Monday, April 21, 2014

How dearth of Canadian teams in NHL hockey playoffs killing local economies

Big hockey games can generate a lot of revenue for bars and restaurants. But economists say while fans may not flood sports bars on game nights when a city doesn't have an NHL team in the playoffs, the economy of a city as whole is unlikely to suffer a major economic loss. (Katherine Holland/CBC)
Bars and restaurants in six of seven Canadian NHL cities are bracing for another spring without a hometown run at the Stanley Cup, but despite their dire financial predictions, some experts insist that local economies – including the service industry – will survive without playoff hockey.

For the first time since 1973, only one Canadian team – the Montreal Canadiens – qualified for the NHL playoffs. That leaves fans in Vancouver, Toronto, Winnipeg, Ottawa, Calgary and Edmonton to cheer on the Habs as the sole hope to bring the cup north of the border.

A spring without local playoffs for these cities will result in empty tables and lowered bottom lines, say those in the hospitality industry.

Jesse Ritchie
Jesse Ritchie's West End Vancouver pub was a popular spot for Canucks fans during the team’s nine-week-long 2011 playoffs. But he has since changed his business model, and says offering customers alternatives to hockey is keeping his business afloat. (CBC)
"You can’t recover from it. It’s money gone," B.C. Restaurant and Foodservices Association President Ian Tostenson told CBC News.

"It hurts part time servers. It hurts suppliers. It’ll have a real impact."

The BCRFA says it studied consumer spending over previous hockey post-seasons. Its research indicated each Vancouver Canucks playoff game was worth $1 million in business to local restaurants and bars, increasing to $2 million in later rounds.

"It’s those four or five weeks that we’re really going to miss," Tostenson said.

The immediate effect of a local team missing the playoffs is obvious, particularly for the sports-oriented bars and restaurants that aren't packed to capacity on game nights. The question, though, is whether that revenue is really "gone" or will simply be spread out over a longer period – and a wider array of businesses.

Playoff boom

Bar owner Jesse Ritchie knows firsthand what kind of impact a playoff run can have on a business, and can also speak to the long-term-revenue argument.

His West End Vancouver pub The Score on Davie was a popular spot for Canucks fans during the team’s nine-week-long 2011 playoffs campaign that ended with a Game 7 loss in the Stanley Cup final.
'A lot of staff and guests here are die-hard Canucks fans, but we can't base our projections and a business that employs this many people on a hockey team.'- Jesse Ritchie, Vancouver pub owner

"Every time there was a game we were full hours before puck drop, and people stayed and partied after it was over," he said.

"When we were full for that long, it was a really big deal."

But the Canucks didn’t fare so well in the seasons that followed. The team lost in five games in the opening round of the 2012 playoffs. A year later, they were again defeated in the first round, falling in four straight after a lockout shortened-season.

Ritchie says those years were devastating for city sports bars, some of which he estimates can rely on game nights for as much as 70 per cent of their annual revenue.

Those Canucks early exits convinced him that the free-wheeling spending that comes during the playoffs wasn’t sustainable.

"By the end of [the post-season] people are burnt out. Nobody can keep up that lifestyle where you get a bunch of drinks four nights a week."

Ritchie changed his business model, even removing sports merchandise and memorabilia from pub walls. He says the big screens stationed over the bar will still show the NHL playoffs this year, but adds that offering customers alternatives to hockey is keeping his pub afloat.

"A lot of staff and guests here are die-hard Canucks fans, but we can't base our projections and a business that employs this many people on a hockey team."

Spending it elsewhere

Economists say while fans may not flood sports bars on a regular night like they would for a game in a playoff series, they’ll still open their wallets somewhere and spend on goods and services, meaning that the city’s economy as whole is unlikely to suffer.

Round Table drinks for gold-medal game
Although hockey fans tend to pack bars when there's a big game to watch, the money they shell out generally comes out of entertainment spending or local purchases they would have made throughout the year anyway, says Brian Goff, a sports economist at Western Kentucky University. (Katie Nicholson/CBC)
"Hockey fans … will spend their money somewhere else," says Brian Goff, a sports economist at Western Kentucky University.

"The spending at the bars for playoff games doesn’t tend to be extra on [top of] what they would’ve done otherwise. If they spend extra at the bar, that comes out of other expenditures," says Goff.

He says it’s hard to pinpoint exactly who will benefit from fans’ surplus cash if they don't flock to bars to watch a local team play, since spending is typically spread out over different amusement options across the city. But they key is they'll still spend on local attractions.

"Whether entertaining themselves by going to eat, going to a movie or something else … people tend to spend dollars that they have earmarked [for entertainment]," says Goff.

A different kind of customer

In Vancouver, Ritchie says he’s drawing in those kinds of customers. He adds that Canucks-less spring nights allow him to appeal to non-hockey fans who might otherwise have stayed home and away from a pub packed with rowdy hockey fans.

"People are going to spend their money, they're just not spending it all on playoffs. A lot of people don’t care and just want to go somewhere and have a quiet beer."

Ritchie says his business actually improved last year overall despite only four Canucks playoff games, and he is anticipating a similar outcome this year.

"Our revenue was higher last year when the Canucks got knocked out than in previous years," he said.

The fickle on and off-field realities of professional sports are something Tostenson and others in the industry who cater to sports fans are coming to terms with.

The springtime options for Canadian sports bars are slim outside of the playoffs, with largely mid-afternoon soccer matches, the less-loved NBA playoffs and early-season baseball games on offer.

So, bars across Canada await a more reliable business-maker as hockey fades away along with the winter weather.

"We’ll forget about hockey," says Tostenson. "The sun will come out. We’ll fill patios and we’ll go back to doing business that way."


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