SINS Committee Meeting

SUB-COMMITTEE ON THE STUDY OF SPORT IN CANADA OF THE STANDING COMMITTEE ON CANADIAN HERITAGE

SOUS-COMITÉ SUR L'ÉTUDE DU SPORT AU CANADA DU COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 28, 1998

• 0900

[English]

The Chairman (Mr. Dennis J. Mills (Broadview—Greenwood, Lib.)): Good morning, ladies and gentlemen, and welcome to our continued hearings on the industry of sport in Canada. I will make few remarks here as part of a short preamble.

First of all, I'd like to welcome the Leader of Her Majesty's Loyal Opposition to our committee this morning. Of course, I would also like to welcome our guests.

In a moment, Mr. Bettman, maybe you would properly introduce your colleagues.

I'd also like to put on the record that it's been brought to my attention by the clerk that a couple of people inquired about my perceived conflict of interest because of my volunteer presidency of the Toronto St. Michael's Majors, and I want to make sure that is on the record. I am a volunteer on the team. I have no financial interest. It is operated by the Basilian Fathers of St. Michael's College School. I will have no hesitancy in pursuing and questioning the National Hockey League and how much they do for major junior hockey in this country. I will not be defensive about that issue.

Ladies and gentlemen, since this building was built many years ago this has been a room where the transportation committee has had its hearings, as have finance committee and the foreign affairs committee, and every year thousands of men and women from every sector of our economy come before legislators here. The purpose of those witnesses is to help educate us so that we can make good public policy decisions.

This morning is an historic event, because this will be the first time that our national winter sport will present itself in the context of its linkage to the economy of Canada, and on behalf of the committee, we would like to thank the National Hockey League for its brief—in both official languages, I might add.

I now turn it over to you, Mr. Bettman. Thank you.

Mr. Gary Bettman (Commissioner, National Hockey League): Mr. Chairman and honoured members of the committee, I am the commissioner of the National Hockey League, and on behalf of the entire National Hockey League I would like to thank you for inviting our six Canadian teams and me to address the Sub-Committee on the Study of Sport in Canada.

We are here to provide you with an update on the status of hockey at the NHL level and we would like to proceed as follows. All of you should have received a copy of our written submission. We will try to supplement its contents for you today. Before I introduce the NHL team representatives, we will show you a brief four-minute video. Our total presentation, as we previously discussed with you, Mr. Chairman, will be less than one hour long. We beg the subcommittee's indulgence and we hope you find this session informative.

Since we will be talking mostly about our game off the ice, the business side, we want to start by giving everyone a chance to focus on what our game is about on the ice. We try never to lose sight of the game. Please roll the video.

[Editor's Note: Video presentation]

• 0905

Mr. Gary Bettman: For more than 100 years, hockey has played an integral part in Canadian life. For more than 80 years, the National Hockey League has represented the very best in sports and the very best that our sport has to offer.

This hearing and the subjects this subcommittee is covering are of vital importance to the National Hockey League and all of our teams. Although 20 of our teams play in the United States, more than 60% of our players come from Canada. The vast majority of our players are born and trained here in Canada. Canada is truly the heart and soul of our league and of our sport worldwide.

But the issues this committee is discussing are of even greater importance to the six national hockey league teams that play in Canadian cities. The cities of Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver, and their provinces, are all brightened by the presence and performance of their NHL teams.

All of Canada is brought together by the love of their hockey teams: NHL teams, minor pro teams, junior teams, peewees, midgets and mites.

To make our presentation here today, we have with us some of the most outstanding businessmen and sports executives working anywhere in the world. One member of our group has recently been named to the Order of Canada. In addition, two of our executives here with us today are honoured members of the Hockey Hall of Fame for their contributions as player, coach and executive.

I am pleased and proud to introduce the speakers who represent our six Canadian teams and also represent the best the sport of hockey has to offer.

Harley Hotchkiss is the chairman and governor of the Calgary Flames and the chairman of the National Hockey League board of governors. In January, Mr. Hotchkiss was named to receive one of Canada's highest honours, the Order of Canada. He will be in Ottawa again next week to receive this richly deserved honour. Mr. Hotchkiss is a native of Ontario, but has spent his entire business career in Alberta managing oil, gas, real estate and agricultural enterprises. He was a prime mover of the community group that brought the Flames to Calgary in 1980.

Ken Dryden is the president of the Toronto Maple Leafs. Along with Mr. Sather, he is also an honoured member of the Hockey Hall of Fame. This native Torontonian gained his fame as the goalie for the great Montreal Canadiens teams of the 1970s. Six times his teams won the Stanley Cup. He also represented his country in the Canada Cup. Before returning to hockey last year, Mr. Dryden had a remarkable career away from the ice as an author, an attorney and a broadcaster.

• 0910

Ronald Corey is the president of the Montreal Canadiens. Perhaps no franchise in sports is as identified with success as the Montreal Canadiens. There are 24 championship banners in the Molson Centre, a testament to the tradition of excellence. Mr. Corey has been president of the Canadiens since 1982, following a successful career in journalism and broadcasting. During his tenure with the Canadiens, the team has won two Stanley Cups. In addition, the Molson Centre opened in downtown Montreal in March 1996, a tribute to the vision, skill and dedication of the Montreal Canadiens organization and Ronald Corey.

Glen Sather is the president and general manager of the Edmonton Oilers. The Oilers have won the Stanley Cup five times, and Mr. Sather has been involved with each of those championships as coach and general manager. He has coached and managed Canada Cup, World Cup and world championship teams for his country. He is one of the newest and most deserving members of the Hockey Hall of Fame, having been inducted last November.

