Thursday, September 23, 2010

Quebec Nordiques & New Colisée Can be Successful

Yesterday I reported that, as best as I can figure, a proposed new arena in Quebec City would cost in the neighbourhood of $20-$25 million dollars a year to operate, or about $7 per Quebec taxpayer per year,  were they to pick up the tab.
It's not an outrageous price, probably worth it, but it's a figure that can be knocked down to almost zero with a little creativity and entrepreneurship.
That sum assumes that the entire cost of the arena will be mortgaged and no direct government subsidy be involved in the construction. It also assumes that the building would generate revenues solely by renting itself out for NHL hockey, concerts, shows etc. etc.

But if the building operated as a business instead of a venue, it could easily boost revenues and seriously cut into that figure, quite possibly breaking even or making a profit.

Finding an owner that would contribute to the arena's profitability, instead of an owner who looked to take money out of the building is probably the first key to success.

In this regard I can't think of anyone better suited to own and operate the Nordiques and the arena than Loto-Quebec...

The Quebec casino and lottery agency is a natural fit.

Folding the Nordiques and the arena into it's operations would provide the team a vast marketing juggernaut and most importantly, financial stability. Unlike a 'private' owner, making a large profit  is not necessary, a goal of break-even for the publicly owned corporation would be perfectly satisfactory. 

It would be up to the Loto-Quebec to assume the mortgage and operations of the building and it would be their responsibility to 'find' this $20-$25 million in additional revenue required to make the project break even.
This can be accomplished through team operations and other revenue devices, most likely, a mini casino, to be added to the Colisee.
Gary Bettman has already given his blessing to casino gambling associating with an NHL franchise. The Pittsburgh Penguins have opted for this route in the partial financing of it's new arena, Consul Energy Center. The Penguins have licensed those rights for a $7.5 million yearly payment.
"Although professional sports generally try to avoid any association with gambling, the NHL has given its blessing for the Penguins to pursue a slots license. NHL Commissioner Gary Bettman said that league would have no problem with a team owning and operating a parlor, even if it were part of the arena."LINK
Now you might say that casino profits are just another form of tax, but at least it's a voluntary tax, one that is assumed by those wishing to gamble. I myself never go to the Montreal casino, it's too cumbersome to get there and I'm not a big gambler to begin with. That being said, if the casino was located in the Bell Centre, I certainly would be enticed to go to the game early or stay late, to complete an evening out.

Additionally, Loto-Quebec can promote the Nordiques through ticket give-aways that would replace some cash prizes.
Win a set of season tickets, a night in a loge for you and your friends, thousands of tickets instead of cash prizes etc.etc. Like I said, Loto-Quebec is a marketing juggernaut.

Arguably, all this is just a shifting of disposable income, but unlike a restaurant meal or a movie, there is a side benefit to a lot of fans who will enjoy having a team without actually paying for it directly it.

The major other aspect to financing the arena is of course, ownership of the NHL franchise, the Quebec Nordiques.

Although the Nordiques can't compete with the Montreal Canadiens who spin off an estimated $40 million dollars in profit, the Nordiques do have some advantages that even the mighty Canadiens don't.

For one thing the arena wouldn't have to pay municipal taxes which now costs the Canadiens over $7 million a year. This tax forgiveness would be in lieu of the arena forgoing the $50 million promise Mayor Lebaume made to the arena project. Also there's a lot of parking revenue to be made because of the large plot of land that the old Colisée sits on. The Montreal Canadiens don't get any parking revenue at all, due to it's confined downtown location. Combined this would add over $10 million in revenue that the Canadiens don't get.

To top it off, broadcast rights for the Nordiques are worth a fortune, more than the Canadiens and possibly second only in the league to the Toronto Maple Leafs. That's right.

Although Pierre-Karl Péladeau has been playing the reluctant hero, he is absolutely desperate to get his clutches into the Nordiques. Without being overly dramatic, the broadcast rights to the Nordiques represent a key element in the battle of media giants, Videotron and Bell.

If you haven't heard, Bell recently bought out CTV and thus are now 100% owners of RDS, the sports network that own the Montreal broadcast rights. If they out-bid TVA sports(Quebecor/Videotron/Péladeau)  for the broadcast rights for the Nordiques, they can put a terrible squeeze on the whole Péladeau media empire.
Remember Péladeau, has recently launched a wireless service to compete with Bell Wireless and Bell has launched FIBE, a high speed cable service to compete with Videotron cable.

If Péladeau gets the broadcast rights to the Nordiques, the two giants will have to live with each other and broadcast each others products, the Canadiens and the Nordiques, both on Bell and Videotron.

If Bell gets the Nordiques, Videotron is screwed.
Once the FIBE network is developed and Bell has enough penetration between that and it's satellite service, imagine the damage they could inflict by removing RDS from Videotron.
Ouch! Remember that both giants offer telephone/TV/Internet packages. If the Videotron package doesn't include the Nordiques/Canadiens, it isn't hard to imagine the competitive advantage of Bell.

