The Barons originated as the California Golden Seals in the 1967 NHL expansion. After new arena plans in San Francisco were cancelled, the NHL dropped its objection to a relocation of the perpetually troubled franchise from Oakland. Minority owner George Gund III persuaded majority owner Melvin Swig to move the team to his hometown of Cleveland for the 1976–77 season. The team was named "Barons" in honor of the successful team in the American Hockey League (AHL) that played in the city from 1929 to 1973, winning nine Calder Cups. The AHL Barons' owner, Nick Mileti, moved that team to Florida in favor of his Cleveland Crusaders team in the new World Hockey Association (WHA).
Cleveland had been mentioned as a possible NHL city as early as the 1930s, when the then-struggling Montreal Canadiens considered moving there. It had also been turned down for an NHL expansion team on three previous occasions, in the 1950s and 1960s.
The Barons played in the suburban Richfield Coliseum in Richfield, Ohio, an arena originally built for the WHA's Crusaders (who left to become the Minnesota Fighting Saints for the 1976-77 WHA season on the Barons' arrival) and the NBA's Cleveland Cavaliers. At the time, the Richfield Coliseum had the largest seating capacity in the NHL, at 18,544.
The NHL approved the move to Cleveland on July 14, 1976, but details were not finalized until late August, and there was little time or money for promotion of the new team. The Barons never recovered from this lack of visibility. They never came close to filling the Coliseum in their two years in Cleveland. The team's home opener on October 7, 1976, drew only 8,900 fans. They drew 10,000 or more fans in only seven out of 40 home games. Attendance was worse than it had been in Oakland and the team did not even draw as many fans as the WHA's Crusaders had. The Barons were also troubled by an unfavorable lease with the Coliseum.
In January 1977, Swig hinted the team might not finish the season because of payroll difficulties. He asked the board of governors for a bailout. The board turned down Swig's request almost out of hand. At the time, no one in the NHL offices believed that the Barons' situation was nearly as dire as Swig claimed. No NHL team had folded since the Montreal Maroons had their franchise formally canceled in 1947 after not icing a team since 1938. No team had folded in mid-season since the Montreal Wanderers disbanded during the NHL's inaugural season in 1917-18 after their arena burned down. The situation quickly deteriorated and team workers went unpaid for two months. The bottom fell out in February, when the team missed two payrolls. The league seriously considered folding the team and holding a dispersal draft for the players; by then, some of the Barons' players were actively being courted by other teams. By February 18, the players had lost their patience, and threatened to not take the ice for their game against the Colorado Rockies. Wanting to avoid the embarrassment of a player strike, as well as a team folding at mid-season (the latter had previously happened in the rival WHA), the league and the NHLPA made a last-minute $1.3 million loan to allow the Barons to finish the season. After the team finished last in the Adams Division again, Swig sold his interest to Gund and his brother Gordon.
For 1977–78, the Gunds poured money into the team, and it seemed to make a difference at first. The Barons stunned the defending Stanley Cup champion Montreal Canadiens on November 23 before a boisterous crowd of 12,859. After a brief slump, general manager Harry Howell pulled off several trades in an attempt to make the team tougher. It initially paid off, and the Barons knocked off three of the NHL's top teams, the Toronto Maple Leafs, New York Islanders and Buffalo Sabres in consecutive games in January 1978. A few weeks later, a record crowd of 13,110 saw the Barons tie the Philadelphia Flyers 2–2. It did not last; a 15-game losing streak knocked the Barons out of playoff contention.