Territory Infringement Rights

[Judas Tavares]

Where can I find info about territory infringement rights about New Entrants? Like I need to know how close a new team could get to an existing one. Is it different in different places? And what are some of the rules around this?

Thanks

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[kdb209]

It is no longer a simple question.

Originally, the NHL Constitution granted each team an exclusive territorial right - a 50 mi radius from the city's corporate limits - and a team had an effective veto power over any move into its home territory. A team would have to negotiate and pay a territorial indemnification fee in order for a team to waive their "home territory" exclusive rights. The Isles paid $4M to the Rangers, the Devils paid a combined $12.5M to the Rangers/Isles/Flyers, and LA received half of Anaheim's $50M expansion fee (numbers all from memory).

However, the league later adopted a new rule (Bylaw 36) which (on paper at least) removed the ability of a single team to veto a move - instead just requiring a majority vote of the BoG. That said, it is still VERY unlikely that a mjority of the BoG would approve a move unless the "home territory" team acquiesced and a territorial rights fee was paid.

More details - cut-and-pasting from the current Gillette thread:

This year didn't the BOG agree also to make it so all 30 would have to unanimously agree on a future transfer, essentially making it impossible for the team to leave? =p No source on that, just think I saw it on Sportsnet in earlier in the year.

No - quite the opposite.

The league has "officially" watered down their restrictions on relocation.

Originally, Sec 4.2 & 4.3 gave a team an effective veto power over a franchise move to within their 50 mi territorial limits.

In the aftermath of the Al Davis / Oakland Raiders lawsuits in the 80's, the league adopted a new rule, Bylaw 36, which stated that if any anti trust issues were raised, only a simple majority vote was needed to approve a move and no team would hold a veto.

The Canadian Competition Bureau looked into the NHL's policies in 2006 and again last year - and upheld them, on the condition that the looser restrictions in Bylaw 36 were in effect.

Cut-an-pasting from one of the other CCB threads.

I though he needed 24 out of 30 approval votes to get in?? Usually the sellers vote is automatic but in Nashville's case it might not be.

The league adopted a change (Bylaw 36) to it's relocation rules in the wake of the Al Davis / Raiders anti trust suits against the NFL. The Canadian Competition Bureau also relied on this Bylaw when they ruled that the league's relocation policies did not constitute an anti trust violation.

Bylaw 36 states that if a relocation raised anti-trust issues, it would be approved by a simple majority of the BoG, and no single team could hold a veto.

Cutting-and-pasting from one of the CCB threads here:

It's covered in the League Constitution and Bylaws - which unfortunately for us BoH wonks are not public documents - but the relevant portions have been reported in the media last year when the Canadian Competition Bureau was rumored to be looking at the league.


http://www.nationalpost.com/news/story.html?id=18c34495-8adc-491e-b73e-e70e1fa02456&k=0

However, sources told the Post the Competition Bureau is reviewing a section of the NHL's constitution that deals with the "territorial rights" of the league and its member clubs.

According to Article 4.1 of the league's constitution, "each member shall have exclusive territorial rights in the city in which it is located and within 50 miles of that city's corporate limits," known as the club's "home territory."

Section 4.2 of the NHL's rules sets out an absolute prohibition over the proposed relocation of existing franchises by declaring that "No member shall transfer its club and franchise to a different city or borough."

Section 4.3 also grants each team exclusive control over its "home territory," and each club can prohibit hockey games from being played in its "home territory" without their consent.

More importantly, section 4.3 states that "no franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member." In other words, existing hockey teams have the individual right to veto the relocation of other clubs within an 80-kilometre radius of their own market.

...

In July, 2006, the bureau launched a similar investigation into the NHL's relocation practises and expressed interest in "how those procedures might be applied with respect to a proposed relocation to southern Ontario," sources say.

However, after meeting with NHL officials to discuss the territorial rights, the watchdog discontinued its probe and recommended against further action last December.

