By Rob Ficiur
A few weeks ago the Calgary Flames announced their plans for a new hockey arena / sporting facility. It is no surprise since the Saddledom is the oldest building in use by NHL. When Edmonton announced new arena – after considerable negotiations – it was inevitable that Calgary would follow suit. Do teams need new updated stadiums in order to run sports franchises in this century?
1. Money Money Money – In 1993-94 the NHL’s league wide revenue was about $700 million. In 2014 league wide revenue was about $3.7 billion; five times what it was two decades ago. Three of the four major team sport leagues have tied their salary cap to league revenue. When there is more money there will be higher salaries. Stadium revenue for concessions, parking and luxury boxes are among the items that help bring in league money.
In that atmosphere at team cannot be competitive on the field / rink if they are not competitive in creating revenue. If a team tried to stand still – and not increase their revenue they would soon cease to exist.
2. Without a New Arena Teams will go – The Winnipeg Jets relocated to Phoenix in 1996 for many reasons. In 2004, eight years after the Jets left the aging Winnipeg arena, the MTS center became Winnipeg’s new professional hockey rink. Seven years later, in 2011 the struggling Atlanta Thrashers were relocated to Winnipeg. A new arena might not have saved the Jets in 1996 but once the new arena was in place Winnipeg was the first city to get a new or relocated NHL franchise.
In 2006 NBA’s Seattle Supersonic were sold to an Oklahoma owner. Sonics owners had said that if the City of Seattle would not help fund a $220 million dollar stadium upgrades, the team would move. This occurred only nine years after a major remodeling. That remodeling still left Seattle with the smallest NBA arena. For the last seven years there has been no NBA team in Seattle and until there is a new arena there won’t be.
3. Stadiums and New Franchises – In the last 50 years leagues waited until an arena was in place before awarding expansion franchises. When Major League Baseball floated the idea of returning to Montreal this year a new reality came to light. In the 21st century neither government nor private businesses are going to build an arena or stadium until they have officially been awarded a franchise. No one is going to put out the money on the hope that they might get a franchise.
4. What will the future look like?
The trans-Canada highway Act was passed in 1949. Construction took from 1950-1971. The post-World War 2 era was a time of government investment in infrastructure the likes of which we have not seen before or since.
The previous five decades have had unprecedented growth in sports and building of arenas. As we move further into the 21st century fewer sports arenas / stadiums will be built. This too has and will begin to slow down. In Glendale, Arizona the city government was paying the Phoenix Coyotes $15 million a year to use the publically built arena. Governments of all levels will not be able to use their shrinking funds to pay for professional sports teams’ homes.
After ten years of seeing league revenue (and salary cap) go up, the NHL is looking at a reduction in league revenue in the near future. When revenues level off or begin to decline so will the demand for new arenas.
In our future world where sports revenue decline teams and leagues will make due with existing arenas. The only problem with my bold prediction is that forty years ago I remember my uncles talking about how overpaid the athletes were and that eventually level off.