- The Washington Times - Wednesday, December 15, 1999

OTTAWA The Ottawa Senators are putting in another listless effort against the Dallas Stars, sleepwalking their way to a 3-1 loss. The Corel Centre Jumbotron drones on with the usual hockey mix of heavy metal, Godzilla videos and dance music with little noticeable effect on the fans.
Then early in the third period, the Jumbotron randomly catches a fan holding a sign reading, “Stay Sens Stay. Save Our Sens,” a reference to owner Rod Bryden’s intention to sell the team to U.S. interests if government aid doesn’t arrive soon. The sign instantly stirs the crowd into one of the biggest ovations of the night.
Up on Ottawa’s historic Parliament Hill, the center of Canadian government, the hot debate these days is not Quebec independence, bilingualism or foreign trade but a proposed financial bailout for the six NHL teams in the Great White North.
Bryden, a hard-driving technology executive who has lost more than $30 million on the Senators, is seeking $2.5 million to $3.4 million in federal government assistance.
He recently gained $2.8 million in annual tax cuts from local and regional authorities, but he’s holding out for a federal subsidy. And if he doesn’t get it in the next two weeks, suitors in Portland, Ore.; Houston, and Cleveland eagerly are awaiting a chance to bid for his team.
Bryden’s success or failure likely will define the course of professional sports in Canada for the next decade. If the Senators leave for the United States, the floodgates are wide open for some of the other five NHL teams to leave, joining the Quebec Nordiques and Winnipeg Jets south of the border.
The exodus could even spread to the NBA and Major League Baseball, where the Vancouver Grizzlies, Toronto Blue Jays and Montreal Expos have seen much better days.
The Canadian federal government historically has not doled out the kind of large tax credits many U.S. teams enjoy and has even mocked U.S. cities that grant them. So far, officials appear reluctant to change course.
As a result, Bryden’s request has generated a heated debate on the government’s role in supporting hockey and the overall role of the sport in the nation’s culture. Hockey, as it’s played today, originated in Canada in the 1850s, and despite a large recent European influx, the country still supplies the majority of NHL players.
“This is a very important, very sensitive time right now,” said Bernard Brisset, vice president of marketing and communications for the Montreal Canadiens. “This is our national game, and something must be done to help it.
“We’ve traditionally been one of the league’s wealthier teams, and we have a great fan base. But we lost [$1.6 million] last year, and never in our worst situation has it been that bad.”

National crisis

All across Canada, the signs of NHL infirmity are deepening. The Canadiens, winners of 24 Stanley Cups and once the undisputed titans of the sport, now sit in last place in the Northeast Division and rarely fill their cavernous, 21,000-seat arena.
With sponsorship and luxury seat revenues maxed out at the 4-year-old Molson Centre and an annual $11 million property tax bill larger than all the U.S. NHL teams combined there’s little room for financial growth.
Scalpers in front of the arena now routinely stop moving cars in the street a full eight hours before games, and the team is on pace to lose a franchise record $2.7 million this year.
The Vancouver Canucks, also playing in a new arena, lost $17.2 million last year and $22.3 million the year before. The team has little chance of becoming profitable anytime soon and is also threatening a move if government aid doesn’t arrive soon.
In Alberta, the Calgary Flames and Edmonton Oilers both pay little or no property tax on their arenas, but their balance sheets also are filled with red ink, and they have failed to bring in top talent.
Only the Toronto Maple Leafs, with a new arena, decent lease, adoring fan base and first-place club, are not on thin ice in Canada.
“Our philosophy has been to run this team like a business, and to a large degree, we’ve been successful in doing that,” said Ron Bremner, Flames president. “But the current economic climate here is having a severe impact on what we can do.”

Exchange rate, tax woes

Four basic problems have weakened every Canadian NHL team: a worsening currency exchange rate against the U.S. dollar, high taxes, a lack of parity with government subsidies given to U.S. franchises and average player salaries that have soared fivefold in the past decade to $1.2 million.
If the federal government does chip in to save NHL hockey in Canada and Ottawa in particular many observers expect the six teams to come right back for more breaks in future years. That could mean numerous other Canadian industries lining up for tax concessions.
“I love Ottawa and I want to stay, but I’m not going to stay and lose [$7 million] out of my own pocket each year to put on hockey here,” Bryden said. “The government simply has to decide if it’s worth [taxing] 15 cents per Canadian to help keep hockey in this country.”
Bryden has worked feverishly to frame the issue as anything but another bail-out-the-rich-owner campaign. Despite the government’s historic stinginess with pro sports, Bryden says the feds have come to the aid of other major industries hurt by a low Canadian dollar and should do so again.
A Canadian dollar is worth about 68 U.S. cents, a rate that has pushed tourism by U.S. citizens to record heights and has helped many other Canadian industries. But that rate is death on hockey teams: The NHL clubs in Canada pay salaries in U.S. dollars but take in revenue in Canadian dollars, also known as “loonies.”
“Hockey is one of the few Canadian industries that can compete on par with the American dollar. We are the NFL of Canada, only better,” Bryden said. “This is not a question of fan support, corporate support or market size. And you can’t run this team better. We build through the draft, and we had the best cost-per-win ratio in the league last year. All we’re seeking is a level playing field.”