According to insiders familiar with events, the bureau made the decision because the NHL provided written assurance that while "relocations generally had required a unanimous board vote," the league has enacted bylaw 36 in response to a series of U.S. court decisions in the 1980s that ruled sports league franchise relocation rules were in violation of American anti-trust laws.

The NHL's bylaw 36 deals with transfer of locations outlined in section 4.2 of the league's laws and provides that in the event that a specific proposed relocation raised anti-trust or competitive concerns, the issue could be determined by a majority vote of the league's board of governors.

Apparently, the competition bureau decided that if the NHL were to confirm in writing its position that a proposed move to Southern Ontario would be subject to a majority vote - not a unanimous one - it would discontinue its investigation and recommend against further action.

edit: as a followup. The CCB issues a determination in March that the leagues policies did not violate anti trust law - with the caveat that Bylaw 36 was in force.

The Canadian Competition Bureau did look in to it and ruled that the NHL's By-Laws did not violate Canadian law specifically the Competition Act.


http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/02641e.html

Note that that ruling was made with the assumption that Bylaw 36 would be invoked over Sections 4.2 & 4.3 of the league constitution and that any relocation would be subject to a simple majority and not to the veto of a single team.

The Bureau's investigation established that under the NHL's rules and procedures, the proposed relocation of a franchise to Southern Ontario would require a majority vote by the NHL Board of Governors. The NHL would not permit any single team to exercise a veto to prevent a franchise from entering into Southern Ontario.

 

[Judas Tavares]

Wow thank you so much for this!

 

[SirJW]

Speaking of territory infringement, ifteh Ilsanders move to Queens, would they have to pay the Rangers anything since they will be in the City limits?

 

[Jake16]

What type of $ would the Leafs demand from another team coming into the Greater Toronto area?

 

[MuzikMachine]

Speaking of territory infringement, ifteh Ilsanders move to Queens, would they have to pay the Rangers anything since they will be in the City limits?

Not the best source, but according Wikipedia the New York Islanders paid a $4 million territorial fee to the Rangers when they started in 1972, http://en.wikipedia.org/wiki/New_York_Islanders#Franchise_history. As they are already in the NYC market, you would think they wouldn't need to pay another territorial fee to move within their own, established territory.

 

[Brodie]

Long Island is the Islanders territory. Since Queens is on Long Island, they have a pretty good case not to pay anything.

 

[kdb209]

Speaking of territory infringement, ifteh Ilsanders move to Queens, would they have to pay the Rangers anything since they will be in the City limits?

Not the best source, but according Wikipedia the New York Islanders paid a $4 million territorial fee to the Rangers when they started in 1972, http://en.wikipedia.org/wiki/New_York_Islanders#Franchise_history. As they are already in the NYC market, you would think they wouldn't need to pay another territorial fee to move within their own, established territory.

Long Island is the Islanders territory. Since Queens is on Long Island, they have a pretty good case not to pay anything.

Yes - the Isles paid the Rangers a $4M territorial indemnification fee in '72.

Since the Isles would be moving within their already established home territory - technically a 50 mile radius of Uniondale city limits - it is unlikely that any additional negotiations or fees with the Rangers would be required. We do not have a full copy of Sec 4 of the NHL Constitution - so we do not even know if any league approval is needed to relocate within a teams home territory. I cannot recall if there was any league action needed/taken when the Devils moved.

Note that there were no territorial fees when the Devils moved from the Meadowlands to Newark - both withing the the home territory of the Rangers.

Even if the Rags did try to block a move (or demand an exhorbitant fee), I think this is a case where Bylaw 36 could/would come into play. I can easily see the majority of the BoG approving a move, even over the objections of the Rangers - since this is a special case whose precedent could only affect a small number of teams (Rags/Isles/NJD and Ducks/Kings). The BoG would be loath to approve a move in the general case (over the objection of a home territory club) - since it could open the door to teams moving into their own backyards without conset/approval/bribes.

 

[Jake16]

Not the best source, but according Wikipedia the New York Islanders paid a $4 million territorial fee to the Rangers when they started in 1972, http://en.wikipedia.org/wiki/New_York_Islanders#Franchise_history. As they are already in the NYC market, you would think they wouldn't need to pay another territorial fee to move within their own, established territory.

