New York Sports Franchise Series: NHL, Ownership Need Islanders to Move

Many business careers face the “up or out” proposition. Either succeed and get promoted, or leave town. While it works over a much longer time period in sports, its time for the New York Islanders to move out. For the good of the team, the owners, and the entire league.

This week’s announcement that the Isles will play a preseason game at the AEG-owned Kansas City arena sparked a new round of rumors that Charles Wang is moving the team out. The move makes sense, and for more than the obvious reasons that the franchise is losing $20M per year and is perenially at or near the bottom of the league in attendance.

First, the metropolitan New York area cannot support three hockey teams. The Islanders actually reside on the periphery NYC, in Long Island, surrounded by water, not easily accessible via public transportation from other parts of the city, and extremely difficult to navigate to from many parts of New Jersey and some parts of NY. Unlike NJ, which can draw from NYC, parts of Pennsylvania, and the entire state of NJ, Long Island is is isolated east of the city. Football could work because its only 8 games a year on Sunday afternoons. Hockey and basketball, a 41 game committment on school/work nights is more difficult. The Islanders really play in the Long Island market, not the NY market, better equipped to support a minor-league franchise, which the Islanders have become over the years. Even if the team improved and built a new stadium – both requirements to have a pray, they would still sell out each night. On top of the isolation, hockey is simply not as popular as the other major sports, so it draws from a substanially smaller subset of fans, decreasing the actual size of the market who is interested.

Beyond ticket sales, the Islanders have minimal local media revenue and coverage. The lack of coverage hurts popularity, in turn contributing to the attendance problem. Lack of revenue hurts the business model. Does anyone even know what channel the Islanders games are on? Whenever their games conflict with the Devils, or if the Knicks and Rangers are both playing and need to use MSG+, the Islanders are jettisoned to a remote place on the dial. In a town with two major sports radio stations, the Islanders are the odd team out. Undoubtedly the ratings are miniscule, meaning less sponsorship and ad revenue, in turn lower rights fees.

On advertisers and sponsors, the Islanders have been aggressive, starting a small business network to garner additional advertisers and season ticket holders, and developing creative media packages. However, with the Rangers in town, all the big money goes to MSG, and the Devils attract a fair share with a new arena and recent history of success.

A consequence of overexpansion, poor expansion city selection, and minimal league TV revenue, multiple NHL franchises are already struggling to meet payroll. That may not be an immediate concern for the Isles thanks to an owner with deep pockets (to say nothing of the ludicrous 15-year Rick DiPietro contract), but having a moribund franchise losing money does not help the league.

In Kansas City, hockey can receive the same injection of enthusiasm Oklahoma City provided basketball. The excitement of a professional hockey franchise playing in a ready-made new arena from day one will boost attendance over 90% capacity – even if the Islanders don’t improve. Put a winning team on the ice, sell-outs galore. As the only game in sizable market, all ancillary revenue streams will increase – TV and radio rights fees, sponsorships, advertising, merchandise. Kansas City may not be NY, but its better to be king of the mansion than a peon in the castle.

Though its not Toronto, Kansas City makes more sense for a move than Pheonix, Miami, Tampa Bay, or even Nashville. THe NHL eventually needs to consolidate and move more of the league north or into Canada. However, alleviating NY of a third team would help boost one franchise immediately.

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