Canadiens’ playoffs bid last hope for business
Financial fallout expected as lone Canadian team advances in race
Best case scenario for Canadian merchants and broadcasters: the Montreal Canadiens take seven games and defeat the Tampa Bay Lightning in their opening round NHL playoff series, which begins Wednesday night.
And a dream outcome? The Habs win a little more often than they lose, and win the Stanley Cup seven games at a time.
But absent that mathematical anomaly, stakeholders need to prepare for the financial fallout of an NHL playoff race that contains just one Canadian team.
Last year 12 NHL playoff games took place in Canadian cities. This year that number could reach 15 if the Habs managed to string together four straight sevengame series, but it’s likely to be much lower.
Economist Glenn Hodgson says the lack of playoff hockey won’t dent the economies of cities, like Toronto, that hosted post-season hockey last year but are missing out this spring. But he acknowledges certain types of business will feel playoff hockey’s absence.
“There’s a shift in how the money is spent within the community,” says Hodgson, an economist with the Conference Board of Canada. “If you’re linked to the Leafs as a broadcaster or supplier in any form, there’s a big impact but professional sports doesn’t create much incremental GDP.”
McMaster University economist Hannah Holmes estimates each playoff game can generate up to $3 million in economic activity for its host city, but says the presence of a big market Canadian team will limit the damage to TV ratings.
“Thank goodness it’s Montreal,” says Holmes, who teaches at the DeGroote School of Business. “It would have been a lot worse if it was Winnipeg or Edmonton. Montreal has a sufficiently large national fan base, so there will be (viewers) as long as they’re still in the playoffs.”
In a 2012 study examining the viability of potential Canadian NHL markets, the University of Toronto’s Mowat Centre found that Canadian sports fans were 40 times more likely than those in the U.S. to watch the NHL playoffs, while Quebec residents were 90 per cent more likely.
But even if viewership numbers decline in series that don’t involve the Canadiens, CBC spokesperson Chuck Thompson says it won’t cost broadcasters ad revenue.
Last year, he says, the network wrung extra revenue from series that gained viewers as they progressed. By the sixth and seventh games of the Leafs’ first-round loss to Boston, Thompson says sponsors paid a premium for the few remaining one-off ad spots.
But he points out that CBC sells hockey sponsorships 12 months in advance, with rates based on viewership numbers from the previous two seasons. So overall ad revenue won’t suffer with only one Canadian team in the post-season.
“As of yesterday our playoff sales are pacing ahead of last year — and the Toronto Maple Leafs were in the playoffs last year,” says Thompson, CBC’s head of media relations. “It would be great if all seven Canadian teams were in (but) the revenue group starts selling the day after the Stanley Cup final.”
Next year Rogers takes over as the NHL’s Canadian broadcast partner, and while sales staff might not follow CBC’s blueprint Hodgson is sure the company accounted for years like this when it reached a 12-year, $5.2 billion broadcast deal with the league last year.
“Anybody who goes in thinking best case is the baseline is kidding themselves in any business deal,” he says. “A normal year is two or three Canadian teams making the playoffs. This is hopefully the bottom of the cycle.”