What’s Up With the CHL? Four Possible Outcomes

The only thing to be certain about at the moment is that there is a lot of uncertainty blowing around the Central Hockey League.

In late August, when the Arizona Sundogs and Denver Cutthroats threw in the towel on the 2014-15 season, it appeared the CHL was ready to go forward into the season with seven teams. Since then, something has changed, as rumors started swirling yesterday that there was again contact between the CHL and the ECHL about some or all of the CHL’s teams joining the Premier ‘AA’ Hockey League.

But what could it be? I submit to you the following, which I admit is pure speculation, but well-informed educated speculation at that:

The cost of travel likely is a huge factor behind what has apparently developed. With only seven teams spread from Brampton to the Dallas Metroplex to Rapid City, there will be a lot of bus miles, and with a lot of bus miles comes a lot of per diem money and hotel stays. Teams immediately started to crunch the numbers on travel and realized that their costs had quickly escalated.

Meanwhile, there was probably a backlash from fans and sponsors who (probably rightfully) didn’t want to see the same six teams come and go all season as the league limped towards oblivion. With revenue projections plunging, it’s likely that two or more teams told the league they would rather sit out the season than lose hundreds of thousands of dollars by playing.

So faced with increased costs and diminished revenue, at least two teams came to the league and said they couldn’t play the 2014-15 season.

The loss of two more teams would give the CHL five teams for the upcoming season, and therein lies the rub. For foreigners (i.e. Canadians) to be able to get P-1 visas to play in the CHL, the league must have SIX teams with the league’s total gross revenue topping $10 million. See generally 8 U.S.C. §1182.

With five teams, and no Canadian or European players, what would the CHL product be? It would be unappetizing at best, putrid at worst. And I say this as an American.

So the CHL owners realized that they couldn’t possibly play this upcoming season, and had to come hat-in-hand, with their proverbial tails between their legs, to the ECHL. If they didn’t, their entire investments in their CHL teams would vaporize overnight, and they’d be left with the debt that they’d incurred, less the value of the physical assets of a hockey team – uniforms, socks, skate sharpeners, etc.

So what are the possible scenarios? I think there are four possible outcomes.

Scenario One

The seven remaining CHL teams are absorbed by the ECHL for the 2014-15 season, resulting in a 29-team league.

This is the least likely scenario. I’d like to think all the CHL player and front office staff jobs would be saved, and this scenario would do that.

But it also means some schedule adjustment. This is not a huge obstacle, but it’s an obstacle.

It also means that the seven CHL teams have to satisfy all the requirements to play in the ECHL – performance bonds, insurance, financial guarantees – in a matter of weeks. Good luck with that. This is a huge obstacle, and one that makes this scenario unlikely.

Scenario Two

Some CHL teams will join the ECHL for the 2015-16 season. The others will cease to exist.

This is the most likely, as some of the seven CHL survivors are probably not financially viable enough to survive a season of dormancy.

The ECHL has all the negotiating power. If the CHL can’t play this season, and it really is my impression that that is the case, the ECHL is in a position to cherry-pick the strongest CHL teams and let the other ones go.

Also, there are legal machinations behind the scenes from the Western Professional Hockey League, Inc. v. Top Shelf, LLC litigation that are at play here. The ECHL is legally restrained from contacting CHL teams, and they’re not going to violate a court order, I’d bet. Any negotiation would require the CHL (which is a d/b/a for Western Professional Hockey League, Inc.) to immediately drop it’s suit against the ECHL, Rapid City, Allen, Brian McKenna, and Paul Hendrick.

Remember, the ECHL, no matter what happens, is playing this year. No one is questioning that. The CHL, we’re not so sure.

According to Shawn Rine of the Wheeling Post-Intelligencer, there were no meeting scheduled between the CHL and the ECHL. The ECHL had a scheduled Board of Governors meeting, and that was all. It sounds to me like the CHL owners showed up hoping to beg and plead their way in.

The CHL has everything to gain by making it sound like there is some kind of “merger” negotiation happening. It makes their fan base think that the league is still somewhat stable.

In reality, I think the CHL owners have an untenable position. They either lose their entire investment when the CHL folds, or they try and get into the ECHL – if they do it this season, they lose little, if any money, if it is for next season, they likely lose a good amount of money, but not all the money they’ve put into their teams from the beginning.

The third outcome would be that all seven teams and the CHL fold without playing in 2014-14. This is still a possibility, but pretty doubtful based on what sources close to the situation have told me.

Scenario four, a seven-team CHL plays the 2014-15 season, is highly unlikely.

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The opinions expressed herein are solely those of the author, and not his current or prior employers.

 

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