Could Saskatoon Support A NHL Team? What Is The Average Cost For A NHL Ticket?

I'm throwing my hat in the ring since Don Cherry has weighed in on the subject.  Like that Dominion Lending commercial, Don may know hockey, but he does not know economics.  Luckily for astute readers of this blog, debating the case for an NHL team in Canadian cities has already been made by the Conference Board in a 4 part series.  Here are the four links:

The pro sports market in Canada
Defining the market conditions for success
The case of the Quebec Nordiques and the Winnipeg Jets
Competitive conditions in pro sports leagues

From the 2nd briefing "Defining market conditions for success"

Every local or regional market has fundamental characteristics that can be assessed to determine whether a pro sports franchise can succeed in that particular market. When assessing such a market, we want to know whether it has what we call the “market conditions for success.”
Of course, the local population’s love or passion for the game has to be a part of the equation. That’s a given. No matter how populous or fortunate a region is, if fan passion for the game does not exist, the team will fail.

Aside from passion, therefore, the success of a professional sports organization in any given market relies on four pillars of support. They are:

• market size;
• income levels;
• a strong corporate presence; and
• a level playing field. 

Market Size

Every professional team requires strong fan support to be financially sustainable. Empty seats in the stands mean fewer tickets sold and lower revenues from souvenir and concession stand sales and parking. In addition to fan support, a successful pro sports franchise will generally need strong corporate or business support and healthy broadcasting revenues in order to survive.
What size population base is needed for a city or region to support a professional team? We believe that the following rule of thumb is reasonable: The population of a market must be at least equal to the potential total number of tickets sold in a season.

A National Hockey League team in Canada needs a little over 800,000 potential fans (4 pre‑season games plus 41 regular season games, multiplied by 18,000 fans per game)

 Income Levels
Saskatoon has the income levels that are comparable or close to comparable to markets with NHL teams.

A Strong Corporate Presence

The third pillar required to support a pro sports franchise is the presence in the region of corporate head offices. Filling your arena or stadium every night is good, but filling dozens of corporate boxes every night is even better. The rental rate for corporate boxes is high relative to the rates for other seats in the stadium. The same holds true for the price of food and drinks served in the boxes. Plus, boxes can generate sponsorship and other revenues. And even if a stadium does not have corporate boxes, the relatively higher income of employees in head offices will help to support the fan base.

 A Level Playing Field

If a metropolitan area has the fan base, both in size and in relative income, and the necessary corporate presence, does that guarantee success? Not quite. Our fourth macroeconomic pillar for success is a level playing field. Two items in particular are part of this pillar: the exchange rate and the tax burden.

Imagine when both of these factors are working against a market, as was the case in the mid‑1990s for the Winnipeg Jets (who moved to Phoenix in 1996) and the Quebec Nordiques. Back then, Québec City and Winnipeg residents faced much higher marginal income tax rates than did their U.S. counterparts. That was a major strike against these teams at the time, and it remains a concern for Canadian teams to this day. And, of course, while fans with higher incomes are more likely to buy tickets, they are also burdened with the highest marginal tax rates—which diminishes their capacity to buy tickets. On top of this heavier tax burden, Canadian franchises in the mid‑1990s were being squeezed by the weakness of the Canadian dollar. At the time, the Canadian currency was worth about US$0.75. (And it would continue to lose ground, dropping below US$0.62 in January 2002!) This negative exchange rate effect was devastating for Canadian NHL teams, since they are required to pay their players in U.S. dollars.

So according to the conference board, Saskatoon is lacking in market size and corporate head office support.  Saskatoon would need at least a doubling of the population, if not a tripling, to meet the minimum requirements based on the conference boards criteria.  And while Saskatoon may have a few world class corporate headquarters, it is not many.  Saskatoon would need to sell 50 boxes at over $200,000 a piece.    And economically speaking, while Saskatoon and Canada are doing relatively well compared to the US at the moment, with this continue for the long term?

