NHL and NHLPA “watching closely” decline of Canadian dollar

[Yukon Joe]

Depends on how far and for how long the Canadian dollar tanks I suppose

So look - the very low Canadian dollar was probably the prime reason we saw the mid-90s relocations of Winnipeg and Quebec City, and almost the relocation of Edmonton.

But things were quite different back then also. #1 you had under-capitalized owners in all three cities. That is to say - owners that didn't have a lot of liquid cash and thus couldn't afford even short-term losses.

You also didn't have a salary cap or revenue sharing.

The exchange rate is going to go up and down over time. It mostly relates to the price of oil - the US buys a lot of Canadian oil. So when the price goes up the US has to buy more Canadian dollars which drives up the exchange rate. When the price goes down the US needs to buy fewer Canadian dollars, which drives down the exchange rate. This is all unrelated of course to the business of hockey itself.

So if you're Michael Andlauer and the Canadian dollar goes down, you know you can afford to wait it out until it goes back up again. Both because you have enough assets to wait it out, plus because league revenue sharing will help soften any loss of revenue.

If we see some kind of Canadian economic collapse, where we become the Argentina of the North, our dollar falls to something unprecedent like $0.25, then all bets are off. But it's not the end of the (hockey) world just because the loonie dips below $70 yet again.

 

[WeaponOfChoice]

who said canada doesn’t support its teams?

Then why wouldn't you expand there?

 

[Golden_Jet]

Then why wouldn't you expand there?

7 cities in Canada, is like 70 cities in the US by capita.
However there is room for one more in greater Toronto.

 

[WeaponOfChoice]

There's "room" for at least 2 more and I'd argue more than that but I digest.

 

[CharasLazyWrister]

Then why wouldn't you expand there?

You know we are in the “business” section of the board right? Specifically, in this thread, we are talking about the economics of the exchange rate between the Canadian dollar and US dollar and how, even with loyal support, Canadian cities are at a disadvantage in perpetuity demographically and economically.

Are you just bypassing all of this so you can concoct an emotional argument about how the league doesn’t expand into Canada because they/Bettman/fans “hate Canada”? If so, I encourage you to make a little room for learning in your life.

 

[Golden_Jet]

, Canadian cities are at a disadvantage in perpetuity demographically and economically.

What does that mean in regards to Canadian hockey lol

 

[CharasLazyWrister]

Delete

 

[WeaponOfChoice]

Let's talk about facts then: Forbes ranked 4 of the bottom 5 nhl teams as US teams. Winnipeg placed 5th last. Do you think winnnipeg supports their team? Do you think they'll move? Are you just out to lunch and begging for people to dog deeper when it's written in God damn black and white?

 

[CharasLazyWrister]

What does that mean in regards to Canadian hockey lol

It means that Canada has smaller markets (even the large cities have comparably small metro areas), people/workers earning income denominated in an increasingly weak currency, and a population bound to decrease earlier and at a quicker rate than that of their larger American neighbors to the south. Ie less opportunity to grow regardless of individual fan loyally.

 

[WeaponOfChoice]

Potential revenue means nothing if it's never capitalized on.

 

[CharasLazyWrister]

Let's talk about facts then: Forbes ranked 4 of the bottom 5 nhl teams as US teams. Winnipeg placed 5th last. Do you think winnnipeg supports their team? Do you think they'll move? Are you just out to lunch and begging for people to dog deeper when it's written in God damn black and white?

You are so wound up over this. I’m just talking about the business of the industry. I have nothing against Canada personally or the prospect of them getting teams. It’s not a disadvantage brought about by anything that Canadians are doing wrong as a people or a commentary on anything negative about its cities. It’s just business.

And yes, there are US teams with a fraction of the current support of Canadian teams and a relatively low value. But the growth potential of those teams is larger (even if it seems like a far cry given their current levels of support) and they’re operating in a place in which their traded currency is significantly more valuable (which is an historic norm).

Your example of Winnipeg is actually fantastic. Despite rabid fan support (with recently being an exception) their overall franchise value is hobbled by the reality of their comparably small market compared to countless other North American cities. Even with the entire community spending on and behind the team, the ceiling financially remains low compared to other options.

