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Weak Fan Support A Major Issue

from Tony Keller of the Edmonton Journal,

Over the past decade, the NHL has become a two-speed league. A small number of teams are making a lot of money -led by the Toronto Maple Leafs, the New York Rangers, the Montreal Canadiens and the Vancouver Canucks. But on the other side of the divide, and the other side of the border, is a long list of teams generating revenues far below the league average: the Phoenix Coyotes, who will be on a moving truck the minute the city of Glendale stops handing over $25-million cheques, are the leaders of the pack. They’re joined by a growing tally of perennial money losers, such as the Columbus Blue Jackets, the Nashville Predators, the Florida Panthers and the team that is on the verge of moving to Winnipeg, the Atlanta Thrashers.

The NHL’s failing teams, all of them American and almost all in the Sunbelt, suffer from a very simple problem: they don’t have enough fans. And the few fans they have will only show up if ticket prices remain low. This matters because the NHL is an attendance business; the name of the game is putting bums in seats. NHL teams earn almost all of their revenues in their home arena.

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The last two paragraphs are the most ominous:

And the third option? The NHL could try to renegotiate the CBA -and cut costs by imposing a much lower salary cap on the players. The CBA comes up for renewal in a little over a year.
Did you enjoy the lost season of 2004-05? We could be in for a rematch in 2012-13.

Posted by BobTheZee on 05/25/11 at 07:22 PM ET

J.J. from Kansas's avatar

  And the third option? The NHL could try to renegotiate the CBA -and cut costs by imposing a much lower salary cap on the players. The CBA comes up for renewal in a little over a year.
  Did you enjoy the lost season of 2004-05? We could be in for a rematch in 2012-13.

Posted by BobTheZee on 05/25/11 at 05:22 PM ET

I really don’t think they’re going to get away with another lockout considering the CBA was designed to create this problem.  The big club owners are going to have to make concessions.

I hope…

Posted by J.J. from Kansas on 05/25/11 at 07:29 PM ET

HockeytownOverhaul's avatar

Attendance isn’t the game being played by the NHL.. it’s broadcasts.. TV contracts.. Attendance works itself out.. if you suck, take money from teams that don’t.. if you don’t, you owe it to the team you’re about to face in the playoffs to get that trade deadline aquisition to make them tougher competition against you.. for the good of the game you know..

Posted by HockeytownOverhaul on 05/25/11 at 07:35 PM ET

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Isn’t the NHL placing teams in the sunbelt an attempt to reverse the fact that the NHL is a gate driven business?  Gate receipts localizes profits and creates a haves versus have not league.  Without loss leaders in the sunbelt, the NHL has no chance of a national U.S broadcast deal that generates real revenues across the board.  They may have come close enough with the last TV deal that they are willing to let a couple of sunbelt teams go.

No sane person believes you will have the same attendance in non-traditional markets that you will have in Canadian markets, but that is besides the point. Where is the growth when you already have near 100% of the market share? The big clubs aren’t about to give away their regional profits and the only hope for a “balanced” league is generating enough non-localized revenue to keep all team scompetitive. It seems like a pipe dream to me, but that has been the NHLs plan for 15 years.

Posted by hockey1919 from mid-atlantic on 05/25/11 at 08:07 PM ET

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Could be wrong, but I’m pretty sure Nashville and Florida both make money; Nashville due to fan enthusiasm, Florida due to sheer market size and the particulars of the region’s economics.

In the end this is just another article written by a Canadian who thinks the 13,005 people in Saskatoon that can afford tickets loving their team more than the 13,000 ambivalent Floridians that choose to buy them on a whim would make Saskatoon a more successful market. It wouldn’t.

It’s just strange that he throws Nashville in the mix. Winnipeg is going to have all the same problems Nashville does (small market, not a lot of corporations to do massive ad buys), except worse (much smaller market, less money in the region).

Posted by steviesteve on 05/25/11 at 08:15 PM ET

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The big gap producer between the rich teams and the poor team is local tv and media rights money. Some markets get 2-5 million for their tv rights while others get 25-30 million. That is a tough difference to make up.

