Why Canada's storied symbol now has a US owner

On Wednesday, the Montreal Canadiens was sold to a US businessman.

It's probably just as well that their jerseys are already red, white, and blue.

Because once regulatory approvals go through, as expected, les Canadiens de Montreal will be owned by a US businessman.

Yes, you read that right: The team that has defined hockey in the country where hockey practically defines national identity is acquiring foreign ownership.

Molson Breweries, owner of the team since 1957, announced Wednesday that Colorado ski baron George Gillett Jr. will acquire an 80 percent interest in the team and a 100 percent interest in the Molson Centre, the team's home. The price: $183 million.

It is the latest answer to the question: Can the economics of major-league sports be made to work in Canada?

For all the nationalistic fervor swirling through the public media here in anticipation of a sale of the team, the initial response to the actual announcement was relatively muted. "It's really good for the Canadiens - it's new blood," says a long-time National Hockey League veteran, noting that the deal stipulates that the team must remain in Montreal, a major issue for the faithful. "There's absolutely no doubt in my mind ... they'll be in Montreal forever."

There may not have been an alternative to a white knight riding in from the south. During the months since Molson hung a "for sale" sign on the team in June, rumors floated about possible Canadian buyers. But during Wednesday's press conference, Dan O'Neill, Molson's chief executive, said, "We did not receive one single offer from a Canadian company or a Canadian individual." By contrast, he added, Mr. Gillett, whose sports-ownership history includes stints with the Miami Dolphins and the Harlem Globetrotters, called within two hours after the team was up for sale.

And that, as CBC sports analyst Tom Harrington noted on the air, "is something Canadians have to think about."

Why have the storied Canadiens - whom Gillett described as "perhaps the greatest franchise in sports history" fallen into US hands? And why is virtually every Canadian team at risk of either a US takeover or a move south, or both? Canada has already lost two NHL teams - the Winnipeg Jets and the Quebec Nordiques - to Phoenix and Denver, respectively. And with Gillett's takeover of the Canadiens, all three of Montreal's pro franchises will be controlled by US interests.

In recent years, other NHL teams, including the Ottawa Senators, Edmonton Oilers, and Calgary Flames, have faced financial troubles.

Currency exchange rates are part of the problem: Teams here earn revenue in Canadian dollars but must pay many of their expenses, including salaries, in greenbacks. To offset that financial burden, Rod Bryden, owner of the Ottawa Senators has called for tax relief for sports teams.

In Canada, property taxes on stadiums are hefty. Even after the municipal authorities in Montreal agreed to cut taxes on the Molson Centre, at US$5 million a year, the tax is still several times what teams in the US pay.

There have been a few calls for political action to help teams, but without much effect. In 1999, John Manley, then Ottawa's industry minister, offered a plan for tax abatements for teams, but withdrew it almost immediately after a roar of public criticism.

At another level, what's put the national game at risk in Canada is its own success. The superlative talent of Wayne Gretzky, who announced his retirement in April 1999, transformed hockey as Michael Jordan of the Chicago Bulls transformed basketball. In recent years, NHL hockey has spread not just across the border but well to the south, into sunbroiled jurisdictions where you've got to figure that part of the appeal to the fans is the refrigeration at the arena.

This "common market" in hockey means that Canadian cities are competing with prosperous Sun Belt cities willing to bid up prices in the competition to woo teams their way. The average NHL salary has increased more than fivefold over the past 10 years.

All this means that sports teams may still be fun to own, but they're not a license to print money, if they ever were. As a result, says Toronto financial analyst David Hartley, of First Associates Investments, "Sports teams nowadays are being owned by individuals, not by corporations." Individuals, he says, "are willing to take losses, in the short term at least."

From all evidence it appears Gillett will need to be willing to take some losses. The Canadiens have won the Stanley Cup 24 times, more than any other team. The team was adored by English and French-speaking fans alike; its heroes were national icons, and yet also a part of the regular Montreal community in a way that today's fly-in, fly-out superstars generally are not.

But more recently the team has been beset by management lapses and a string of "uncannily bad" trades and draft picks, as one NHL manager told the Globe and Mail. The team needs a major rebuilding, in short.

But Gillett knows what it's like to be down. In the early 1990s, he defaulted on a billion dollars worth of junk bonds but has recouped his fortune.

"We want to find a way to win, and win again," said Dan O'Neill of Molson Wednesday. He sounded convinced that in Gillett, Molson had found the right partner to do so. "George puts the heart back into companies."

Gillett himself is already dreaming of "that 25th Stanley Cup," he said.

(c) Copyright 2001. The Christian Science Publishing Society

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