Franchise allocation in international sports business: Case of the NHL

Abstract

OBJECTIVES OF THE STUDY:

The research sought to identify the franchise allocation criteria in international sports. The National Hockey League was used as a single case study, which focused on the league to understand how it would select a host city in the event of relocating a franchise in dire financial situation. Once the determinants of allocation have been identified, the thesis aimed at studying whether or not the Canadian market would be able to sustain additional National Hockey League franchises.

THEORY AND METHOD:

There is an extensive background of research done on sports business but only little research focused on understanding how the National Hockey League franchising criteria are established. The theoretical background suggests that a high concentration of fan support and the presence of adequate arenas contribute to attracting professional sports teams. Further research suggested that such factors as city location, city population and disposable income of fans are important points in allocating a professional sports team. While the National Hockey League did not make itself available for comment, a collection of 58 radio interviews of experts and NHL insiders and 24 articles and documents were used to gain profound insights.

FINDINGS AND CONCLUSIONS:

The research first sought to identify the set of criteria used by the NHL to relocate a team in financial difficulty in order to help improve the financial health of the league. However it became clear that the NHL would not want to relocate any franchises but would rather prefer to engage into expansion. The findings show that the NHL would expand to a city that would have approval of the Board of Governors, is located at least of 80km from the nearing NHL city, has a large fan base and corporations, is an important media market, has a large modern arena and has an owner who is willing to engage in the long-term and to absorb any losses. The Canadian cities of Hamilton, Ontario and Quebec City, Quebec would fulfill all of those criteria and would be suitable targets for expansion.