Acknowledging the importance of hockey to Canadian culture, the Canadian government announced today that it is prepared to provide up to $2 million to each of the country's six NHL franchises each year to ensure that they do not move to the United States.
Industry Minister John Manley said the subsidies are justified because some Canadian teams find themselves in a financial squeeze caused by the decreased value of the Canadian dollar, the smaller size of Canada's urban markets and the generous tax breaks some American teams get from their host cities.
However, payment of federal money to any team is contingent upon contributions from the league, which have been arranged, and from its city and provincial governments, which are not assured.
But Manley also expressed the government's ambivalence about using taxpayer funds to aid millionaire team owners and players. He warned that the subsidies would last only for four years--enough time for the NHL to develop a more equitable formula for sharing revenues among its teams and a new collective bargaining agreement with the players that would put a cap on player salaries, which have been growing at 20 percent a year.
"In our hearts, we felt that hockey is really part of Canada," Manley said. "But at the same time our heads are saying, 'What is this all about?' "
To qualify for each dollar of the federal aid, Manley said teams would have to win $3 in other financial assistance from provincial and city governments and from the NHL. No team is expected to get more than $2 million of federal money in any year and each team's arrangement with the government will be reviewed annually. All subsidies would have to be refunded if the team moves before 2004.
"This is a temporary, modest package that gives the NHL time to solve its fundamental problems," Manley said at a news conference. Although the issue had been under study for a year, sources in Ottawa said Prime Minister Jean Chretien finally pushed it through a reluctant cabinet last week.
Within hours of Manley's announcement, Ottawa Senators owner Rod Bryden took down the "For Sale" sign on his money-losing franchise, saying that an expected package of subsidies and tax breaks would substantially close the $9 million gap between the team's revenues and expenses.
Team officials of the Vancouver Canucks, Edmonton Oilers, Calgary Flames and Montreal Canadiens also said they hoped to hammer out similar deals, although some provincial and municipal government leaders have been lukewarm on the idea of providing tax breaks or other aid.
"It's going to be difficult," said Philip Owen, the mayor of Vancouver, a city that already has lost its Class AAA minor league baseball team to Sacramento and is on the verge of losing its NBA basketball team, the Grizzlies, to St. Louis.
In the province of Alberta, where the Flames and Oilers are based, Conservative Premier Ralph Klein reiterated his opposition to taxpayer subsidies for professional sports.
In Toronto, where the Maple Leafs may be the only Canadian NHL franchise to earn a profit, Mayor Mel Lastman said taxpayers would not stand for tax breaks for professional sports teams.
The government's aid package, which requires no vote by Parliament, immediately was denounced by opposition parties and even some members of Chretien's Liberal party. Critics argued that it was folly to pour government funds into professional sports at a time when the national health system is cracking under financial pressure and prairie provinces are in the grips of a farm crisis.
"There'd be very, very few people that would say they'd rather fund a hockey player than a hospital bed," said Brenda Chamberlain, a Liberal member of Parliament from Ontario. "I don't think we should do it."
Another Ontario Liberal, Carolyn Parrish, said she was "flabbergasted" by the decision, saying the government had been turned around by pressure from "a few jocks" in the Liberal caucus.
Officials from Winnipeg and Quebec City noted that the government had not offered direct subsidies to keep their hockey teams from moving to the United States.
In anticipation of the Canadian initiative, NHL owners, at their most recent meeting, agreed to extend for four years $9 million a year in "equalization payments" to Canadian teams to help offset the disadvantage that results from having revenues in Canadian dollars but player salaries that must be paid in U.S. dollars.
Today, NHL Commissioner Gary Bettman issued a statement calling the Canadian aid as "meaningful and substantive."