Minor League Teams and Minor League Cities: Evidence from the ECHL

By Fraser, Steve P. | Sport Marketing Quarterly, September 2007 | Go to article overview

Minor League Teams and Minor League Cities: Evidence from the ECHL


Fraser, Steve P., Sport Marketing Quarterly


Abstract

This study examines the relationship of locational factors on the viability of minor league hockey franchises and examines two market factors not generally found in the literature. The data suggest that minor league hockey, specifically the ECHL, has a higher probability to succeed in moderately sized markets (populations up to 500,000), with few NCAA Division I institutions, and where there is a presence of youth interest in the sport. There appears to be no significant relationship between the per capita income in a market and an ECHL franchise's success.

Introduction

We've never folded a membership...Teams have either been inactive or relocated. We've relocated teams annually for the past seven years. Countless teams relocate to upgrade their market so it's a naïve process to think that won't continue to happen.

-Former ECHL President Richard Adams Handel (2001)

Seven different minor hockey leagues added 55 teams over the five seasons spanning 1996-2001. Unfortunately, profits and attendance figures did not improve with the increase in the number of new markets. Teams are folding and leagues are competing for host cities. Bernstein (2001) noted that league commissioners admitted they expanded into markets that were not viable, chasing rising expansion fees that reached a peak of $6 million per club in top leagues.1 While the economic impact to a particular city is often debated, the economics of minor league hockey certainly have significant implications for teams, leagues, and facilities-with annual operating costs reaching $3 million for teams playing in the upper echelon of competition (Kent , 2006). This study examines the characteristics of those cities that play host to successful minor league sports franchises. Specifically, we use the ECHL (formerly known as the East Coast Hockey League) as a case study to investigate locational attributes that are associated with a successful, viable franchise.

This research contributes to the literature in several ways. First, this study focuses on the locational attributes of minor league franchises (i.e., those that play at levels below the National Hockey League [NHL]). Locational attributes are those that characterize the host city or community (e.g., population, income). Much of the existing literature examines these issues for sports at the major league level. Second, this study utilizes two local-market factors not generally found in existing studies: youth interest in the sport and competition from collegiate athletics. Finally, this study provides an in-depth look at a particularly successful league in one sport, the ECHL. The league started with five teams in 1988, growing to over 30 clubs in cities all across the country in 2003-04. In this study, we develop a model that relates locational attributes on success in a particular market with franchise viability; and equally as important, we examine the marginal effects of these attributes. To the extent that the model developed here accurately describes the economic environment faced by the ECHL, we predict the potential viability of the league's most recent expansion franchises.

The Minor League Hockey Landscape

Minor league hockey had a presence in nearly 100 communities during the 2003-04 season across the United States and Canada, in both large markets and small, and at various levels of competition. We use the recognized descriptors of competition levels identified as A, AA, and AAA, with AAA identifying the highest level of minor league play. The American Hockey League (AHL) represents the top caliber (AAA) of minor league hockey and fields 28 teams primarily located in the northeastern U.S. and Canada. The ECHL (AA) plays at a talent level one step below the AHL; in 2004, the ECHL had 31 teams compete in all regions of the U.S. In addition to the ECHL, and playing at a similar level, are the Central Hockey League (CHL) and the United Hockey League (UHL), which operated 17 and 11 clubs, respectively, in 2003-04 (Carnefix & Rivera, 2003, 2004; AHL; CHL; ECHL; UHL). …

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