Rod Bryden is the governor and principal owner of the Ottawa Senators. I guess Mr. Bryden is the home team here today—first, in these hearings, and secondly, with the ongoing play-off series with the New Jersey Devils. Mr. Bryden was the driving force in re-establishing NHL hockey in Ottawa back in 1992, and he directed the construction of the Corel Centre. After a career in government, Mr. Bryden became a successful entrepreneur, building one of Canada's largest computer services companies.

Finally, but not least, is Stephen Bellringer, president of Orca Bay Sports and Entertainment, the parent company of the Vancouver Canucks. Mr. Bellringer has moved into sports and entertainment in the last year, after an outstanding career in the oil and gas industry in British Columbia. In addition to the Canucks and the Vancouver Grizzlies, Orca Bay also operates GM Place, which was the site of the 1998 NHL all-star weekend.

Once again, Mr. Chairman and honoured members of the committee, I would like to thank you for this opportunity for my colleagues and for the entire National Hockey League to be with you today. If you please, we have asked our chairman of the NHL board of governors, Mr. Hotchkiss, to begin our presentations.

Mr. Harley Hotchkiss (Governor and Chairman of NHL Board of Governors, Calgary Flames): Thank you.

The Calgary Flames are owned by nine Calgary businessmen. I'm one of the original owners, dating back to the time when we purchased the franchise from Atlanta in 1980. I serve as governor for the Flames, as Gary has mentioned, and I've been chairman of the board of governors of the National Hockey League since 1995.

As you will have seen in our written submission, every Canadian team has a substantial economic impact on its city, and each makes important community contributions. For the Calgary Flames owners, support of hockey development and community involvement have been priorities since the beginning.

I'd like to tell you some things about the Flames, why we got involved, our support of hockey, our commitment to our community, our record on the ice, our financial results, and our current concerns about our ability to survive and compete.

I want to also talk about what I think is the most important issue of all, and that's the need to protect the environment in our country so young Canadians across Canada can fulfil their hockey dreams.

In 1979-80, Calgary was competing for the Winter Olympics, and there was a clear need for a new building to house Olympic hockey and figure skating, a building that would only be economically feasible if there was a long-term major league tenant to use the building after the Olympics.

A small group of us who cared about the game of hockey and who had strong feelings about our community believed Calgary would support a National Hockey League franchise. We finalized the purchase of the Atlanta Flames in 1980, in time for the 1980-81 season, and we worked closely with all three levels of government in preparation for the Calgary Winter Olympics of 1988 and the building of the Saddledome.

The Saddledome is owned by the City of Calgary, and it's operated by the not-for-profit Saddledome Foundation. Until the middle of 1994, it was managed by the Calgary Exhibition and Stampede, who received significant building revenues largely generated by the Flames. The Saddledome Foundation also received significant revenues from building rent, a percentage of gate receipts and 50% of the box suites, again largely Flames-generated.

• 0915

Those foundation revenues totalled some $18 million for the 11-year period from 1983 to 1994. Of that, $7 million was set aside as a building reserve fund, and the remaining $11 million was distributed as follows: one-third went to the Calgary Olympic Development Association for maintaining facilities and training Olympic athletes; one-third went to the Canadian Hockey Association to support the Canadian Hockey Centre of Excellence and Olympic hockey; and one-third went to the Calgary Parks Foundation. There are over 228 communities in Calgary that have accessed these funds for a whole variety of community projects and activities.

In the early 1980s, the economics of the hockey business started to change, and to survive and compete we needed to receive the revenues we were responsible for generating and to enhance those revenues wherever we could. The Flames owners bought out the Calgary Exhibition and Stampede management contract for $20 million. We took over building management in 1994.

Two of the original owners who had become concerned about the risks of the hockey business were bought out, and six other community-minded owners joined us to strengthen the ownership group and to provide long-term ownership continuity.

In 1995 a major building renovation was completed. It involved a new concourse, a new level of suites, upgraded seating, and major improvements to the public concourse and public facilities—a world-class building for the city of Calgary. The total cost was $37 million, with $22 million coming directly from us, the Flames owners.

To summarize that, to take over the building management and to renovate the Saddledome, we paid $42 million directly and $7 million indirectly, for a total of $49 million out of a $57-million investment.

We operate the Saddledome under an extendable 20-year lease with the Saddledome Foundation. Payments over the 20 years are estimated to be some $16 million, and these funds will flow to the same beneficiaries—the Calgary Olympic Development Association, the Canadian Hockey Association, and the Calgary Parks Foundation. Over 30 years, from 1983 to 2013, there will be some $8 million to each of those beneficiaries from revenues generated by the Calgary Flames.

In addition to our goal of securing an NHL franchise for Calgary, we had a strong interest in providing support for grassroots hockey development in Canada. Our ownership group set up Flames Project 75. It was named in honour of Alberta's 75th birthday and specifically dedicated to hockey development.

To date, some $2.4 million have been contributed to Project 75, and that support is ongoing. The main focus has been the establishment and support of the Canadian Hockey Centre of Excellence in Calgary. The centre emphasizes grassroots hockey development for young Canadians of all ages, providing instruction videos on the basic skills, and coaching materials and clinics. The centre has earned worldwide recognition.

Other centres of excellence are now located in our Flames farm team in Saint John, New Brunswick; in Toronto, supported by the Maple Leafs; in Vancouver, by the Canucks; and in Montreal, by the Canadiens. Hundreds of thousands of young Canadians across our country are benefiting.

The Canadian Hockey Association tells us that over 500,000 players are registered annually in their programs.

The Flames organization—owners, players, wives and alumni—also support, as do all other Canadian teams, a host of other community and charitable causes. We now coordinate these activities through the Calgary Flames Foundation. Several million dollars has been channelled back into our community. As one example, our Calgary Flames charity golf tournament alone has put back over $1 million, benefiting such worthy causes as Special Olympics.