Obviously popularity plays a role in that, but so does the media environment in the market. If there are multiple regional channels that can bid on the rights to a game that drives up the price.

Posted by jkrdevil on 05/25/11 at 08:19 PM ET

Baroque's avatar

The big gap producer between the rich teams and the poor team is local tv and media rights money. Some markets get 2-5 million for their tv rights while others get 25-30 million. That is a tough difference to make up.

Obviously popularity plays a role in that, but so does the media environment in the market. If there are multiple regional channels that can bid on the rights to a game that drives up the price.

Posted by jkrdevil on 05/25/11 at 06:19 PM ET

Sponsorships as well. A team in a major metropolitan area has a wider variety of sponsoring businesses or organizations to court, and can charge more for the exposure than a team in a less populous area.

The sunbelt teams were an attempt to get away from reliance on gate revenue, but I would guess that the problem for some teams is that a few of the major markets are able to pull in so much by selling many seats at each game, and for very high ticket prices, that they inflate the hockey-related-revenue numbers for the entire league. The smaller market teams can’t draw in the same amount in media or sponsorships, so they have to make it up in ticket sales - which is hard to do if the team is horrible, and/or the fan base is used to paying a low price for tickets. You can only increase the ticket price so much without having people stop going altogether.

(Florida I read somewhere loses money because the attendance is so low and there are so many ticket giveaways, but Nashville breaks even or makes a modest profit in recent years - advancing past the first round should help them a great deal, both in gaining more revenue this season and in increasing excitement and ticket sales for next season.)

Posted by Baroque from Michigan on 05/25/11 at 08:41 PM ET

J.J. from Kansas's avatar

Could be wrong, but I’m pretty sure Nashville and Florida both make money; Nashville due to fan enthusiasm, Florida due to sheer market size and the particulars of the region’s economics.

It’s very possible that they do.

The Forbes data posted in December of 2010 lists them both as operating at a negative income (Florida -$9.5M, Nashville -$5.5M)

However, that data must be taken with a pretty big grain of salt, as that is only the data that they release about hockey-related revenues versus spending.  Plenty of clubs (read: all of them) engage in so-called “Hollywood accounting” where they hide profits in one way or another (for example, Ted Leonsis owns the Caps and is a big shareholder in the group that owns the Verizon Center, however, he’s not required to report the money that the Caps “pay” for the rights to use the Verizon Center as hockey-related revenue.)

Posted by J.J. from Kansas on 05/25/11 at 08:48 PM ET

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The NHL should never have gone to 30 teams.  That means almost half the teams don’t make the playoffs and that they are really reaching for markets to put teams in.  In markets with lukewarm support, that is a recipe for disaster when you don’t go to the playoffs for several years in a row.  You can’t blame the people of Atlanta, Columbus or Florida for not going to games, their teams have all been terrible for over 10 years (a combined 2 playoff appearances among those 3 teams in the last 10 years if my math is right) due to poor management and all of those teams don’t have great futures ahead of them either.  All the same, the NHL should admit they made a mistake and contract them but I don’t see them ever doing that.

Posted by Devils In The Details on 05/25/11 at 09:24 PM ET

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@J.J. Thing is, that data also has the Blue Jackets losing less than $10 million and in reality last season they lost more like $25 million. That creative accounting can go both ways and Florida and Nashville might also be losing *much more* than we know about.

Posted by dzuunmod on 05/25/11 at 09:28 PM ET

HockeytownOverhaul's avatar

Where’d you hear the Jacks lost 25mil?  I read they lost 9mil.

Posted by HockeytownOverhaul on 05/25/11 at 09:44 PM ET

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@HockeytownOverhaul: The Columbus Dispatch.

Posted by dzuunmod on 05/25/11 at 09:50 PM ET

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Haha! Don’t click that link - it’s a video I was sharing a minute ago. Try this one: http://www.bluejacketsxtra.com/live/content/sports/stories/2011/05/11/blue-jackets-lose-25-million-nhl-source-says.html?sid=101

Posted by dzuunmod on 05/25/11 at 09:51 PM ET

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@J.J. Thing is, that data also has the Blue Jackets losing less than $10 million and in reality last season they lost more like $25 million. That creative accounting can go both ways and Florida and Nashville might also be losing *much more* than we know about.

