Andrew Zimbalist is a fairly well-known name among those interested in the business side of sports. Indeed, according to his Wikipedia page anyway, he's regarded as "as one of the most prominent sports economists in the world."
Which I'm assuming is why Jim Balsillie's legal team had him put together a study of (a) the viability of Hamilton as an NHL market and (b) the potential figure for a relocation fee.
Among other tidbits in a declaration for the court on Friday, Zimbalist reveals that:
- Balsillie's camp estimated in its transfer application that a team in Hamilton would have first-year revenues of $72.9-million, higher than 12 teams posted last season, and that those figures would rise 9.2 per cent annually as renovations were completed on Copps Coliseum (a process that would take four years). As a point of reference, the Coyotes brought in roughly $44-million this past season in Glendale.
- "It is almost a certainty that, in the presence of competition, ticket prices for Maple Leafs games will be lower than they would otherwise be," Zimbalist writes. "However... it seems likely that the Maple Leafs will be able to continue to sell out its arena."
- Zimbalist also examines attendance data for the Rangers, Islanders and Kings when new teams came into their markets and states that "there is little in the historical attendance record of the NHL to support an expectation that introducing a second or third team into a metropolitan area would hurt he attendance of the existing team(s)."
- "After examining a variety of evidence," he writes in summing up issue (a), "I conclude that Hamilton is a superior economic location to many of the metropolitan areas that currently host an NHL team and that there is no economically justifiable reason for the NHL to reject Hamilton as a host city for a relocated team."
The bulk of Zimbalist's findings, contained in one of the latest court documents, focus on the relocation fee, however, and he uses language in the NHL's bylaws and the Raiders II case to come up with an estimated figure of $11- to $13-million.
In this section, he reveals that:
- The Canadiens paid the following amounts into the NHL revenue sharing pool in the four years after the lockout: $9.6-million in 2005-06, $7.1-million in 2006-07, $18.4-million in 2007-08, and $8.5-million in 2008-09. That's an average of about $11-million a season, and, given their revenues, I imagine that means the Leafs paid more.
- Toronto made $158.5-million in hockey-related revenue last season, by my count more than doubling at least half the league's teams in that regard. (Ed. note: Teams making less than $80-million a season are unlikely to turn a profit without revenue sharing, which likely leaves quite a few teams in the red every year.)
- "The average estimated value for a new Hamilton franchise ranges from $143.5-million to $183.9-million."
- "Under Raiders II, using the revenue multiple method, I determined that the difference between the value of an expansion franchise in Hamilton ($174.9-million) and the value of an expansion franchise in Phoenix ($162.7-million) is $12.2-million."
- Zimbalist adds that he sees "no economic basis for an additional indemnification payment" on top of a relocation fee and that said fee can instead be divided among teams affected by the relocation.
All in all, some pretty interesting stuff and a lot of numbers not previously available. It seems to me he's undershot the value of a second Southern Ontario franchise by a fair margin, perhaps due to the fact it starts out with an outdated arena badly in need of renovations.
I've posted the whole document here for those looking to read more.