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The Globe and Mail

Size of market not important for NHL viability, study says

Sabres coach Lindy Ruff and his team may not be long for Buffalo, with or without the presence of a Jim Balsillie-inspired team, according to a Toronto financial planner.


It is the perception of many Canadian hockey fans that the league has misguidedly placed teams in locations around some parts of the United States where they don't make sense.

Now a Toronto-based financial planner and CEO can back up their claims and prove they are right.

Ted Rechtshaffen was performing due diligence for a client who is looking to sell his share in a current NHL team when he started crunching numbers on such things as ticket prices, attendance and market size to see which NHL markets made sense.

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His conclusions? Size of market, unlike the case in most instances concerning the NBA, Major League Baseball and even the NFL, does not have much to do with where it is viable to support NHL hockey. What matters in most instances is geographic location, with the league's strongest franchises located in places where the game of hockey has a long history and it at least part of the cultural fabric.

"There's no question that certain regions of the U.S. have not shown an ability to sustain an NHL team," said Rechtshaffen, who has not published his study beyond sending its summary to various media outlets. "[In some areas]it's kind of like throwing money at GM. It's a broken business model and the biggest example is when you hear things like those teams having 90-per-cent full attendance. You have 90 per cent all right, but the average ticket price is $20 and how many giveaways do you have?"

Rechtschaffen notes that some weaker markets are able to be viable when their teams are at the top of the NHL's standings. But he notes that when that inevitably turns, teams suffer in attendance and have no ability to raise ticket prices to make up for revenue shortfalls.

"I'm a financial planners so I deal with people saying `If things are good …' and what we do in the financial planning world is say `Let's assume things are less than good.' "

Interestingly, the one Northeastern market Rachschaffen casts doubt upon is Buffalo, where attendance has been strong in recent years but where the average ticket price ranks at or near the bottom of the NHL. And he concludes the Sabres' challenges could become acute as the city's population continues to diminish.

"I don't want to comment on the Balsillie situation but the team moves to Hamilton and it kills Buffalo, it's going to happen anyway in my opinion."

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