If Florida was losing money, I would think the ownership group would try to sell it, instead of buying more of the surrounding real estate every year. Don’t forget, they’re in the same area as the Marlins who have been able to con the city into giving them a new arena (not just building a new stadium; the Miami area built a stadium and transfered ownership to the Marlins at no cost to the sports team), under the auspices that the Marlins were losing money, which they were not (something like $50mm per year in the black). Wouldn’t surprise me if Sunrise Sports had some sort of sweet deal with local and regional government.

And if I’m not mistaken, the Predators’ COO said they’re making a lot more money than they used to and can now up payroll. If they were losing money, you’d be hearing rumors about Weber (much like rumors surrounded Hartnell, Upshall and Hamhuis in the same situations). No such credible rumors exist.

Posted by steviesteve on 05/25/11 at 09:55 PM ET

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A lot of “ifs” in your tale there, Steviesteve. I’m *showing* you a team that lost way more than Forbes said.

Posted by dzuunmod on 05/25/11 at 09:59 PM ET

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The US is in a major recession.  Canada seems to have avoided a lot of the problems, at least for now.  Canadian teams jrft for the US because the Canadian dollar was worth .60 cents and player contracts were in US dollars.  It’s fine to move a team here and there but what happens when the US dollar strengthens again?  The NHL has a strategy to increase it’s footprint.  The NHL has always been hampered by provincial Canadians who are afraid the US will take over.  Had the New York Rangers had the history the Montreal Canadians had hockey would be up there with baseball in the US.  Instead the Rangers win a Cup every 50 years and interest fades except among the die hards.  I know it’s Canada’s game but if you keep it strictly Canadian as most Canadians seem to want it will always be small potatos in the US and Europe as well.  The NHL needs strong franchises in NY Boston Chicago Philly LA etc in order to bolster the sunbelt teams which will gain traction eventually.  If not then you can take your puck and go home, but prepare for CFL salaries not NFL ones.

Posted by 13 user names on 05/25/11 at 10:01 PM ET

J.J. from Kansas's avatar

If Florida was losing money, I would think the ownership group would try to sell it, instead of buying more of the surrounding real estate every year.

Another of the owners’ tricks (one I know that’s been run by the Flames’ ownership) is to use the increase in franchise values that has been happening every year to loan yourself money for real estate or other projects that aren’t hockey-related.  So the team is technically a money loser (which they can write off), but the equity of the team allows them to make more money.

Not a value judgment on the businessmen doing it, just one of those things that happens.  My worry is about the creation of a small franchise bubble, which could ruin an owner and throw a team into a dire financial situation if it bursts (almost like what happened with the Coyotes, but not really).

And if I’m not mistaken, the Predators’ COO said they’re making a lot more money than they used to and can now up payroll.

It’s possible, and I’d be happy for the Predators to put their money where their COO’s mouth is, but until I see them spending up to the midpoint, I’ll temper expectations.  Right now it’s more profitable to keep themselves below the salary midpoint (more than $8M below the cap), so they retain their eligibility for profit-sharing dollars.

However, I’ll still say that I’m incredibly happy with the seeming turnaround that Nashville has had as an economic hockey base this season.  They seem to have a good thing going which I believe can be sustainable.  There’s absolutely no good reason to root for a team to fail financially (although I’ll continue to hope they lose games on the ice).

Posted by J.J. from Kansas on 05/25/11 at 10:58 PM ET

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Interesting this article comes out of Edmonton, acting as if they are a “have” when in reality no free agent wants to play there. They will need a major handout of a publicly funded arena to subsidize the market. All of this incessant demand to roll back the sunbelt stategy is based on the fear that the US will in the end dominate the sport of hockey. They see he writing on the wall, Californians and Texans getting drafted, more Americans playing in their junior leagues, US pulling even in World Juniors, US winning the midget worlds regularly, larger and larger TV contracts from the US. This phony charade about the Canadian heartland is solely intended to stop the national footprint strategy taken by the NHL.

