattle is more valuable than Las Vegas), rather than a multiple of current or projected revenue/earnings; the price also accounts for inflation.

The Bonderman/Bruckheimer group wanted the team to take the ice in October ’20, but ultimately opted to play it safe and give itself another 12 months to ensure deadlines were met. That was a wise decision on their part, as any delays in the arena’s redevelopment (or in the development of transportation infrastructure) likely would have forced the team to start its inaugural season with an extended road trip (not ideal from a competitive advantage standpoint) and it’s possible (if not likely) that the start of the ’20-‘21 season will be delayed (see: looming player lockout); you don’t roll out an expansion franchise during an abbreviated season.

Skanska (a Swedish multinational construction/development co.) and AECOM Hunt (an American multinational engineering/design/construction firm) will break ground on the Downtown Seattle Center arena project later today. You can’t buy into the Bonderman/Bruckheimer group or invest in the developer, Oak View Group (b/c MSG recently sold its stake in Azoff MSG Entertainment), but you can play both companies tasked with the reconstruction of Key Arena; Skanska and AECOM Hunt. Skanska trades over-the-counter under the symbol SKSBF, while AECOM Hunt (a subsidiary of AECOM, component of S&P 400) trades on the NYSE under the symbol ACM.

Elevate Sports Ventures, formed by Harris Blitzer Sports & Entertainment, the San Francisco 49ers and Creative Artists Agency, will manage the venue’s premium seat sales; Live Nation (LYV) and Ticketmaster (a Live Nation subsidiary) are also strategic partners and stakeholders in the sales, marketing and premium services company. Oak View Group will sell the building’s naming rights.

Fan Marino: Seattle has been the largest U.S. market (18th) without a winter pro sports franchise since the Sonics skipped toward more than a decade ago. With the addition of an NHL franchise the Emerald City is once again a 3-sport town, but the Oak View Group isn’t content with placing just an NHL franchise in the building; they plan to bring the NBA back to Seattle too. Councilwoman Sally Bagshaw said she expects the city to have an NBA franchise by 2020. San Diego and Baltimore are now the biggest U.S. cities without a winter pro sports franchise.

Seattle has never had an NHL team, but the city maintains a proud hockey history; the Seattle Metropolitans of the Pacific Coast Hockey Association (PCHL) won the 1916-1917 Stanley Cup (1st team from outside Canada to do so) and finished with the league’s best record 5x in the 10 years the team operated between 1915-1924. More recently, the Seattle Totems won 3 PCHL championships between 1959-1968; the club last played a game in 1975.

Fun Fact: The Metropolitans won the Stanley Cup the year prior to the National Hockey League’s formation. The NHL was still the National Hockey Association in ’17 and the league didn’t take exclusive control of the Stanley Cup, as its championship trophy, until 1926.

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Author: John Wall Street

At the intersection of sports & finance.

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