And so like the auction where two rich buyers try to out-bid each other, I expect the Nordiques to win the second largest broadcast deal in the NHL, making the team highly profitable.

By combining all these revenue streams, it seems to me that the whole arena/Nordiques can be done without direct public financing and Loto-Quebec can probably turn a small profit on the whole affair.

My plan may not be pretty, but it's a plan. At least it's a call for those involved to look for answers outside the taxation route.

French or English, all Canadiens benefit from more Canadian teams in the NHL. It would be wonderful to add Winnipeg and another team in southern Ontario to the fold.

Now this post is non-political, it is about HOCKEY, so no anti-Quebec or anti-Canada comments please.

Can you make my plan better?
The idea is to get Quebec City and more Canadian teams in the NHL. If you are against that notion than post somewhere else.

That being said, fair criticism is always welcomed. Fire away.


  1. Why are you focusing on a dumb hockey team when you could be talking about bringing back the Expos to Montreal?

  2. @Anonymous,

    The Expos will never come back in Montreal and that's a shame and a tragedy without name.

    Hockey is really a canadian game and maybe the north of the USA. It doesn't belong in Atlanta, Miami or Phoenix. All those teams will move to Quebec, Winnipeg in priority as Bettman mentionned it himself several times and finally will come back to Hartford and maybe another team for the Toronto region in Hamilton.



  3. Hockey failed in Quebec City with the Nordiques and will fail again. The demographic is too small to support a major franchise and Quebeckers showed their "unwavering support" with the last franchise. Montreal, on the other hand, is a much larger venue and therefore successful. The real question is that should there be public funds expended on this facility. I would think not as it sets a dangerous precedence and if the feds kick in what ever amount of money, they can expect to do the same in other regions. The price tag will easily be 7 oe 8 times what they give to Quebec City. For what, no guarantee of a franchise and no guarantee of the Olympics. No deal.

  4. Mississauga Guy said...

    To 1:29AM: Hockey didn't exactly fail in Quebec. The problem was there was no salary cap, and without a cap, smaller market teams had a much, much more difficult time competing. The Leafs, Rangers, Kings and to an extent Canadiens have much bigger markets, but the Nordiques created a sensational, intense rivalry in the Quebec market.

    My interest in hockey took place after the Original Six era ended so the rivalry between the Leafs and Habs was somewhat diluted. When both teams were in separate conferences and only two meetings per year, it practically dried up.

    Be that as it may, hockey is practically a religion in Quebec and so a salary cap makes a team in Quebec City feasible again, but La Colisée is far too passé and a new facility is a must.

    The arena project, too, could use a restaurant that is mid-to-upscale and a hotel along with it. The hotel can cater to visiting teams and those who come from a fair distance to watch hockey games, especially Saturday night games as weekend getaways. If not Atlantic Canada, then certainly Chicoutimi, Baie Comeau and Sept Iles and other parts of Eastern Quebec. Some people can make a weekend getaway around the hockey game and a casino would nicely add to the mix.

    Toronto now has informal junkets to Montreal when the Leafs roll into Montreal. Quebec can consider making them more formal with organized vacation packages, offering them to cities like Ottawa, Montreal and Boston. Toronto and New York are a bit of a stretch, but possible.

    Some lobbying on the part of the ownership would be necessary. For example, a tradition in Montreal now is to have back-to-back matinée games on Saturday & Sunday, usually on the Superbowl weekend. In fact, there are now two weekends set up for what is promoted as Family Weekends, encouraging fans to bring the wife and kids. I can see full weekend junkets working out very well, especially if the fiercest rivals are featured for at least one of the two games.

    In the offseason, the venue can be used for concerts and the Cirque de Soleil. Hmmmmm....maybe I'll buy the venue....NOT! It can work, but some of it is a little too «catin» for my taste.

  5. I still say it is a bad idea to use public money to build sports stadiums. This is simply not an area for government to be involved in. A hospital or a school would be a better use of public money. As a good rule of thumb if private enterprise isn't willing to do it, its probably not a good idea. The Toronto guy.

  6. I think moving the 'yotes to Quebec City would be great. A lot of the problems that the Nords experienced the first time around aren't there, or don't matter as much now. The US/CAN $ exchange rate will work for them and not against them, and I frankly see no reason for that to change anytime soon, with the US's huge debt problems. In the internet age lack of English-language media is nowhere near the stumbling block it used to be. Just get your webpage and what not translated, and with a click of the mouse, voila, Anglais! The salary cap would be a great help to QC as well.
    I ESPECIALLY think that it would totally AWESOME if the Nordiques went with this

    as their new uniforms. Check it out! The Bleu, Blanc, Rouge Fleur de Lys forms the letters 'q' and 'c' I love it!

  7. I think it would best if when the team comes back, they televise games in QC in both French and English. Quebec City has a good sized English population. One thing the old Nordiques didn't do is get the Anglophones involved. You look at Montreal and Ottawa, and they offer services in both languages, I think the Nordiques should do the same if they want a maximum amount of fans.