The Limping Loonie: Are Canada's Pro Sports Team In Trouble Again?

With the Canada/ U.S. Tariff War going from talking conflict to hot trade war on Feb. 1 there are numerous predictions as to what might happen if the dispute drags on. As the sides in the Ukraine War will tell you very few of the outcomes so far were foreseen by the sides when the shooting started. That’s the nature of these conflicts. 

One immediate byproduct seems to be the continued descent toward 60 cents by the Canadian dollar. If Trudeau and his anointed successor Mark Carney are true to character it will also involve billions in cheques going out the door— a la Covid— to those citizens “harmed” by the Liberals stumbling into a highly predictable and easily avoidable trade war. If past is prologue, vast amounts of that money will disappear as bad actors find a way to access the funds. While Canada’s GDP collapses some more.

For the moment, however, let us concentrate on what Justin Trudeau’s ineptitude might be costing Canadian professional sports teams in American-based leagues. On the purely trivial level it means that your beer at the park/ arena will be Canadian suds exclusively. Not cheaper or better. Just Canadian. Owners will stock luxury boxes with Canadian wine, etc. A road trip to see the Canucks in L.A. or the Canadiens in NYC will balloon, too.

But on a more serious level the showdown between Donald Trump and Trudeau could well return Canadian teams in the NHL to the bad-old days of the early  21st century. Despite efforts then to create a Canadian fund to save teams, two clubs— Winnipeg Jets and Quebec Nordiques— were forced to sell because of a dollar that bottomed out around 62 cents U.S. Winnipeg went to Phoenix/ Quebec City went to Colorado as a result

In Montreal the MLB Expos also moved— to Washington— after 37 years, because no one in Quebec would/ could pony up the money to make up for the declining dollar or repair the disastrous Olympic Stadium. Expos fans then had the cruel fate of watching Washington win the 2019 World Series after the Expos had never gotten that far. (Noridques fans saw Colorado win two Stanley Cups after escaping Quebec.)

Why were these teams forced to move? Because while teams collect revenues locally in Canadian dollars almost all their payroll and other costs are paid in American dollars. So when you see the Toronto Blue Jays facing a possible US $500 million price tag to keep star Vladimir Guerrero you’re really talking about raising $750,000 million in CDN revenues to meet the demand. Multiply those jumps over a 25-man roster and you’re talking a huge jump in payroll— or being consigned to after-ran status.

While no one  is about to hold a tag day for Toronto it will make the Jays’ job of competing in a division with the big-spending New York Yankees and Boston Red Sox that much harder. With a national market of almost 40 million now to exploit they still have resources. But will American players want to play in Canada during a hot trade war between the nations? Now that yahoos fed by a doltish CDN media have started booing the Star Spangled Banner in Ottawa and Vancouver before games do you think that will encourage American stars on teams there to stick around? 

But the NHL is where the biggest losses will be seen. Already there have been concerns about the Jets.2 surviving in Winnipeg. Last week it was revealed that after years spent coming back from Covid revenue shortages, the NHL is going to raise its salary cap from today’s US  88 million to as much as an estimated US$ 115 million in three or four years. The news that players will no longer have escrow payments held back to compensate owners for revenue shortages was greeted with cheers by players and their agent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

The boost in the cap will likely mean that today’s US$14 million peak (Leon Draisaitl) will also advance to somewhere just beneath US$20 million a season. And while that figure is a few years off, teams will have to start negotiating today with their stars with that figure in mind if they wish to retain them. 

The test case will be superstar Connor McDavid who is due for a new contract after 2025-26. For the small-market Edmonton Oilers that will mean creating a template that buys him out of estimated salary later by boosting his salary before the cap arrives at its peak. With Draisaitl already pulling down top dollar the Oilers’ resources will be stretched thin to accommodate McDavid— while still paying the rest of the roster.

Could the drop in the dollar producer another Gretzky-like trade for Edmonton when the Oilers were forced to dump the greatest scorer in NHL history to L.A. because his worth exceeded the Oilers’ ability to pay? We chronicle the trade in depth in our new book Deal With It: The Trades That Stunned The NHL & Changed Hockey.

The fate of hockey stars will be only a small piece of any future U.S. trade deals. But they will be highly visible to Canada’s hockey fans. Not being able to satisfy them is a political price no pelican wants to face. But given the current intransigence by Justin Trudeau scrambling to stay in office it is far from improbable.

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster  A two-time winner of the Gemini Award as Canada's top television sports broadcaster. His new book Deal With It: The Trades That Stunned The NHL And Changed Hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org. You can see all his books at brucedowbigginbooks.ca.