SBD/March 16, 2012/Franchises

Quebecor's High Q4 Revenue Means Company "Has All The Tools" To Pursue NHL Team

Quebecor Inc.’s plan to "revitalize its media division has little to do with newspapers and television stations and everything to do" with bringing an NHL team back to Quebec City, according to Steve Ladurantaye of the GLOBE & MAIL. While the Montreal-based media, cable and telecommunication company’s plan is "hardly a secret, the extent of its ambitions were laid bare Thursday as the company released earnings that blew past analysts’ expectations." Although the day’s focus was on the numbers, CEO Pierre Karl Péladeau "couldn’t help slipping in a mention of the company’s NHL ambitions in the press release." And while the past year may have been "difficult -- the company cut 400 jobs in its Sun Media division -- much of the restructuring has been done to prepare the media division for an NHL bid." Péladeau said, "Quebecor Media now has all the tools it needs to pursue its goals, which are to manage a world-class multipurpose centre and to bring a National Hockey League team to Quebec City." Ladurantaye notes the company has "reached a deal for the naming rights" of a yet-to-be-built C$400M arena in the city. Terms of the deal "vary depending on the eventual tenant, but Quebecor could pay" as much as C$65M for the rights. It would like to see a setup "similar to that enjoyed by Rogers Communications, which owns both the Toronto Blue Jays and the rights to broadcast the team’s games on its specialty sports channels" (GLOBE & MAIL, 3/16).

RELOCATION DESTINATION? In Toronto, Morgan Campbell notes Quebecor's revenues from Q4 '11 were C$1.15B, a C$59M "increase over the same period in 2010 and an indication Quebecor can bankroll a major sports team." Conference Board of Canada Senior VP & Chief Economist Glen Hodgson said, "If you’re an organization with $4 billion in cash flow, buying an NHL franchise for $200 million is not that big a thing to imagine." Campbell notes if the NHL decides that a "struggling franchise" like the Coyotes should be "sold and moved, Quebec City would likely have to compete with Seattle, which hopes to lure the NBA back to town with a new arena." Both Hodgson and Univ. of Ottawa sports business professor Norman O'Reilly indicated that the "strong Canadian dollar gives Quebec City an advantage its owners didn’t enjoy" in previous years (TORONTO STAR, 3/16). The GLOBE & MAIL's Sean Gordon notes the talk in hockey circles is the NHL would "prefer to move the Coyotes to Seattle or perhaps Kansas City, but neither of those cities presents the same short-term appeal as Quebec City" (GLOBE & MAIL, 3/16).

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