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Small-market NHL cities need more than fervent fans

Now that NHL hockey is back in Winnipeg, here are two reasonably safe predictions: The Jets (we always liked the name) will be a huge success at the box office in their first season, despite what are sure to be high ticket prices; and the owners will be hard-pressed to turn this into a profitable venture.



That's partly because owning a pro sports franchise is no licence to print money, unless you happen to be in the NFL, with its $9-billion (U.S.) in league-wide revenues and $4-billion in national U.S. TV deals alone. As a result, a team can locate in a tiny market like Green Bay and still compete with the likes of Dallas or the two New Yorks for top talent. Heck, Green Bay could play its games in an empty stadium and still turn a profit. Yet the league owners are in the midst of a bitter labour dispute because they feel players are getting too much of the pie.



The NHL already went through that, locking out players for an entire season to fix the game's financial structure and provide a measure of cost certainty for the smaller franchises. It didn't work. Most small market teams still bleed red ink.

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Ah, but Winnipeg isn't Atlanta or Sunrise, Fla., or Phoenix or Nashville. Unlike those sunbelt outposts, hockey really does have strong roots in Manitoba, as witnessed by the financial success of so many fine teams at lower rungs of the sport (Go Wheat Kings!).



The MTS Centre, where the reborn Thrashers (what a lousy name for a hockey team) will play, may be the smallest stadium in the league, but all 15,015 seats will be filled much of the time. Compare that to decrepit Nassau Coliseum, where the Islanders toil in near-obscurity. It seats 16,174 but averages barely 11,000 paid admissions per game. In their old home, the Thrashers, averaged fewer than 13,500 a game, just under 73 per cent of capacity. One problem in Winnipeg is a lack of luxury boxes where corporate types can entertain clients and friends with pricey amenities at taxpayer expense. But Atlanta is a big head office town, and that didn't help the hockey team's marketers, partly because of a lack of interest in the sport and partly because the team was lousy.



If Winnipeg sells out every game, it will finish no better than 24th in attendance across the NHL, based on figures for the 2010-11 season, trailing the likes of Nashville, Florida and Dallas, all money-losers last year.



Which brings us to another problem for the new Winnipeg venture. What happens in Year 2 if the team is playing no better than it did in Atlanta, where it counted exactly one playoff appearance on its resume? Will knowledgeable hockey fans anywhere but Toronto really keep shelling out big bucks for the dubious pleasure of watching a bad team? Maybe. So far Ottawa's attendance has held up remarkably well. And Edmonton's fans continue to live in hope. Still, it's a good thing the True North partners have deep pockets. They'll need them.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More

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