WInning teams not essential to make most professional sports franchises in Toronto financially successful

TORONTO, Nov. 10, 2011 /CNW/ - A large and affluent local market allows Toronto's professional sports franchises to achieve financial success without producing contending teams, The Conference Board of Canada suggests in its latest analysis of the Canadian professional sports market.

"Strong market fundamentals for pro sports in the greater Toronto region mean that many Toronto teams can succeed financially without having to succeed competitively," said Glen Hodgson, Senior Vice-President and Chief Economist, and  co-author of the publication, Why Are Toronto Teams Financial Successes, but Competitive Flops? (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-10.aspx).

"Unlike smaller markets, where teams may need to win to be financially viable businesses, teams in Toronto don't have to win consistently to deliver a financial return to their owners."

The Conference Board series, Playing in the Big Leagues (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-2.aspx), identifies four pillars to determine the viability of a franchise in a given market: size of the population; income level; corporate presence; and a level playing field within its league. Toronto fares well on all of these indicators. Moreover, the strong appreciation of the loonie over the past decade has meant millions of dollars in savings for teams that play in leagues where salaries are set in U.S. dollars, yet another positive factor for Toronto-based franchises.

Competitive conditions (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-4.aspx) differ by league (the playing field is much less level in baseball than in hockey, for example), but these differences alone do not explain the poor results of Toronto franchises. Moreover, the quality of sporting facilities does not appear to be a factor, since all Toronto teams play in modern amenities. Toronto franchises also appear to be aware of the changing demographics in the city and are reaching out to attract the 40 per cent of Torontonians who were not born in Canada.

The remaining franchise-specific factor (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-8.aspx) is ownership and management ability. The current Toronto professional sports scene includes six franchises. The Toronto Maple Leafs (National Hockey League), Toronto Raptors (National Basketball Association) and Toronto FC (Major League Soccer) are owned by Maple Leaf Sports and Entertainment, while Rogers Communications owns the Toronto Blue Jays (Major League Baseball). The two franchises owned by individuals are the Toronto Argonauts of the Canadian Football League and the Toronto Rock of the National Lacrosse League (NLL).

Most Toronto franchises can generate significant profits without necessarily putting a competitive product on display, so overall success is measured in dollars rather than wins. Although Toronto franchises have made management and player-personnel changes in recent years to try to improve their competitiveness, corporately-owned teams don't have the same burning platform as the individually-owned teams - or as franchises in other markets, particularly smaller markets.

The two Toronto-based franchises that are individually-owned have played for and won championships in their leagues within the past decade. The Argonauts last won the Grey Cup in 2004 and the Rock are both the defending NLL champions and the league's most successful franchise.

This report is the 10th in the Conference Board's series Playing in the Big Leagues: What Makes a Professional Sports Team Successful in Canada?  (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-1.aspx).

Upcoming publications will use the framework developed throughout the series to assess the outlook for franchises in major Canadian cities and sports leagues.

SOURCE CONFERENCE BOARD OF CANADA

For further information:

Brent Dowdall, Media Relations, Tel.: 613-889-2352
Yvonne Squires, Media Relations, Tel: 613-526-3090, ext. 221
E-mail: corpcomm@conferenceboard.ca

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