So you’ve got an extra $500M hanging out in your bank account and you have an interest in owning a franchise in the best league in professional sports? You are presented with two options. 1) Buy an expansion team and bring them to Las Vegas. 2) Buy the Hurricanes and keep them in Carolina. Which way should you go? (Spoiler: This is a website that covers the Vegas Golden Knights. You already know our answer.)
The rumors are swirling in Carolina that Peter Karmonos Jr. is close to selling the team to former Texas Rangers owner Chuck Greenberg. The asking price should sound very familiar for Golden Knights fans. Of course while writing this article Forbes put out a story calling the Bloomberg report fake news, but who are we to get in the way of the McGregor/Mayweather battle of business website reports.
The first thing to realize when comparing which franchise is the better buy is the fact that $500M does not equal $500M when it comes to these two organizations. There’s a massive operating cost to get an expansion team to the same organizational framework as a team that’s been in Raleigh since 1997 and been in the NHL since 1972. Vegas needed a staff, an office, a practice facility, retirement plans, health care options, and a ton of “start-up business” marketing. It’s just an estimate based on what we know about the organization, but we believe The Creator is over $1 billion into the Golden Knights franchise, and their first game is still 84 days away.
Back to the Hurricanes. In cutting a check to the Karmanos family for $500M, what are you actually getting? First, a fully operational organization from team president to street teamers. Next is a hockey history. Now I’m not about to go out and say it’s a rich one, but the Hurricanes do have more Stanley Cups than the Capitals, Sharks, Senators, Predators, Panthers, Sabres, Canucks, Blues, and… the Golden Knights. Last is a roster of players and a pretty solid one at that.
But, the Hurricanes are ranked last in value on the Forbes “Business of Hockey List.” According to Forbes, they operate at a $15M a year deficit. They have the worst attendance in the NHL, filling just 64% of the building a night, and the team hasn’t been in the playoffs since 2009.
I’d go through why Vegas blows all of that out of the water, but you already know, so just chalk that one up for the Golden Knights.
Which brings us back to the rosters. Obviously, the Hurricanes are going to have a better team on the ice in 2017-18 than the Golden Knights, but are they closer to winning a Stanley Cup?
Carolina had a big offseason, improving their team tremendously, with a lot of help from Vegas in fact. They kicked off the Summer by trading for Scott Darling then signing him to a four-year deal. Carolina then added Trevor van Riemsdyk and Marcus Kruger via trade from the Golden Knights. Finally, they signed Justin Williams via free agency to a two-year $9M contract.
The Hurricanes have a nice young core of Sebastian Aho, Jeff Skinner, Teuvo Teravainen, Victor Rask, and Elias Lindholm, and signing Jaccob Slavin to the long-term deal looks like it’ll be a steal in a few years.
Simply put, the Hurricanes are ready for a trip to the playoffs but are probably not set up to win the Cup this year or next. However, as much as we want to get excited about Shea Theodore, Alex Tuch, or any of the Golden Knights draft picks, the Hurricanes have more talent currently, and more talent coming through the ranks in the next few years than the Golden Knights do… right now.
All in all, the value is undoubtedly in the corner of the Golden Knights when it comes to the better long term investment. You know what you are getting with the Hurricanes, and unless they suddenly turn it around and start winning playoff series every year, it’s a losing proposition. The Golden Knights cost way more, and are probably not in line for a Cup for quite a while, but the return on investment is likely to be much better. However, if Forbes is right and the price is more like $200-300M, Carolina might end up looking like a steal when compared to Vegas.
But don’t forget VGK fans, if you bought the Golden Knights, they never had to be named the Golden Knights… cause that’s how it works.
James
@Ken Boehlke
‘Which brings us back to the rosters. Obviously, the Hurricanes are going to have a better team on the ice in 2017-18 than the Golden Knights, but are they closer to winning a Stanley Cup?’
NHL franchises’ fortunes can change quickly with a little help from a generational player … Edmonton and Toronto looked to be light years away. It wouldn’t shock me if the Golden Knights hoisted the cup before the Hurricanes. This could go so many different ways, whether they are good, bad or indifferent….
