Le Retour des Nordiques Partie XIV: Jamais 2 sans 3 (Expansion bid submitted)

[MarkhamNHL]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

the cap will be headed down, as the loonie is the biggest sway for the cap...

in 2 years who knows the loonie may be above par again...

 

[Mightygoose]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

It will be a pinch but not as bad as it looks on the surface.

Central revenues (i.e. US sponsors) and their share are in US funds. If they qualify for revenue sharing (which didn't exists in the 90s) is also in US funds.

Plus average ticket costs will be higher than most US markets so the impact won't nearly be a bad from 20 years ago.

If they buy in at 500M USD, the CAD going up will decrease the franchise value

 

[madhi19]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

If corporation of that scale made decision solely on currency fluctuation you be right. But if corporations of that scale made decision solely on currency fluctuation they never do anything ever. Currency are in constant fluctuation, and major corporation like Quebecor are always edging against it. They have to, this is just a fact of life for them.

 

[GordonGraham]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

They are on the record saying they have done their studies, crunched the numbers and at 500M us it works out fine for them

20M from National tv deal
30M from regional tv deal (habs get 60 lets say they get half)
50M gate (1.2M per game thats 18000 at 66$ avg)

thats 100M canadian already +merchandise+ all the sponsorship/advertising + they also get 100% from parking, beer, concessions it should work out fine for them.

 

[WeTheNords]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

Quebecor have been working on this for 5 years. They probably have a US$ reserve for that day they have been working for that they get a team

 

[WeTheNords]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

Plus, Quebecor who is actually bidding, said time and time again that they will be OK. This will drive their TV channels and papers and magazine, and mobile phones.

 

[NucksRuleYep]

They are on the record saying they have done their studies, crunched the numbers and at 500M us it works out fine for them

20M from National tv deal
30M from regional tv deal (habs get 60 lets say they get half)
50M gate (1.2M per game thats 18000 at 66$ avg)

thats 100M canadian already +merchandise+ all the sponsorship/advertising + they also get 100% from parking, beer, concessions it should work out fine for them.

Yeah but, just playing along here, those figures are all in CDN dollars, which works out to about $77 million US. And that's basically what the cap is at right now? Even if the cap goes down, it won't be by much.

So where will the profit come from? The cost of servicing $650 million in debt, at about 6% bond rates (which is a very good rate, they may not even have that much), is $39 million a year. Even if they paid ALL CASH, they could still easily have gotten a 6% return on that $650 million ($39 million a year).

So in other words, doing ridiculous amateur rough math, just to break even they would need to be pulling in like $150 million Canadian a year, assuming they spend to the cap. And if they do that, they service the debt but they don't actually make any movement towards paying off the $650 million.

They would need to go DEEP in the playoffs or win a cup in order to actually make a huge dent in the financials. But how do you go deep in the playoffs without spending to the cap (assuming they don't, to save money).

Again, I would very much like to see Quebec have an NHL team, so I don't want people to think I am against that aspect of it. I want Saskatechewan to have an NHL team too. But financials of it don't make sense, and the reason for that is because the NHL is asking way too much. $500 million is a joke.

 

[WeTheNords]

Yeah but, just playing along here, those figures are all in CDN dollars, which works out to about $77 million US. And that's basically what the cap is at right now? Even if the cap goes down, it won't be by much.

So where will the profit come from? The cost of servicing $650 million in debt, at about 6% bond rates (which is a very good rate, they may not even have that much), is $39 million a year. Even if they paid ALL CASH, they could still easily have gotten a 6% return on that $650 million ($39 million a year).

So in other words, doing ridiculous amateur rough math, just to break even they would need to be pulling in like $150 million Canadian a year, assuming they spend to the cap. And if they do that, they service the debt but they don't actually make any movement towards paying off the $650 million.

They would need to go DEEP in the playoffs or win a cup in order to actually make a huge dent in the financials. But how do you go deep in the playoffs without spending to the cap (assuming they don't, to save money).

Again, I would very much like to see Quebec have an NHL team, so I don't want people to think I am against that aspect of it. I want Saskatechewan to have an NHL team too. But financials of it don't make sense, and the reason for that is because the NHL is asking way too much. $500 million is a joke.

Quebecor is not worried, and that's all that matters to me.

