On April 28, 1996 the Winnipeg Jets, flanked by a sold-out crowd of pompom waving fans, said goodbye to the city the team called home for 24 years, and moved to Phoenix. Nearly a decade and a half later the team’s memory still looms large in Winnipeg. While the old Winnipeg Arena was torn down to make room for an expanded shopping centre, you’ll still see people wearing Jets jerseys, reminiscing about the “white out” playoff games, and, these days, trying to figure out whether or not a new franchise would be viable in the city.
The idea of bringing a team back to Winnipeg has been bandied about nearly every year since the Jets left. But, only in the last few years — when Pittsburgh was up for sale in 2006, Nashville in 2007 and now Phoenix — has the chatter around returning a team to what many think is a hockey holy land of sorts been kicked up a few notches.
While it would be hard argue that Winnipeg wouldn’t be the sentimental favourite for a new NHL team — especially if that team were the Coyotes — there’s more to relocating a franchise than nostalgia. The big question right now is can Winnipeg financially support a top-tiered hockey team?
Here are the top three challenges a team would face if it relocated to Winnipeg.
Corporate box calamity
The only way the Winnipeg Jets will succeed is if they sell all 50 of their corporate boxes, and at a much higher price than they do now. Currently, a suite at the MTS Centre, for Manitoba Moose games, costs between $43,500 to $67,500. At Rexall Place, where the Oilers play, boxes run from $49,200 to $410,000 a year, while luxury suites at the Air Canada Centre cost $500,000. In order to make money, arena owner True North Entertainment would likely have to significantly increase its annual corporate box costs. The problem, however, is that it might not find any buyers.
Rob Warren, executive director of the Winnipeg-based Asper Centre for Entrepreneurship, says that so far, no one that he knows is willing to purchase a suite at NHL prices. “I haven’t seen the corporate community step up,” he says.
Warren knows because he’s already asked. “I spoke to one senior executive with a Winnipeg-based insurance firm point blank whether his company would buy a luxury box. He said no. Another fellow in town, Doug Harvey from Maxim Truck & Trailer — he’s a huge hockey fan — also said no. Unless you get a guy like Harvey on board it’s tough in this market to make those revenue targets.
“It’s the cost,” he adds. “They just don’t see the benefit. They don’t run enough clients in from out of town to make it worthwhile.”
Warren points out that Winnipeg doesn’t have the big head offices that other hockey towns do. And while a lot of local companies are community oriented, he says, “a box starts to stretch their promo budget, and in many cases will break it.”
Sharing won’t work either. Warren says that many businesses already do that, and if the prices rise, “how many companies have to share that to make it worth it?” he asks.
Another concern for the corporate community is the team’s long-term viability. Warren explains that while the team would likely sell out for the first few years, it’s hard to say how the Jets would fare in a decade. “Most people in the business community see [the long-term] where the economics start to get shaky.”
If you build it, they will come — right?
There’s no doubt that Winnipeggers are excited about the prospect of an NHL team. Mayor Sam Katz recently revealed that he wants to talk to Gary Bettman about bringing a team back to the city, and every April residents feel a little heartbroken as they recall the famous “white out” playoff games at the Winnipeg Arena. But, as thrilled as many people would be to have a franchise back, there’s no guarantee that all that enthusiasm would translate into regular sellouts.
Jim Silver, author of Thin Ice: Money, Politics and the Demise of an NHL Franchise, a book about the downfall of the Jets, remarks that while many Winnipeggers fondly recall going to sold out games, attendance was always an issue for the franchise. “Contrary to what people believe, during regular season games you could easily get tickets,” he says.
He’s right. Between 1989 and 1995 the average attendance at Jets games was 13,138, while capacity was 15,565. In the team’s last year — the ‘95-’96 season — they averaged 11,316 fans a game.
And that was when the average ticket price for a Jets game was about $22 (they had seats as low as $10), while the league average was $34.79. Today, the average ticket price for a NHL game is $46.96 — that’s a 35% increase from 13 years ago.
