Would a return to Winnipeg work for NHL?

TSN/The Globe and Mail

7/6/2010 2:30:47 PM

Earlier this year, the city of Winnipeg was buzzing with speculation that the NHL was about to announce its return. First, it was the Atlanta Thrashers that were coming. Then it was the Phoenix Coyotes. The rumours dissipated, but not the fever didn't. In Part 2 of our series Why Not Canada, we size up the chances of an NHL return to Winnipeg 14 years after the Jets left town.

Darren Ford started his Bring Back the Jets website ( seven years ago - inspired by the fact Winnipeg was getting a new downtown arena.

"When that arena started to become a reality, when they started building it in 2003 - that's when I kind of started seeing things that could happen," he told TSN. "I wanted to create a hub where people could come, chat on a chat board. Relive old memories...and it just snowballed from there."

The Jets played their last game in Winnipeg in April of 1996, done in by the winds of change in the NHL. New American cities were coming on board and salaries were skyrocketing. And the small Canadian market with the arena from a bygone era simply couldn't keep up.

A slumping Canadian dollar was the final straw and the Jets packed up and headed to Phoenix.

"Nobody, nobody wanted to own that team in Winnipeg anymore," said NHL commissioner Gary Bettman. "And so it wasn't even a question of moving it - the franchise became no longer viable."

A lot has changed since then. Winnipeg now has the MTS Centre, a six-year-old downtown arena that some believe is ideal for the NHL.

The NHL has a salary cap that has slowed runaway payrolls, and the Canadian dollar is near par with the U.S.

And those factors are helpful to True North Holdings chairman Mark Chipman.

"I think those things come together, coupled with the strength of our economy in Manitoba, which has grown in a measured way every year since 1996," he said. "You put them together and it's just made the model viable, where it wasn't 15 years ago."

True North Holdings is the company that built the MTS Centre. Chipman's partner in his sporting ventures is Toronto-based David Thompson, head of media giant Thomson Corporation and part of Canada's richest family with a net worth of $19 billion.

"We've got almost a decade of history between us," said Chipman. "We have never had so much as a mild disagreement. We're both of the same view on timing and our willingness to be patient."
The MTS Centre has been ideal for the American Hockey League's Manitoba Moose, but it's also big enough to support an NHL team. With just over 15,000 seats, it would be the smallest building in the NHL and only marginally bigger than the old Winnipeg arena.

And with just 47 luxury suites, its potential high-end revenue streams would pale in comparison to other Canadian teams.

"I think your building has to fit your market," explained Chipman. "And I think if I've learned one thing in this business in the past 15 years, if your supply far outstrips your demand, it's a slippery slope. It's a very difficult business to be in."

From the league's standpoint, the issue of luxury boxes and seating doesn't seem to be a pressing one. 
"You're going to have a very intimate building that can generate substantially, not completely, but substantially all of the revenues that a slightly larger building could generate," said Bettman. "So I don't think people need to get hung up over a thousand seats."

The most common question asked about Winnipeg is if it has the corporate muscle. The research firm Environics Analytics turned up 272 businesses in Winnipeg with at least 100 employees and more than $20 million in sales.

That's just over half of what exists in Edmonton.

"One of the ways around that, and we're already seeing that at the MTS centre, you see companies get together and share a box," says Robert Warren, Exectuive Director at the University of Manitoba's Asper School of Business. "And I think you'll see more of that. That's really where Winnipeg's sense of community comes into play."

"We're very satisfied that there is a large and strong enough corporate base," adds Chipman. "The fact that we have all of our suites sold. We've got a waiting list of about 50. The size of the community is such you can get a real good sense of the corporate communities desire and appetite for a team."

With a smaller building, Winnipeg would be a mid-range payroll team more along the lines of Buffalo or Nashville.

"There are lots of organizations that are in smaller markets that are highly successful," explained Professor Norm O'Reilly, a sports business expert. "So having the right owner and having a shrewd management team in place can narrow those gaps between profitability and a massive loss."

The NHL has already said there are no plans to move anyone anywhere, but if that time comes, Winnipeg would be in the mix.

"There's never been any doubt about the passion of the fans, people, in Winnipeg for NHL hockey," said Bettman. "I know there were a lot of people who weren't happy when the Jets left. I wasn't happy when the Jets left. So it's always been a good hockey market. Finally they have an arena that's up to NHL standards."

And that's music to the ears of Darren Ford, who could one day shut his website down for all the right reasons.

"I think we're as close as we can be," said Ford. "We're certainly a lot closer than when I started this campaign seven years ago. I could only have dreamed of where we are right now."


At TSN's request, Professor Norm O'Reilly developed a grading system for what makes an NHL team viable. Here's how Winnipeg did.

Market Attractiveness

Economy: B-

Demographics: C

Market size: C

Corporate presence: C+

Overall Score for Market Attractiveness: C+

Franchise Viability

Arena and Location: B+

Competition and Barriers to Entry: A

Potential Owner (Mark Chipman, David Thomson): A

Final Grade: B

What Norm O'Reilly says: "With the right owner, and the right management team, and the right overall philosophy, you could make it work. You'd have to accept probably not having a high paid team on the ice. You're going to fill 80 to 90 per cent of your building with an average team so your risks are mitigated a bit. With a few factors in play, with the current economic situation, it could work. Long term? That's a question."

Note: O'Reilly's evaluations are based on his own background and knowledge of the subject, transcripts of interviews done by TSN/Globe and Mail for this series and data collected from various sources including Statistics Canada, the Conference Board of Canada, Environics Analytics, IMI and Harris-Decima.

 Watch for more tonight on SPORTSCENTRE, and all this week at and in the Globe and Mail.

Coming Wednesday: Why Not Hamilton?