 

[NucksRuleYep]

Quebecor is not worried, and that's all that matters to me.

Well, to be fair... Quebecor has been pushing for an NHL team for a long time. They have built an arena. They are made promises that they will bring the NHL back. This was LONG before they knew the price tag, and long before the Canadian dollar dropped. 3 years ago, they might have assumed a new franchise would cost $300 million. And the dollar was at par. The NHL then announced this $500 million dollar price tag and gave teams just a few weeks to apply. Quebecor could have said "No way, we're out." but they obviously decided that $2 million dollars was a small enough amount of money for them to apply, and then see where things go.

Them spending $2 million on an application fee by no means is an indicator that they will end up with a team though, or that it is financially viable. They simply might not be ready to give up yet. Like I said, funny things happen when push comes to shove. We will see...

 

[WeTheNords]

Well, to be fair... Quebecor has been pushing for an NHL team for a long time. They have built an arena. They are made promises that they will bring the NHL back. This was LONG before they knew the price tag, and long before the Canadian dollar dropped. 3 years ago, they might have assumed a new franchise would cost $300 million. And the dollar was at par. The NHL then announced this $500 million dollar price tag and gave teams just a few weeks to apply. Quebecor could have said "No way, we're out." but they obviously decided that $2 million dollars was a small enough amount of money for them to apply, and then see where things go.

Them spending $2 million on an application fee by no means is an indicator that they will end up with a team though, or that it is financially viable. They simply might not be ready to give up yet. Like I said, funny things happen when push comes to shove. We will see...

Lol, ridiculous frankly. Why spend at least 2 M$ if you are not willing to bid. The application papers said it was 500M$. They are ready [mod]

 

[Killion]

Well, to be fair... Quebecor has been pushing for an NHL team for a long time. They have built an arena. They are made promises that they will bring the NHL back. This was LONG before they knew the price tag, and long before the Canadian dollar dropped. 3 years ago, they might have assumed a new franchise would cost $300 million. And the dollar was at par. The NHL then announced this $500 million dollar price tag and gave teams just a few weeks to apply. Quebecor could have said "No way, we're out." but they obviously decided that $2 million dollars was a small enough amount of money for them to apply, and then see where things go.

Them spending $2 million on an application fee by no means is an indicator that they will end up with a team though, or that it is financially viable. They simply might not be ready to give up yet. Like I said, funny things happen when push comes to shove. We will see...

And you would know this how exactly?... And ya, funny things do happen when push comes to shove, and youd be wise to get your facts straight because thus far all Im reading in your posts is hyperbolic conjecture & wild speculation, most of it beyond negative & highly derisive.

 

[Fugu]

How will the Canadian dollar affect this bid?

$500 million US = $650 million Canadian.

All tickets will be sold in CDN dollars. All merchandise will be sold in CDN dollars. But player salaries will be in US dollars.

I don't see this realistically happening. It will be a "last minute bail out" by Quebec once they actually crunch the numbers. Passion never overrides a smart business decision.

I mean, nevermind breaking even, how would Quebec team earn back that $650 million? It could take a hundred years...

Here you go.

Borrowing from my friend Fourier's post, we should review how the cap system works:




While the CAD was hovering around 0.90-1.0 range, we believed that 40% of NHL HRR was derived from Canada (inclusive of the Rogers deal).

So HRR of $3.7 billion would have been ~US$1.480 b from Canadian sources, leaving US$2.220 b immune to currency fluctuation.

Using an annual average of 0.8, the Canadian-derived portion yields US$1.184b; and 0.7 yields $1.036b; and 0.6 yields $888 MM.

Adding these back up, we're left with total HRR of, in the same order:

$3404
$3256
$3108

Relative to US franchises, Canadian teams ranks would probably remain mostly unaltered at 0.8, a slide to the middle for the lowest ranking of them at 0.7, and a massive slide at 0.6. [These are based on the CAD's annual average for the league year.]

Winnipeg is the lowest in est HRR of the Canadian teams, per Forbes, at $102 MM. Their new HRR at the above levels would range between mid 80s to mid $60s MM.

So the big market US teams would be the main contributors to revenue transfer at the lowest CAD level; and more of the mid-small Canadian teams would qualify at the middle tier.

