Pro sports market in Winnipeg is in good shape, but margins for success
are tight; franchise management counts more than in other cities
WINNIPEG, May 29, 2014 /CNW/ - The conditions for financial and
competitive success of the two major professional sports franchises in
the Winnipeg market are more favourable than they have been in at least
two decades. However, the Winnipeg sports market remains smaller than
many other Canadian cities—reducing the margin for success among the
franchises. Skilled management is therefore more crucial than in other
markets to the long-term success of both the Winnipeg Jets of the
National Hockey League (NHL) and the Winnipeg Blue Bombers of the
Canadian Football League (CFL).
The Conference Board of Canada's newly published book, Power Play: The Business Economics of Pro Sports, assesses how the Winnipeg market for professional sports has improved
markedly since the original Jets moved to Phoenix in the mid-1990s, and
what challenges may lay ahead for the long-term future of the two
Economic and market conditions in Winnipeg are much better today than
they were in the 1990s when the original Winnipeg Jets NHL franchise
Winnipeg remains a small pro sports market and the margin for success
would be slimmer than in larger cities.
"Since the 1990s, Winnipeg has grown in population and wealth. The
Canadian dollar is much stronger today, the operating environment in
the two leagues have improved substantially, and both the Blue Bombers
and the Jets have impressive new playing facilities," said Glen Hodgson, Senior Vice-President and Chief Economist.
"However, Winnipeg remains a comparatively small pro sports market and
the margin for success is going to be slimmer than in larger cities.
That makes player evaluation and business management even more crucial
to the franchises than they would be elsewhere."
The Conference Board's analysis assesses conditions for successful
franchises on three levels:
market pillars: market size, income, corporate presence, and economic
conditions (notably the exchange rate)
league competitive conditions: including caps on player salaries,
revenue sharing, and access to player talent
franchise specific factors: ownership and management strength, playing
facilities, and fan support
The market conditions in Winnipeg are, by and large, sufficient for the
Jets and Blue Bombers. Winnipeg's population had risen to 780,000 in
2011-12 when the NHL returned, from 650,000 in 1996 when the original
Jets franchise left.
Winnipeg's disposable income per capita is eighth in Canada among major
pro sports markets, higher than Montreal. In 2012, Winnipeg was home to
26 of Canada's 800 largest corporations, more than Edmonton, Ottawa or
Quebec City. While the loonie has slipped into the low 90-cent-range in
recent months, it is much stronger than it was a decade ago, and it is
still high enough to avoid weighing down Canadian franchises that pay
players in U.S. dollars.
Nevertheless, market size remains a potential longer-term issue for both
franchises. Winnipeg is substantially smaller than comparable Canadian
cities with both CFL and NHL teams—Calgary, Edmonton, and Ottawa. The
Conference Board's analysis suggests that a Canadian NHL market should
have at least 800,000 residents, and the minimum for a CFL franchise is
about 250,000. Thus the desired population level for the market could
be as high as one million, and it may take many decades for Winnipeg to
attain that population level.
Of course, financial success in a small market is made more likely by
winning on the field and on the ice. Winnipeg fans have shown
exceptional passion for both NHL and CFL franchises—the Jets sold out
almost instantly for their first three seasons, and the Blue Bombers
have a devoted supporter base. To maintain that enthusiasm, both
franchises will have to manage their player talent and business
operations well to make competitive success more likely.
The competitive conditions within the respective leagues are favourable
to the Jets and the Blue Bombers. In particular, both the NHL and the
CFL have player salary caps, although both have been the subject of
tough bargaining between the leagues and their players. The NHL went
through a work stoppage in 2012-13 and the CFL is currently in the
midst of negotiations with its players—which could affect the start of
the 2014 season.
Released in March, Power Play: The Business Economics of Pro Sports is authored by economists (and passionate sports fans) Glen Hodgson and
Mario Lefebvre. It examines the economic conditions of the communities
that host professional sports franchises, looks at the operating
conditions for pro sports leagues, discusses franchise ownership and
management, and addresses the politically hot topic of who should pay
for new pro sports facilities. It is available in printed and e-book
Join a live webinar by Glen Hodgson and Mario Lefebvre June 18, 2014 at 12:30 p.m. EDT.
For more information, visit http://www.conferenceboard.ca/powerplay.
SOURCE: Conference Board of Canada
For further information:
Telephone: 613-526-3090 ext. 448