Spector and the Canadian Dollar

Discussion in 'Fugu's Business of Hockey Forum' started by william_adams, Sep 17, 2006.

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  1. william_adams

    william_adams Registered User

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    Lyle Richardson brings up a fantastic point in his Soapbox: http://www.spectorshockey.net/

    The Canadian small market teams that have done so well in the past couple of years; Edmonton, Ottawa and Calgary; are reaping the benefits of the Canadian dollar being almost 50% stronger than it was in 2002. And the rabid fans of these franchises are part of why the NHL had a larger than expected boost in both attendance and revenue.

    With Canada and the US both expecting to have finished raising interest rates, M&A flows nearing an end, and the price of oil falling, one can only hope that these teams can still succeed if the dollar dips a bit.
     
  2. Northern Dancer

    Northern Dancer The future ain't what it used to be.

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    There is absolutely no doubt that high municpal taxes and the weak Cdn $ were the biggest cause of the financial plight of the Cdn teams. (shows you the financial strength of the Leafs though despite the $ and despite 1 miilion per month in muni taxes they still rank # 1 in the NHL for profitability).
    Always thought that owing a Cdn NHL team was a good hedge for exporters (like pulp and paper industries).
     
  3. william_adams

    william_adams Registered User

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    Maybe Domtar or Cascades can bring the Nordiques back to Quebec!
     
  4. Wetcoaster

    Wetcoaster Guest

    For the Canucks, each rise in the dollar by one cent meant about a $300,000 rise in profitability

    The Canucks were very successful financially because of COO Dave Cobb who was handling all the financial matters for the organization, not Brian Burke who was always quick to take the credit for the financial turnaround. Cobb made a pile of money for Orca Bay playing the currency market and used the rising Canadian dollar as hedge.

    When Cobb left to join the Vancouver 2010 Olympic Committee as CFO the Canucks lost the brains behind the team's financial turnaround and the next President of the team. He was a huge loss.
     
  5. vbet*

    vbet* Guest

    If the canadian dollar drops (which I think it will) it just means that the overall revenue drops. The vast TV contract cbc/ctv has also drops in value.

    This would mean the salary cap goes down and it shouldn't have a full effect on the canadian teams.
     
  6. Northern Dancer

    Northern Dancer The future ain't what it used to be.

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    You are forgetting one thing, most NHL teams lost money pre the new CBA when the 'average NHL team budget was 42 million' . Now the cap is 44 million and a majority of teams are playing near the cap. I think any drop in revenue for the NHL is very dangerous no matter where it comes from.
     
  7. vbet*

    vbet* Guest

    Very true but if teams average 41 million is salary you can almost guarentee a escrow of 12 or so percent. That would bring salaries back in line to around 36 million. It's capped at 54% no matter what.
     
  8. puckhead103*

    puckhead103* Guest

    another huge loss for vancouver is the big price you guys have to pay after '10 olympics....

    can u say the big owe revisited?
     
  9. syc

    syc Registered User

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    As good as he is with money he couldn't get an olympic games to run on budget. But I don't think that has ever happened in the history of the olympics.
     
  10. willie

    willie Registered User

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    The notion that Canadian cities are 'small markets' is one that - irrespective of the strength of the dollar - is quickly fading.

    Toronto is the NHL's biggest market. Montreal and Vancouver are firmly entrenched in the top-half of the league. Calgary is easily one of the fastest growing cities in North America and Edmonton isn't that far behind. Within fifteen years, Calgary will be a top-10 hockey market and Edmonton will rise also. Ottawa's growth is a bit more tepid but it's a government town and vested interests will ensure it's viability. Plus, it's the league's second french canadian market.

    And the Canadian economy's fundamentals are very strong. All 6 teams are rock solid.
     
  11. Willis

    Willis Registered User

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    There is the fan support, however the 3 smallest markets in Canada would take a hit if the dollar drops. Remember the 85 cent dollar vs a 60 cent dollar means huge dollars. If the Oilers had a 30 million US budget with a 60 cent dollar then they would spend 50 million CDN in salaries. Now with an 85 cent dollar this same 50 million Canadian means a 42.5 million US budget. Now granted all 3 cities are growing with huge growth in $ and population in Alberta but do not underestimate the effect of teh dollar.
     
