What’s Next For NHL Expansion After Vegas Golden Knights’ Stanley Cup?

One week ago, the Vegas Golden Knights made good on their audacious goal, winning their first Stanley Cup in just their sixth year of existence.

As it turns out, the accelerated development curve that grew out of their unexpected trip to the Stanley Cup Final in Year 1 didn’t derail them. Neither did an injury-plagued 2021-22 season, which saw them finish outside the postseason picture for the first time in their franchise’s history.

Now, they’re at the top of the mountain, letting it all sink in after their celebratory parade down the Las Vegas Strip on Saturday.

And after paying a $500 million expansion fee to own the NHL’s 31st franchise, owner Bill Foley and his partners, the Maloof family, saw their investment valued at $965 million by Forbes last December. That’s an impressive ROI.

The Golden Knights’ valuation has likely spiked even higher in the last six months, thanks to both their Cup win and last week’s agreement to sell the Ottawa Senators for $950 million. That’s an all-time NHL record for a sale, and is being committed to a franchise that Forbes valued at $800 million six months ago.

The Senators sale, which was triggered by the death of then-owner Eugene Melnyk in March of 2022, brought out a large contingent of potential suitors. These days, pro sports teams are blue-chip assets which offer cachet and status as well as massive returns.

NHL teams are no exception. Forbes pegged the annual increase in NHL franchise values at 19% in 2022 and the numbers still appear to be rising. After buying a share of the Tampa Bay Lightning at a valuation of $1 billion late in 2021, private equity firm Arctos Sports Partners was reported last week to be looking to further increase that stake at a valuation of $1.4 billion, according to a report from Sportico.

In just over two years, the NHL’s expansion fee went from $500 million for Vegas to $650 million for the Seattle Kraken, who received their approval in December of 2018.

When the Kraken debuted in 2022, the NHL finally had a nice tidy grid: 32 teams, with two 16-team conferences and four divisions of eight, and exactly half of those teams making the playoffs. But it’s unlikely that symmetry will overshadow the appetite for further growth — especially when expansion fees can go even higher, and that money is divided equally among the current owners without being added to the pot of hockey-related revenue that is split 50/50 with the players.

For the price of surrendering one player in the expansion draft — and, yes, lowering their team’s odds of Stanley Cup success a bit due to increased competition — each owner pocketed nearly $17 million from the Vegas expansion and almost $22 million from Seattle (because the Golden Knights are so new, they did not receive a slice of the Kraken pie, which was divided among the 30 legacy franchises).

Where Next?

The league’s focus on American markets for expansion is a source of constant derision in Canada — especially when the NHL-ready 18,000-seat Videotron Centre in Quebec City has been open since 2015. It currently serves primarily as the very luxurious home digs for junior hockey’s Quebec Remparts.

After losing the Quebec Nordiques to Colorado in 1995, where they became the Avalanche, the market has been eager for a return of top-level pro hockey. But the NHL has not been as enthusiastic about the idea.

Quebecor Media applied for an expansion franchise in 2015, at the same time as Vegas, but ultimately had its application denied. Quebec City is a relatively small market, with a population of less than 1 million including surrounding areas. The region is already immersed in hockey so there is less opportunity for the type of explosive growth into new demographics that has been seen in both Vegas and Seattle. And the weak Canadian dollar remains an issue. One U.S. dollar was worth $1.35 Canadian in 1995, when the Nordiques left Quebec. On June 1 of this year, the exchange rate was $1.34.

The league has been expanding into ‘non-traditional’ U.S. markets since before Gary Bettman signed on as commissioner in 1993, and has remained committed to growing the game in regions where hockey is not a primary sport — not just with a pro presence and best-in-class marketing and merchandise that sells tickets and delivers ancillary revenue, but also with grassroots programs like NHL Street that engage young people and build a footprint for the next generation of hockey fans.

That’s why Salt Lake City makes sense. It’s a fast-growing region that’s up to 1.2 million people in its metro region, with plenty of young families, a proven appetite for pro sports, and a local suitor in owner of the NBA’s Utah Jazz and Real Salt Lake of MLS, Ryan Smith. And unlike Vegas or Florida, Salt Lake City is even a winter sports mecca, which sees snow on the ground every winter.

Elsewhere, could it be third time lucky in Atlanta? Though the city’s original franchise, the Flames, decamped for Calgary after eight years at the end of the 1970s and the Atlanta Thrashers became the second version of the Winnipeg Jets after 11 seasons in 2011, rumors are swirling once again that the Big Peach is looking to get back into the mix.

Atlanta is a natural fit as the home base for Warner Bros. Discovery Sports, the parent company for the NHL on TNT, which has leaned in hard to hockey since acquiring a portion of the NHL’s broadcast rights two seasons ago. And Metro Atlanta is another growing region — the seventh-largest in the U.S., with a population base of more than six million.

With the fourth-largest population in America, Houston is also on the expansion radar — although it is most often discussed as a potential landing spot for the beleaguered Arizona Coyotes if they do eventually end up needing to relocate.

But after the rapid success of Vegas and Seattle, ownership groups are even hungrier to purchase expansion franchises than to relocate existing teams. They get a clean slate — in terms of branding and marketing, and also with player personnel, where no pre-existing contracts mean complete freedom for hockey operations to assemble a roster of its choosing without any onerous salary-cap issues.

Also, once the next round of expansion fees are set, there will likely be somewhere between 25 and 30 million reasons why the league’s current owners would prefer to see new franchises come on board than have current teams relocate.