According to Team Marketing Report, a research firm that calculates the fan cost index of NHL teams, it would have cost a family of four $142.16 to see a Jets game in 1995. (That includes four tickets, two beers, four soft drinks, four hot dogs, two programs, two hats, and one parking spot.) If the team comes back, and wants to be financially competitive, they’ll have to charge fans prices similar to other smaller market Canadian teams such as the Edmonton Oilers, where the average ticket price is $54.17, and the fan cost index is $294.61.
At those prices, Silver doesn’t think enough people will shell out the coin to keep the Jets around long-term. “I think some people would pay $100 a person, because the game matters a great deal to them,” he says. “But I take my three grandsons to see a Manitoba Moose game and it’s about $100 for the evening. If it costs that much per person the game will lose its point as entertainment for kids and adults.”
Another hurdle a new team would have to overcome is the size of the MTS Centre, which opened in 2004. A sellout crowd at the venue is 15,003, or 562 seats less than the old Winnipeg Arena. The arena would be the smallest in the league — Nassau Coliseum, which houses the New York Islanders, claims that title now with a capacity of 16,297 seats.
Because of its comparatively tiny size, the team would instantly find itself at the bottom of NHL attendance figures. Right now, only three teams — the Coyotes, Atlanta Thrashers and the Islanders — sell less than an average of 15,000 tickets a game. The Oilers’ average attendance is 16,839 (they sold out every game in 2009), while Ottawa saw about 18,949 fans walk through Scotiabank Place’s doors each game.
It’s all about who has the Benjamins
If you haven’t noticed, Phoenix Coyotes suitor Jim Balsillie is a wealthy man. According to Canadian Business’ Rich 100 list the RIM co-founder is worth $2.37 billion. If that’s the kind of dough one needs to have to buy a professional hockey franchise these days, you can count Winnipeg out. It’s not that there aren’t rich men and women in the city, it’s that there aren’t people who are Balsillie rich.
The natural go-to family to bring back a team is the Aspers. But it’s no secret that their main business, Canwest Communications, is in trouble. As well, their net worth, according to the Rich 100, is valued at $341 million, a far cry from the $1.1 billion of 2006.
Is there anyone else who might buy a team? Not likely says Ian Hudson, an associate professor of economics at the University of Manitoba. “It would take someone like Balsillie, who’s prepared to put up their own money and risk losing it, in order to have a team here,” he says. “There are people with lots of money, but it’s more than just having money on that scale — they have to be willing to throw it away.”
Warren agrees, saying that Winnipeg doesn’t have anyone who has $212 million (the price tag Balsillie has put on the Coyotes) “lying around to blow on a pro-hockey team.” He estimates that only someone with a net worth of $2.5 billion would be able to afford a franchise. “I picked that number because the person is not going to commit the bulk of their portfolio. This is really another investment. It’s going to be something that they might use their last 10% to play with.”
Why the city might get a team anyway
There are a number of other obstacles standing in the way of the Jets’ return to Winnipeg — rising salary caps and Bettman’s ongoing American experiment to name two — but it’s not inconceivable that a team could come back.
For that to happen though, the league would have to dramatically contract, which is a possibility considering how many American teams are in financial trouble. “The NHL has to shrink,” says Warren. “A source of mine in the league has said that anything south of New York you want to get out of because those aren’t good hockey markets. You might find a pocket here or there, but places like Carolina and Florida, those are not traditional hockey markets.”
If the NHL becomes smaller, player salaries will come down, and then Winnipeg might be able to afford a team. Author Jim Silver explains that salaries “aren’t consistent with anything in the real world” and that while players should be well paid, they don’t need $1 million a year.
Warren adds that while contraction won’t stop the superstars from getting the big bucks, everyone else’s salaries will come down. Then it will be less expensive to purchase, and run, a franchise. “And, when that happens, Winnipeg becomes a much better prospect for NHL hockey.”
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