Sunday, December 15, 2013

1992 NHL Expansion

For more about 1992 Expansion Draft, click here.

In 1989 the National Hockey League was a 21-team league. It had been so since 1979, when the Edmonton Oilers, Hartford Whalers, Quebec Nordiques and Winnipeg Jets of the World Hockey Association joined. The decade that followed was the NHL's most stable since it began expanding in 1967. From 1967 to 1979 the NHL expanded five times adding sixteen teams in the process, had two teams relocate (the Golden Seals to Cleveland and Kansas City Scouts to Denver in 1976), and one that eventually effectively folded and ceased operations. From 1979 to 1989 the only franchise changes were the Atlanta Flames' move to Calgary in 1980 and Colorado Rockies' move to New Jersey in 1982, moves which solidified those franchises' foreseeable futures.

At the Board of Governors meeting in December of 1989 the NHL owners decided to change all that. They decided to expand again. The plan was the most ambitious since the first big expansion in 1967: the league would add seven teams by the year 2000, at least one by 1992. The league had just signed a new national broadcast agreement in the US with SportsChannel but it paled in comparison to what they had hoped it would be (SportsChannel ended up losing millions in the deal and became effectively defunct by the end of the broadcast agreement in 1992). It was hoped that expanding to new markets would solidify the NHL's case for demanding higher broadcast rights fees in its next negotiations. The NHL was after as big a TV deal as it could get and it was thought that more teams, particularly in the United States, would increase the league's exposure and potential TV market. Coincidentally this was the exact same reason that expansion in the 1960s was pursued in the first place (and a big reason why the California Seals remained in Oakland for nine forgettable years, but that's another story).

The most promising expansion site was San Jose, California. Howard Baldwin (former owner of the Hartford Whalers) and Morris Belzberg (Chairman and CEO of Budget Rent-a-car) were tentatively leading a push for a team in San Jose but the Gund brothers, owners of the Minnesota North Stars, announced their intention to move the North Stars there. The NHL reached a compromise with both groups in May, 1990 whereby the Gunds would get the expansion team in San Jose and Baldwin and Belzberg would buy the North Stars from them instead. That took care of the first team by '92.

The second and third expansion franchises were tentatively planned to begin play in 1992 or 1993, with the franchises being awarded by December, 1990. The three main criteria for acceptance were:

  • the ownership group must have at least $100 million net worth
  • the team must own or have a lease at an arena with at least 18,000 seats, and the team must receive the revenues from luxury boxes, concessions and other income streams from the arena
  • the expansion fee would be $50 million, with $5 million due upon awarding of the franchise, $22.5 million due by June of 1991 and the remaining $22.5 million due by December 15, 1991.

That last criterion—fifty million dollars—would prove to be the biggest sticking point for most of the applications. The sale of the North Stars to Baldwin and Belzberg was for only $31.5 million. $50 million for an expansion team seemed to be far more than an NHL team was really worth, but for the NHL it was absolutely non-negotiable. Applicants would pay $50 million for their new teams or they simply wouldn't get one.

The NHL sent out an open request for proposals for 1992 expansion franchises with a deadline for initial application set for midnight, August 15, 1990. At that time they received 11 bids from 10 cities:

  • Seattle, headed by Bill Ackerley. Ackerley was the son of Seattle SuperSonics owner Barry Ackerley. The Ackerleys planned to build a new arena in Seattle not far from the Kingdome. They proposed that their expansion team would play at the Seattle Center Coliseum, shared with the Sonics, until the new arena was complete. They did not want to front most of the money though and only wanted to retain a minority stake of the NHL team. They wanted a new NHL team to be a tenant in their arena more than anything.
  • Two groups from San Diego. One was headed by Harry Cooper, owner of the San Diego Sports Arena, while the other was headed by Jerry Buss, owner of the NBA's Los Angeles Lakers, former owner of the Kings (he sold the team to Bruce McNall in 1988) and owner of the Forum in which the Lakers and Kings played.
  • a group from Phoenix
  • Milwaukee, headed by Lloyd Pettit, the owner of the IHL's Milwaukee Admirals (and former Blackhawks broadcaster). He and his wife, Jane Bradley Pettit, donated the money to build the Bradley Center arena.
  • Houston, headed by Charlie Thomas, owner of the NBA's Houston Rockets and Ray Patterson, former GM of the Rockets. The team would play at The Summit, home of the Rockets, until a new arena was built.
  • Hamilton, fronted by promoter Gerry Patterson (who in the past had been a player agent, executive director of the Canadian Football League Player's Association and commissioner of the National Lacrosse League (the one in the 1970s, unrelated to the modern NLL)). The team would play at Copps Coliseum, completed in 1987. Patterson would not name his financial backers at the time.
  • Ottawa, headed by Bruce Firestone, Randy Sexton and Cyril Leeder of Terrace Investment Ltd. Terrace, a real estate development company, proposed to build a 22,000 seat arena in Kanata, a suburb of Ottawa.
  • St. Petersburg, Florida; headed by Peter Karmanos of Detroit, owner of Compuware, and fronted by former NHL player Jim Rutherford. The team would play in the Florida Suncoast Dome, a then-unfinished baseball stadium, until a hockey-specific arena was built later.
  • Tampa, Florida (just across Tampa Bay from St. Petersburg); fronted by former NHL player Phil Esposito. Esposito's financial backers were the Pritzker family, owners of the Hyatt hotel chain. The team would play in a new hockey arena to be built near the existing Tampa Stadium, home of the NFL's Buccaneers.
  • Miami, represented by Boston businessman Godfrey Wood. His ownership group comprised several partners, including investment banker John W. Henry (then-owner of the Pacific Coast League's Tucson Toros baseball club). The team would play at Miami Arena.