Individual players provide support to many community endeavours focused on health, education and social needs. I think we have seven players who are leaders of various community activities at the present time in Calgary.

There is a summary in appendix 4 of community and charitable support listed for the NHL Canadian teams. You'll see there that all the teams provide leadership and support similar to the Calgary Flames.

The Flames have paid municipal taxes, business taxes, since moving to Calgary. After we took over the building management in 1994, property taxes were imposed on the building, even though it's city-owned. These taxes currently total $524,000 per year.

The Flames hockey record was good for the period 1983 to 1992. We won the President's Trophy twice for finishing first in the league. We went to the Stanley Cup finals against Montreal in 1986, and again in 1989, when we won the cup.

In 1989, when we won the cup, our payroll was $5.8 million Canadian. This season, eight years later, it's $25.8 million, and we're in the bottom quarter of the league.

• 0920

Since 1992 the record has been less impressive. We've missed the play-offs three times and didn't advance beyond the division semi-finals. The deteriorating Canadian dollar and the changing economic circumstances, particularly as they impact on a small market team such as Calgary, have been our most significant challenges.

We are, however, positive about our hockey development program. We have a number of good young players, both in Calgary and in the Saint John, New Brunswick farm team, and that farm team is having an excellent season. It's in the second round of the play-offs.

Our financial performance was acceptable for the period up to 1994. I'm going to give you some overall numbers. They're actual pre-tax cash profits or losses, based on independent audited financial statements, and they include revenues earned from other events in the building.

For the first 13-year period, from 1980 to 1995, our pre-tax cash profits, including play-offs and expansion revenues, averaged $3.46 million per year. Our strong play-off performance and expansion revenues made major contributions to this financial performance. Without expansion revenues, which are essentially non-recurring, we averaged $2.6 million per year pre-tax cash profit over this 13-year period. That's not a great return by normal investment standards considering our significant capital at risk, but it was acceptable to us in light of our strong community motivation.

Financial results changed dramatically starting in 1993-94 and costs, particularly players' salaries, escalated rapidly. For the next three years, through to 1995-96, we had cash losses totalling $14.4 million, including a loss of $10 million in the 1994-95 season, when due to a work stoppage we played a much shorter schedule.

Last year, 1996-97, we had a $3 million cash profit on an equity base of $95 million. This season, with one of the lowest NHL salaries in the league, we're budgeted just to break even.

We avoided cash losses in the last two years only with the significant help provided by the league's Canadian currency equalization program. That meant to us this past year $3.5 million in Canadian funds. That plan was unanimously approved and contributed to by all teams, including small-market American franchises.

We're determined to stay in Calgary and to have a competitive team, but we're equally determined to operate on a sound business basis. With one of the lowest payrolls in the league, the major negative effect of the Canadian dollar, and the continued upward pressure on salaries, we're under no illusions about the magnitude of the challenges we face. Looking ahead over the next five years and using league average salaries, it will be very difficult for the Flames to compete or perhaps even to survive.

In summary, the Calgary Flames ownership is committed to the support of hockey in Canada, to continue to play an important role in our community, and to stay in Calgary with a competitive team. We're also firmly committed to run our franchise on a sound and responsible business basis. We cannot meet these commitments unless the major competitive disadvantages we face are alleviated.

I'd like to end on a personal note. I grew up in southern Ontario. My dad was a farmer. What I'm going to say now is going to date me, but I went to a one-room public school in the Depression years. We had one teacher, we had eight grades, we had 30 to 40 farm kids as students. Our lives were centred around the school, the church, and our family, but in the winter it was hockey. We were all caught up with it.

The big attraction was the Saturday night broadcast—Foster Hewitt's radio broadcast from Maple Leaf Gardens.

Toronto in those years, Ken, was my team. Syl Apps, number 10, was my favourite player, and I'll never forget my first NHL game in Maple Leaf Gardens.

We learned to skate on outdoor ponds on the farm. We'd shovel snow to clear a place to play, use our boots as goal posts, and play all the rest of the day when we didn't have to work. I never saw rink boards until I went to high school, and I never saw artificial ice until I went to university.

It's different now. We have a family farming business out in the area I grew up in. It's a tree nursery business. My granddaughter Katie, who is 12 years old, plays hockey for the Belmont Bombers, and my grandson Matthew, who is eight, plays for the Aylmer Flames novice team. They went to the Ontario semi-finals this year.

There are no more one-room schools. Everybody is bused to town, and everybody watches colour TV instead of listening to the radio. There is artificial ice for everybody to practise on and play on.

However, with all that change, one thing hasn't changed at all—and that's the dream the young Canadians across our country have about hockey. It's in our hearts, and it's a unique common bond that helps identify and keep us together as Canadians. Those of us in the hockey business—owners, management, coaches, players—and you in government share an important responsibility to do everything we can to not let that change.

• 0925

Thank you for the opportunity to be here this morning.

The Chairman: Thank you, Mr. Hotchkiss.

Glen Sather, please.

Mr. Glen Sather (President and General Manager, Edmonton Oilers): Mr. Chairman, honoured members, thank you for this opportunity.

The Edmonton Oilers operate in the smallest market in the National Hockey League, and as a Canadian team operating in a North American league, we recognized some time ago that we face specific challenges. Our primary challenge is to remain a competitive team and a viable organization in the NHL, while competing with larger markets and contending with disparity between American and Canadian currencies.

Having said that, it is important to make it clear that the Canadian teams are responding to this challenge; they have done a great deal to help themselves survive in this environment. We think the Oilers are a good example of the extraordinary efforts that have been put forth to ensure our franchise remains in Canada. We're working very hard to maximize our revenues to create growth opportunities, to control costs, and to look for innovative solutions to the unique situation we live in.