That had to have been more than the franchise itself cost given that the Jets, Nords, Oilers and Whalers paid $6M to get into the NHL 7 years later in 1979.

Leafs would have to demand $100M plus, no?

 

[selkie]

I wouldn't be surprised if the Leafs wanted a $100 million fee. Years ago when the rumor mill said that Bill Davidson was thinking of moving the struggling Lightning to Detroit (Palace of Auburn Hills for an arena) Illich's territory rights price was supposedly in the $50 million range, and it would have only gone up from there.

 

[Fugu]

I wouldn't be surprised if the Leafs wanted a $100 million fee. Years ago when the rumor mill said that Bill Davidson was thinking of moving the struggling Lightning to Detroit (Palace of Auburn Hills for an arena) Illich's territory rights price was supposedly in the $50 million range, and it would have only gone up from there.

I don't think Ilitch would have ever allowed a second team into Detroit's territory even for a fee. I also don't recall TB/Davidson being in the mix. There were rumors about Karmanos wanting to put a second team in SE Michigan.

 

[Faltorvo]

Seeing how Toronto's veto vote no longer needs to be purchased, as in the past with other franchises. Toronto no longer has the footing to "demand" anything.

For the record, the league BOG has never in it's history voted on any T fees that have every been paid out in the past.

 

[LadyStanley]

For the record, the league BOG has never in it's history voted on any T fees that have every been paid out in the past.

So, why did Anaheim have to pay $$s on top of franchise expansion fee to the LA Kings?

 

[kdb209]

Seeing how Toronto's veto vote no longer needs to be purchased, as in the past with other franchises. Toronto no longer has the footing to "demand" anything.

For the record, the league BOG has never in it's history voted on any T fees that have every been paid out in the past.

In the past (except for the Ducks) the league did not have to vote on territorial indemnification fees, since they were negotiated between the affected teams, and were a prerequisite before the league would even vote on a relocation/expansion.

So, why did Anaheim have to pay $$s on top of franchise expansion fee to the LA Kings?

Actually, the Kings received half of the Ducks $50M expansion fee - which certainly would have required league approval.

http://www.nytimes.com/1993/08/30/s...uck-quack-like-a-duck-market-like-disney.html

Half of the Ducks' $50 million expansion fee went as a territorial indemnity fee to Bruce McNall, the owner of the Kings and chairman of the N.H.L's board of governors, who was looking to sell part of his franchise's territory.

 

[kdb209]

Seeing how Toronto's veto vote no longer needs to be purchased, as in the past with other franchises. Toronto no longer has the footing to "demand" anything.

They may not have an explicit veto - the league's Bylaw 36 having replaced the absolute veto with a majority vote of the BoG - but it is VERY unlikely that a majority of the BoG would vote to approve a relocation without a satisfactory deal worked out with the Leafs.

Doing so would set a very bad precedent for the owners in other large markets, opening up the prospect of another team trying to move to Montreal, Detroit, Chicago, Vancouver, etc.

And keep in mind, the BoG is still pretty much an old boys club and would be loath to do anything to shaft a current member.

 

[May Day 10]

S2s = Balsielle?

 

[Northern Dancer]

They may not have an explicit veto - the league's Bylaw 36 having replaced the absolute veto with a majority vote of the BoG - but it is VERY unlikely that a majority of the BoG would vote to approve a relocation without a satisfactory deal worked out with the Leafs.

Doing so would set a very bad precedent for the owners in other large markets, opening up the prospect of another team trying to move to Montreal, Detroit, Chicago, Vancouver, etc.And keep in mind, the BoG is still pretty much an old boys club and would be loath to do anything to shaft a current member.

Totally agree with that. If the precedent were set for no territorial rights by ANY team then each and every market is vulnerable to poaching. Any successful franchise business would insist on teritorial rights. I don't think it is an old boys thing, why would ANY owner/franchise not have any interest in protecting their own market?