Each bidder was to submit a $100,000 deposit, refundable in full until September 7 and thereafter only $65,000 refundable.

It didn't take long for one of the groups to drop out entirely. The Phoenix group was composed of a large group of small businessmen who didn't believe that they would be able to fund a team in Phoenix. On August 19, only days after submitting their application, they withdrew. (They didn't even pay the $100,000 deposit in the first place.)

The bid by Lloyd Pettit of Milwaukee seemed to be relatively strong. The new team would play at Bradley Center alongside the Bucks basketball team and Pettit was experienced and well-regarded in operating a hockey team. Despite the apparent strength of Pettit's bid he withdrew it on October 9, about a week before an interim presentation to the NHL Board of Governors. The reason was the money. Pettit's group analyzed the potential revenue of an NHL team in Milwaukee and found that it wasn't feasible, particularly given the non-negotiable $50 million expansion fee.

On November 28, 1990, only eight days before the final presentations, Charlie Thomas's group from Houston did the same, for the same reasons. They were open to being part of another round of expansion bids in 1993 or 1994 but at the time it just didn't make financial sense to them.

In the interim Jerry Buss had shifted the geographic focus of his bid from San Diego to Anaheim, a suburb of Los Angeles best known for being the home of the Disneyland amusement park and the California Angels of baseball's American League. A new arena in Anaheim was in the planning stages and Buss wanted to get his foot in the door there. Buss didn't actually have a tentative lease agreement at any arena; he planned on trying to get the best lease he could and his bid was an open-ended one for somewhere in southern California.

The least likely group to succeed in getting one of the new franchises seemed to be Esposito's Tampa group. The proposed team, already anointed with the moniker "Tampa Bay Lightning", had no home and no owner: the Pritzker family backed out of the deal on October 18 and the preliminary motion to fund the new Tampa Coliseum was voted down by Tampa's city council on December 4, two days before the final presentations. Esposito searched far and wide for new financial backers and had a tentative agreement with a group of Japanese companies led by Fuji Bank going in to the final presentation on December 6. They still had no firm plan for an arena but would continue pushing Tampa to build the new coliseum and would seek a temporary lease with another venue for the team's first couple years.

By contrast Karmanos's bid for St. Petersburg appeared to be the strongest. Funding wasn't a problem and the team secured a four-year lease with the Florida Suncoast Dome, which could have been extended to up to 20 years. The stadium would be modified to suit hockey; in fact a pre-season game between the Kings and Penguins was held there in September of 1990 using a temporary ice plant to create the ice surface, and they set a new record for attendance at an NHL game with 25,581 fans in the stands.

Hamilton's bid was eventually supported by Ron Joyce, owner of the Tim Hortons donut and coffee shop chain. Joyce would own 90% of the team with the rest split among several minority partners.

One by one the candidates presented to the NHL Board of Governors at The Breakers Hotel in Palm Beach, Florida on December 6, 1990. At the end of the day the news broke: there would be new NHL teams in 1992 in Ottawa and, surprisingly, Tampa.

The San Diego bid wasn't ever in consideration. Harry Cooper attended the meeting and presented anyway, hoping to emphasize that despite having no firm bid package put together in 1990 he was still interested in expansion at some time in the 1990s. Buss's non-committal bid for somewhere in southern California, probably Anaheim, wasn't given any serious consideration either.