RJ
But there are 31 teams looking for that generational player, and they only come along every generation or so. Banking your fortunes on landing that generational talent is like investing in powerball instead of a 401K.
RJ
Bottom line is this: both markets need to convince people to like hockey. That’s why Las Vegas is a much better market, the vast majority of Las Vegans have no idea if they like hockey or not, but are excited to find out. In Raleigh (and really all of the Carolinas) they have had Hockey for literally 20 years.
Most people wh are interested in finding out if they like hockey or not have checked it out, and made up their mind. Unfortunately, in Raleigh they need to convince people that already have decided Hockey isn’t for them to give it another chance.
Here is an analogy. Let’s say you own Pepsi. You want to get more Pepsi drinkers. You can either try to sell to a group of people who are hardcore Coke fans, or you can try to sell to a group of people who have never tried cola before. Which is more desireable? Obviously the new cola drinkers are the better marketing opportunity.
Ken Boehlke
I love a good analogy, and that one is brilliant for this situation.
RJ
To beat the analogy into the ground I’m just worried they are giving us Diet Crystal Pepsi in 2017 and asking us to believe them that in 2023 when we finally get real Pepsi it’ll be worth the wait.
Phisig150
I think Foley is trying to sell warm pepsi. He needs to invest in a fridge. Lot of money up front but will pay off in the end.
James
@RJ
Isn’t it fun to watch a promising youngster develop, regardless of the scoreboard? Fans love the homegrown player.
RJ
Heck yes it is fun. And fans like you and me who are posting comments on hockey blogs in July will love that. To the analogy, we are ALREADY Pepsi lovers.
That isn’t 90% of the market needed to sustain a healthy fan base here in town. They aren’t going to see Alex Tuch and think of him as a decent prospect they are going to see him as just some guy that’s going to get beat by the better guys. They aren’t going to spend the time that we do looking into the developing plan for our up and coming draft picks. They are going to go to a few games as a taste test, and if it tastes a little too much like Luca Sbisa they are going to lose interest fast, having never bothered to learn about our assets in future draft picks.
Heffay702
Spot on. The other factor to consider is that Vegas has an auxiliary market of international travelers, many of which also may not have been introduced to hockey or made up their mind about it yet.
Las Vegas also has a pretty significant population of Canadians who migrate down here during the winter which will provide a foundation of people who already like the sport.
These are both additional one ups that the Vegas market has over the Carolinas.
Cappy
“Of course while writing this article Forbes put out a story calling the Bloomberg report fake news, ”
What Bloomberg report? You made no other reference to it.
“There’s a massive operating cost to get an expansion team to the same organizational framework as a team that’s been in Raleigh since 1997 and been in the NHL since 1972.”
Um… nope. The Whalers were in the WHA from 1972-1979. They became part of the NHL in 1979 and lasted until 1997.
Maybe someone will buy the ‘Canes, move them to Hartford, and call them the Whalers, or move them to Quebec and call them the Nordiques.
Ken Boehlke
Here’s the Bloomberg one… https://www.bloomberg.com/news/articles/2017-07-13/greenberg-is-said-to-near-500-million-deal-for-nhl-s-hurricanes
Here’s the Forbes one… https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/mikeozanian/2017/07/14/carolina-hurricanes-500-million-sale-is-fake-news/&refURL=https://www.google.com/&referrer=https://www.google.com/
James
@RJ
I agree with you from a business perspective, but I think it’s a bad idea from a hockey perspective. Catering to the needs of the casual hockey fan is a bad way to run a team, it’s the blueprint for the New York Knicks!
James
@Phisig150
I think Foley is trying to sell hope. While it will take many years to complete the process, it will at least provide hope for better days in the years ahead.
James
So…. here’s a hypothetical question.. The Carolina Hurricanes are on the playoff bubble … Would a relocated up-and-coming Carolina Hurricanes team thrive in Las Vegas long term? I have serious doubts.