I don't think you make a very strong argument for contraction being the optimal solution for this problem. While I agree it would definitely fix the issues, it'd be quite the Pyrrhic victory. I can see a whole list of downsides to that for everyone involved:
I don't think that once you get to this point, that there is something called an optimal solution. Someone will lose something no matter which way you turn. Once you accept that, you have to devise a strategy that yields the best return for the stake holders. I hope that comes through in the individual replies to the points below.
I don't believe that job protection is a justifiable reason to ignore market feedback (in and of itself). If a false economy was created that enabled those jobs in the first place, it's all the more reason to reassess the economics at hand.
Yes, I know I'm viewed as pro-union, but the reality is that I'm anti-
current NHL thinking.
2. owners of contracted teams losing their investment (and making the league look bad to people who may be inclined to invest in the league in the future)
That has value up to a point. That point is how much real money do you have take from profitable portions and transfer to something that is just being 'propped up' for appearance's sake? One may also have to accept that the value of Vancouver, Detroit or Toronto depends on the value of contracted team X. That may not necessarily be correlated at all.
3. less upward salary pressure (bad for players, not so bad for owners) due to their being more qualified people fighting for fewer spots.
From a fan's perspective, this wouldn't be so bad. If you're on the side that believes talent is stretched too thinly given the current product rates of players by all hockey-producing countries, the product would improve.
For example, Canada could probably develop even more players if they didn't stick to the current age cut-offs and number of programs available. The current cut-off favors kids born in the first half of the year. This has everything to do with when you make the cut-off. If you made the selections six months later, the opposite would happen. That means you're [at a minimum] leaving half of all potential NHL players behind.
4. Less growing of the popularity of the game nationwide (you can't deny that having a team in your city increases the chances of you becoming a hockey fan).
I have mixed feelings on this point. Is the NFL popular because there are 32 teams? Of is football as a sport popular because it's football and Americans play it? Canadians didn't have as many teams back in the day either, and they were usually devout fans in spite of that.
Growing the popularity of the game probably can be helped by the presence of a local team, but then we get into the entire debate of how long that takes, how much money needs to be invested and if that team has to be a winner consistently for it to work. I don't know the answers to these issues. Isn't this the ideology that got us this far?
I don't understand how these consequences are somehow considered less worse than the things you outlined above, which to me sound pretty minor. Obviously it'd be more complicated and more work to design a better system, but it's far from an unsolvable problem.
Don't you have to identify the problem and agree that's the one you're fixing? I think the NHL is targeting something other than revenue disparity.
I realize you seem to think it's inevitable that the big revenue teams will pull the floor up too high for the smaller revenue teams to ever make money, but there's a lot of assumptions inherent in that outlook. The biggest one is the assumption that there is no cap in revenue on the high revenue teams and they will continue to grow at the rate they have been. How do you know that we aren't getting close to the maximum for those markets? Ticket prices can only go up so far. Frankly I think it's just as likely that the majority of future revenue increases will come from the smaller revenue markets, as well as league wide revenue sources that help everyone, because those are the areas with the largest room for growth.
I believe this argument was used during the last lockout-- that there was more room for growth hence the time and resetting of economic conditions to facilitate that were needed.
The first problem is that [outside of a second team in Toronto, possibly Houston, Atlanta (which was just negated) and Seattle], there are no remaining open markets with a high market potential. The proverbial low lying fruit has been picked.
If you accept that premise, the next question is how much time and money needs to be invested in these undeveloped markets to get them to their fully mature state? After you answer that question, you can decide if it's worth the investment. Obviously, a market with 10 million inhabitants is preferable to one with 1,000,000. Your penetration rate for the 1 MM size would have to be 10x as high to get the same value, assuming the demand levels are at comparable price points. It really does come down to eyeballs. The more eyeballs, the more potentially lucrative. You may also factor in that the adoption rates in Canada are higher than the US, on a per capita basis.
Finally, a 5% growth rate for Toronto (assuming HRR is $200 MM for this example) yields $10 MM in additional HRR. For Phoenix (say $60 MM HRR), that would mean ~17% growth to get the same amount.
If that happens, big increases in revenue sharing (as has been agreed to), and a slightly lower percentage of revenue going to the players could make all the difference that is needed to make a league where all the franchises are stable.
That big increase in Revenue Sharing alone may become more money than the NHL ever garnered in expansion fees for those teams, except it's paid out by the top ten teams alone. In theory, your idea can work, but if you actually go through and add up all that money per team (givers and recipients), you can measure whether that is reasonable return for all that money. I'm postulating that it may not be a good ROI at all.
I think contraction is ESPECIALLY silly in a country going through recession, because how do you know that if things were booming again it wouldn't be a perfectly viable market? Why jump ship an abandon all that is good with having the team if you can possibly make a scenario that works by changing other parameters?
Because I've been a fan since the 1970's? Because I don't think the right problem is being addressed, and it was addressed, would the ROI I discuss above be there to justify it (using objective, measurable business parameters)?
Phoenix is the one problem that may be intractable, but I am not entirely convinced of that. They may just need a few more years to grow things. I think that is the biggest problem I have with everyone saying contraction would be so great - it takes time to build a good market in somewhere that isn't naturally a good market, and a lot of things have to go right. It has to be considered a long term project. Even if it is ultimately an unwinnable scenario, moving it makes way more sense than contracting it. There are still a few markets that are likely to be better.
I agree with most of this, but when you see the NHL having to retreat from the biggest city in the south due to possibly its own mismanagement and implementation of expansion plans---you have to wonder. Indeed, it is a long-term project, but if the national footprint is the holy grail, then there are cities that MUST have teams that are nurtured, while others potentially sacrificed to make it possible to do just that. Heck, if they could go back and do it all over again knowing what they know today, they might have longer periods of time between new additions, and a better support plan to make sure the new teams can take root.