However, league spending on players is 50% of HRR, so while making a lot less money, they also would be spending far less on player salaries, with a cap midpoint being around $51 MM at the 0.6 level!


(This is just to illustrate the built in protection a cap system provides. The US revenue sharing of US national monies would still be in USD, so not all of the Canadian team revenues would be susceptible to the currency flux.)

 

[Revo]

And see, I'd watch the crappiest team in creation if it meant I had NHL hockey in Arizona...

...wait a minute, I did exactly that last season!

I really hope this guy isn't indicative of QC fans as a whole - beggars can't really be choosers in a situation like this, y'know?

He's not. It is a cultural thing, having the Nordiques (back). Having a shot at winning would be nice, of course. But it pales in comparison to just having the Nordiques.

 

[SOLR]

Also, Quebecor's revenues will be substantially bigger than Winnipeg's. 125m + is a good estimate (on par with Ottawa). Quebecor's market is Montreal and the Nords will get a similar(less than Montreal but substantially higher than Winnipeg) regional deal as the Habs. The Nords will be the "alternative" media product to the Hab (on top of improving the Habs revenues). Quebecor owns a part of the Habs TV rights, so they can collect on both sides of this TV Market. This is not about putting a team in Quebec. This is about making a lot more money out of the demand for hockey in the province of Quebec.

It feels good to have predicted all this 7-8 years ago(here on HFboards). The only thing I couldn't predict is Labeaume's leadership. Quebecor got a sweetheart deal and the city won't regret this. Win-win.

 

[DJ Omnimaga]

The reason why the salary cap didn't go down that much is because the low canadian dollar has not yet started to impact Canadian teams. It's this season that it will start being a "problem" and that's if the Canadian teams didn't store large amounts of money in US banks back when the dollar was on-par.

Besides, with a lower loonie, even the Leafs and Habs will generate less revenues for the league. This means much less revenue sharing available for the 18 or so teams that lose money. If the salary cap doesn't go down after this, then it's the sunbelt teams that don't draw as well as the other cash-strapped teams (eg Devils, Sens, Sharks and Preds) that will have the most troubles meeting both ends, since they rely a lot more on revenue sharing. Without a salary cap and revenue sharing, this would be a different story, but right now with the current CBA the small market Canadian teams will probably be middle of the pack teams that will break even with revenue sharing.

The biggest challenge if the dollar tanks even more will be for teams that always spend to the cap and never use any common sense while signing players: How do you deal with your player contracts if the salary cap suddenly goes down by $10-20M?

 

[Fugu]

Also, Quebecor's revenues will be substantially bigger than Winnipeg's. 125m + is a good estimate (on par with Ottawa). Quebecor's market is Montreal and the Nords will get a similar(less than Montreal but substantially higher than Winnipeg) regional deal as the Habs. The Nords will be the "alternative" media product to the Hab (on top of improving the Habs revenues). Quebecor owns a part of the Habs TV rights, so they can collect on both sides of this TV Market. This is not about putting a team in Quebec. This is about making a lot more money out of the demand for hockey in the province of Quebec.

It feels good to have predicted all this 7-8 years ago(here on HFboards). The only thing I couldn't predict is Labeaume's leadership. Quebecor got a sweetheart deal and the city won't regret this. Win-win.

How much do you think their TV rights will be worth? Here's the thing though. Quebecor is the broadcaster, no? They might valuate the rights at some level for cap purposes, but not really pass that on to the team's books. Of course, as long as its the same owner, that's somewhat moot as long as they're making money providing the content. I'm just not sure how much money that's going to be and why you think there are more lucrative revenue streams in QC than Winnipeg.

 

[Fugu]

The reason why the salary cap didn't go down that much is because the low canadian dollar has not yet started to impact Canadian teams. It's this season that it will start being a "problem" and that's if the Canadian teams didn't store large amounts of money in US banks back when the dollar was on-par.

Besides, with a lower loonie, even the Leafs and Habs will generate less revenues for the league. This means much less revenue sharing available for the 18 or so teams that lose money. If the salary cap doesn't go down after this, then it's the sunbelt teams that don't draw as well as the other cash-strapped teams (eg Devils, Sens, Sharks and Preds) that will have the most troubles meeting both ends, since they rely a lot more on revenue sharing. Without a salary cap and revenue sharing, this would be a different story, but right now with the current CBA the small market Canadian teams will probably be middle of the pack teams that will break even with revenue sharing.