Posted by timbits on 05/25/11 at 11:43 PM ET

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Interesting to see so many Americans getting their backs up about a meaningless article from a meaningless Canadian NHL market.

Posted by dzuunmod on 05/25/11 at 11:45 PM ET

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Interesting to see so many Americans getting their backs up about a meaningless article from a meaningless Canadian NHL market.

No we are sick and tired of condescending Canadian writers and fans that continually trash American hockey fans, cities and our love for the sport. They act as if they are entitled by birth to own the game that no one else can play it or understand it. That our cities can never support the game like their cities and the continuous lies and distortions intended to damage the reputation and marketability of our teams. If they shut the “F” about our fanchises we will stop trashing sh!tty little towns like Winnipeg, Hamilton and Saskatoon.

Posted by timbits on 05/25/11 at 11:54 PM ET

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We’re tired of seeing 6,000 in the stands to watch the game we love when (and you cannot deny this much) twice that amount would easily be in the stands in a handful of other Canadian cities without teams at the moment.

When Phoenix and Atlanta and Florida get respectable, Canadians will stop making fun.

Posted by dzuunmod on 05/25/11 at 11:56 PM ET

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BTW - Can someone tell me how Canadians are provincial when Americans are the ones who are so precious they can’t handle a Canadian team on TV from time to time, and who apparently can’t be sold on going to see games versus a team from Winnipeg?

Because that sounds like the definition of provincialism to me.

Posted by dzuunmod on 05/26/11 at 12:16 AM ET

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Americans have no interest in Canada.  The only ones that do are the “so called ” unsophisticated hockey fans you dump on all the time.  That is not provincialism it is a complete lack of awareness that your little country even exists.

Posted by 13 user names on 05/26/11 at 01:38 AM ET

Gary A$$ SUCK !!'s avatar

Anyhow Hockey belongs to the Scandinavians,Americans and Russians we rule.

Posted by Gary A$$ SUCK !! from Fort Myers, Florida on 05/26/11 at 01:51 AM ET

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Thank you, 13 user names, for providing an example of provincialism right here in this thread!

Posted by dzuunmod on 05/26/11 at 01:56 AM ET

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So, I guess the NHL should drop the teams in the southeast and southwest, then rip up the new TV deal they got from NBC since hockey will be basically a regional sport. Then with the lack of big network dollars, they can drop some of the smaller market northeast and midwest teams and we’ll be back to the original 6.

I think this is a plot to try and insure Toronto has a better chance to win the Stanley Cup.

Posted by RogerNYLA on 05/26/11 at 03:58 AM ET

J.J. from Kansas's avatar

Accusing an entire country of provincialism while talking shit on three cities which make up but a small drop in the entire population bucket that is the United States.

By the way, what are ratings like on HNIC when Florida and Atlanta play?

Posted by J.J. from Kansas on 05/26/11 at 10:05 AM ET

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By the way, what are ratings like on HNIC when Florida and Atlanta play?


And J.J. ends this conversation, mercifully.

Seriously, how many more articles do we need to read about Canadians lambasting Americans because they don’t, on whole, love hockey as much as Canadians?

Should Canada be looked at suspiciously and lambasted because Canadians do not love football as much as Americans?

Yeah, yeah, i know Canada, hockey is “Your Game”. But I’ll let you in on a secret: you’re making it more and more difficult to enjoy your game, because of your constant whining and complaining over peripheral issues.

Americans love football, and some Americans love hockey, too.

Canadians love hockey, and some Canadians love football, too.

SO WHAT?

Posted by Work from Work on 05/26/11 at 12:16 PM ET

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The ratings when those cities are involved aren’t as good as they could be, but they don’t drop off the table either, like Ottawa and Anaheim did in 2007 on NBC - and we don’t hear Canadians constantly complaining and fretting over how low the numbers are going to go for those teams either.

