Saskatchewan Blues Essay

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Saskatoon, Saskatchewan would be an ideal place to relocate a NHL franchise to, and no
better franchise to move than a team struggling in its current situation such as the St. Louis
Blues. Saskatchewan is the newest booming economic centre in Canada. The oil industry is
taking off as they are finally beginning to drill for oil in large quantities in this area. Canadian
citizens and immigrants are flocking towards Saskatchewan. Many of these citizens are desperate
for their hockey fix and missing a home team to cheer on. Even though the greater St. Louis area
may have a much larger population, with almost 3,000,000 people, population does not always
mean a successful sports franchise. Take the Atlanta Thrashers for example. Atlanta is major
American city, had an outstanding arena to play in, yet they still struggled at the gate for ticket
sales. Hockey is just not as beloved a sport in the southern United States like it is all across
Canada. When the Thrashers relocated to Winnipeg, Manitoba for the 2011-2012 season, the
franchise has never seen such success in terms of community support and the league does not
regret the move at all. If the St. Louis Blues were to relocate to Saskatoon, Saskatchewan it
would be almost a parallel situation and the league would only prosper from the decision.
The most important factor in deciding whether this transfer should take place or not is the
demand for a professional sports franchise is there, and the answer is yes in this case. Although
there none of the of the four major sports leagues in Saskatchewan, they have a rich sports
history. This is proven by the track record of the Saskatchewan Roughriders. Although they are
based out of Regina, the Roughriders represent the entire province and attract fans all throughout
Saskatchewan. This would be the same for the Saskatoon Blues; the fan base would exceed just
Saskatoon and go all throughout Saskatchewan. The Roughriders are known for being the
“Home of the 13th Man.” They have long have had the most passionate fans in the CFL and this
has launched them into numerous Grey Cup titles. As you can see in figure one below 1, the
Roughriders have been increasing average game attendance sales gradually over the years and
they largest amount was last year with over 32,000 attending each games. This number is
remarkable when the stadium can only hold 28,800 fans. They are exceeding capacity for every
game proving that there is a demand for professional sports in Saskatchewan. Saskatoon has
shown in the past that they are in fact a true hockey city. In 2010, they hosted the IIHF World U20 Hockey Championships and the 2013 Memorial Cup with their hometown Saskatoon Blades
playing host. Both these events are some of the most prestigious tournaments in hockey and
Saskatoon was a real class act in both, furthermore showing that they can live up the
expectations of being home of a NHL franchise.
Saskatchewan is the place to be in Canada. Their economy has never been so strong and
this is backed up many statistics provided by Stats Canada. As of 2012, Saskatachewan has the
lowest unemployment rate in Canada at a remarkable 5%. Also, to go with this number, average
salary has gone up 2.8% in the past year more than double of any other province in Canada. This
means the average person in Saskatchewan is earning $907 per week. As you can see in figure 2,
Saskatchewan’s non-farming payroll is growing at a much higher rate than the rest of Canada.
With this new found money, individuals are looking for ways to spend their higher income. With
the amount of hockey fans in Saskatoon and the entire province of Saskatchewan it would only
make sense for a NHL franchise to be located there. If the league is concerned about Saskatoon’s
population not being large enough, some simple math will prove that if the demand is high
enough, sheer numbers are not as important. The average ticket price for the St. Louis Blues was
just over $50. If they were to sell 20,000 seats for every game they would make revenue of
$1,000,000. However, in Saskatoon with the demand being much higher, you could sell the
tickets at an average of $100 a ticket and even if you only sold 15,000 seats you would still make
a revenue of $1,500,000, more than half a million dollars more revenue per game than you would
make in St. Louis. Based on these numbers alone, how can the NHL turn down relocating to
Saskatchewan.
The southern United States is a lost cause when it comes to hockey franchises. The
majority of the bottom dwellers in terms of attendance come from the south including St. Louis,
which only sells 93.5% of it tickets for every game. St. Louis has been around for almost half a
century now and they still have never won a championship and only reached the Stanley Cup
finals 3 times, which was between 1968-1970. Even if they did win a championship, Tampa
Bay, Carolina and Anaheim have all shown us that winning does not always bring in bigger
crowds. St. Louis already has a NFL and a MLB team, which directly compete with the NHL and
have a much greater following in that area than hockey. After seeing the success of the NHL in
Winnipeg and the emergence of the Saskatchewan economy, how can the NHL pass up playing
the prairie province?
Figure 1
1970
16,743
1980
24,582
1990
26,318
2000
24,715
2010
30,148
1971
17,203
1981
27,828
1991
22,597
2001
22,097
2011
29,940
1972
17,875
1982
28,103
1992
21,704
2002
24,226
2012
32,351
1973
20,176
1983
26,174
1993
23,851
2003
29,352
Capacity28,800
1974
19,028
1984
24,661
1994
24,455
2004
24,783
1975
19,979
1985
23,117
1995
28,500
2005
25,454
1976
21,665
1986
19,166
1996
22,376
2006
25,293
1977
21,160
1987
24,033
1997
27,038
2007
28,054
1978
20,337
1988
25,450
1998
24,141
2008
29,996
1979
21,186
1989
24,176
1999
19,327
2009
30,606
Figure 2
Bibliography
1. http://www2.macleans.ca/2012/04/02/booming-job-market-makes-saskatchewan-aland-of-opportunity-average-weekly-earnings-higher-than-national-average/
2. http://www.arcticicehockey.com/2012/3/16/2877723/the-nhl-in-saskatchewanlessons-from-winnipeg
3. http://cfl-scrapbook.no-ip.org/CFL-Attendance.php
4. http://www.hockeyattendance.com/league/nhl/2012/?sort=avg_att
5. http://www.forbes.com/sites/mikeozanian/2012/11/28/nhl-team-values-2012-mapleleafs-first-hockey-team-worth-1-billion/
6. http://www.mowatcentre.ca/opinions.php?opinionID=70
7. http://fullcomment.nationalpost.com/2011/02/11/quebecs-400-million-arena-laugh-athon/
8. http://fullcomment.nationalpost.com/2011/02/10/scott-stinson-quebec-citys-nhldream-an-expensive-risk/
9. http://www.conferenceboard.ca/reports/briefings/bigleagues/briefing-3.aspx
Mr. Bettman, I am writing this report as per your request to delve into the expansion
scenario of a new NHL team to Quebec City. I know that you are highly skeptical of expanding
into Canadian markets, however I have several quantitative and qualitative facts that I feel need
to be brought to your attention in order to prove that this venture is both profitable and
worthwhile. But before reviewing these promising facts and numbers, I feel it necessary that I
shed some light on the reasons for the failure and relocation of the Quebec Nordiques in 1995 to
Colorado after 16 years in the NHL.