There are a number of ways in which we will achieve these objectives.

One is ticket revenue, which is a prime source for dollars in any NHL franchise. In Edmonton we raised our season tickets by 17% in the 1997-98 season. We will have 22 regular season sell-outs this year. We operate at a 95% capacity, which places us 9th in the National Hockey League in attendance. These are impressive numbers, considering that three seasons ago we had only seven sell-outs and our average attendance was 12,335.

The difference is that our season ticket base is now very healthy. We were able to raise our base, double it in fact from 6,500 to 13,500, through a very aggressive campaign we initiated in the spring of 1996. The campaign was essential to our existence in Edmonton, and the success was tied to our ability to take the campaign to the citizens of Edmonton and northern Alberta.

We recognized a need for creative ticket programs and payment options. We developed plans that made Oilers hockey affordable for everyone.

Sponsorship and sales is another area in which we have increased revenue. Currently all of our suites and advertising inventory for the Oilers hockey are sold. We intend to raise the advertising inventory prices by 20% for the next season. The suite contracts will be renegotiated as they come due.

We will also be expanding our sales and marketing operations to increase our ability to explore new opportunities and to extend client services. Increasing revenue derived from the building is essential. In 1994 the Oilers renovated the Edmonton Coliseum to add 39 suites, 3,000 club seats, and a corporate club and to upgrade food and beverage services.

All the Canadian clubs have renovated their buildings or constructed new buildings or are in the process of building new facilities to take full advantage of these revenue opportunities.

Although we worked very hard to maximize revenues, we have worked equally hard to control costs. I think it is fair to say the Oilers have been fiscally responsible in an industry where it has been very difficult, considering the rapid escalation of players' salaries. As an organization we look to all areas of the business to contribute to cost control. With that in mind, we have one of the smallest staffs in the NHL, and our travel budget is ranked 21st in this league despite our geographic location.

I've spoken about what we've done to date to maintain our viability in the NHL. Now I'd like to talk about what we plan to do in the future to promote our stability.

We're in the process of taking our radio and television broadcast in-house for the 1998-99 season. We will offer a multitude of growth opportunities for the organization and provide new revenue streams. As previously mentioned, we have increased our advertising inventory price by 20%.

These revenues will in fact be bolstered by building new inventory, which will be added this summer. The title of the building will be sold, and now that our ownership issue has been solidified, it will be much easier.

Our ticket prices have been increased by an average of 19% for the upcoming season. This price increase reflects a 36% increase over the past two seasons. As a major source of all our revenue, this is necessary. However, we recognize that in our small market, prices are at the upper end of the scale and we cannot expect this area to continue to grow at this rate. Even with the most recent increase, it should be noted that we expect our average ticket price to remain in the lowest of the league.

These are some of the things we're doing to maintain our viability and to work toward increasing our ability to compete with the other teams in the NHL. We recognize the challenges we are facing, as does the league. To that end they have taken some measures to help the small market teams. The Canadian currency equalization plan was initiated by the NHL and approved by the board of governors. And the $2.5 million that it contributed to each eligible Canadian team has been very valuable.

• 0930

The NHL has also recently reworked the Canadian television rights to create a new level of opportunity based on the U.S. model of regional cable broadcasts, and this will create new revenues for all Canadian teams.

Clearly the NHL is viewed as a good investment. Expansion franchises are highly sought. As an example, Nashville offered $20 million to secure a team. These incentives and offers are difficult to ignore, and even more difficult to compete with.

These are the economics of the industry, but for the Canadian teams they are a daunting reality. The Oilers are fighting to remain a Canadian team in the NHL, and we are doing everything we can to help ourselves. We have no shortage of fan support for hockey in this country, but that alone is not enough to sustain the NHL in the small Canadian market.

To move forward with certainty and with the promise of the stability of our future, the Canadian teams must operate in an environment that provides a more level playing field.

Thank you very much for the opportunity.

The Chairman: Thank you, Mr. Sather.

Mr. Gary Bettman: Stephen Bellringer.

Mr. Stephen Bellringer (President and CEO, Orca Bay Sports and Entertainment, Vancouver Canucks): Thank you, Mr. Chairman, members of the committee.

First of all I feel like I'm back in British Columbia, around a corner here on the edge of the country.

Orca Bay Sports and Entertainment operates General Motors Place, an 18,000-seat, state-of-the-art hockey venue in downtown Vancouver. We also own and operate the Vancouver Canucks NHL hockey franchise. As mentioned earlier, we also operate the NBA franchise in Vancouver, the Vancouver Grizzlies.

Subject to the completion of the Air Canada Centre next spring, we're the largest professional sports organization in Canada. The relevancy of that comment will become apparent in a few moments, when I speak about our ownership changes over the last year or so.

As part of the NBA privilege of appearing before you last Thursday, I shall be mercifully briefer today.

British Columbian fan support for the Canucks hockey organization continues to be incredibly strong despite a rather disappointing season of on-ice performance. This goes, in part, to show the importance of hockey throughout British Columbia, be it at the professional level or in the many neighbourhood rinks involving youth or so-called old timers, be they men or women. It is a sport that reaches out increasingly to all parts of our society and cultures.

As we discussed for another sport last week, it is also an important economic activity for this country of ours. In the case of our operations in British Columbia, we employ some 185 full-time people and more than 1,000 part-time employees. In fact, in a recently commissioned study by the accounting firm of KPMG, it was established that, both directly and indirectly, we support some 1,600 equivalent jobs throughout British Columbia.

These Canadians employed range from part-time college students to university co-op students from the sports marketing program at UBC, to part-time men and women trying to earn extra income, to full-time professional broadcast technicians and professional engineering people. Yes, we employ 20 to 25 relatively highly paid athletes who receive the public profile, but what is often forgotten are the hundreds of average Canadians who work behind the scenes to allow them to perform and entertain us and our children.

