Wednesday, May 04, 2011

Can the NHL survive in smaller markets in Canada?

In reading that article my first question is; are we to believe from reading this article that NHL is better off struggling in markets like Phoenix and Atlanta than the small Canadian markets like Quebec City and Winnipeg. Some my next question would be; are we to glean from the article that it would be a down grade if one of these two Canadian cities were able to have an NHL franchise again?

Let’s break this down further; the Phoenix Coyotes drew an unimpressive average of 12,208 fans per game this past season, this ranked the Coyotes 29th out of 30 teams. Also, the Atlanta Thrashers were a little better, but not much, as the Thrashers averaged an also unimpressive figure of 13,403 fans per game, that’s good enough for 27th out of 30 teams… If you don’t’ believe me click on the attendance number yourself and look at the numbers.
OTTAWA, May 4 /CNW/ - The market conditions in Québec City and Winnipeg have improved since National Hockey League (NHL) franchises left about 15 years ago— but both cities face additional challenges to make new NHL teams sustainable, The Conference Board of Canada concludes in its third publication on the pro sports market in Canada.

"Compared to the mid-1990s, when their respective teams departed, Quebec City and Winnipeg have higher populations and increased per capita disposable income, and Canadian franchises enjoy a loonie at parity with its U.S. counterpart. The prospective teams in both Quebec City and Winnipeg would unquestionably be in small markets, but the NHL's player salary cap would give them a chance to stay competitive with teams in larger cities," said Mario Lefebvre, Director, Centre for Municipal Studies, and co-author of The Four Market Pillars at Work: The Case of the Quebec Nordiques and Winnipeg Jets.

"Whether the overall conditions are sufficient to bring back a team to the passionate fans in either city remains debatable. Quebec City has a very small corporate presence. Winnipeg's fans would face a challenge of supporting both NHL and Canadian Football League teams. Overcoming these hurdles will require a lot of work and dedication from all stakeholders."

The Conference Board's previous publication in its Playing in the Big Leagues series identified four market factors - market size, income levels, corporate presence and a level-playing field - that help to explain why NHL teams departed from Quebec and Winnipeg in 1995 and 1996, respectively.

Both the Québec City and Winnipeg Census Metropolitan Areas now have populations over 750,000 - they both stood at roughly 680,000 in the mid-1990s. As discussed in the previous briefing in this series, Defining the Market Conditions for Success, the Conference Board estimates that the population of a market must match the potential total number of tickets sold in a season. Thus, a successful NHL franchise in Canada requires a minimum population of approximately 800,000 people. This conclusion is based on a review of the sports economics literature and the Conference Board's hypothesis on key market-based factors.

Income levels have also improved in both cities. Winnipeg moved from sixth in the 1990s to fifth in 2009, in terms of per capita income levels among Canada's nine largest cities (population wise). Québec City's per capita income ranking improved from eighth to seventh place during the same time period.

The biggest change in favour of a return of NHL teams to Canada is the evolution of a more level playing field. The Canadian dollar is now hovering around parity with its U.S. counterpart, and the Conference Board forecasts that the loonie will remain in that range for the foreseeable future. As a result, Canadian teams are no longer paying an exchange-rate premium on player salaries.

In addition, a player salary cap has been established. While the NHL could do more when it comes to revenue sharing, the salary cap gives some assistance to smaller-market franchises in competing with larger centres.