There is always a multitude of issues at the root of the relocation of any major sports team
however with the case of the Quebec Nordiques I feel that these factors that I will mention here
mainly for the teams downfall, comes down to pure money issues. First of all, one of the major
fallacies at the time preceding the relocation of the Nordiques to Colorado was the lack of major
corporations having their headquarters in Quebec City; by having more headquarters within the
city limits, the team would be able to draw ticket sales as well as season tickets or box sales to
these corporations. These numbers have improved, there are currently 17 of Canada’s 800 largest
major corporation head-quarters based in Quebec City, just 2 below the number of headquarters
based in the successful city of Ottawa. Another negative contributing factor was the struggling
Canadian dollar in comparison to the USD. Along with the fact that due to income tax laws in
Canada, players on Canadian teams, such as the Nordiques, would be taxed on average 10%
more than their American counterparts. This issue bled into another factor that was the fact that
when the Nordiques were absorbed into the NHL from the WHA, the average player salary was
$100,000 USD; when the team moved just more than 15 years later, the average salary increased
750%. Due to this at the time, the Nordiques could no longer afford to keep up with paying their
players in American dollars that had to be converted from the weaker Canadian dollar that they
received their revenues in (refer to Figure 5 to view total salary changes from absorption to
relocation). However this major issue here has changed in recent years due to the NHL’s
equalization program and the resurgence of the growing Canadian dollar, which has risen 70%
since the early 2000’s. Teams, such as the Nordiques, would now have the ability to earn their
revenues in the stronger, more reliable Canadian dollar and simultaneously pay their players in
the weaker, less costly American dollar.
Firstly Commissioner Bettman I would like to point out that Quebec City does in fact meet
all 4 of your requirements for expanding into a new market. Quite obviously there is an
abundance of fan support for a NHL hockey team in the city. The team and new arena already
have serious and reliable investors lined up even before there is any proof of a team going to
Quebec City; the municipality of Quebec City is paying for $187 million of the arena, another
$200 million being paid by the Province of Quebec and the remained of the tab being allocated
to the private sector company, of whom the arena will bear its name, Quebecor. Even though this
new arena will meet NHL standards of seating 18,000 minimum, the old Colisee would also be
able to pass as an acceptable arena like the Winnipeg Jets MTS Center. Finally, there are no
territorial conflicts by expanding a team into Quebec City; if anything, this would only seek to
reignite the passionate rivalry shared between the Montreal Canadian and the Quebec Nordiques.
There are many promising statistics that prove that Quebec City is suitable enough to
sustain and maintain another NHL hockey team. The Quebec Nordiques, who played in the NHL
for 16 years before being relocated to Colorado, still have a very strong and avid fan base. The
city has also proven itself by being able to sustain the Major Junior Quebec Ramparts Hockey
Team for many years in the Colisee Pepsi, which seats 15,176 people. Although this arena is
somewhat outdated, it is still suitable for an NHL team and the City of Quebec has already
guaranteed $7 million in renovation funds in case the NHL does authorize an expansion to this
city before the new arena is completed. The new arena, for which ground was broken for
construction in September of this year, will seat a proposed 18, 482 people and costs $400
million, well above the league average for arena costs of $280 million.
Canadian teams and markets have proven themselves profitable: looking at Ottawa,
Calgary and Edmonton, the three smallest markets in the NHL, and yet all profitable and all
generating ticket revenues well in excess of the U.S. average. In fact, the Edmonton Oilers,
despite playing in the NHL's smallest market, and the second smallest arena, last year recorded
higher` gate revenues than 21 out of 24 U.S. teams. Quite obviously there is lots of potential for
expansion to Quebec City. Two of the top five valuable teams in the NHL are based in Canada,
Toronto and Montreal. Even though Quebec City isn’t the largest of possible markets, their fan
base and the proof of success and profitability of other small Canadian markets should be more
than enough proof that Quebec City is a viable option, especially when larger US market teams
fail to generate more income than their smaller Canadian counterparts (refer to Figure 3). Every
Canadian team on average can sell higher priced tickets than the rest of the leagues American
counterparts (refer to Figure 1). Not only do the majority of Canadian teams sell out their arenas
for an average amount of their games, but 75% of the league’s revenues come from ticket sales
(refer to Table 3 and Figure 4 respectively).
Based on the information that I have provided for you here, I suggest to you Mr. Bettman
that we begin to stray away from your proposed southward expansion and focus more on the
reliability more profitable markets such as Quebec City. Quebec City is a financially sound and
reliable choice when deciding to expand this great game of ours into new markets.
NHL Relocation to
Quebec City and Saskatoon
Ian McShane 201103952 & Everett Watters 200905164
Economics 291
Greg Tkacz
October 25, 2013
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