NHL Relocation back to Canada? Do the Numbers Support the Possibility?
By Scott Kozlowski aka Scottkoz20
With the current news out of Phoenix about the legal issues that surround the survival of the Coyotes, there have been rumblings about Winnipeg getting their franchise back. Phoenix is not the only franchise in despair. The ownership situation in Atlanta is causing people to think that the Thrashers could move to Quebec City.
Winnipeg and Quebec City share the bond of losing an NHL franchise in the mid-1990s after years of losing money and viability to survive in Canada. Fast forward 15 years and both cities have either built (MTS Centre in Winnipeg) or are planning (Videotron Amphitheatre in Quebec) to build an arena and are looking for a primary tenant.
Some people think that it didn’t work before, how can it work now?
The single biggest factor is the Canadian Dollar is about 30% stronger today that it was 15 years ago against the US Dollar. In June of 1995, when the Nordiques moved to Denver, $100/CAD was worth only $72.60/USD. During that season, the Nordiques payroll was $8.9 Million/USD (12.257 Million/CAD). The average ticket price was $31.71/USD during that season. However, all of the ticket revenue was taken in Canadian Dollars for an adjusted average of $43.66/CAD. There were 24 home games for the Nordiques during that season with a capacity of 15,176 at Le Colisée. Meaning the maximum revenue they could bring in from their home dates was $15.903 Million/CAD (this is assuming every game was a sell-out)
After paying the players, this left only 3.65 Million/USD to pay for operating expenses, non-player salaries, etc.
In Winnipeg, it was worse. When the Jets left Manitoba in 1996, the value of the Canadian Dollar was higher, but not significantly as $100/CAD was worth only $73.30/USD (or .60 per $1.00/USD). The average ticket price during the 1995-96 season was $23.82/USD ($32.50/CAD) giving a maximum ticket revenue for the Jets of around $20 Million/CAD for the 40 home dates. The average attendance was less than 12,000 during the 1995-96 season in Winnipeg, making ticket revenue closer to $15 Million/CAD. The payroll for the 1995-96 Jets was $28.1 Million/USD (or $38.384 Million/CAD)!!!!!!!!
Do you need me to show you that the Jets were operating in the red?
So, let’s fast forward to today. The current value of the US Dollar against the Canadian Dollar is $100/US to $102.11/CAD. Meaning the value of the Canadian Dollar has increased nearly $30 per $100 since the Nordiques and Jets moved from Canada.
Let’s look at if a team were to move into Winnipeg’s 15,015 seat MTS Centre. The average ticket price during the 2009-10 season was $51.41/USD ($50.35/CAD). So if a team were to move into Winnipeg and charge that amount for tickets, they would make 31.648 Million/USD from ticket sales. The Salary Cap floor is $44 Million/USD, leaving a $12.5 Million/USD gap. In order for a team to break even, they would need to charge an average of $71.43/USD ($70/CAD) per ticket at the 15,015 seat MTS Centre, which is a possibility.
On the flip side, the planned arena in Quebec is slated to handle 18,000+ for hockey. Using the same average ticket numbers, this would be about $38 Million/USD from ticket sales, leaving about $6 Million Dollar gap.
Obviously, ticket sales are not the only source of revenue for an NHL team but it is by far the biggest source. The NHL does not have a lucrative TV deal like the NFL and NBA has and the teams need to rely on the fans to stay afloat. Additionally, what happens when the Canadian Dollar declines against the US Dollar? It was only 2 years ago that the Canadian Dollar was worth less than 80 cents for a short time, and over the past 20 years, it’s typical that the Canadian Dollar is worth 80 cents or less.
Is it possible for Canada to support a 7th or 8th team? I believe so, as long at the Canadian Dollar can stay strong. If you were to press me to make a choice between Winnipeg and Quebec City, I’d believe Quebec City would have a better chance of survival, based on the numbers.
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