The biggest challenge if the dollar tanks even more will be for teams that always spend to the cap and never use any common sense while signing players: How do you deal with your player contracts if the salary cap suddenly goes down by $10-20M?

It's not really possible for the cap to remain high, or to grow, if the Canadian dollar is in a declined state. Not saying the Canadian teams won't be hurting on the player cost side to some extent (and revenue transfer will make that up as it's paid in USD), if the dollar remains in the 70s cents range.

 

[MetM]

Yeah but, just playing along here, those figures are all in CDN dollars, which works out to about $77 million US. And that's basically what the cap is at right now? Even if the cap goes down, it won't be by much.

So where will the profit come from? The cost of servicing $650 million in debt, at about 6% bond rates (which is a very good rate, they may not even have that much), is $39 million a year. Even if they paid ALL CASH, they could still easily have gotten a 6% return on that $650 million ($39 million a year).

So in other words, doing ridiculous amateur rough math, just to break even they would need to be pulling in like $150 million Canadian a year, assuming they spend to the cap. And if they do that, they service the debt but they don't actually make any movement towards paying off the $650 million.

They would need to go DEEP in the playoffs or win a cup in order to actually make a huge dent in the financials. But how do you go deep in the playoffs without spending to the cap (assuming they don't, to save money).

Again, I would very much like to see Quebec have an NHL team, so I don't want people to think I am against that aspect of it. I want Saskatechewan to have an NHL team too. But financials of it don't make sense, and the reason for that is because the NHL is asking way too much. $500 million is a joke.

The team itself may not make profits the first few years (low CAD) but Quebecor will. The same way Rogers is ok paying so much for TV rights, synergy.

 

[madhi19]

How much do you think their TV rights will be worth? Here's the thing though. Quebecor is the broadcaster, no? They might valuate the rights at some level for cap purposes, but not really pass that on to the team's books. Of course, as long as its the same owner, that's somewhat moot as long as they're making money providing the content. I'm just not sure how much money that's going to be and why you think there are more lucrative revenue streams in QC than Winnipeg.

Unless they own the team at 100% they can't really play that kind of game with TV rights. Their shareholders agreement would include a market rate clause.

 

[Fugu]

Unless they own the team at 100% they can't really play that kind of game with TV rights. Their shareholders agreement would include a market rate clause.

I'm not sure I follow, madhi.

Isn't this going to be Quebecor owning the team at 100%? Their shareholders would be happier to pay less for the rights, but make a lot of money?

 

[madhi19]

I'm not sure I follow, madhi.

Isn't this going to be Quebecor owning the team at 100%? Their shareholders would be happier to pay less for the rights, but make a lot of money?

We don't know yet. But best guess they own 51%, with a few junior partners picking the rest and a front guy like Toronto with Tanenbaum.

 

[GordonGraham]

Also, Quebecor's revenues will be substantially bigger than Winnipeg's. 125m + is a good estimate (on par with Ottawa). Quebecor's market is Montreal and the Nords will get a similar(less than Montreal but substantially higher than Winnipeg) regional deal as the Habs. The Nords will be the "alternative" media product to the Hab (on top of improving the Habs revenues). Quebecor owns a part of the Habs TV rights, so they can collect on both sides of this TV Market. This is not about putting a team in Quebec. This is about making a lot more money out of the demand for hockey in the province of Quebec.

The habs are getting 62M from RDS (1M per regional game), the best i can see the nords doing is half that any idea how much money the jets are getting for regional rights?

 

[GordonGraham]

We don't know yet. But best guess they own 51%, with a few junior partners picking the rest and a front guy like Toronto with Tanenbaum.

They never mentionned getting any partners

 

[WeTheNords]

Winnipeg has done an amazing job. It will be tought to replicate, but the potential is there for sure. On the TV side, i think they can do better. Ticket wise, i dont know, cause Winnipeg is killing it at the gate.. Quebec games will be broadcasted province wide which is a plus on Winnipeg.

 

[madhi19]

They never mentionned getting any partners

We will see. But the template make sense and it been used all over the NHL.