OTTAWA, April 14, 2014 /CNW/ - There may be only one Canada-based team in this year's Stanley Cup playoffs, but the market conditions for professional hockey will allow up to three more Canadian franchises to join the National Hockey League (NHL) over the next two decades.
In addition to the seven existing Canadian franchises, Hamilton and Québec City appear to meet the minimum market conditions—population, income levels, corporate presence and economic factors (such as the exchange rate)—to support franchises in next few years. By 2035, a second franchise for the Greater Toronto Area is also possible, although any move into the Toronto market will not come cheap.
As part of its newly-published book, Power Play: The Business Economics of Pro Sports, The Conference Board of Canada assesses the market conditions and other key factors required to support an NHL-level professional hockey team.
"Hamilton and Quebec City meet most of the basic market criteria for an NHL franchise. However, both are among the smallest markets in the league, so new franchises will need to have dedicated owners who are in it for the long run and manage their business operations carefully," said Glen Hodgson, Senior Vice-President and Chief Economist.
Like Winnipeg, the Hamilton and Québec City markets meet the minimum requirements for population and income, although both have a relatively small number of corporate head offices. These smaller markets would be more vulnerable to negative shocks in their local communities or in the national economy -- such as a further decline in the Canadian dollar.
For Toronto, Montréal and Vancouver, the question is whether any of these markets could support a second NHL franchise. In 2014, none of the three cities have the population base to support a second franchise. By 2035, however, the population of the Greater Toronto Area is forecast grow to 10.5 million (from the current 6.8 million), making the market large enough to support a second club.
The challenge for a second Toronto-based franchise would be to make the business economics work, since the cost of entry into the NHL will be steep. While it is difficult to put a final tally on the start-up costs, $1 billion (in 2010 dollars) is one estimate of the investment required to acquire a franchise, build a quality playing facility and address the Toronto Maple Leafs' territorial rights.
Calgary, Edmonton and Ottawa are viable NHL markets today, and will continue to be so in 2035. However, the Maritimes and Saskatoon will not have the population size or corporate presence, even by 2035, to sustain an NHL franchise.
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. The book looks at why some pro sports franchises succeed, financially and competitively, while others fail, and concludes with a "fearless forecast" of what the Canadian pro sports scene could look like in 2035.
Power Play: The Business Economics of Pro Sports is available in printed and e-book formats. For more information, visit http://www.conferenceboard.ca/powerplay, or join the live Power Play webinar on May 8, 2014 at 11 a.m.
SOURCE: Conference Board of Canada
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448