Again, this is just a reality in a league spread across two nations with two different currencies, one of which is the significantly more populated nation which retains a strong currency regardless of national debt due to its prominence throughout international markets. It’s the type of disadvantage Canada will (likely) never overcome regardless of what a slick politician or business person tells you.

Potential revenue means nothing if it's never capitalized on.

Of course not. But when individuals and groups throw a ton of capital at something (and especially when there is a collaboration of owners in a revenue sharing system vested in the viability of “competing” franchises), the higher POTENTIAL pay off wins over the “safe” play whose best outcome is turning a very modest profit.

 

[WeaponOfChoice]

You are so wound up over this. I’m just talking about the business of the industry. I have nothing against Canada personally or the prospect of them getting teams. It’s not a disadvantage brought about by anything that Canadians are doing wrong as a people or a commentary on anything negative about its cities. It’s just business.

And yes, there are US teams with a fraction of the current support of Canadian teams and a relatively low value. But the growth potential of those teams is larger (even if it seems like a far cry given their current levels of support) and they’re operating in a place in which their graded currency is significantly more valuable (which is an historic norm).

Your example of Winnipeg is actually fantastic. Despite rabid fan support (with recently being an exception) their overall franchise value is hobbled by the reality of their comparably small market compared to countless other North American cities. Even with the entire community spending on and behind the team, the ceiling financially remains low compared to other options.

Again, this is just a reality in a league spread across two nations with two different currencies, one of which is the significantly more populated nation which retains a strong currency regardless of debt due to its prominence throughout international markets.

Ask the NHL why potential market Mexco City hasn't been seriously considered.

That's entirely the point you're not getting. Winnipeg's not going to move like phoenix just did.

 

[CharasLazyWrister]

Ask the NHL why potential market Mexco City hasn't been seriously considered.

That's entirely the point you're not getting. Winnipeg's not going to move like phoenix just did.

You are curiously resistant to countering any of what I’m saying directly. I never said or implied that Winnipeg was moving “like Phoenix just did” or that Mexico City doesn’t have a whole host of obstacles to becoming a viable option for the league. I’m simply adding to the discussion about why Canadian cities are often not as favored for expansion as some/Canadians would like them to be. Canada is at a perpetual disadvantage when contrasted directly with US cities. Expansion into Mexico is a whole different discussion.

 

[sawchuk1971]

i guess the talk of quebec getting a team is over...

 

[Golden_Jet]

It means that Canada has smaller markets (even the large cities have comparably small metro areas), people/workers earning income denominated in an increasingly weak currency, and a population bound to decrease earlier and at a quicker rate than that of their larger American neighbors to the south. Ie less opportunity to grow regardless of individual fan loyally.

lol you made that up, and that’s not what it means.

 

[x Tame Impala]

So look - the very low Canadian dollar was probably the prime reason we saw the mid-90s relocations of Winnipeg and Quebec City, and almost the relocation of Edmonton.

But things were quite different back then also. #1 you had under-capitalized owners in all three cities. That is to say - owners that didn't have a lot of liquid cash and thus couldn't afford even short-term losses.

You also didn't have a salary cap or revenue sharing.

The exchange rate is going to go up and down over time. It mostly relates to the price of oil - the US buys a lot of Canadian oil. So when the price goes up the US has to buy more Canadian dollars which drives up the exchange rate. When the price goes down the US needs to buy fewer Canadian dollars, which drives down the exchange rate. This is all unrelated of course to the business of hockey itself.

So if you're Michael Andlauer and the Canadian dollar goes down, you know you can afford to wait it out until it goes back up again. Both because you have enough assets to wait it out, plus because league revenue sharing will help soften any loss of revenue.

If we see some kind of Canadian economic collapse, where we become the Argentina of the North, our dollar falls to something unprecedent like $0.25, then all bets are off. But it's not the end of the (hockey) world just because the loonie dips below $70 yet again.

We’ll see how long these Canadian owners can last with poor gate revenue and a tanking dollar. American owners are probably resistant to keep supporting teams costing them hundreds of millions of dollars in revenue sharing.

