Canadian sports franchises cheer domestic currency

By Frank Pingue

TORONTO (Reuters) - Canadian professional sports teams are cheering the Canadian dollar's rapid rise to parity with the greenback, as it should help boost their bottom lines and keep star players on their rosters.

Last week the Canadian dollar pulled level with the U.S. dollar, capping off a 62 percent rally that started in 2002. It marked the first time the currencies were at par since 1976.

With most of their expenses in greenbacks and the bulk of the revenues in Canadian dollars, the currency shift will likely benefit Canada's six National Hockey League teams, Major League Baseball's Toronto Blue Jays and the National Basketball Association's Toronto Raptors.

For the Blue Jays, about 85 percent of the team's expenses are in U.S. dollars, including a $90 million payroll, while about 60 percent of its revenues are in Canadian dollars.

"When the dollar hit par I felt like taking a checkered flag and doing a run around the building," said Paul Godfrey, chief executive of the Blue Jays. "We know the pain of a dollar that is so far out of kilter with the American counterpart."

According to Godfrey, the rise in the Canadian dollar has been one of the key factors, along with a desire to be more competitive, behind the Blue Jays' decision to increase its payroll by about 30 percent since 2001.

But while the higher domestic dollar puts the Blue Jays on a level playing field with the rest of Major League Baseball's 29 U.S.-based franchises, it has also reduced the number of U.S. visitors to Toronto's ballpark.

Baseball fans of the New York Yankees and Boston Red Sox, who often make the trek north of the border given the ticket availability and the once-favorable exchange rate, have started to think twice about making the drive.

"We've lost some of our attendance from our American fans ... because they don't get as much bang for their buck when they come here," said Godfrey. "So there's an offsetting mark."

A higher Canadian currency may benefit domestic teams and help open the door to funds that can be used to offer lucrative contracts to star players. But the premium enjoyed by athletes who earned U.S.-dollar salaries while living in Canada has vanished.

Canadian-based hockey players, paid in U.S. dollars, as outlined in the NHL's collective labor agreement, now take home less cash in real terms than before.

A hockey player signed to a $5 million contract during the 2001-02 season would have been looking at C$8 million. At Wednesday's exchange rate of C$1 worth about 99.6 U.S. cents, that contract is now worth C$5.02 million.

So while the hockey players find their U.S.-dollar salaries are worth less now than before, the Canadian-based teams should enjoy a turnaround from 2002 when the domestic currency was at an all-time low.

"We have exposure on U.S. dollars in the tens of millions so any improvement in the Canadian dollar helps us significantly," said Ian Clarke, chief financial officer of Maple Leaf Sports and Entertainment, which controls the Maple Leafs and Raptors.

The NHL also acknowledged the benefits that Canadian hockey teams can enjoy now that the domestic currency is sitting just around par with the U.S. dollar.