By Caryn Hirshhorn
Industry Minister John Manley confidently stick-handled his way past opposition last week, scoring support with Canadian National Hockey League teams, owners and fans.
The politician promised that the federal government would kick in 25 per cent of any package that included contributions from the league and assistance from municipalities and provinces to lighten the tax burden of Canadian NHL teams.
However, Manley’s shot went wide of the net.
Just three days after dangling the plan before NHL teams, Manley bowed to public pressure and pulled back the government’s offer to provide an estimated $12 to $20 million in annual assistance to Canadian NHL franchises until 2004.
In short, Manley finally came to his senses.
“I’m not embarrassed at trying and making a good effort,” he said after killing the deal.
A number of economic and political realities underlie Manley’s abrupt about face.
If the government is willing to loosen its purse strings, there are a variety of serious needs to address.
Even Ottawa Senators owner and Liberal-supporter Rod Bryden told a news conference that he couldn’t blame the government for the fact Canadians had not accepted the economic arguments Manley put forth in an attempt to aid professional hockey.
Proponents of government support for the NHL claim sports teams have many positive effects on a city. Teams can improve local economies by generating new spending, creating jobs and attracting tourists and local companies to the host city.
All of these benefits are supposed to have spin-off effects leading to more spending and job creation. Some believe sports teams spur so much economic growth that any subsidies will be offset by government revenues from ticket taxes, sales taxes on concessions and other spending outside the stadium.
But a recent Brookings Institute study on the economics of sports casts doubt on these financial expectations. The study found government-subsidized U.S. sports facilities have an extremely small, even negative, effect on overall economic activity and employment. No recent facility was found to be self-financing in terms of its impact on net revenues. Stadiums were found to attract few tourists and no new industry.
While the flip-flop decision may not have shocked anyone, Manley’s initial announcement did. The government had been warned the bailout would lack public support.
A poll commissioned by the federal finance department last summer indicated 50 per cent of Canadians were strongly opposed to helping NHL teams, while 53 per cent rated it the lowest priority for goverment spending. No other issue on the poll provoked such a hostile reaction.
While the government was only offering short-term financial support to Canadian teams, it is highly unlikely that Canadian hockey would become financially sustainable in the long run with this support. Manley’s offer risked opening the door to a continuing flow of taxpayers’ dollars to Canadian sports franchises.
Maybe hockey is our national sport. Maybe it does generate an incredible amount of excitement among people of different ages. And maybe it is difficult to point to an activity that has captured the hearts of Canadians in the same way hockey has.
But for all that, we cannot forget economic realities and the federal government’s broader obligations to Canadians. The bottom line is, in a country with many pressing social needs, it is unacceptable for the government to use valuable taxpayer dollars to subsidize a professional sport.