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Not Good News For The NHL, The Canadian Dollar Is Dropping

from Pat Hickey of the Montreal Gazette,

The Canadian dollar has been steadily losing value vis-à-vis its U.S. counterpart. It dropped below 90 cents this week and economists see a further decline in the future. A CIBC report said the loonie could fall to 82 cents early next year.

What does this mean for the NHL?

The league has enjoyed a dramatic rise in revenues over the past decade despite two potentially devastating lockouts. We would like to give NHL commissioner Gary Bettman credit for growing the business, but the driving force behind the increase has been a healthy Canadian dollar. Canada bounced back from the recession faster than the U.S. and that was the result of a booming resource sector.

But oil prices have reached the stage where it is too expensive to extract the sludge from the Alberta oilsands. The dollar is dropping and every decline in the loonie’s value will have a largely adverse effect on the NHL.

We start by looking at those overall revenues. Upwards of one-third of the money that is used to measure hockey-related revenue in the NHL is generated by the seven Canadian franchises. If the dollar drops in value, so does the overall revenue.

Teams are expecting to have a little more cap money next season because the full value of the Rogers Canadian TV deal kicks in, but that deal will be worth a little less next year and the value could continue to decline.

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Filed in: NHL Talk, NHL Business of Hockey, | KK Hockey | Permalink
 

Comments

Red Winger's avatar

A CIBC report said the loonie could fall to 82 cents early next year.

The hell with the NHL, this is great news for American border communities smile

Posted by Red Winger from Sault Ste Marie, MI on 10/25/14 at 10:18 AM ET

blammo's avatar

Except that many American border towns (Bellingham in my case) thrive on Canadian shoppers. And in your example money is leaving the American towns so I’m not sure how this can be seen as a benefit for them.

Posted by blammo from Vancouver, BC on 10/25/14 at 01:59 PM ET

Alan's avatar

The last time the CAD fell, we had Quebec City move to Denver, Winnipeg move to Phoenix, and Edmonton nearly moved to Houston.

While I don’t think there’s a remote possibility of Edmonton being in the crosshairs again, or teams like Vancouver experiencing such difficulties, one has to wonder if markets like Ottawa or Winnipeg are in any danger, and how immediate that danger would be, should the CAD drop to the lows experienced in the mid-90s.

Posted by Alan from Atlanta on 10/25/14 at 02:38 PM ET

Red Winger's avatar

Except that many American border towns (Bellingham in my case) thrive on Canadian shoppers. And in your example money is leaving the American towns so I’m not sure how this can be seen as a benefit for them.

Because our dollar is worth more, so we can buy Canadian money and get a very good deal to buy Canadian goods over there. Meanwhile, Canadians continue to come over here in droves because the cost of gas and many food staples are so ridiculously high in Soo, Ontario, that buying American funds with a .82 Loonie to buy goods over here is still a worthwhile deal.

As of now, very few Americans here cross the border to shop. A lower CAD will change that.

I have talked to more than a few Canadians who bring over both vehicles to fill up,and shop for certain staples,and say they easily save $100-$150 every two weeks. If the lower CAD means they will now only save $65-$115 every two weeks I would think most will still come over.

Posted by Red Winger from Sault Ste Marie, MI on 10/25/14 at 04:01 PM ET

Canucklehead's avatar

My dad heads across the river every week to fill up and do a bit of shopping in the Michigan Soo.  He’ll do that even more if our dollar drops further.

Posted by Canucklehead from Ottawa, Ontario on 10/25/14 at 06:34 PM ET

Slumpy's avatar

Windsor Casino will like this news..Detroit casinos not so much.
Will the exchange rate go back to what is was in the 90s ah probably not though.

Posted by Slumpy from Under My Wheels on 10/26/14 at 04:44 AM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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