April 14, 2014, MONTREAL (ISN) – The Conference Board of Canada says the economic conditions are favourable enough to have three more National Hockey League franchises in the country within the next 20 years.
The board suggested Monday that in addition to Canada’s seven existing NHL teams, Quebec City and Hamilton, Ont., appear to meet minimum requirements to become home to franchises in the near future.
In the longer term, another franchise could eventually find its way to the Toronto area, but a lot of money and population growth would be required for the region to support two teams.
Two economists are making the case for expansion in a new book entitled “Power Play: The Business Economics of Pro Sports.” It was published late last month by the Conference Board.
It’s not the first time the organization has painted a rosy picture for professional sports in Canada.
In 2012, the same duo of Mario Lefebvre and Glen Hodgson floated the idea of the same three new NHL teams being in place by 2035.
Over the same period, they also foresaw the return of Major League Baseball to Montreal, the resurrection of the NBA in Vancouver and as many as three new Major League Soccer teams and several new Canadian Football League franchises.
Lefebvre, who no longer works for the Conference Board, said in an interview that cities like Hamilton and Quebec City meet basic requirements including adequate income levels, population base and corporate presence.
But potential franchises in these smaller markets would require dedicated owners and would likely face tough times in the event of economic shock waves such as a falling Canadian dollar.
“As has been the case with the Ottawa Senators, there will be deficit years if the team doesn’t make the playoffs for a few seasons,” Lefebvre said. “The owner can’t just pack everything up the first time this happens (a deficit year).”
Lefebvre said he doubts the Canadian dollar will ever fall as low as 62 cents US, which it did in January 2002. He believes the current level of roughly 90 cents US would be workable. Most professional sports teams operate in U.S. dollars.
Quebec City has already begun construction on a new NHL-calibre arena set to open next year. The city has said it hopes to attract a team — expansion or otherwise — to play there.
Lefebvre argues that Quebec City residents are better off now than they were when their city lost the Nordiques to Denver in 1995. Lefebvre quoted Statistics Canada figures that indicate the average per-capita income has grown from $17,500 in 1995 to $28,903 in 2012. He says that’s better than Montreal, where the income per capita in 2012 was $26,722.
Lefebvre said that suggests Quebec City locals can afford to buy tickets. Corporate sponsorship, he added, will present a different challenge.
“You will have to work a lot harder to make sure your private boxes are full, when compared to Montreal and Toronto where there are waiting lists,” said Lefebvre. “For Quebec City and Hamilton, it will take a marketing department that will have to work a lot harder.”
Andre Richelieu, a sports marketing professor at Universite Laval, agrees.
“The (Montreal) Canadiens have become, out of necessity, the team of the province,” Richelieu said. “There would be a huge amount of work to be done when it comes to marketing and corporate boxes in order for the team to survive.”
Lefebvre said there is no doubt that Hamilton, a city that has long been linked to NHL franchises in financial trouble, can sustain a team.
“Purely from an economic standpoint, it can,” Lefebvre said.
Being in proximity to Toronto means having access to the big businesses which could become eventual sponsors or season ticket owners for a new franchise. But there would be a need to upgrade the existing facility — FirstOntario Centre.
Another question revolves around a fee to compensate the Buffalo Sabres and the Toronto Maple Leafs, who currently claim the territory.
“We did not tackle this question,” Lefebvre admitted. “First of all, we don’t know (the amount) and secondly, would it be such a prohibitive price that it would keep any new franchise from coming over to Hamilton?”
Despite the report, Richelieu believes talk of any new Canadian NHL franchises are sheer speculation for now.
“The signals being sent recently by the NHL are not favourable, although that can change,” Richelieu said. “When we talk expansion, we mention especially cities like Seattle and Las Vegas rather than Quebec City and Hamilton.”
As for another franchise in the Toronto area, the gambit would be a long-term one. Currently, none of the major Canadian cities with an NHL franchise — Vancouver, Toronto or Montreal — have the population to sustain a second one.
By 2035, however, the population of Toronto is forecast to grow to 10.5 million. Factors to be considered, however, include start-up costs as well as financial compensation for the Leafs. The board estimates the entire bill would be in the neighbourhood of $1 billion.
The co-authors predict that franchises in Calgary, Edmonton and Ottawa will continue to be viable markets over the next 20 years but that the Atlantic provinces and Saskatchewan will not have the population or corporate presence to support NHL teams.