Canada could support 12 NHL teams, new report says
CTV.ca News Staff
Published Tuesday, April 12, 2011 8:07PM EDT
Last Updated Saturday, May 19, 2012 4:27AM EDT
Instead of trying to foist expansion hockey teams in southern U.S. markets that don't really want them and may not support them, the NHL should massively ratchet up its presence in Canada.
That's the conclusion of a new report by the University of Toronto's Mowat Centre for Policy Innovation.
The report finds that Canada's rabid hockey fans could, and would, support a total of 12 teams -- double the six squads currently lacing up on Canadian ice.
The Greater Golden Horseshoe itself -- an area encompassing Toronto, Hamilton and Niagara Falls -- could support three teams alone, according to the report.
And within the region, the Greater Toronto Area is the best spot for a new team, with easily enough hockey fans to support a second team in addition to the Toronto Maple Leafs.
"A new team would also be successful in one of the following cities to the west of Toronto: Hamilton, Kitchener-Waterloo or London," the report states.
Vancouver and Montreal could each support a second team, and Winnipeg and Quebec City -- former homes of the failed Jets and Nordiques franchises -- also have sufficient demand to support a team.
The researchers used Edmonton as their benchmark. The Oilers' home city is the smallest market in the NHL and has the second-smallest arena. Yet due to the dedicated Canadian fan base, the team consistently generates higher arena revenues than most American NHL teams, the report states.
The researchers then analyzed 10 Canadian cities, comparing their economic and demographic strengths to those in Edmonton. They concluded there are six Canadian markets that could generate US$23 million a year in extra game revenue, compared to an equivalent-sized American city.
The report also delved into what it suggested is a deep inequity in the league.
Despite making up just one-fifth of the league, Canadian teams account for one-third of the NHL's total revenues. A good chunk of those Canadian dollars go to the U.S. through a revenue-sharing plan that amounts to Canadian fans subsidizing underperforming American franchises, the report states.
"The primary victims are Canadian hockey fans, particularly those in cities that could support a team but are deprived from having one (or two) by the NHL."
While the report creates an exciting vision of how the NHL's future could look in Canada, it also includes a sobering reality.
The NHL is not a free market model where businesses can freely move to cities where the demand exists, the report explains. Instead it is a monopoly that has an interest in maintaining unrequited demand so that various markets are forced to fight for teams -- usually using massive subsidies such as tax breaks, or a shiny new arena such as Quebec City is considering, as enticement.
"The league has no interest in having supply meet demand, but rather benefits from ensuring that supply always remains below demand," the report states.
"For the NHL, this is an entirely rational strategy: artificial scarcity in the number of teams drives up their value."
Unless Canada joins the bidding war and begins offering subsidies to billionaire owners, pursues legal options for ending the inequity, or simply waits for American taxpayers to "turn off the tap" to the NHL, those six new Canadian teams aren't likely to hit the ice any time soon, the report says.