Why is it that revenue raised by Canadian NHL teams is so much higher that their US counterparts?

Question

I'm throwing this out there because I keep seeing mistaken references in this forum about how the NHL prefers to start franchises in the U.S. because the Canadian teams don't make money. The opposite is true.

From Kevin McGran of the Toronto Star:

The six Canadian teams, representing 20 per cent of the 30-team league, account for 33.3 per cent of all NHL revenues.

That means Canadian team fans cough up an estimated $733 million (all figures U.S.) of the league's $2.2 billion revenue.

Whether it's a family buying season tickets, individuals buying sweaters, advertisers buying in-arena signage, radio and television companies purchasing broadcast rights and people parking their cars in club-owned lots, Canadian teams have economic clout.

Those facts came to light this week when agents gathered at an NHL Players' Association meeting where league revenues and salary-cap issues were discussed

Read the story here:
http://www.thestar.com/Sports/article/180345

Answer 1

It is NOT always cold "up" in Canada so we have more ice. I suggest you get a map out and you'll see that the southern most part of Ontario is equal to the northern part of California. Minnesotta is further north than my city. A little geography lesson.
It is not just the Maple Leafs and Canadiens that account for the majority of sales in Canada. Calgary Flames have the highest sales for merchandise for example. They can't be considered small players and neither can the other franchises.
I think the next two franchises should be in Canada since the US can't get much support for many of their teams. It's sad to watch games with arenas 1/3 full - you don't find that here. Why they put the kibosh on selling the Phoenix or Nashville teams to a Canadian is beyond me. They would do so much better here.
Canada will remain superior in hockey and it's only because four of the original six teams were in the US that the NHL's base is there. It should be in Canada and it's time that we had more franchises here. Winnipeg can definately support one as can Hamilton, or even Kitchener or London.

Answer 2

There are several factors, the NHL's major source of revenue is ticket sales. The Canadian teams usually sell out and ticket prices are generally higher. Montreal and Toronto have a decent television market.

The second reason is the Relative strength of the Cdn vs US dollar as all revenues are measured in US dollars. Five years ago 150 million cdn revenue was equal to 100 million US. Today it is more like 140 Million US. Without raising ticket prices revenue measured in US dollars just went up 40%.

These teams are also making a significant profit because the salaries are still paid in US dollars and some of the teams like Toronto wo were spending 70 plus million in salary pre lockout are now limited to the cap.

A large portion of the increased cap is due to the depreessed US dollar. If the US dollar gains strength with everything else being equal the cap will drop.

Answer 3

Toronto's local TV deals alone generate more revenue than many teams south of the border. I recall reading that Toronto makes almost $60M just from local TV. Considering the NHL salary cap is a little over $40M that type of money is not insignificant.

Montreal's local TV money probably isn't far behind. The only American teams I could see making similar local TV money are the Rangers and possibly the likes of Philadelphia, Detroit and Colorado.

Then there is the fact that to get season's tickets to the Leafs you basically got to take out another mortgage on your home or tell one of your kids that there won't be any money to send them to college.

The 'Hockey Culture' in Canada can't be discounted either. Here Hockey is the official religion. The TV ratings for teenagers playing in Sweden at 6 AM during the World Juniors are ratings that the NHL would kill for on American Network TV.

I also recall reading that during the Gold Medal game in Men's Hockey in Salt Lake that it was estimated that 20 Million people watched the game, out of a population of about 32 million.

Answer 4

That's a very misleading article. As a matter of fact, the leafs and habs are the only real big players in canada. and by big, I mean the other ones don't really count. The Leafs avlone contribute about a third of that money. right now quite a few US teams are bigger then the Oilers, Vancouver, Calgary and Ottawa. Basically, without Toronto, you would never be able to make this argument, flawed or not. toronto is the center of the hockey universe, that's why that's the big one it has nothing to do with canada versus the US, it's just the age of the team and it having been established that long. The rags make a lot of money too. In fact, they're bigger then 4 of the 6 Canadian teams. Tampa has higher attendance then all but Montreal and Toronto too.

Don't believe everything you read. sometimes it misleads.

Answer 5

The problem is that article is misleading, and McGran was informed of that late in February.

Most of that revenue is people buying merchandise, and most of that nerchandise is purchased 'out of market'. In the state of Texas, Maple Leafs and Canadiens merchandise ranked 2nd and 3rd. That money counts 'for' the team.....but is 'split' among the league.

Another thing that McGran's story didn't mention is that Toronto and Montreal account for more than half that total (meaning the other 4 are minor contributers).

Another thing not mentioned, is that while Montreal and Toronto are 'big' revenue generators, the provinces and country they are located in make sure they get their fair share.

I'll have to dig up an article for people. During Lemieux's problems a couple of years ago, he was approached by a group in Winnipeg............a couple of members who owned the Jets. They concluded it wasn't feasible. When I find it, I'll post it.



Finally, be wary of the information provided by player agents! They have a purpose, but they can also misinterpret data to fit their interpretations







Hotcakes 16
The current deal between the NHL and NBC paid the NHL $60MM in 2005-2006, $70MM last year, and $70MM last year. Down from the $120MM a year they made from 1999-2004, but larger than any other US TV contract the league had.

Starting next year, the CBC will pay the NHL $55MM a year for the next 7 years to broadcast games for Hockey Night in Canada, down from the current $65MM.

These revenues are split among the entire league. Canadian teams are free to deal with Sportsnet/TSN/RDS to showcase their non-nationally televised games....this money goes to the team (as does money associated with channels such as Leafs TV)

Answer 6

well for starters, people attend the games all year long wether they are winning or losing. this is mostly true in the case of montreal and toronto. i know for a fact that in canadian cities, hockey is all year long, even after the finals people still find something to say about hockey in the sports news, and tv , etc. there's also the fact that people purchase lorts of merchandise from toronto and canadiens because these are teams who are part of the original 6. while these 2 teams have not reached the finals in years, it still remain they have a big history.

there is also the fact that many television networks air the games here, which can allow fans to have access to their teams even if they can't afford to go to a game. i have satellite and 1 thing that i realized is that its only after at least half of the season has passed that american networks actually decide to air hocke games and during the playoffs they even interrupted a game that went in overtime to continue their own program.

the problem in the U.S. is that hockey is not marketed like it used to be. some people are clueless when the season begins or that playoffs or taking place or whatnot. in their papers they only have a small article explaining the outcome of a game.

it's not about having the nfl or the mlb, there is the cfl in canada and nfl is also aired on our networks. its a question of marketing and trying to get people interested into watching or going 2 the games, one thing that they do not have to do in canada but that is deeply necessary if they want 2 make it successful in america!!!

Answer 7

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Answer 8

I think it has a lot to do with the booming economy in Canada. The loonie is near parity, the price of oil is high so Alberta is laughing, the IT companies buy up the Sens season's tickets, Habs and Leafs always sell out, Vancouver has a very good supply of rich folks....life is good these days. Even the Oilers are profitable as their "not for sale" status attests.

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Answer 10

Canadian teams produce more money than American teams because the sport originated there, and it will always have support there. It's the same thing as soccer will never make more money in America as in Europe, or as Baseball won't make as much in Japan as America. Americans are too pre-occupied with the NFL and MLB to worry about hockey.