OTTAWA, May 4 /CNW/ - The market conditions in Québec City and Winnipeg have improved since National Hockey League (NHL) franchises left about 15 years ago— but both cities face additional challenges to make new NHL teams sustainable, The Conference Board of Canada concludes in its third publication on the pro sports market in Canada.

"Compared to the mid-1990s, when their respective teams departed, Quebec City and Winnipeg have higher populations and increased per capita disposable income, and Canadian franchises enjoy a loonie at parity with its U.S. counterpart. The prospective teams in both Quebec City and Winnipeg would unquestionably be in small markets, but the NHL's player salary cap would give them a chance to stay competitive with teams in larger cities," said Mario Lefebvre, Director, Centre for Municipal Studies, and co-author of The Four Market Pillars at Work: The Case of the Quebec Nordiques and Winnipeg Jets.

"Whether the overall conditions are sufficient to bring back a team to the passionate fans in either city remains debatable. Quebec City has a very small corporate presence. Winnipeg's fans would face a challenge of supporting both NHL and Canadian Football League teams. Overcoming these hurdles will require a lot of work and dedication from all stakeholders."

The Conference Board's previous publication in its Playing in the Big Leagues series identified four market factors - market size, income levels, corporate presence and a level-playing field - that help to explain why NHL teams departed from Quebec and Winnipeg in 1995 and 1996, respectively.

Both the Québec City and Winnipeg Census Metropolitan Areas now have populations over 750,000 - they both stood at roughly 680,000 in the mid-1990s. As discussed in the previous briefing in this series, Defining the Market Conditions for Success, the Conference Board estimates that the population of a market must match the potential total number of tickets sold in a season. Thus, a successful NHL franchise in Canada requires a minimum population of approximately 800,000 people. This conclusion is based on a review of the sports economics literature and the Conference Board's hypothesis on key market-based factors.

Income levels have also improved in both cities. Winnipeg moved from sixth in the 1990s to fifth in 2009, in terms of per capita income levels among Canada's nine largest cities (population wise). Québec City's per capita income ranking improved from eighth to seventh place during the same time period.

The biggest change in favour of a return of NHL teams to Canada is the evolution of a more level playing field. The Canadian dollar is now hovering around parity with its U.S. counterpart, and the Conference Board forecasts that the loonie will remain in that range for the foreseeable future. As a result, Canadian teams are no longer paying an exchange-rate premium on player salaries.

In addition, a player salary cap has been established. While the NHL could do more when it comes to revenue sharing, the salary cap gives some assistance to smaller-market franchises in competing with larger centres.

The corporate presence, however, is low in both markets. In 2009, Quebec City was home to just 17 of Canada's 800 largest corporations, while 30 were headquartered in Winnipeg. While there is no definite minimum number of corporations required in a community for a professional sports franchise to be viable, it is interesting to note that Quebec has less than any city currently home to a NHL franchise, while Winnipeg has more corporate headquarters than either Edmonton or Ottawa.

So, while both Québec City and Winnipeg meet the minimum population and income thresholds, they still face significant hurdles in making new franchises viable. In addition to its modest corporate presence, Québec City needs a new arena. Winnipeg has a new arena, but it may require more corporate boxes and at least a couple more thousand seats.

Winnipeg faces a potential challenge that Quebec City does not. The Conference Board believes that cities with two or more professional teams may require a higher population to support both teams compared to cities with just one pro franchise. Winnipeg has a CFL team, requiring a population of 250,000. As discussed in the previous briefing, the Conference Board estimates that a population of 800,000 is a minimum market size for NHL teams in Canada.

This is the third briefing in the Playing in the Big Leagues: What Makes a Professional Sports Team Successful in Canada?, which will continue throughout 2011.


For further information:

Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448

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