Here is how all NHL cities compare. From house of puck

	Unit ——- >	(M)		(M)	(M)	(M)			(M)
#	Team	Value	1 yr Change	Rev	Op Inc	Debt	^Avg Ticket  (09-10	Avg Att	City Pop
1	Toronto	$505	8%	$187	$83	$136	$114	19,354	5.7
2	New York R	$461	11%	$154	$41	$0	$59	18,108	12
3	Montreal	$408	20%	$163	$53	$286	$72	21,273	3.8
4	Detroit	$315	-6%	$119	$15	$0	$47	19,680	4.4
5	Boston	$302	11%	$110	$3	$121	$55	17,565	4.6
6	Philadelphia	$301	10%	$121	$13	$66	$60	19,715	6
7	Chicago	$300	16%	$120	$18	$0	$47	21,423	8
8	Vancouver	$262	10%	$119	$18	$110	$62	18,860	2.4
9	Pittsburgh	$235	6%	$91	-$2	$99	$56	18,240	2.4
10	Dallas	$227	-8%	$95	$6	$200	$36	15,073	4.3
11	New Jersey	$218	-2%	$104	$7	$251	$48	14,775	*2.1
12	Los Angeles	$215	3%	$98	$1	$163	$47	18,083	10
13	Calgary	$206	3%	$98	$5	$31	$60	19,289	1.2
14	Minnesota	$202	-4%	$92	-$2	$113	$61	18,012	3.2
15	Colorado	$198	-4%	$82	$2	$30	$41	14,820	2.5
16	Washington	$197	7%	$82	-$9	$79	$45	18,397	4.3
17	Ottawa	$196	-1%	$96	-$4	$129	$53	18,378	*1.2
18	San Jose	$194	6%	$88	-$6	$45	$43	17,562	1.8
19	Anaheim	$188	-9%	$85	-$5	$36	$44	14,738	3
20	Edmonton	$183	10%	$87	$8	$101	$60	16,839	1.2
21	Buffalo	$169	0%	$81	-$8	$51	$36	18,452	1.1
22	Florida	$168	6%	$76	-$10	$96	$59	15,685	*5.5
23	St. Louis	$165	-6%	$79	-$6	$120	$38	19,150	2.8
24	Carolina	$162	-9%	$75	-$7	$130	$38	16,415	1.1
25	Columbus	$153	-7%	$76	-$7	$44	$48	13,658	0.8
26	New York I	$151	1%	$63	-$5	$100	$51	11,059	2.1
27	Nashville	$148	-5%	$74	-$6	$81	$48	16,142	1.6
28	Tampa Bay	$145	-24%	$76	-$8	$45	$36	17,268	2.7
29	Atlanta	$135	-5%	$71	-$8	$65	$49	13,469	5.5
30	Phoenix	$134	-3%	$67	-$20	$35	$37	12,188	*4.3

Every Canadian city make money last year except Ottawa which lost $4 million.

What are the average prices for NHL tickets in Canadian cities for this year?
Toronto  $123.77
Winnipeg $98.27
Montreal $88.67
Edmonton  $70.13
Vancouver $68.38
Calgary  $68.18
Ottawa $55.51

What is the Fan Cost Index price for each city? (four tickets, two small draft beers, four small soft drinks, four regular-sized hotdogs, parking, two programs and two adult-sized caps)
Toronto $626.45
Winnipeg $485.52
Montreal $486.28
Edmonton $369.48
Vancouver $371.94
Calgary $374.51
Ottawa  $314.06

The average cost of season tickets would be near $7000 for 2 tickets.  While expensive, I personally would consider getting tickets if a team came here.  Probably no vacations...ever, but I'm a hockey nut.  Tickets would be nose bleed.  While I'm sure that Saskatoon could do better than Phoenix and Florida, the NHL would only move the team here if they were absolutely positive they would make money.  While Saskatoon may make money off the start, would Saskatoon make money, if commodities were to sustain a long downturn?  Would Saskatoon make money in the event of a housing bust, which would exacerbate consumer spending along with the reverse of the wealth effect? Would the city of Saskatoon or the province guarantee that the team would not lose money?  Would the public cover losses?

If the NHL is looking to move a few teams, Hamilton, Quebec, Seattle would be cities the NHL would look at first.  I believe Saskatoon will be 0-2 for moving a NHL team here, but there is nothing wrong in dreaming big.