Government reluctance

A key part of the government’s reluctance is the fear of opening a Pandora’s Box of aid to the NHL teams. In Winnipeg, the city government allowed the Jets to come to the public trough repeatedly for more than $50 million in aid. The team still left to become the Phoenix Coyotes and recently gained Scottsdale, Ariz., voter approval for $140 million in public funds for a new arena.
The Nordiques also sought government aid but were unsuccessful. They moved to Denver in 1995 to become the Colorado Avalanche.
Winnipeg mayor Glenn Murray and other anti-aid activists have phoned key Ontario and federal politicians, citing the Jets case and urging them to turn their backs on the NHL teams.
“The NHL simply needs to decide if it wants to keep franchises in Canada and then create some sort of system to control salaries, share revenues and get the Canadian teams on a more equal footing,” said Howard Hampton, head of Ontario’s New Democratic Party. “But that’s for them to do.”
John Manley, Canada’s minister of industry and the government’s point man on the issue, has walked a fine line, saying he’s seeking a national solution that would help all six teams not just Ottawa.
When Bryden officially put his team up for sale Dec. 2, Manley snapped, saying Bryden “took on this hockey team, he has problems and I’m sorry for him, but that’s his problem. I hope he can find a way out of it, but he took a risk. He’s a big boy.” Since then, he’s offered a more conciliatory tone.
“If I [offer direct cash aids to NHL teams], and that’s a big if, I’ve got to be sure that I’m getting our teams through to a point in a few years where this is a long-term solution,” Manley recently said on “Hockey Night in Canada.” “We’re not going to put money into hockey so that it can pass through to increased [player] salaries and in 2003 or 2004, we’re back at this.
“But the problem I see is one that transcends levels of government. It’s all about Canada… . [Hockey] is part of what makes Canada different. It’s part of what makes us Canadians,” Manley said.
Making Manley’s job more difficult has been a mixed message from ordinary Canadians. The 1 million Ottawa-area residents overwhelmingly favor government aid, according to recent polls, while most other Canadians believe aid to millionaire owners and players amounts to corporate welfare.
At the heart of fan objections is a decidedly American complaint: Games cost way too much to attend and offer too little exciting play and entertainment value, while players make too much money.
“I paid $50 for me and my son to get in and we got a discount rate. When you add in parking, popcorn, Cokes and maybe a souvenir, it’s still not a cheap night,” said Guy Townend of Orleans, Ont., an Ottawa suburb. “I understand where [Bryden] is coming from the currency thing is a real problem. But you … have to wonder if Ottawa is big enough to truly support a team at these prices.”

Passing the buck

In recent weeks, federal officials have insisted that regional governments must help first, and Manley also called on the NHL and the players union to make some financial sacrifices. Regional officials also made their support conditional on local aid.
That meant the entire issue initially rested on the tiny shoulders of suburban Kanata, home of the Senators’ Corel Centre. A bedroom community 15 miles west of Ottawa, Kanata has an annual budget of just $18 million.
Over the strong objections of Mayor Merle Nicholds, the town’s five-member board approved an annual property tax cut of $200,000 for the Senators only about 2 percent of the total aid Bryden is seeking.
But the decision sent the issue quickly back up the political food chain. The region of Ottawa-Carleton chipped in with $2.6 million in annual tax relief and moved the issue on to Manley, where it now sits.
“It was really ironic that all the eyes of Canada were on us about this. Our role was really small,” said Nicholds, whose objection to aid remains firm. “Everyone was waiting on us, but the problems really lie with the NHL and the other levels of government.
“The NHL has got a big problem, and it’s not going to be solved by a few tax dollars. It’s a short-term solution. If Disney wants to [sell the Anaheim Mighty Ducks], one has to question where the game is going.
“The other levels of government didn’t show a lot of leadership here,” she said. “They’re going to be forced eventually to take a real position.”

Federal solution?

Sources close to Manley say the cabinet official is leaning toward devising an aid package but is struggling hard with the details and a way to present it without angering the public.
One proposal spiked last month at a provincial level is being proposed again by Canadian Heritage Minister Sheila Copps. She wants to expand each of Canada’s provincial hockey lotteries which use NHL logos and, for the first time, give the teams part of the revenue.
Her proposal faces several stumbling blocks:
1) The NHL is reluctant to form a stronger relationship with legalized gambling, even though Las Vegas is pursuing an NHL team.
2) Lottery revenues in Canada traditionally go to education and health care, and many citizens oppose any reallocation of those funds.
3 Canada’s provinces are loath to cede any control of the lotteries after battling hard with the feds in the 1970s to get it.
“We really think the lottery is something that could work. We provide a lot of value to the Canadian lotteries,” Calgary’s Bremner said. “If we put our heads together to expand the [lottery], it wouldn’t be taking funds from other areas.”
The NHL, largely quiet on the entire issue, last week extended its Canadian financial assistance program, designed to help offset the currency differential, through the 2004 season. The program, originally extended on a year-to-year basis, funnels money to the smaller Canadian teams. Ottawa, Vancouver, Calgary and Edmonton each receive more than $3 million annually from the program.
But the extension came with a large string attached: The NHL insists the Canadian federal government matches the funds.
“It is critically important our franchises in Canada remain in Canada and thrive in Canada,” NHL commissioner Gary Bettman said. “We are optimistic things will work out.”
So will the NHL’s move prompt the Canadian government to act in time for Bryden? The Senators owner maintains that by Christmas, he, the Senators, the U.S. suitors and hockey fans everywhere will know for certain.
“I really don’t care how they do it. Money is money,” Bryden said. “Everything else is right here for hockey to succeed for a long time. It essentially comes down to the simple question of what they can do to offset the currency [differential] and the issue of tax fairness.”

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