Wednesday, May 07, 2008
Why has Canada not subsidized the CFL?
Five CFL teams – the Montreal Alouettes, Winnipeg Blue Bombers, Hamilton Tiger-Cats, Saskatchewan Roughriders and the ownership of a conditional Ottawa franchise – are aggressively pushing plans to build new stadiums or drastically alter and refurbish old ones.It's the overdue question that intrigues me. The article notes that no stadium has been built for football since the 1960s, although some teams play in venues built for another purpose. Some are dilapidated.
Factor in the anticipated makeover of Vancouver's B.C. Place Stadium, which could add a retractable roof to the facility, and a potential redesign of Toronto's BMO Field to accommodate the Argonauts, and the CFL could be looking at well over a half-billion dollars invested in stadium infrastructure during the next five years.
Many would suggest it's long overdue.
Why the lack of public investment? The CFL, like other prominent North American leagues, is a closed set of teams that controls entry. The incentive to obtain a stadium subsidy that derives from the league structure and the relocation threat thus exists. The view of Canadian government as fairly liberal with the checkbook would imply public-private "cooperation" on stadium ventures.
The article suggests at one point that "local and provincial governments are wary about investing in pro sports facilities of any kind," but that doesn't wash with me. Brad knows all about the current subsidy issue over a hockey arena in Alberta, for instance ;)
I can see two possibilities.
It is possible that the CFL makes so little money and has such a small impact that the relocation threat is not operative. There is in fact relatively little demand for football stadiums, public or privately financed.
Second, the political distribution of power differs in Canada from the U.S. This renders the execution of a relocation threat pointless, since (by assumption) there is not a significant source of local public revenue. [bleg: Anyone know the facts?]
I lean towards the first. But the second is testable: hockey arenas should have a greater fraction of public funding south of the U.S. border, despite the fact that hockey is Canada's national sport.
Labels: cfl, nhl, stadium subsidies
Friday, February 29, 2008
Watch Out, NHL!
According to the CIA World Factbook, PPP adjusted GDP per capita in Russia was $14,600 in 2007. I have trouble believing that a country with income per capita that low can generate sufficient revenues from fans to support NHL-level salaries, no matter how expensive crude oil gets.
(HT to Brian Soebbing)
Saturday, February 02, 2008
The Weak Dollar and Franchise Values
The US dollar has depreciated significantly against other currencies over the past several years. Currency depreciation has a differential effect on an economy. For example, manufacturers who export their products abroad benefit, as their goods are cheaper in foreign markets, while manufacturers who purchase raw materials from abroad are hurt because they face higher input prices.
The financial environment is quite different now. The chart below shows the Canadian dollar-US dollar exchange rate over the past five years. The Loonie has been trading roughly at par with the US dollar since last fall, and some analysts predict that this exchange rate will persist for some time.
A recent New York Times article points out that the value of Canadian NHL teams surged in the latest Forbes franchise value estimates, and that Canadian NHL teams appear to be attractive purchases for foreign investors. These events are not surprising, given that Canadian NHL teams have seen their payroll costs drop significantly relative to their US competitors.Labels: franchise values, nhl
Wednesday, October 24, 2007
Sandomir on the Rangers vs. NHL Lawsuit
The rhetoric of the Rangers, and their parent, Madison Square Garden, features phrases like "unrestricted power," "illegal cartel," "seizure," "crackdown" and "blatant expropriation of team assets."Sandomir has some useful facts and analysis as well. Recommended.
There is a Marxist twist to this. Not Karl, but Groucho. The Rangers could well have cited in their legal papers the far funnier Marx, who once said, "I wouldn’t belong to any club that would have me for a member."
Saturday, September 29, 2007
Hockey team sues NHL
The NHL violated antitrust laws and is acting like "an illegal cartel" by monopolizing control of team promotions, Madison Square Garden claimed in a lawsuit Friday.The NHL appears to be copying major league baseball's approach to managing team websites. Surely there are significant economies derived from MLB running astros.mlb.com, padres.mlb.com, etc. for the team. Baseball's internet operations have turned into a significant revenue generator for the league and its teams, and this revenue growth is surely not derived from restricting competition.MSG, which owns the New York Rangers, said it filed the suit in U.S. District Court in Manhattan because the NHL would begin fining the organization $100,000 per day starting Friday if the company did not give the league complete control over the Rangers' Web site and other promotions.
The league is seeking to control the licensing of teams for all commercial purposes and to stop teams from marketing apparel, merchandise and memorabilia, the suit said. MSG asked that a judge order the league to stop limiting team promotions, and it also wants the court to clarify the boundaries of the league's rights.
The company said the NHL had once worked with teams in a legitimate joint venture but had more recently "veered into unlawful behavior."
"By seeking to control the competitive activities of independent businesses in ways that are not necessary to the functioning of that legitimate joint venture, the NHL has become an illegal cartel," the suit said.
In 2006, Chris Isidore wrote:
One of Selig's greatest legacies might end up being MLB Advance Media, the joint Internet operations for all the clubs. Besides being a leader in things like Web casts and mobile updates for fans, Selig was able to get the owners to agree in 2000 to equally share their Internet revenue, a move that might one day be comparable to Pete Rozelle getting the NFL owners to agree to share their national television revenue.These facts suggest to me that the NHL's website operations can be cast in a joint venture framework. MSG's real complaint could be with the manner in which the venture is produced or, more likely, how the revenues are distributed.
Both newyorkrangers.com and rangers.nhl.com claim to be the "official site of the NY Rangers." They are built from a similar template and look equally crummy, although the Rangers' own site has a "Rangers Account Manager" tool that is lacking on the league-produced page.
