Saturday, July 26, 2014

$500,000 Can Buy You A CHL Franchise - But You've Only Just Begun

 You may have seen the article below that has been making its way around social media the last couple of days about CHL expansion with the headline about owning a CHL franchise for $500,000. An informative interview with CHL Commissioner Steve Ryan and owner Rodney Steven that talks about the league and expansion.  But before you start putting an ownership group together at your next fan get together keep in mind in addition to the franchise fee the annual budget for a CHL team is in the 2-3 million dollar range. And has been widely reported and not disputed the only team that made money last year was the Missouri Mavericks. Without a doubt the CHL business model with the teams currently in the league is a very difficult one. But with the ownership group currently in place it seems everyone is pulling in the same direction and the optimism about growing the league next year is real rather than wishful thinking. In the meantime the mantra around the league is how do you reduce costs and everyone needs sell, sell, sell. If you are employed by a CHL team, whether you are a coach, broadcaster, owner,  mascot, player, janitor, administrative assistant, president, or account rep, your position description includes sales.

The article below was written by Mike Sunnucks who is a senior reporter for the Phoenix Business Journal. (

A half-million bucks.
That’s the cost of a 2014 Lamborghini Gallardo. It will buy a seaside villa on the tropical island of Bali. It’s also the price tag to become a Bollywood movie producer in India.
It can also buy you a new franchise in the Central Hockey League.
The nine-team independent minor league is actually based in Phoenix, and held its annual meeting this week at the Gila River Indian Community's Wild Horse Pass Hotel & Casino.
The CHL has teams in markets such as Denver, suburban Toronto, Rapid City, South Dakota and the Arizona Sun Dogs in Prescott. The league changed its business model last year when team owners bought out Glendale-based Global Entertainment Corp.
Global owned the league and was headed by Canadian businessman Jim Treliving. Now, the CHL is controlled by its franchise owners and recently moved into new offices in north Phoenix.
The league is looking to expand, said Commissioner Steve Ryan, a former National Hockey League executive and CEO of the Major Indoor Soccer League. He said $500,000 is the entry point for prospective franchise owners.
Ryan said the league is looking at expansion possibilities in Wyoming, Kansas and Illinois. He also sees some opportunities for the league if there are changes with American Hockey League affiliations. Some of the NHL’s West Coast teams want AAA-level affiliates closer than some of their current AHL homes.
The Los Angeles Kings AHL affiliate, for example, is in Manchester, New Hampshire. The Anaheim Ducks feeder team is in Norfolk, Virginia. The Arizona Coyotes AHL affiliate is in Portland, Maine. That makes for long treks for players and coaches going between the AHL and NHL.
Western NHL teams could create a new California-centric AHL division. That also could create some new market opportunities for the CHL if there are location changes in hockey’s minor league landscape. “That’s going to open up some markets,” Ryan said.
The CHL's geographic footprint is centered in the Midwest and Great Plains states. However, a CHL team in St. Charles, Missouri folded after this past season.
Ryan sees the Phoenix-based CHL as competing not just with other sports, but really for consumer discretionary spending. “We are in the entertainment business,” he said. CHL teams average 3,400 fans per game.
Like other minor leagues, the CHL touts its value propositions to fans and sponsors. Ryan said the average ticket price for CHL games is around $17 compared with more than $80 for NHL tilts.
Still, Ryan said CHL teams look for the same types of sponsors major sports league do, such as retailers, cell phone companies and car dealerships. The CHL, like others sports leagues, are also looking to navigate the post-recession business landscape.
Businessman Rodney Steven and his brothers own three of the CHL’s nine franchises. They own the teams in Wichita, Kansas, Tulsa, Oklahoma and Allen, Texas, near Dallas.
Steven — who owns a chain of health clubs in Wichita — said he bought the team there in 2011 to keep it from going out of business. He’s since bought the two other franchises. Steven said owning the team in Wichita has created synergies for his health clubs as well as been good for the community.
He said minor league teams can flourish with sponsors and business partners in markets such as Wichita and Tulsa because those cities do not have major league teams. “We’re it,” he said. “We have 6,000 loyal fans,” Steven said outside CHL ownership meetings. The Wichita Thunder's sponsors include Sonic, Outback Steakhouse and American Family Insurance.

DID YOU KNOW: If you want to own a hockey franchise the best business model might be in the North American Hockey League (NAHL) which is the only second tier junior league in the US. As an owner you pay for ice time, and all travel expenses including meals and hotels. But no player payroll, players stay with families (called billet family) who get about $300 a month (paid by the player in most cases) for room and board. The $300 probably doesn't even cover the families cost for drinks (soda, gatorade protein drinks etc). And no insurance costs as the kids are typically covered under their parents health insurance plan. Many of the players (something like 30%) go on tho play college hockey and there are over 100 former NAHL players who have made it to the NHL so the entertainment value is there with the possibility of seeing future college and NHL stars. Players like Patrick Kane, Phil Kessel & Ryan Miller. While teams come and go the NAHL has been expanding and for the 2014-2015 season will have 24 teams.

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