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Is the NHL's Las Vegas gamble worth the risk?

LAS VEGAS – Mayor Carolyn Goodman has seen false starts and missteps in Las Vegas's attempts to get a major professional sports team through the years.

The NBA has kicked the tires on a team relocating to Sin City, but it hasn’t happened yet.

Las Vegas was a possible relocation option for the Montreal Expos in 2004 but that never materialized.

Only the last several years have the rumors and speculation turned real. The NHL is expected to make a decision on expansion into Las Vegas – granting a franchise to the city to play in the new T-Mobile Arena.

The league’s Board of Governors will meet Wednesday morning in Las Vegas with a vote on expansion likely on the agenda.

“The population cries for it and the size cries for it. We’re just really ready,” Goodman said. “Las Vegas is about extravagance, it’s about excitement, it’s about new things. We definitely could handle an NBA team a soccer team and ice hockey ... that was not one I had thought about.”

The potential choice to land an ice hockey team in this non-traditional market is one that took time and calculated procedures by the NHL.

The Las Vegas group led by Bill Foley has gone through all the necessary requirements to have a team ready for 2017-18. They have a beautiful new arena in the heart of the strip that’s ready for action. They have plans for a practice facility in Summerlin. He hit 14,000 season ticket deposits.

All the NHL’s questions have been answered by Foley. Now comes the real test.

Will Foley’s $500 million expansion fee will be worth the price for the NHL to enter a partnership with Vegas? Can the locals prove that this city can support a major sports team? And can a Las Vegas franchise make the league’s bottom line grow?

“It’s an outstanding sports city. Passionate fans. Very knowledgeable. They love their teams,” said UNLV deputy athletics director Darryl Seibel, who used to work for USA Hockey. “They’re very proud of the association with those teams.

“Sports holds a special place in Las Vegas. It’s part of our DNA.”

Competition in market 

Up and down the Las Vegas strip – the area where T-Mobile Arena sits – there’s competition for a paying customer’s entertainment dollar.

There are concerts, shows, restaurants and casinos. In 2015 Las Vegas drew a total of 42 million visitors.

Is this a positive or a negative for an NHL team looking to build its own name and brand? Those involved in the sports community in this area look at it as an overwhelming positive, one that has helped lift their products. The belief is that a stronger Las Vegas as a whole helps all entities involved.

“There’s no doubt there’s competition for the discretionary dollar here,” Seibel said. “You’re not going to turn on the lights and open the ticket booth and expect people to line up. Our fans are sophisticated and they have high expectations and they have innumerable choices for entertainment and demands on the discretionary dollar here. Ultimately that’s a benefit to us. It’s a positive. We’re able to draw upon the expertise and resources of game presentation people and other experts in entertainment who live and work right here that we may not have access to.” 

The large visitor population means there is a greater number of people to pull for hockey games on top of the local populations. 

Some fans, for example, may get tired of going to a casino or a concert and opt to go to a sporting event instead.

“We had a bunch of guys here last week – eight dudes and they lost all their money on a Friday night and decided to do something inexpensive. We’re the best in fun, affordable family entertainment southern Nevada has to offer and that’s why we’ve been able to succeed and stick around here so long. ” said Don Logan, the president and COO of the Las Vegas 51s minor league baseball team, who added, “(Hockey) is another menu item on the menu of entertainment options in the entertainment capital of the world.” 

Goodman noted that Canada is the No 1 direct flight partner to Las Vegas and “we have a huge Canadian base population here.”

There’s also a belief that fans in colder climates will want to take a weekend trip to Las Vegas to see their favorite team play.

“I think the visiting fans will flock to Vegas,” Logan said. 

But would someone come to Las Vegas just to see a sporting event they can see in 30 other markets rather than local staples like Cirque du Soleil or Britney Spears?

“The non-traditional Las Vegas demographic is not hockey friendly,” Vanderbilt sports economics professor John Vrooman said. “Visitors are not coming to Vegas to watch hockey and unstable transient fanbases do not create value in the corporate client driven NHL.”

But team supporters believe they finally have strength in numbers to overcome some of their historically perceived issues. Las Vegas has recently often been ranked one of the fastest growing cities in the United States. 

“I think the fact that it will be the only major sports franchise here – I’m biased but I think hockey live is the most entertaining sport in the world,” said Bob Strumm, who was the general manager of the IHL’s Las Vegas Thunder from 1993-94 until the organization folded in 1999. “I’m biased obviously but no question that for people who are exposed to hockey, I think it’s something that people will warm up to.” 

What’s your fanbase?

Fans who enter T-Mobile Arena for games won’t only be fans of other teams or visitors from halfway around the world looking for a sporting event.

They will also be part of Las Vegas’ local population.

Even though much of the action for visitors is located on the strip, the Las Vegas area is home to a population of over 2 million people – which has grown heavily since the late 90s when a major pro team in the area started to be discussed in a more serious nature. 

Sports fans for Las Vegas area teams are no different than fans all over the country. 

“Our fans come from every walk of life,” Seibel said in regards to UNLV fans. “They’re a cross section of Las Vegas. Our teams draw from throughout Southern Nevada, Arizona and Southern California. We have a strong fan following from the greater Southwest region and we’re really fortunate in that our brand in a national brand. It doesn’t just have local and regional appeal, it has national appeal.”