Posted by dzuunmod on 05/26/11 at 01:01 PM ET

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One big difference about American fans and Canadian fans generally, is that Americans will not watch teams that perenially lose. You can say it isn’t loyal, or you can say it is smart. Unlike Toronto, most Americans won’t put up with a crap product poorly marketed.  That being said I don’t believe there is a single Canadian market, other than Toronto, that would support a team any better than Florida or Atlanta or Phoenix or Columbus if they had 10 straight years without a playoff berth. You forget that Calgary had to block off the top section of the arena back in the 90’s, or that Ottawa went bankrupt, or that the Winnipeg Jets averaged 13000 fans for its entire existence. How about that it took an American to build GM place and turn the team around in Vancouver, when it averaged 15000 per game. You can go on with your delusions about Canadian superiority, but facts are a stubborn master!

Posted by timbits on 05/26/11 at 01:15 PM ET

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I am all for American teams and Americans watching hockey!

It’s not about winning and losing, timbits, it’s about watching teams other than one’s own. Canadians will watch Chicago and Philly in the finals without bitching about it. But when Vancouver makes the finals, what I see on Twitter and the Web from American puckheads is, “Americans aren’t interested in Vancouver. Americans aren’t going to watch this final.”

Well, why not? Whichever two teams are in this year’s final aren’t going to be losing teams, so you don’t get to use that excuse.

Posted by dzuunmod on 05/26/11 at 01:23 PM ET

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“Americans aren’t interested in Vancouver. Americans aren’t going to watch this final.”

No doubt Vancouver vs Tampa will have bad ratings. It still will get 2 million viewers on NBC.

Posted by timbits on 05/26/11 at 01:33 PM ET

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Ok - yeah, and why is that? Why are Americans so fairweather that they basically won’t watch?

Posted by dzuunmod on 05/26/11 at 01:38 PM ET

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You also forget we had 35 million viewers for the Canada vs US Gold Medal final, more than the entire population of Canada watching hockey.

Posted by timbits on 05/26/11 at 01:40 PM ET

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Ok - yeah, and why is that? Why are Americans so fairweather that they basically won’t watch?

Americans watch what is relevant to them personally. Vancouver and Tampa are not relevant to most Americans.

Posted by timbits on 05/26/11 at 01:44 PM ET

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I didn’t forget anything - we were just having a conversation about something mostly unrelated.

Americans watch what is relevant to them personally. Vancouver and Tampa are not relevant to most Americans.

And that’s fine - but can we stop pretending then that if more Americans just see the game, that eventually they will watch in great numbers?

Posted by dzuunmod on 05/26/11 at 01:53 PM ET

J.J. from Kansas's avatar

But when Vancouver makes the finals, what I see on Twitter and the Web from American puckheads is, “Americans aren’t interested in Vancouver. Americans aren’t going to watch this final.”

You follow the wrong people on Twitter, pal.

What’s the overarching point you’re trying to make here, dzuunmod?

Canadians are better at watching hockey than Americans?  Ok, I concede that point.

Canadians will watch Chicago and Philly in the finals without bitching about it

Is that why every year there’s a national argument about whether all Canadians should instantly transform into a fan of the last northern club to remain in the playoffs?  Because Canadians don’t care which side of the border the hockey is coming from like Americans do? 

I think you’re mixing a point there.  Canadians will still watch (and good on them for it), but there does seem to be merit to Timbits’ original idea that there seems to be this worried pastoral zeitgeist going through much of Canada that the sport “belongs” to you and that American involvement and interest is a threat to the national purity of your game.

You know what?  I’m not sure that there’s really anything wrong with that, either.  I don’t want to get too sociological here (since I already feel pretentious enough for using the word “zeitgeist” earlier), but it’s pretty clear that (by percentage), Canada really does care more about hockey than America.  The problem (which causes much of the worry) is that America’s population is ten times that of Canada’s.  While there’s a difference in currency value right now, it’s not large enough to override the fact that having ten times the population also means having ten times the gross domestic product. 

