SBD/Issue 29/Finance

Depreciating Canadian Dollar Hurts Blue Jays, Canadian Teams

Godfrey Says Depreciating Loonie
Costing Blue Jays Millions
The Canadian dollar Wednesday fell under $0.80, and it is costing the Blue Jays a "ton of dough," according to Dave Perkins of the TORONTO STAR. Outgoing Blue Jays President & CEO Paul Godfrey said the team has lost "about [$16-17M]." The team "typically purchases vast amounts of U.S. dollars, out of which to pay the players, when rates are favourable, but did not buy enough to cover the entire payroll this time." Additionally, the Blue Jays "no longer receive currency equalization payments" from MLB, which "were worth another $5M and ceased when the buck" decreased to $1.10. The Blue Jays receive about $30M annually in revenue sharing, as well as $22M for U.S. TV and marketing rights. Perkins noted unless Blue Jays Owner Ted Rogers is "willing to suck up all the losses ... the alternative to cutting costs, including player costs, is raising ticket prices." In addition, the depreciation of the Canadian dollar "will affect the discussion, even in theory, about the possibility of adding a second NHL team to southern Ontario" (TORONTO STAR, 10/23). Meanwhile, in London, Patrick Kidd reported the winning players in the Stanford Super Series Twenty20 cricket match, pitting England against a West Indian All-Stars team for $20M in Antigua on November 1, were slated to earn about US$805,000 each, but as a result of the U.K. pound falling Wednesday to a "five-year low," the players could earn up to about US$995,000 each (LONDON TIMES, 10/23).

ST. LOUIS BLUES: In St. Louis, Derrick Goold writes under the header, "St. Louis Sports Teams Brace For Economic Downturn." The Blues are “finalizing a new ticket program -- described by a team officials as ‘creative’ -- to meet their goal of 30 sellouts.” The Cardinals “cited the uncertain economy this week as a reason for freezing prices on 70[%] of their season-ticket packages,” and the team is “prepared for attendance to be below last season’s 3.4 million.” Rams Exec VP & General Counsel Bob Wallace said that “reducing ticket prices is ‘not in the NFL model.’” But he added, “If our customers are having problems, then we’re going to have problems” (ST. LOUIS POST-DISPATCH, 10/24).

Armstrong Feels It Is Best
Time To Buy Pro Team
GOOGLE ALERT: Google N.A. Advertising & Consumer President Tim Armstrong, who owns the NLL Boston Blazers, indicated that, despite the struggling economy, "now is actually the best time to buy" a professional sports franchise. Armstrong Wednesday said, "Sports tends to cut through economic situations and is a long-term investment, and I am interested in long-term investments. ... This is probably the best time ever to invest in real assets in general. A franchise is like a house. The value doesn't go up and down based on the weather." Armstrong noted that lacrosse's "smaller stature as a sport and its lower reliance on corporate support should protect it more during any economic slowdown or recession" (REUTERS, 10/22).

TAKING A DROP: Wasserman Media Group Principal Gary Stevenson, in a Q&A with GOLFWEEK, said of how the economic downturn will affect golf, "I suspect that the PGA Tour, LPGA, the governing bodies, are talking two giant steps back and making sure that the value they deliver is consistent with what they are asking -- and if it's not, they should be making adjustments to those packages so that the value is there." Stevenson added, "If I was a golf tournament director, I would be less concerned about my title sponsor than I would those sponsors that were spending between $50,000 and $250,000. Those are the hardest to find." Stevenson said of the impact on the PGA Tour's broadcast partners, "What the networks will be concerned about is the 'scatter market.' The scatter market generally is made up of equipment manufacturers and other companies who want to reach the desirable demographic. I expect the equipment manufacturers will slow down some of their spending. The networks may not make as much money as they will on other sports because they have the title sponsors already locked in" (GOLFWEEK, 10/25 issue).

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