In 1995, the struggling Canadian dollar and increasing player salaries meant that the Nordiques of Quebec City were forced to move to Denver and become the Colorado Avalanche. Shortly thereafter, the same factors led to Winnipeg’s Jets being relocated to Phoenix. A scant few years later, both NHL teams in Alberta had to take drastic measures to stay viable, including a special provincial lottery and campaigns begging fans to buy more season tickets. Ultimately those teams avoided the fate of their departed brethren.
In 2004, the NHL and NHL Players Association could not come to an agreement on a new collective bargaining agreement. Finally in the summer of 2005, both parties came to an agreement on a new agreement that would implement a salary cap, among other changes. This cost certainty meant that the owners in the larger markets couldn’t just attempt to buy themselves the top talent. Much like the average Joe, general managers had a fixed amount of resources that they had to use effectively.
At this point, financial fortunes began to change for the Canadian NHL teams. Big market teams couldn’t spend a ridiculous amount of money on free agents anymore, so that brought superstar player salaries down. Combine that with the strong Canadian dollar (revenues are taken in Canadian dollars while players are paid American) and suddenly the small market teams in Calgary, Edmonton and Ottawa could be competitive again. Each of them have made a run to the Stanley Cup finals since 2003. Each of the 6 Canadian NHL teams are spending very close to the limit for salaries for the 2010-11 season. With the exception of Toronto that always made money, the bottom line of every other team is vastly improved since the 2004 lockout.
Partially due to the recent financial trouble of markets like (ironically) Phoenix, there has been a recent uproar about moving a struggling American NHL franchise back to Canada. Jim Balsille very famously made bids for both the Nashville Predators and the Phoenix Coyotes with intentions of relocating them to southern Ontario, either in the Kitchener-Waterloo area or Hamilton. These attempts were rejected by the league for a variety of reasons, the most important of which is that the new franchise would encroach on the territorial rights of the NHL’s most valuable, the Toronto Maple Leafs. It appears Balsille has given up on his plan for the time being.
In the meantime, Quebec City has announced intentions to build a new $400 million arena with the hopes of bringing back an NHL team. The Province has pledged $180 million while Quebec City has agreed to throw in $50 million. That only leaves the city $170 million short. Who will make up the difference? Why, the Feds of course!
One has to look no further than Kansas City to see how this plan can go horribly wrong. Completed in 2007, The Sprint Center was supposed to be the centerpiece of a plan to bring a NBA or NHL franchise to Kansas. We’re now over 3 years later and The Sprint Center has no major professional sports teams calling it home. It hosts a NCAA basketball tournament once a year and a handful of concerts. This was worth $276 million of taxpayers’ money?
Besides this, I’m not sure how feasible Quebec City is for an NHL market. According to the 2006 census, Quebec City has a metropolitan population of 715,000. As a comparison, the current smallest market in the NHL is Edmonton with a metropolitan population of 1.03 million. Of course, the size of a market isn’t the final factor of a team’s fortunes, it’s more a factor of the intensity of the fans. While I’m sure the fans in Quebec City are decent fans, whether they can pack that new arena every single night is debatable.
What if the city doesn’t get the team? Don’t worry, the guys who did the feasibility study have you covered. From Ernst and Young:
The feasibility study released Tuesday contended the economic spinoffs over a 40-year period would be $497-million without an NHL franchise and $593.6-million with one.
First of all, let’s examine the return on a $400 million investment over 40 years. Let’s assume the best case scenario and say that the arena generates $593.6 million as a return. According to the Money Chimp compound interest calculator, this translates to a paltry 1% return per year. Is this really the best place for government to put their money?
The current arena (The Colisee) was originally built in 1949 and is well known to be kind of a dump. Even though it was renovated extensively in 1980 to house the Nordiques, the venue isn’t really ideal to host an NHL hockey team. It continues to be the home of junior hockey’s Quebec Ramparts, as well as the host of countless concerts and other events over the years. While everyone would love a new arena, that doesn’t mean that it’s needed.
Quebec City is reportedly mulling a bid for the 2022 Winter Olympics, another reason for the new rink. Respectfully to the bid, I give about a 0.2% chance of them getting the games, simply because the Vancouver games will be so fresh in everyone’s memories. Yet again, Quebec City is putting the cart before the horse by building the venue before they even get considered for the games.
I understand that sometimes governments have to make decisions that aren’t based on money. You could probably convince me that this rink is one of those decisions. But the bottom line is that a new arena is only a piece of the puzzle that would bring the NHL or the Olympics to Quebec. Maybe the city would be better served to move a little further along the approval process before getting excited about a new venue.