Say what you will about the comparative value of the economies and the standard of living differences and all of the other tiny pieces that make up the whole picture; I don’t really want to get involved in that.  No matter all of those things, a business is going to look at the differences and they’re going to keep thinking “if we can get the big herd to love this product half as much as the little herd, we’ll be rolling around in Scrooge McDuck money and THAT’S what I want!”

I would say that the concern appears to be not that there are only 6,000 people watching the Florida Panthers on any given night, but that with a turnaround, there could be 20,000 people watching them regularly and that will take some of the power to dictate the future of hockey farther from Canada.

To tell the truth, I’m actually a little scared of that too… I like hockey growing as a sport and I love that there are leagues forming in California and Texas.  What I don’t like is the thought of the NHL trying to water down the sport to make it appeal to the widest audience possible.  Unfortunately, it’s very hard to separate the two.

Posted by J.J. from Kansas on 05/26/11 at 01:53 PM ET

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Is that why every year there’s a national argument about whether all Canadians should instantly transform into a fan of the last northern club to remain in the playoffs?  Because Canadians don’t care which side of the border the hockey is coming from like Americans do?

Sure Canadians *care*, but not nearly so much as Americans. And that’s fine. Americans prefer football and baseball and basketball and maybe some other sports too and that’s their prerogative.

Canadians will still watch (and good on them for it), but there does seem to be merit to Timbits’ original idea that there seems to be this worried pastoral zeitgeist going through much of Canada that the sport “belongs” to you and that American involvement and interest is a threat to the national purity of your game.

That’s the thing - (some) Canadians wrap up their national identity in hockey in a way that Americans frankly cannot understand. National identity is tricky overall up here in a way that Americans cannot understand. (But that said, I do recall lots of hand-wringing when the Blue Jays won their two World Series and I can even remember CBS talent making the point that none of the Blue Jays players were actually from Canada.)

Say what you will about the comparative value of the economies and the standard of living differences and all of the other tiny pieces that make up the whole picture; I don’t really want to get involved in that.  No matter all of those things, a business is going to look at the differences and they’re going to keep thinking “if we can get the big herd to love this product half as much as the little herd, we’ll be rolling around in Scrooge McDuck money and THAT’S what I want!”

I think this is what bothers a lot of Canadians. Like, how long will our game (I’m using that as a rhetorical device - I would never call it that in casual conversation) continue on this chase down the rabbit hole? How long do you chase after that big TV contract or that big southern market before you eventually go back to your base and throw them a bone?

Posted by dzuunmod on 05/26/11 at 02:07 PM ET

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And the other thing, J.J. is that I think the league has pursued those things - the big TV contract and the big southern market - to its own detriment. Has the situation in Phoenix hurt the league? Have the other unstable franchises hurt the league? Have low TV ratings for many of those clubs hurt the league? If the league had gone about its southern expansion differently - and I have always said this - I would have supported it. If they had added one or two teams in, like, 1992 and then *waited 10 years until those were totally stable before adding more*, I could have gotten on board with it. But that’s not how it went and now some of those teams are dragging the league down.

Posted by dzuunmod on 05/26/11 at 02:14 PM ET

J.J. from Kansas's avatar

National identity is tricky overall up here in a way that Americans cannot understand. (But that said, I do recall lots of hand-wringing when the Blue Jays won their two World Series and I can even remember CBS talent making the point that none of the Blue Jays players were actually from Canada.)

I think that quite a few Americans can understand it - maybe not as strongly, but at least empathize with the feeling.  I’m not a fan of professional basketball, but watching the U.S. “Dream Teams” get their asses handed to them at their own game in the Olympics was kind of a weird and terrifying thought for many Americans.  Hell, even though it was ridiculous satire, the plot of Talladega Nights where a European comes in to dominate stock car racing being a major plot point wasn’t far off what I think would happen in that real-life situation.

I think this is what bothers a lot of Canadians. Like, how long will our game (...) continue on this chase down the rabbit hole? How long do you chase after that big TV contract or that big southern market before you eventually go back to your base and throw them a bone?

A bit like watching the hot girl you grew up with go on dates with rich assholes, huh?

Posted by J.J. from Kansas on 05/26/11 at 02:22 PM ET

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