Business success depends on to a large extent on team performance
OTTAWA, June 4, 2014 /CNW/ - The conditions for financial and
competitive success of the professional sports franchises in the
Ottawa-Gatineau market are more favourable than at any time in the past
But the Ottawa market is constrained in size and buying power compared
to other major cities in Canada and the United States. Savvy management
of playing talent and effective control of costs will be crucial to the
long-term success of both the Ottawa Senators of the National Hockey
League (NHL) and the new Ottawa RedBlacks of the Canadian Football
The Conference Board of Canada's newly published book, Power Play: The Business Economics of Pro Sports, describes the outlook for professional sports in Ottawa-Gatineau. Jeff
Hunt, co-owner of the Ottawa RedBlacks, is the guest speaker at an
Ottawa Economics Association Luncheon today at the Chateau Laurier.
"The Ottawa sports market is smaller than in many other Canadian cities"
said Glen Hodgson, the Conference Board's Senior Vice-President and Chief Economist, who
will discuss Power Play at the luncheon. "It has a smaller corporate sector and many fewer head
offices than a city of comparable size like Calgary. This puts added
pressure on team ownership and management to put a quality product on
the rink or field."
Ottawa has the population size and disposable income to support multiple
professional sports franchises successfully.
Ottawa's model for re-building its combined outdoor and indoor stadium
appears to strike the right balance between private investment and
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
With almost 1.3 million people in the Ottawa-Gatineau region, the
population is large enough to support both Senators and the RedBlacks,
and disposable income per capita in 2012 was third only to Calgary and
Edmonton. However, the small number of Canada's largest corporations
headquartered (18 of 800 in 2012) does put more onus on ticket sales
and less on corporate boxes and advertising.
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, as is the case in the NHL.
The respective leagues' competitive conditions are favourable to
Ottawa's NHL and CFL franchises, largely because of caps on player
salaries. These conditions have been hard-won—the NHL went through a
work stoppage in 2012-13, and the CFL is currently in the midst of
negotiations with its players that could affect the start of the 2014
Franchise-specific factors will likely have the most profound impact on
the CFL RedBlacks. Ottawa should never have lost either of its previous
CFL franchises -- the Rough Riders or the Renegades. As outlined in the
book, many years of ineffective ownership and poor management
decision-making contributed significantly to the folding of both
franchises. To maintain enthusiasm, the RedBlacks will have to manage
their player talent and business operations well to make on-field
competitive success more likely.
An upgraded playing facility is also crucial, and Lansdowne Park is
undergoing a fundamental renovation in preparation for the 2014 season.
As has been done in Ottawa, making use of private-public partnerships
(or PPPs) is one way to share the costs and risks of developing pro
sports facilities, engage private sector project management practices,
and thereby reduce the overall costs and risks to taxpayers.
Ottawa also has a new entry in the North American Soccer League, but
could aim for even higher status in Major League Soccer (MLS). The
population of Ottawa is anticipated to climb to more than 1.7 million
by 2035. The combination of a larger and increasingly diverse
population would provide the appropriate mix for an expansion of MLS to
Ottawa within 20 years. A minor league baseball team in Ottawa is also
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:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448