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



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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 U-20 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.




Figure 2- Non-Farm Payroll across Canada.
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?



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

Figure 1
 non-farm payroll employment in saskatchewan, january 2008 to january 2012

Bibliography



  1. http://www2.macleans.ca/2012/04/02/booming-job-market-makes-saskatchewan-a-land-of-opportunity-average-weekly-earnings-higher-than-national-average/


  2. http://www.arcticicehockey.com/2012/3/16/2877723/the-nhl-in-saskatchewan-lessons-from-winnipeg


  3. http://cfl-scrapbook.no-ip.org/CFL-Attendance.php


  4. http://www.hockeyattendance.com/league/nhl/2012/?sort=avg_att



  1. http://www.forbes.com/sites/mikeozanian/2012/11/28/nhl-team-values-2012-maple-leafs-first-hockey-team-worth-1-billion/



  1. http://www.mowatcentre.ca/opinions.php?opinionID=70

  2. http://fullcomment.nationalpost.com/2011/02/11/quebecs-400-million-arena-laugh-a-thon/



  1. http://fullcomment.nationalpost.com/2011/02/10/scott-stinson-quebec-citys-nhl-dream-an-expensive-risk/



  1. 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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