Not to sound like an ass, but the attempts at nuance in discussions like these are usually in vain. It was like that when talking about Arizona, it’s like it still talking about how Columbus is perpetually bad. There’s always a detailed explanation or a list of excuses. Bottom line is this is going to start hurting the owner’s in their wallets. So maybe we don’t see relocation from Canada to Houston, but I think the chances are even more slim we get an additional Canadian franchise.

 

[WeaponOfChoice]

brutal. expanding in Canada should never be discussed again

You are so wound up over this. I’m just talking about the business of the industry. I have nothing against Canada personally or the prospect of them getting teams. It’s not a disadvantage brought about by anything that Canadians are doing wrong as a people or a commentary on anything negative about its cities. It’s just business.

And yes, there are US teams with a fraction of the current support of Canadian teams and a relatively low value. But the growth potential of those teams is larger (even if it seems like a far cry given their current levels of support) and they’re operating in a place in which their traded currency is significantly more valuable (which is an historic norm).

Your example of Winnipeg is actually fantastic. Despite rabid fan support (with recently being an exception) their overall franchise value is hobbled by the reality of their comparably small market compared to countless other North American cities. Even with the entire community spending on and behind the team, the ceiling financially remains low compared to other options.

Again, this is just a reality in a league spread across two nations with two different currencies, one of which is the significantly more populated nation which retains a strong currency regardless of national debt due to its prominence throughout international markets. It’s the type of disadvantage Canada will (likely) never overcome regardless of what a slick politician or business person tells you.



Of course not. But when individuals and groups throw a ton of capital at something (and especially when there is a collaboration of owners in a revenue sharing system vested in the viability of “competing” franchises), the higher POTENTIAL pay off wins over the “safe” play whose best outcome is turning a very modest profit.

You are curiously resistant to countering any of what I’m saying directly. I never said or implied that Winnipeg was moving “like Phoenix just did” or that Mexico City doesn’t have a whole host of obstacles to becoming a viable option for the league. I’m simply adding to the discussion about why Canadian cities are often not as favored for expansion as some/Canadians would like them to be. Canada is at a perpetual disadvantage when contrasted directly with US cities. Expansion into Mexico is a whole different discussion.

That is a very different pov from what I originally replied to.

 

[CharasLazyWrister]

That is a very different pov from what I originally replied to.

The POV you replied to was the second response in a thread about declining revenue due to a declining exchange rate. One would naturally assume that “never talking about expanding in Canada again” in this context was about the aforementioned very unfavorable exchange rate.

You, strangely and apparently due to preexisting bias, created this nonsensical binary about how the post was saying that an unfavorable exchange rate meant Canadians don’t support their teams. Multiple times in this discussion, you have simply discarded all of the relevant information and subbed an artificial argument which you then counter while trying to hold the person (me, in most cases in this thread) to the false argument that you yourself concocted. And it started with your very first response to the third post in the thread.

What it seems like is this is an emotional topic for you and you’re only going to talk business as far as it supports your desired conclusion based on that bias.

 

[Squiffy]

It means that Canada has smaller markets (even the large cities have comparably small metro areas), people/workers earning income denominated in an increasingly weak currency, and a population bound to decrease earlier and at a quicker rate than that of their larger American neighbors to the south. Ie less opportunity to grow regardless of individual fan loyally.

Toronto is 6th in USA/CAN in terms of metro area, but the point of metro areas generally holds true. Montreal hits next at 17th. But why is the population decreasing earlier and quicker?

 

[CharasLazyWrister]

Toronto is 6th in USA/CAN in terms of metro area, but the point of metro areas generally holds true. Montreal hits next at 17th. But why is the population decreasing earlier and quicker?

Well, predicting future population is certainly not an exact science. We know the current birth rate in Canada of 1.33 is well below the accepted Western replacement rate of 2.1, while the US is around 1.6 or 1.7. Even if the birth rate rose (it won’t), you still have a solid two generations of people in which more cannot be born. What we don’t know is the future in terms of immigration which is most of the developed world’s only chance at staving off sharp population decline and how that is influenced in terms of economics and politics and other unpredictable complexities.

