People who follow sports don't necessarily look up currency rates. But a significant benchmark was reached last week when the Canadian "loonie" was valued at slightly more than $.99 compared to the American greenback (the loonie is currently valued at $. 99691). It is the first time since November 1976 that the American and Canadian dollars have been virtually on par.
Running franchises in Canada became progressively difficult as the Canadian dollar started a free fall, and bottomed out at around $.62 by 1998. But because the two currencies are now on par, the NHL and the NFL may start looking north of the American border to expand their business opportunities.
The NHL once had eight franchises in Canada. The league "expanded" into Quebec City, Edmonton, and Winnipeg in 1979 as a result of what really was a business merger between the NHL and the World Hockey Association. A year later, investors bought the Atlanta Flames franchise and moved it to Calgary, Alberta.
But as the Canadian dollar plummeted, it became clear that smallmarket Canadian cities — and even Montreal and Vancouver — were going to have a difficult time financially as the gap between the greenback and the loonie widened. The NHL expanded into Ottawa in 1992 and that was almost a disaster, financially, from the outset.
By the mid-1990s, the financial situation in the small Canadian markets began to take a toll. Neither Marcel Aubut in Quebec City nor Barry Shenkarow in Winnipeg could sustain their franchises. Even though NHL owners locked out their players in 1994–95 with the hopes of putting a drag on surging salaries to help out small market franchises, both gave up after not getting commitments for new arenas and sold their franchises to American interests. Aubut's Quebec Nordiques ended up in Denver in the fall of 1995, and the following year, Shenkarow's Winnipeg Jets were in Phoenix.
The commissioner of the NHL, Gary Bettman, somehow managed to keep the Edmonton Oilers in Alberta, even though owner Peter Pocklington had a deal to sell the team to the owner of the NBA's Houston Rockets, Leslie Alexander, in 1997. Alexander planned to move the team to Houston. Pocklington had also explored relocating his team to Minneapolis prior to his planned sale to Alexander. Bettman established the Canadian Assistance Program in the late 1990s, as a revenue-sharing scheme for the smallest of the four Canadian markets — Calgary and Edmonton in Alberta, Ottawa in Ontario, and Vancouver, British Columbia — despite the objections of the then head of the NHL Players' Association, Bob Goodenow. Goodenow thought bigger markets should replace the small markets, and that the special revenue sharing (which kicked in if the franchise averaged more than 14,000 paid customers per game) was a drag on salaries. Bettman also got the Alberta government to share some of the proceeds of a provincial hockey lottery with the two Alberta franchises. After the 2004–05 lockout, the league got a salary cap concession from the players. That was supposed to help the small-market Canadian owners close the economic gap.
Fortunately, though, Calgary and Edmonton are in oil country. The Canadian economy is now booming because of Alberta's oil and a low inflation rate. Things are now so good in Edmonton that a local businessman, Daryl Katz, has twice tried to buy the Oilers in the past year and has been rebuffed by the Oilers' partners. Katz allegedly offered $175 million for the franchise. The Alberta economy has heated up so much that people are flocking to the province, knowing that jobs are plentiful and housing is scarce.
So now, small-market Canada is back on the NHL's radar. Bettman has given an endorsement of sorts to Winnipeg's efforts to land an NHL team more than a decade after the Jets' departure.
Outside of hockey, the NFL and Toronto have been courting one another for years. The president of baseball's Toronto Blue Jays, Paul Godfrey, has been talking with NFL officials about expanding to Toronto for two decades. Godfrey, back in 1989, pegged an NFL expansion franchise price at between $50 and $60 million. In some cases, NFL franchises are now worth $1 billion, and with the former exchange rate, it seemed that Toronto interests would never be able to afford an NFL team. But with the currency now equal, Toronto is an extremely attractive city. It is the financial and press capital of Canada, and is bigger in market size than just about every American city in market size, with the exception of New York, Los Angeles, and Chicago.
Is Vancouver back in the NBA's global expansion plans? As the Canadian dollar was about to hit rock bottom in the mid-1990s, Vancouver businessman Arthur Griffiths, who owned the NHL's Canucks, decided to build a new arena for his hockey team and wanted a basketball team in the building to fill up dates.
The commissioner of the NBA, David Stern, sold Griffiths an expansion team, with the understanding that while Vancouver wasn't a traditional basketball hub, it was becoming the home of many immigrants from Hong Kong who were leaving the island prior to the transfer of Hong Kong's sovereignty from Britain to China on July 1, 1997. The NBA had identified Hong Kong as a major basketball hotbed. With Hong Kong residents flooding nearby Richmond, it seemed that Vancouver would be a wildly successful franchise.
The new franchise entered the league with the Toronto Raptors in 1995. Griffiths soon began to feel the financial pressure of having to foot the cost of a new arena and the $100 million American expansion fee, and could not handle the debt service payments. The 1998–99 NBA lockout of the players seemed to be the death knell for the franchise, as corporate support disappeared. By 2001, new owner Michael Heisley moved his team to Memphis. It was not a good move for Heisley, who found out in a hurry that small market Memphis might not have the financial wherewithal to support the franchise.
Meanwhile, Vancouver is hosting the 2010 Winter Olympics, and that might open up the eyes of sports promoters who might give the city another look. Vancouver is hosting an NBA preseason game between the Phoenix Suns and the Seattle SuperSonics on October 27. This probably isn't a "test" game to gauge support for another NBA franchise in the city. But SuperSonics owner Clayton Bennett has given Seattle-area politicians a November 1 deadline to fund a new arena, or he is headed elsewhere with his team. Vancouver isn't on Bennett's short list of relocation possibilities, but in the long run, Vancouver might be a better choice than Kansas City or Oklahoma City.
There is a possibility that over the next few months, the loonie will be worth more than the greenback. That might be enough to persuade some sports owners to return to Vancouver, Winnipeg, Montreal, and Quebec City with major league sports franchises much sooner than anyone ever expected.