Report; NHL lockout pain and gain for businesses
The NHL lockout is forcing some merchants near hockey arenas into the penalty box but giving power plays to others further afield as fans spend their money at alternative eating and drinking holes, says a report issued Tuesday.
The report by credit and debit card processor Moneris found that overall spending at venues near arenas in Winnipeg, Vancouver, Toronto, Montreal and Calgary has decreased more than 11 per cent from a year ago on a game day.
Drinking establishments are being hit the hardest with business falling nearly 35 per cent.
Restaurants are taking a nearly 11 per cent hit, followed by fast-food outlets which are down almost seven per cent compared to a game day in 2011.
Edmonton fast food outlets are facing the largest impact with business falling 27 per cent.
Spending near Montreal’s Bell Centre is down more than 21 per cent, followed by a 17 per cent drop in business near Toronto’s Air Canada Centre.
Merchants away from arenas, however, have been benefiting from the 11-week labour dispute, with spending up 5.4 per cent from a game day in 2011.
“While overall spending at establishments near hockey arenas is down, it would appear that Canadians are simply choosing to stick closer to home,” said president and CEO Jim Baumgartner.
Spending in bars further afield is up nearly 19 per cent while fast food business grew 11.5 per cent and was up nearly five per cent in restaurants, in line with overall spending increases in the third quarter.
Moneris surveyed the game day spending of about 750 of its customers in the hockey host cities.
“The ones that were affected very heavily are the ones that are in the same two postal codes as the arenas,” vice-president Malcolm Flowler said in an interview.
Molson Coors Brewing Co. (TSX:TPX.B) and owners of the La Cage aux Sports chain (TSX:SPS.A) have both recently noted that the labour dispute has reduced revenues.
As a league sponsor, Molson Coors 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 vice-president Donald Beauchamp noted that all 100 employees, including president Geoff Molson, have taken a 20 per cent pay cut by working four days a week. Some 1,000 part-time employees who normally work during home games now only work during other events at the arena.
The Moneris report only tracked 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 per cent of its 13 stores.
BMO Nesbitt Burns deputy chief economist Douglas Porter has estimated that a cancelled NHL season would trim just 0.1 per cent from the gross domestic product as people spend their hockey money elsewhere.
A University of Montreal professor specializing in sports business said the lockout is having a painful impact on workers and businesses near arenas, but the broader financial impact 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, (but) 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 of this.”
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 per cent. Hockey betting generated $72 million, or more than 26 per cent of the $270 million wagered on sports lotteries last fiscal year. The Ontario government receives about 25 to 28 per cent 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,” said Ontario Lottery and Gaming spokesman Don Pister.