The Edmonton Oilers sell out their building every night, but have been losing money the last few years.
And the place holds nearly 17,000 fans.
The problem (aside from the fact they haven’t made the playoffs): the man who owns the Oilers, Daryl Katz, doesn’t own the arena.
So a ton of potential revenue goes to Edmonton Northlands, an arm of the city not unlike Winnipeg Enterprises, which used to run the old Winnipeg Arena.
In other words, NHL hockey alone, even in a hot Canadian market like Edmonton, isn’t necessarily viable. It needs revenue from other sources like concerts and trade shows.
“In our market, if we owned our own arena it’s another $10 million to $15 million a year,” Oilers president/CEO Patrick LaForge told the Sun. “You can’t justify not being in your own building. That’s a key.”
It’s why the Oilers are looking at a new facility — and it’s why talk of Winnipeg possibly supporting an NHL franchise even exists.
True North Sports and Entertainment owns the MTS Centre and the Manitoba Moose, and would own an NHL franchise, should one return.
Without that arrangement, major-league hockey wouldn’t stand a chance here.
Even with it, it won’t be easy.
Winnipeg would be the league’s smallest market with its smallest arena, capacity 15,000 with 48 luxury suites (Edmonton has 67).
“Just that math alone is challenging,” LaForge said. “The average size building right now is about 18,500. All the new ones are right on that. All of them have 100 suites, or better.”
That’s what the Oilers and Katz are hoping to build.
“We’ve been in the red the last few years,” LaForge said. “Our estimated market size in terms of media market is only one million. Vancouver might get three times as much in media revenue as we do. We’re lucky, we have the oil and gas industry here.”
LaForge says the Oilers are top-five in the league in ticket prices (around $60 average), and are probably charging as much as they can. An Edmonton luxury suite starts at around $150,000 per year.
True North’s suites, currently starting in the mid-$40,000 range and going up to the mid-70s, would likely triple in cost, at least, in the NHL.
After all, the team would be forced to spend between $45 million and $60 million on player salaries alone, based on today’s NHL cap.
Travel is now all by charter, hotels first-class.
So would LaForge vote for Winnipeg to rejoin the league?
“This governor is more likely to make a business decision about the league going forward than an emotional decision about the league where it was,” he said. “If any market can substantiate sustainability, then it deserves to be given utmost consideration.”
LaForge says there is one critical factor in Winnipeg’s favour: the ownership team of local businessman Mark Chipman and billionaire David Thomson, partners in True North.
“You need an owner who can write a cheque, for sure,” LaForge said. “Mark is a great leader. I don’t think anybody that knows Mark would ever bet against him doing anything.
“But if it was easy he would have had the franchise by now, I guess.”