  12. vbet*

    vbet* Guest

    I guess you didn't read my post. Even though the dollar may drop the majority of the TV revenues to the league is the canadian contract. If the Canadian teams revenues drop the whole leagues revenue drops. This means that the salary cap drops, and thus equalises the drop of the CDN dollar. It will not be a 1 for 1 drop of course but it won't affect the cdn teams as much as people think.

    The weak cdn dollar crushed teams like edm, cal, ott in the past when teams like Detroit spent 70 million, but that is not the case anymore. If you take into effect the revenues generated by the CDN teams, the league does NOT want a lower cdn dollar.
     
  13. Hawker14

    Hawker14 Registered User

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    a low canadian dollar would just mean revenue sharing for them, instead of for the underperforming US markets, from the leafs.

    would be justice.
     
  14. Wetcoaster

    Wetcoaster Guest

    Unfortunately Cobb was not on scene when the budget was first set. He is coming late to the party and trying to clean up.
     
  15. kdb209

    kdb209 Registered User

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    But, the revenues generated by the canadian teams are far from the majority of NHL revenues - TV or otherwise. The gate (and other game related) revenues from the 24 US based teams is significantly greater that those of the 6 Canadian clubs - and the NHL is a gate driven league. The US National TV deals (NBC & OLN) may not be large, but the aggregate of those and the US regional cable deals (MSG, Fox Sports Whatever, etc) verly likely come close to or exceed the revenues from CBC, TSN, etc.

    A 15% drop in the $CDN will reduce HRR and possibly lower the cap, but by far less than 15%. If the loonie drops 15+%, but the cap drops only 5%, the Canadian teams will be hurting.
     
  16. vbet*

    vbet* Guest

    Perhaps I am overstating the cdn tv revenues. Actually yes I am overstating the revenues. I had a few brewskies last night.
     
  17. Northern Dancer

    Northern Dancer The future ain't what it used to be.

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    :biglaugh: :biglaugh: :biglaugh:

    Been there done that !!!

    :clap: :clap: :clap:
     
  18. Gnashville

    Gnashville HFBoards Hall of Famer

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    Me too except I set sail with Captain Morgan:yo:
     
  19. Montrealer

    Montrealer What, me worry?

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    Every forecast I've seen in the last two years has the Canadian dollar eventually reaching par with the US dollar before the end of 2008.

    Should be interesting to see the effects of that; maybe a team in Winnipeg isn't so far fetched.
     
  20. william_adams

    william_adams Registered User

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    Sorry, which forecasts are you reading?? None of the major banks in Canada are calling for a stronger dollar going forward let alone a dollar at par... Have you seen the price of oil recently??
     
  21. The Fuhr*

    The Fuhr* Guest

    Hes right I'll see if I can dig some articles up.
     
  22. Montrealer

    Montrealer What, me worry?

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    I just did a quick search and you're right, the predictions are slowing down.

    National Bank is saying 2009 now instead of 2007 for dollar parity.

    http://www.theglobeandmail.com/servlet/story/RTGAM.20060920.wnbfdollar0920/BNStory/Business/home

    The Bank of New York, on the other hand, is saying end-of-2007 even now.. though RBC seems more gloomy in the same article. http://www.bloomberg.com/apps/news?pid=20601082&sid=aXWXwVIkQ_p0&refer=canada

    Of course, now we're seeing some saying the dollar will decline.. Merrill Lynch Canada sees the dollar falling to C$1.16 per US$ in 2007 here: http://www.bloomberg.com/apps/news?pid=20601082&sid=a9srG6wYVems&refer=canada


    So, you're right that some people are calling for a slowdown or even a reversal of C$ gains, but it's not unanimous yet.



    Edit: Oh, and I'm enjoying 89 cent/litre gas, so yeah I've seen how the price of oil has fallen. ;)
     
  23. william_adams

    william_adams Registered User

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