Tuesday, December 19, 2017

Are The Carolina Hurricanes Moving To Texas?

For the past few seasons the Carolina Hurricanes have been at or near the bottom of NHL attendance. Owner Peter Karmanos has been himself waist deep in financial trouble, having been sued by his kids for borrowing money against their trust. Rumours of the Hurricanes being sold have been running rampant over the past year, until a majority share was finally sold to Texas billionaire Tom Dundon in December of 2017 (pending approval). Everyone involved has been quick to say he is not moving the team to Texas, despite the perilous attendance situation that’s been plaguing the franchise.

The Hurricanes parent company Gale Force Holdings leases the arena from the “Centennial Authority”, and has an agreement to run arena operations for another 7 years. That would need to be broken for the team to move and is cited as the reason this team is staying in Raleigh. Some guy on Twitter tried telling me that the team is profitable because NCAA basketball also rents the building and draws good crowds. According to Forbes magazine, GFH lost $1.3M from PNC arena operations in 2015 (the most recent earnings report I could find online), which also includes the income from NCAA basketball games at the facility. Just having a successful 2nd tenant is not enough to make arena operations profitable.  Sorry dude.

Earlier this year, a Texas lawyer tried to purchase the Hurricanes but his bid fell apart in October when he failed to secure enough investors. Shortly after that bid failed, the billionaire owner of the Houston Rockets Tilman Fertitta expressed an interest in bringing in an NHL team to his facility. Then shortly after that announcement, another Texas billionaire Tom Dundon bought controlling interest of the Hurricanes. All signs point to Texas. Houston is the 7th largest media market in the United States, Raleigh is the 25th. Gary Bettman loves large media markets.

Even if Dundon intends to move the team back to his home state, nobody can openly say that. For at least this season they have to make due with their current home, and if the fans expect the team is moving, nobody is going to show up for the remainder of the schedule. I’m not a lawyer and don’t know how or if they can break their arena lease to move the team. It seems like where there’s a will, there should be a way.

It does feel a bit strange that a few weeks after one Texas billionaire expressed his interest in NHL hockey, a different Texas billionaire bought the Hurricanes. Maybe it’s just a coincidence that all the suitors are coming from the same state. It begs the question, are they working with or against each other? Is there a competition to see who can be the first to bring NHL hockey to Houston, or is there perhaps collaboration? If Fertitta had bought the Hurricanes 3 weeks after saying he wants an NHL franchise, it would have been obvious what he intended to do.

As bad as things might be in Carolina right now, the situation in Phoenix is even worse. Revenue sharing and expansion money were able to offset the money loss in Canes hockey ops. It's possible that the team will start winning games, fans will start buying tickets and everyone will be happy. Or the status quo will persist and the downward spiral will continue. If I were a gambling man, I'd bet money they're moving to Texas before the arena lease expires.

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