While hockey is a deep part of Canada's culture, it is entertainment, just as important to this country's economy as broadcast production or film production. It has many of the same characteristics of a few highly paid individuals creating hundreds of jobs for other Canadians.

As mentioned in our formal presentation, the Canucks alone generated some $70 million of economic activity in my home province of British Columbia. The last several years have been financially very difficult for operation. We lost some $20 million last year, and we're budgeted to lose some $30 million this year ending June 30.

These particular losses over the last couple of years have forced the Canadian-based Vancouver family of more than 25 years of ownership in this league to sell out to U.S. ownership. Our group is now basically owned and controlled by a U.S. owner.

While they are not the only challenges we face as professional sports in Canada, the average tax differential between our league's U.S. teams and Canadian teams, plus the Canadian dollar differential at a 70¢ dollar, would ironically equal the total losses absorbed by our Canucks operation during the last two years.

• 0935

Before I continue on too long about our financial plight, I also want to indicate that the Canucks are fortunate to be able to contribute to the fabric of our communities. Among other activities, we are a major fund-raiser for Canuck Place, a hospice for children. We support various school and hospital programs and provide a centre of excellence to support amateur hockey throughout British Columbia.

While the number of charitable events are increasingly challenging because of the many demands, like the demands upon you as representatives of the government, professional hockey provides an important umbrella and support for charities and amateur hockey throughout Canada.

I very much appreciate the opportunity to take a few minutes today to discuss this very important topic for Canadians.

The Chairman: Thank you, Mr. Bellringer.

Ken Dryden.

[Translation]

Mr. Ken Dryden (President and General Manager, Toronto Maple Leafs, National Hockey League): Mr. Chairman, ladies and gentlemen, thank you very much for your invitation.

[English]

There has been an NHL team in Toronto since the league began in 1917. First called the Arenas, and then the St. Pats, in 1927 the Toronto Maple Leafs were born.

In the next few years, two events happened that were the making of the team and its legacy: the building of Maple Leaf Gardens and a radio broadcast that brought Foster Hewitt's voice to a nation. The building gave the team a place as special as the team aspired to be. Foster Hewitt's voice, through cold, dark, mid-winter nights, made legendary figures of the Leafs' players, bigger than life could ever be. The NHL, the Toronto Maple Leafs, and Maple Leaf Gardens became the repositories of dreams.

A lot has changed in the years since. The Saturday night habit of families sitting in front of their TV screens watching Hockey Night in Canada is now no longer the rule. With many more than two channels to watch and many more other things to do, hockey doesn't hold the same monopoly over Canadians that it once did.

But with so few things of any kind that Canadians share and do together, hockey still holds a unique place in the country's life. One need only listen to coffee break and lunchtime conversations: they still often centre around hockey. Or go down to Maple Leaf Gardens on any Saturday night in the winter. With the lights, the sounds, the crowd, and the action, it's without a doubt still the best show in town.

I took the job as president of the Toronto Maple Leafs because of all that the job entails. In the book Home Game, I refer to hockey as Canada's national theatre. In NHL arenas and minor hockey rinks, each night, vivid human dramas get played out. In the uncontrollable circumstances of a game, we discover who is courageous and who isn't, who is generous or greedy, who quits and who doesn't, what we should do and what we shouldn't. With family and friends, we share that experience. We talk about things we otherwise never talk about in ways we otherwise never do. We learn lessons in family cars and over the dinner table that we learn in no other ways.

In this theatre, no one plays on a bigger stage than an NHL team. One absolute certainty is that people are going to notice the Toronto Maple Leafs. We are vivid dramatic reference points in their lives. So it matters not just what we do, but how we do it. We are important in ways that much larger companies and entities can never be.

In Home Game, I tried to explain why hockey matters in this country. It matters because communities matter. Kids matter. Kids, parents, and grandparents matter. Friends matter. Dreams, hopes, passions, common stories, common experiences, common memories, myths and legends, common imaginations, things that tell us about how we were, how we are, and how we might be—they all matter. Links, bonds, connections, young, old, past, present, east, west, French, English, men, women, abled, disabled, things in common, things to share—they all matter. That is why hockey matters, and that's why I took this job.

• 0940

If the Toronto Maple Leafs are going to be important in all those ways, the Toronto Maple Leafs have to do things right, off the ice and on. And part of doing things right is not just surviving economically and competitively, but succeeding, competing at the top of the league. With the Leafs driving the TV ratings in Canada, it is important for the league that we succeed. It is important for the Canadian people, for dreams and bonds and common stories for new generations, that Canadian teams win the Stanley Cup at least some of the time.

Until recently Canadian teams won most of the time because of what I call the Canadian advantage—that unorchestrated conspiracy of hopes and expectations, demands and rewards that fill the air in those places where a game matters, that makes players play harder and battle longer and win more often. Now Canadian teams lose most of the time because of the Canadian disadvantage—that unorchestrated conspiracy of currency values, tax structures, and public and governmental understandings that, given the fragility of competing at the top, is too much to overcome.

The challenge for me, for the Canadian teams in the NHL, and for this committee is to find ways of minimizing the Canadian disadvantage so the Canadian advantage can work its wonders.

Thank you.

The Chairman: Thank you, Mr. Dryden.

[Translation]

Mr. Ronald Corey (President and Governor, Montreal Canadiens, National Hockey League): Mr. Chairman, ladies and gentlemen, first of all, I'd like to thank you for inviting me to tell you about our point of view today. I plan to use this opportunity to share my perception of the current situation in professional hockey with you, in the interest of everyone, and particularly of hockey fans in Canada.

