Tuesday, December 4, 2012
Study: Lockout hits Canadian merchants near arenas
TORONTO -- Canadian businesses near NHL arenas are taking a hit because of the lockout.
According to a leading credit and debit card processor, spending is down more than 11 percent from a year ago on game day.
The report by Moneris found that business is off nearly 35 percent for bars near arenas in Winnipeg, Vancouver, Toronto, Montreal and Calgary. Moneris surveyed the game-day spending of about 750 of its customers in the hockey host cities.
Restaurants are taking a nearly 11 percent hit, with fast-food outlets down almost 7 percent compared to 2011. Edmonton is facing the largest impact, a 27 percent plunge. Spending near Montreal's Bell Centre is down more than 21 percent, with a 17 percent drop in business near Toronto's Air Canada Centre.
Merchants away from arenas, however, are getting a boost from the 11-week dispute. Moneris finds spending is up 5.4 percent.
"While overall spending at establishments near hockey arenas is down, it would appear that Canadians are simply choosing to stick closer to home," said Jim Baumgartner, the company's president and CEO.
Molson Coors Brewing Co. and owners of the La Cage aux Sports chain say the labor dispute has reduced revenues. As a league sponsor, the brewer said it will seek financial redress from the NHL once the dispute is resolved.
The Montreal Canadiens won't discuss the financial impact of the lockout, but Canadiens Vice President Donald Beauchamp noted that all 100 employees, including President Geoff Molson, have taken a 20 percent pay cut by working four days a week. Some 1,000 part-time employees who normally work during home games now work only during other events at the arena.
The Moneris report tracked only food and drink spending, but the lockout is hurting hockey merchandise vendors and parking lot owners near arenas as well.
La Capsule sportive, which sells licensed NHL clothing in Quebec, has been in creditor protection since Oct. 19 as its debts grew in part due to the lockout. The chain hopes to survive by closing 60 percent of its 13 stores.
Douglas Porter, deputy chief economist for BMO Nesbitt Burns, estimates that a canceled NHL season would trim just 0.1 percent from the gross domestic product because people would be spending their hockey money elsewhere.
A University of Montreal professor specializing in sports business said that while the lockout is hurting workers and businesses near arenas, the broader financial effect is minimal.
"The net loss, if there's a loss, it's very small. People make a big fuss about it but certainly this impact is quite small in the aggregate," Michel Poitevin said in an interview.
"Of course, we can find some losers from the lockout. It's harder to find the winners because it's a lot more diffused -- people can spend it anywhere. But I don't think overall there's a big impact."
The lockout is also hurting lotteries that offer sports betting and provincial governments that earn millions of dollars in lottery profits.
Loto-Quebec says it is losing about $500,000 a week in revenues without its top selling sport, while the Quebec government is out a quarter of that amount, or more than $1.4 million since the conflict started.
The Ontario Lottery and Gaming Corp. said its sports revenues have been cut by 12 percent. Hockey betting generated $72 million, or more than 26 percent of the $270 million wagered on sports lotteries last fiscal year. The Ontario government receives about 25 to 28 percent of revenues.
During the 2004 lockout, Ontario lost $25 million in sports betting revenues while Quebec's revenues dropped by $17 million from $46 million.
"While we acknowledge that there's been some impact on our business, we appreciate the fact that it's probably been a greater impact on a lot of either businesses and individuals that really rely on the sport and the industry for their livelihood," Ontario Lottery and Gaming spokesman Don Pister said.