By Rod Nickel
WINNIPEG, Manitoba, Feb 5 (Reuters) - The Canadian dollar's
recent fall threatens Quebecor Inc's QBRb.TO bid to bring back
Quebec City's beloved National Hockey League franchise, the
Nordiques, by increasing costs.
Montreal-based Quebecor, a telecommunications and media
company, submitted its bid in July, vying with Las Vegas for a
team that may start play in 2017.
When Quebecor struck a deal in 2011 to manage Quebec City's
new 18,259-seat Videotron Arena as it began talks with the NHL
about a franchise, the Canadian dollar was trading at a slight
premium to its American counterpart.
The currency has since been hit hard by falling energy and
commodity prices. With the Canadian dollar now worth about 73
U.S. cents after touching a 12-year low of 68 cents in January,
the NHL's franchise fee of at least $500 million is now at C$685
million.
"Passion can only take you so far," said Glen Hodgson, chief
economist of the Conference Board of Canada and co-author of a
book on the business of professional sports in Canada.
"Quebecor is going to have to think really hard before
shelling out that much money because it could be really hard to
show a return on your investment."
Quebecor declined a request for comment on its NHL bid.
Quebec City lost its beloved Nordiques to Denver in 1995,
partly because a sagging Canadian dollar boosted costs in a
league dominated by U.S.-based teams.
In the two decades since the Nordiques and the Winnipeg Jets
left Canada amid financial woes, the NHL imposed a player salary
cap that decreases as revenue falls, giving Canadian teams a
buffer against currency drops.
But that safeguard does not make the NHL's asking price for
an expansion team any cheaper. They earn ticket and concession
revenue in Canadian dollars while salaries, which account for
half of the league's hockey-related revenue, are paid in U.S.
dollars.
Stronger Canadian teams such as Montreal, Vancouver and
Toronto benefit from large population centers. But
smaller-market teams such as Winnipeg, Calgary, Edmonton and
Ottawa are in a more precarious position.
Winnipeg, which lost its team in 1996, met with good timing
when it bought another NHL franchise in 2011. The price was a
reported $170 million and the Canadian dollar was strong.
"If the dollar was what it is right now, it would have been
a material impact for sure," Mark Chipman, chairman of True
North Sports and Entertainment Ltd, which owns the Jets, told
Reuters.
However, the flagging Canadian currency has had no impact on
the Jets' bottom line through five seasons, Chipman said, noting
that the tie between revenue and player salaries offset more
than three-quarters of the currency's fall, with hedging
mitigating the rest.
NHL Commissioner Gary Bettman, asked on Saturday about
Quebec's chances, said he did not know if the currency's fall
would be a factor in a purchase, but that he did not think the
process had changed.
Bettman added that the league's governors were not ready to
recommend whether or not the NHL should expand, and needed a few
more months.
To be sure, Quebecor, with a market capitalization of $3.2
billion, may still have the resources and appetite for a bid.
But the dollar's plunge inevitably poses risk for Canadian
teams who may need to hedge year after year, Hodgson said.
That's a troubling thought for fans who dream of the
Nordiques skating again.
"People here really really love hockey," said Vince Cauchon,
a Quebec City radio host who co-founded the fan website
Nordiques Nation. "Every time we lose a cent on that dollar,
it's pretty concerning."
(Editing by Alan Crosby)