As you know, Montreal is synonymous with hockey. Sports Illustrated describes the Montreal Canadiens as one of the three great world dynasties of sport and “a symbol of excellence in Canada.” Actually, I think that the link between Montrealers and hockey goes far beyond the sport itself.

There's no doubt that, in sports and, in a broader sense, in our culture overall, our team is a significant source of pride for Montrealers, Quebeckers and Canadians from coast to coast. This pride has been maintained and fully shared by the Molson family, which became associated with the Montreal Canadiens over 40 years ago. Our team, the Montreal Canadiens, has won 24 Stanley Cups, including five consecutive Cups between 1956 and 1960. It won four in the 1960s and six more in the 1970s. The Canadiens have never won less than one Stanley Cup a decade since the creation of the team in 1909, long before the National League. Such a team is a true legend. Players like Maurice and Henri Richard, Harvey Morenz, Jean Béliveau, Doug Harvey, Jacques Plante, Guy Lafleur and others are genuine mythical heroes in Montreal and Canada.

Surely you all remember the ceremonies for the closing of the Forum. They showed how much hockey has become a symbol for Montrealers. Remember the incredible ovation for Maurice Richard. I'd also like to mention that, as part of our contribution to the community, when the old Montreal Forum was closed, we sold some items and gave $500,000, then $400,000 to the United Way, and $100,000 to retired Canadiens players. We play an extremely important role in the Montreal community.

We also recall, like everyone else, the solemn opening of the Molson Centre when the 24 Stanley Cup banners were raised.

• 0945

[English]

Hockey has fused into cultural life in Montreal, but the impact of the Montreal Canadiens is not only a question of legend, myth, and emotion. Our team also makes a significant ongoing contribution to the economy of the Montreal area.

[Translation]

In 1996, the opening of the Molson Centre, a $270 million project, was the crowning achievement of the largest private investment in Montreal in the 1990s. This project alone created 3,800 jobs occupied by Quebeckers and Canadians, for a total payroll of more than $135 million.

Today, the Molson Centre permanently employs 1,486 people full- time and part-time, for over 600 jobs more than the old Forum. Our contribution to government revenues is impressive.

In 1996-97, income taxes and payroll contributions, at the federal and provincial levels, accounted for more than $22 million. GST and QST accounted for another $19 million.

I also take this opportunity to tell you that, last year, the Molson Centre was rated by Performance Magazine, in New York City, as the best entertainment centre having between 15,000 and 20,000 seats. We even had some box-office records, and each time this helps create revenue for the various levels of government.

Property taxes and capital taxes surpassed $11 million. This is a major issue, which I'll come back to later.

So our organization's contribution to the community is a very significant one. Nevertheless, we are going through some difficult times these days. There are four reasons underlying this situation. Allow me first to list them and then explain them.

The first reason is the matter of players' salaries. This is a problem that has to be solved at the League level.

Second, there is the considerable gap between the Canadian dollar and the American dollar, which is obviously linked to sky- rocketing salaries.

Third, there is the ever-increasing support of the various levels of American government for their local hockey franchises.

Fourth, there's the fact that the property taxes we pay at present represent twice what is paid by all the other professional clubs in Canada put together and more than five times what is paid by the 20 American franchises in the League all together.

The first of these issues is extremely important, and we have to deal with it at the league level. Obviously, I'm talking about players' salaries. This is a complex question, heavy with consequences for the future of hockey in Canada. But this is a topic for discussion in a different arena.

As for the difference between the Canadian and American dollars, the problem is clear. It's directly linked to the total payroll. The Montreal Canadiens, like the other Canadian teams, pay their players in American dollars. Straight off, this means a 40 per cent premium on salaries for us. This isn't a temporary problem, but rather a problem we've been living with for years. For instance, it costs us $300,000 more every time the Canadian dollar loses one cent. Eventually, this becomes a major curb on our ability to compete with the American teams.

[English]

Then there is the issue of support by the U.S. government for hockey. With the expansion of NHL franchises throughout North America, that support has become a vital element for teams to compete with each other and force cities to maintain their franchise. In the United States, especially in the south, municipalities and even states compete furiously for major league franchises, providing generous support to obtain them. For American cities, a major franchise is not only economically attractive; it is also a tangible and an emotional confirmation of their success as a community.

U.S. authorities offer many kinds of incentives to attract teams.

[Translation]

Furthermore, I've sat on the National League's expansion committee and I've met 11 groups in seven different U.S. cities. You had to be at these presentations to see the involvement of all levels of government. They're offered all sorts of possibilities, for example,

[English]

a special deal on renting municipality-constructed arenas.

[Translation]

They build arenas. The teams that are going to occupy them are offered some very advantageous deals. There's also a way of funding the construction of these arenas with municipal bonds. We also have all sorts of programs to help build training areas and to meet all the other needs the teams may have.

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In addition, as Glen mentioned a while ago, substantial amounts of money are even given. As an example, I'm going to give you the Nashville Predators, who are going to join the National League next year. The arena is already built. When we went to meet the people, the meeting was conducted in the new arena, which was awaiting the team. The City of Nashville, on top of giving the team the arena, paid $20 million towards the cost of the franchise in the National League, which was $80 million. The club's rent is capped at 5% of the net box office take for each game, and this basically covers the city's operating costs for these games. Finally, the club is exempted from paying all property and school taxes.

Let's compare this now with our situation. All, and I mean all, of the $270 million required to build the Molson Centre was paid by the Molson company. This considerable investment brings me to the last issue which is threatening the team's situation.

When construction of the Molson Centre, which, I repeat, is a major contribution by Molson to the Montreal economy, was complete, we were faced with property taxes and capital taxes amounting to $11,300,000, or more than ten times what is paid in Toronto or Boston, and almost 500 times the $23,000 paid by the Detroit Red Wings.