The Seattle bidders didn't present at all. In the morning Bill Ackerley and his associate from First Chicago Bank, Bill Lear, withdrew their application. Their (former) partners were left in the lobby, stunned. The Ackerleys never built their arena and the Sonics continued to play at the Seattle Center Coliseum, heavily renovated in the mid-'90s and renamed KeyArena, until the team moved to Oklahoma City in 2008. Ackerley sold the Sonics in 2001.

The Hamilton, Miami and St. Petersburg bids were rejected for one reason: money. They refused to pay the expansion fees in full following the schedule given by the NHL. The Hamilton group wanted to put $5 million down immediately, pay $20 million in 1991, and the remaining $25 million over the course of the following seven years. They anticipated having to pay indemnities to the Maple Leafs and Sabres and felt that the $50 million up front, months before the team would even begin play, was too onerous given the uncertainty around territorial indemnifications.

The Miami bid was rejected because John Henry (who took over the Miami bid from Godfrey Wood) wanted to pay $30 million of the expansion fees by the end of 1991 and the remaining $20 million over the course of many years afterward. He also had no firm lease agreement at Miami Arena, although it was expected that anyone who could put together the financing would get an agreement to play there. Henry would go on to become owner of the Florida Marlins baseball club in 1999 (he sold the team to Jeffrey Loria in 2002), and has since founded Fenway Sports Group. Fenway Sports Group owns Fenway Park, the Boston Red Sox, 80% of New England Sports Network (the other 20% is owned by Jeremy Jacobs's Delaware North Companies, owner of the Boston Bruins) and the Liverpool Football Club.

The St. Petersburg bid, the arguable front-runner that day, was rejected because they were only willing to pay the first $5 million immediately if it was refundable and the other $45 million over the course of several years.

The Ottawa bidders, who arrived at the hotel that day with local supporters including a marching band, were willing to pay the $50 million fee in full at the prescribed times. The arena project in Kanata was not yet finalized and approval had to go through the Ontario Municipal Board so the team would play at least its first couple seasons at the Ottawa Civic Centre, which had been the home of the WHA's Ottawa Nationals and briefly the home of the Ottawa Civics née Denver Spurs in 1976. (Trivia: the Ottawa Civic Centre was also home to the Ottawa 67's junior team and was built under the north stands of the much larger football stadium at Lansdowne Park. As of the writing of this post it is closed while renovations to Frank Clair Stadium are carried out.) Phil Esposito's Tampa bid was also willing to accept the expansion fee schedule; Esposito secured funding from the Japanese. Despite having no agreement to play anywhere and having only gotten the funding for the team in a scant few days before the presentation from dubious Japanese sources the NHL accepted the bid. The Tampa and Ottawa proponents were the only ones willing to pay the expansion fees on time and in full so they were the only ones accepted.

The two teams would have almost a year and a half to prepare for their expansion draft, shore up their finances and finalize their agreements to build new arenas. Over the course of 1991 Esposito lobbied to have the Tampa Coliseum plan resurrected but the plans never materialized. Esposito had a tentative agreement to play at the Florida Suncoast Dome, the stadium that the rival Karmanos bid would have used, instead but the deal fell through in January, 1992. He fell back on a two-year lease agreement with the Florida State Fairgrounds to play at their Expo Hall on April 23, 1992.

(Trivia: Ultimately the Lightning would play only one season at the small confines of the Expo Hall. They broke the lease and signed two-year lease at the Florida Suncoast Dome on July 30, 1993. The team would end up playing there for three seasons, finally moving to the new Tampa arena (built in Tampa's Channelside district, not near Tampa Stadium as originally intended) in 1996. The Suncoast Dome was renamed 'ThunderDome' during the Lightning's tenancy and is now known as Tropicana Field, home of the Tampa Bay Rays baseball team.)

Esposito also began hiring personnel. He would act as President and General Manager of the Tampa Bay Lightning; he hired his brother Tony to be his chief scout. They hired former Flames coach Terry Crisp as their head coach on April 23, 1992.

Meanwhile the Ottawa group, which named their team the Senators in honour of the former NHL team, hired Mel Bridgman as their GM on August 30, 1991. Former Rangers and Jets GM John Ferguson (Sr.) joined him as Director of Player Personnel on March 22, 1992. They hired Rick Bowness to coach on June 15, 1992.

The stage was set for the 1992 NHL Expansion Draft...

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