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Keeping up with the Americans in the NHL

Canada is a hockey nation, but has had a heck of a time preventing its hockey franchises from going south. From the (then) defunct Winnipeg Jets and Quebec Nordiques to financial messes in Edmonton and Ottawa, the CBC has followed the ups and downs of Canada's small-market NHL teams as they forever skate on thin ice.

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Nashville, Tenn., is famous for music, not hockey. But the city is doing everything in its power to become a hockey town. They've showered their newly-acquired NHL franchise, the Predators, with subsidies ranging from tax breaks and cash payments to a new $230-million arena. There are gimmicks for the kids, clinics on hockey rules for the fans. As we see in this clip, the promoters believe this investment in hockey (or in the words of the owners, "a sports entertainment product") is helping redefine Nashville itself.

In stark contrast, the Ottawa Senators had to build their own arena, a road to reach it, and that road's interchange to the Trans-Canada Highway. Last year, the team paid $4.6 million in taxes; more than all U.S. teams combined. Canadian team owners say their tax burdens present an almost insurmountable competitive disadvantage. Others see no need to engage in a subsidy war that gives hockey special treatment simply because Americans cities choose to do so. 
• There is considerable debate over just how much economic benefit an NHL franchise brings to its host city. In Nashville, economists estimated that the impact on the first year alone was $82 million, and would approach $600 million in new economic activity over five years. Yet other studies have indicated that when the Jets left Winnipeg there was no noticeable commercial decline, and that 95 per cent of the money generated by the team was simply spent on other Winnipeg activities.

• Ottawa Senators owner Rod Bryden told CBC he doesn't accept this "substitution" spending theory. He pointed out that if the money were simply spent elsewhere, other local businesses should see measurable economic improvement - and they haven't. Similarly, when a new NHL team arrives in a city, some local businesses should lose revenue under this theory, and that hasn't been demonstrated either.

• In 2000, Forbes Magazine pegged the value of the NHL teams in Ottawa, Calgary and Edmonton at about $75 million US. The newly-relocated Nashville Predators were already estimated at twice that amount. When asked why he doesn't just sell the Senators and make a fortune, owner Rod Bryden responded that "the purpose of having a team here is to have a team here."

• Nonetheless, Bryden was eager enough to put the onus of the team's survival on the fans. When he didn't get the government money he asked for, Senators ticket prices were raised by seven per cent. As well, an ultimatum was set for sponsors and season ticket holders: fill the seats and make the team viable, or lose it. Season ticket sales did increase.

• Later in an item on the CBC's The National Magazine, Montreal sportswriter Michael Farber had this to say about Ottawa's "use it or lose it" approach to ticket sales:
"In what other business is the customer wrong? The consumer in hockey is always wrong. If you don't like my product, it's your fault.. You must buy our tickets, or we're leaving. It would be like if you made Ishtar and said, 'If you don't come to my movie, I'm not going to make any more movies.'"

• Canadian teams do carry heavy tax burdens that other teams in the league do not have to cover:
- Ontario teams (Leafs and Senators) have to pay a 10 per cent "amusement tax" levied on non-Canadian entertainment (e.g. tickets to rock concerts by American artists are taxed, while those for Canadian performers are not). Canadian hockey owners point out that by charging this tax on NHL games, the government is essentially saying the NHL is American.

- Ontario teams also pay seven per cent GST.
- Ottawa also pays a five per cent special tax to the Ontario government to pay for a highway interchange leading into the Corel Centre.
- Most Canadian teams pay millions in property taxes on the arenas in which they play (the arenas in Edmonton and Calgary are city-owned). The Toronto Maple Leafs annually pay about $7 million in property tax. By contrast, the 21 U.S. franchises pay a total of $4 million in municipal property taxes. Fourteen of them pay no local taxes at all.

• There are some creative solutions in place to help out Canadian teams:
- In British Columbia, the Canucks receive a portion of B.C. Lotteries profits, which have been boosted by betting on hockey games.
- In Alberta, the Flames and Oilers benefit from scratch-and-win lottery revenues. The province also decided to tax visiting hockey players for their time spent playing in the province.
Medium: Television
Program: The National Magazine
Broadcast Date: Feb. 24, 2000
Guest(s): Phil Bredesen, Rod Bryden, Michael Farber, John Harvard, Craig Leipold, John Manley, Tiger Williams, David Zussman
Host: Brian Stewart
Reporter: Terence McKenna
Duration: 13:40
Hockey footage: National Hockey League

Last updated: April 30, 2013

Page consulted on September 10, 2014

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