I'd like to be properly understood on this point. The Montreal Canadiens don't want to get out of paying their fair share of taxes. The Molson companies have always paid their share in this area. I maintain, however, that the level of these taxes shouldn't be arbitrary. When the Canadiens have to pay $11,300,000 in taxes according to an assessment for which there is no possible basis for comparison in Montreal, while the other teams in the National League pay taxes which are clearly lower than ours and 13 teams in the League actually pay nothing, we are in an unfair situation.

We don't expect any favours or special status. We just want to be treated fairly and equitably, like any other taxpayer.

These four issues, players' salaries, the gap between the American dollar and the Canadian dollar, which obviously has an effect on players' salaries, greater government support in the U.S. and the overwhelming taxes we have to pay are all threats to the quality of professional hockey, and for us in Canada, this is an enormous challenge.

I am very happy that the House of Commons Sub-Committee has decided to take a look at this situation. Furthermore, with all due respect, I'd like to suggest that a task force by created, consisting of government and National Hockey League representatives, to follow up the Sub-Committee's report and ensure the implementation of the solutions identified, in order to guarantee the future of the Canadian teams in the National League.

Hockey cannot be taken for granted on the pretext that it has always been part of our life up to now. The world is changing and the world of hockey is changing too.

I wish to thank you once again for inviting me and to assure you that you can count on me for my contribution.

[English]

The Chairman: Thank you, Mr. Corey.

Rod Bryden.

Mr. Rod Bryden (Chairman and Governor, Ottawa Senators, National Hockey League): Mr. Chairman and honourable members, you've heard from five National Hockey League teams with long and illustrious histories. I represent the Ottawa Senators Hockey Club, and our historic performances lie in the future—one of them, I hope, this evening.

The Ottawa Senators Hockey Club and the Corel Centre, however, are already significant generators of economic growth and community development for the Ottawa region. Together with the NHL clubs in the five other Canadian cities, we deliver a significant impact on the economic growth and community development of our country. We ask this committee to recognize this and to recommend measures that will result in the treatment of this business fairly in relation to the treatment of other businesses in Canada.

Our City of Ottawa is driving hard to build a balanced and dynamic economy. It's proud of its role as the home of the Government of Canada, but it's creating its future through private sector growth in knowledge-based industries. These industries would not thrive in our community or in this region without public policies that produce a level playing field in their highly competitive international markets for capital, for people, and for customers.

Nortel announced earlier this year its quarter-billion-dollar investment to expand its technology research and development campus here, which would add 5,000 new people to the more than 50,000 who work for more than 800 companies in the technology sector in Ottawa. Nortel itself already employs more than 10,000 people in Ottawa.

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We have a quality education system, a strong work ethic, a concentration of government research scientists and facilities and a quality urban environment. Together with the surging international demand for high-tech products, a favourable Canadian-U.S. dollar exchange rate and internationally competitive federal and provincial tax credits and grants to support product R and D, this has contributed to build international-scale, knowledge-based industries in Ottawa.

Ottawa has a marketing problem that restrains its growth. Internal confidence and external perception are dominated by the view of Ottawa as a sleepy government town. That perception affects the flow of rich capital and of highly skilled people that are required to fuel the sustained growth of knowledge-based industries. Local and regional governments and the Ottawa-Carleton Economic Development Corporation are focused on this problem and spend millions of dollars a year to try to combat it.

The Ottawa Senators and the Corel Centre that it pays for provide world-class entertainment to Ottawa and bring to Ottawa international notice as a big league city.

Like the technology corporations, we must compete for our talent from and with the best in the world. We must compete for the spending of our ticket buyers and our advertisers against mainly U.S.-produced alternatives. Unlike our friends in the technology industries, we pay 80% of our expenses in U.S. dollars and we receive 80% of our revenues in Canadian dollars. That's the inverse of a typical technology company.

As you know, when running elections if you switch a voter from one side to the other you just lost two. When you have a reverse situation as we have, compared to our technology friends we have about a 70% cost-to-price disadvantage relative to that industry.

Unlike our technology friends, we do not receive tax credits or direct funding treatment that is competitive with the treatment accorded to the same industry by our U.S.-based competition. We ask for fair treatment, not as compared to the United States but as compared to our fellow businesses in Canada and in our own city.

We do not have a local market problem. The people and businesses of Ottawa are delivering fully competitive support for the Ottawa Senators.

For example, in this season just completed we are 10th overall in the National Hockey League's 26 teams in paid attendance, nosed out by a position by a team that's in the smallest market in the National Hockey League, the Edmonton Oilers. We are third among all 26 teams in luxury suites, that is, in the boxes sold per game. We are third overall in all teams in the National Hockey League. And we are in the top five in revenues generated from advertising, signage and promotion within and on the building.

So those things that can be delivered by a local market are being delivered well above the league averages by the market in Ottawa, by both people and businesses. We are hurt by the exchange rate and we require continued support from the National Hockey League both through currency equalization and growth in U.S.- and internationally based revenues. With appropriate and effective league support, we will succeed in the exchange rate environment that works for Canada.

We are being killed by two factors: taxation and private payment for public facilities. Again, the inverse: our U.S. competitors get public payment for their private facilities; we make private payment for public facilities. Our property and capital taxes last year amounted to $4.4 million. When all the teams and all the buildings in the United States are added together—that's 20 teams and their buildings—they paid $4.1 million Canadian. That includes the New York Rangers in Madison Square Garden, in that modest location in the centre of Manhattan, the Chicago Black Hawks in the United Center, the FleetCenter in Boston. The Senators paid more than all 20 of our U.S. competitors combined.