As societies have gone from agrarian to industrialized to advanced economies, additional children has transformed from an asset in terms of labor to expensive liabilities from a fiscal standpoint (by the way, I have a son and find it well worth the expense. It’s a dilemma of basically all advanced economies globally. The “richer” you get, the fewer people are born, thus cutting into a nations long term ability to support its people. This is a problem that will plague the balance sheets of every nation (declining work forces with decreasing investment and increasing costs to support aging populations) that is annoyingly absent from political discussions in which those seeking power want to keep you convinced that they can control the economy with a tax cut or a subsidy and all the problems are because of the “other side” and not the complex nature of society.

The US is projected to peak in population (even accounting for immigration) around 2060 give or take years depending on the source. Some sources say Canada will be a bit before or a bit after, but regardless, it’s not a nation which can realistically, barring some “Black Swan” earth shattering event, hold any sustainable economic advantage over the bulk of the United States.

Perhaps rapid climate change could work to Canada’s advantage if parts of the US become unlivable and Canada becomes MORE livable in some places, but that’s conjecture. Certainly nothing the NHL is going to call a favorable reliable investment.

Sorry to be so long winded. I’m a little bored.

 

[Melrose Munch]

I wonder if we’re less likely for expansion to 34-36 teams (yuck) and more likely what happens is a couple Canadian teams get relocated to more stable markets in the US.

I wouldn’t want to see that for Canadian fans but if the owners are seeing 8-figure losses on repeat I’m not sure what their next move would be.

The league is not looking to move teams.

Who is the mythical team that would get moved? Ottawa is now off the board with new ownership, and I already outlined why Winnipeg's issues are a nothing burger considering who owns the team and the wealth he has.

Think the issue is how long is anyone looking to take a bath just to keep a hockey team around in any location? Everyone has their limits, even the ultra wealthy.

 

[Yukon Joe]

We’ll see how long these Canadian owners can last with poor gate revenue and a tanking dollar. American owners are probably resistant to keep supporting teams costing them hundreds of millions of dollars in revenue sharing.

Not to sound like an ass, but the attempts at nuance in discussions like these are usually in vain. It was like that when talking about Arizona, it’s like it still talking about how Columbus is perpetually bad. There’s always a detailed explanation or a list of excuses. Bottom line is this is going to start hurting the owner’s in their wallets. So maybe we don’t see relocation from Canada to Houston, but I think the chances are even more slim we get an additional Canadian franchise.

"poor gate revenue" - Calgary is at 89.6%, Winnipeg is at 90.9%, Ottawa at 91.5% Obviously all three teams would like to be higher, but those aren't atrocious numbers. (by the way - Utah is at 68.7%,, San Jose at 76.9%, Columbus at 80.4%).

"tanking dollar" - Canadian dollar is at $0.69. It usually hovers in the mid-70s. Again obviously Canadian teams would prefer a higher exchange rate - but "tanking" is hardly the word for it.

Arizona was perpetually bad for 20+ years. They went bankrupt. Look at how long it still took for the team to be relocated.

Don't get too worked up about short-term fluctuations. These are billion-dollar businesses.

 

[varsaku]

7 cities in Canada, is like 70 cities in the US by capita.
However there is room for one more in greater Toronto.

If you are going by that metric, the number of viewer would be incredibly high for a population the size of the US if you are scaling it up by capita. The number of teams is reflective of the number of fans.

 

[Yukon Joe]

Well, predicting future population is certainly not an exact science. We know the current birth rate in Canada of 1.33 is well below the accepted Western replacement rate of 2.1, while the US is around 1.6 or 1.7. Even if the birth rate rose (it won’t), you still have a solid two generations of people in which more cannot be born. What we don’t know is the future in terms of immigration which is most of the developed world’s only chance at staving off sharp population decline and how that is influenced in terms of economics and politics and other unpredictable complexities.

So I don't want to get political here.

Canada's population is actually growing faster than the US. We've grown at rates of 2-3% per year the last couple of years. We hit 30 million in 1997, but 40 million in 2023. That's a one third increase in 27 years.

Yes that is almost entirely due to immigration.

You can say lots about immigration, which I don't want to get into. But while you mention immigration it's only to wave it away with " we don’t know is the future in terms of immigration".

 

[Golden_Jet]

If you are going by that metric, the number of viewer would be incredibly high for a population the size of the US if you are scaling it up by capita. The number of teams is reflective of the number of fans.

We already know the per capita numbers for viewers in the US, US numbers are lower, before you even bring per capita into the equation.