They may be more starved for the top sports simply because they’ve never had the highest level of professionals in their area, which could increase their passion level. The way Strumm saw it, the reason why the Thunder ceased operations had little to do with hockey and fan support. It more had to do with the fact that they weren’t the top professional hockey league.

“Vegas has the best of the best here. I mean, anything in Vegas whether it’s the casinos or the entertainment facilities. Vegas is a special city in that regard and the best of the best, that’s what Vegas wants and I think minor league sports people realize that over a period of time I think that hockey was unique here we had a good run at it to start with but the fact it was minor league, I think over time the interest dissipated,” he said.

Even though building a local fanbase is important – filling the stadium is more vital in order to boost the team’s bottom line and local sports people believe there will be plenty of paying customers in the city to do this.

“It is a great sport and I think it will be an interesting and wonderful time for Las Vegas,” Goodman said. “But I do see the fanbase really being here, or as tourists coming in and a boom for our 150,000 (hotel) rooms that are in a five-mile proximity to each other.” 

LAS VEGAS, NV - JUNE 21: A general view of the 2016 NHL Awards Trophy Display case is seen at the The Hard Rock on June 21, 2016 in Las Vegas, Nevada. (Photo by Dave Sandford/NHLI via Getty Images)

 Potential pitfalls

Las Vegas is not a slam-dunk NHL expansion market by any stretch. That would be Quebec City, which also has a brand new arena and also submitted an expansion bid. The NHL has reportedly put Quebec City on the backburner as a relocation option instead, putting all their chips into Las Vegas.  

This area is not a traditional hockey market and is located in the American Southwest – the same general spot where the Arizona Coyotes have struggled to gain a following.

Even though Las Vegas has increased in population over the last several years, it would still be a relatively small market.

“The Vegas market is marginal especially for the gate driven revenues of the NHL,” Vrooman said. “Las Vegas is only the 45th largest TV market with 726,000 TV households. This is the same size as the relatively successful NBA market in Oklahoma City but the fanbase is totally different and the entertainment dollar is very competitive in Vegas. Oklahoma City has demographic depth while Vegas is a shallow shell market for sustained demand for hockey.”

There’s also the question of whether the NFL may be successfully lured to the area with the Oakland Raiders being rumored to relocate to Las Vegas. The NHL would quickly go from the only sports game in town to competing with another major pro sport for fans as well as sponsorship money.

Washington Capitals coach Barry Trotz remembered how difficult it was when he was with the Nashville Predators and both his team and the Tennessee Titans came to Middle Tennessee at the same time.

“If we had come solely like we were supposed to come to Nashville and be the only thing it would have been like San Jose. The Sharks are the only thing there. I think it would have galvanized really quickly in Nashville,” Trotz said. “We went from being, 'Hey, we got a professional team' to 'Now we've got two.' We went from being the talk of the town to now the Titans were the talk of the town, and that did hurt.”

Also, the arena is not located in a population center and even though the strip is great for tourists and entertainment, it isn’t always frequented by the city’s locals. There’s traffic and the properties around the arena charge for parking for events. 

“It’s not the greatest position for easy access if there weren’t other cars, but because there’s been no widening recently of the traffic there and no new garages built right there on site and on a very congested cross street to it,” Goodman said. “It’s a challenge and I think they’ll learn and they’ll fix it as the team really begins.”

There’s also the question of being so close to gambling and gaming. There are no gambling locations within the arena, but the proximity to gambling is an issue that could pop up at some point – especially with T-Mobile Arena being associated with MGM.

“You know gambling is available in every city in the US now. It’s not – the stigma that was attached to Vegas because of gaming is gone,” Logan said. “It’s a professional business and it’s very well run and very strictly regulated in Nevada. It’s more strictly regulated here than anywhere. I don’t think gaming will be an issue at all.”

Also, what if the team isn’t profitable? Would a struggling Las Vegas organization burn through the league’s $500 million fee for the team?

“From the outside point of view of hockey fans the League should expand as long as a team can generate a positive profit,” Vrooman said. “From the inside point of view of the owners/governors the league should expand to the point where the marginal expansion club can still afford the compensatory expansion fee.” 

Will it work? 

The NHL has put great faith in its executive committee, which has looked over every expansion detail in order to try to make this decision.

The NHL has meticulously crunched numbers over the last year to make sure this makes sense.

Foley has hit every mark the league has set for him to prove this will work. The NHL will try its best to make sure the team is competitive quickly with a deep expansion draft.

If the NHL in Las Vegas doesn’t work, it won’t be for lack of preparation or trying by the league or local sports people who have desperately waited for this moment

“I put a deposit on two season tickets myself and they’ve communicated by email and what not. They’ve done a real good job here of building up to this thing,” Strumm said. “This week hopefully it’s approved. I think from a major sports perspective nobody really knows for sure, but it’s an entertainment city and if they provide the entertainment on the ice it will be supported well.”

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Josh Cooper is an editor for Puck Daddy on Yahoo Sports. Have a tip? Email him at puckdaddyblog@yahoo.com or follow him on Twitter!

 

 

 

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