Grange: Sinking loonie and what it means for canadian teams bottom line
Old 02-06-2014, 10:16 AM   #1 (permalink)
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Grange: Sinking loonie and what it means for canadian teams bottom line

Sinking loonie threatens teams' bottom lines -

Canada’s cross-border sports discount shopping spree may finally be coming to an end.

It’s been a good run. For nearly a decade participation in US-based sports has been at marked down prices for Canadian clubs — at least according to historic trends — thanks to the robust health of the Canadian dollar compared with its US counterpart.

That’s changing. For the first time in five years the dollar is hovering around 90 cents and some economists are predicting we will see an 85-cent dollar by the end of 2014. Where it goes from there only Nostradamus knows, but it’s seems the currency parity-party could be over.

It’s a prospect that owners and executives fear and has been the mover behind seismic shifts in the Canadian sports landscape in the recent past and yet is the easiest to overlook.

“It’s not good, it’s trending the wrong way,” said retired Maple Leafs Sports and Entertainment executive Richard Peddie, who joined MLSE when the dollar was trading at 70 cents and was helped in his efforts to turn the company that owns the Toronto Maple Leafs, Toronto Raptors, Toronto FC and the Air Canada Centre into a $2-billion business, in part because the dollar had surged to $1.04 by the summer of 2011 when he announced he was retiring. “We used to say every penny the dollar went down cost us about $1.1-million in profit.”

The reason isn’t complicated: the single greatest expense for all Canada’s NHL teams, the three MLS teams, the Toronto Blue Jays of MLB and the NBA’s Raptors is player salaries, which are paid in US dollars. As the Canadian currency slides, expenses rise.

“It won’t affect our plans for this year, we’re already locked and loaded (with regard to payroll),” says Blue Jays president Paul Beeston. “But it will affect our bottom line, that’s for sure.”

There is no operation more vulnerable to a weakened dollar than the NHL. There are just seven Canadian-based franchises but the industry is so robust north of the border that it’s estimated between 25 and 40 per cent of league-wide revenues flow south from Canada.
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