The Montreal Canadiens paid something like three times as much as all U.S. competitors combined. I ask you whether our technology industries would make the investments they're making in Ottawa if that were true of their facilities. Would Nortel be spending a quarter of a billion dollars in Kanata if it faced those kinds of penalties for putting its investments here?

Let me talk about the total tax burden on our tickets. The direct taxes on our tickets range from a low of 20% to a high of 39% of the pre-tax price, depending on the price level. The lower-priced seats pay a higher tax rate because we must charge a fixed two-dollar charge to pay for a four-lane highway interchange on the provincial highway and the connecting four-lane highways that run between that interchange, which we paid for, and another four kilometres away, both of which service the Corel Centre.

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Our family-zone tickets, which we make $15 in total price so that families can come to our games, net us just under $11 and attract a 40% tax rate. What other business in Canada is required to carry that cost?

These are just the most strikingly absurd taxes imposed upon NHL hockey in Ottawa. These taxes alone cost us over $6 million a year. This is money that is skimmed by our government off the top of what our fans pay to watch the Senators, thereby draining our financial strength.

We suffer a competitive disadvantage as a result of our failure, the failure of our teams, to demonstrate to our federal government and our provincial governments that the National Hockey League and the facilities in which it is delivered should be recognized as economic generators for their regions and their country.

Canada may wish that other countries did not subsidize commercial investment in product research and development, but that is part of the international reality. If Canada is to retain and expand its technology-based industries, it must keep the playing field level. We may wish that other countries did not support the export of capital equipment, but the practice is widespread. If Canada is to meet that competition, it must meet it if companies like Bombardier are to thrive and to deliver their dynamism to Quebec and to the rest of Canada.

The forestry industry requires appropriate stumpage fees. Oil and gas and mining require appropriate royalties and tax treatment. Every industrial category in Canada is assessed by the Government of Canada and the provinces. Its value to the country is established. Its international competitive position is reviewed, and the government typically follows two programs. One is to work with other countries to reduce international subsidies to get the tax cost down to taxpayers. Secondly, if it's an industry we wish to hold on to, we take the appropriate actions to level the playing field.

All of us wish that U.S. cities did not bid with their taxpayers' money against each other and against Canadian cities for NHL hockey in their city. But they do. The result is that the Ottawa Senators and other Canadian clubs are denied revenues that flow annually to our U.S. competitors. They are not going to stop because we don't like it.

The Corel Centre suite leases and signage revenue does not go to our hockey club, because it is needed to pay for the capital invested in the building. Our competitors, such as the Florida Panthers, keep those revenues because the local government pays for the building costs. In the coming season the net disadvantage between us and the Florida Panthers on that one factor, not including taxes, will be $15 million a year.

The Nashville example summarized in the league submission done by Mr. Corey is even more generous than Florida's. Neither of them is unique.

Ottawa can be sound and successful without matching U.S. support because hockey is Ottawa's sport. Fan and business support is much more concentrated and much more loyal than that in U.S. cities. We don't need to have private facilities paid for with public money, but we cannot continue to pay for public facilities with private money.

Would this committee or someone you speak to please find a way that either the federal government or the provincial government pays for that highway interchange on that great dream established by John Diefenbaker in 1958 called the TransCanada Highway? Undoubtedly, we own the only four-lane private interchange on that highway. I would love to give it to somebody.

We do not need operating subsidies. We do need to have a tax treatment that is appropriately designed for this industry to provide a similar reduction in net taxes to that provided to other industries that are highly internationally focused, most notably the R and D tax credits that reduce the effective cost of doing business for technology-based businesses in Canada.

For NHL hockey and its buildings, perhaps a credit that would be based on a percentage of revenues and deductible from the federal and provincial tax payable could be appropriate. The value of the credit to any club would reflect their success in maintaining the support of their fan base. It would not reflect the club's expenses. This would encourage the delivery of maximum value to the fans at minimum cost.

The Ottawa Senators are proud of our contribution to the Ottawa community and to our economy. We are proud of the response of this market. If the burden of federal and provincial taxes is reduced, as it is for other important industries in Canada, and public infrastucture is paid for with public money, as it is for other industries in Canada, NHL hockey in Ottawa will be strong and highly competitive into the next millennium.

Let me conclude by saying that every member of the committee was invited to join us to see the NHL at work this evening. I hope you will come and do that. Canadians often think that if you're doing research, which is also fun, it's probably bad. Just pretend this is a fishing industry and you have to go out on a boat tonight instead.

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When you come you will see 50 hockey players, and because they are there playing their sport, which is the most exciting in the world, there will be 1,300 people working tonight who wouldn't be working without them. We should remember that the 2,800 construction workers who built that building built it in the lowest period of construction within the last 25 years in Ottawa. They were happy for the job.

The $15 million of taxes we paid into this region at that time was equal to the amount the region had in deficit that year and to the budget squeeze that was going on across the province.

What you will see when you see NHL hockey at work tonight is a very important industry. You ask any of the 1,300 people working there if they like their job; they'll tell you they find it a very valuable job. We value hockey. Our community values hockey, and we appreciate the opportunity to present it to the committee.

The Chairman: Thank you, Mr. Bryden.

Mr. Bettman.

Mr. Gary Bettman: I just wanted to thank you again, Mr. Chairman and honourable members of the committee, for giving us the opportunity to be with you today to open a dialogue on our sport and its place in Canada. I'd like to very briefly offer a few points in summation.

NHL hockey, the league and its teams, directly and indirectly generate more than 12,000 jobs in Canada. The teams in the league pay more than $300 million a year in wages and benefits. Our six teams have been responsible for spending almost $1 billion this decade in arena construction and infrastructure improvements.

The six Canadian teams pay $211 million in direct taxes to all levels of government. This total represents 40% of all revenues, not taxable income. Over $1 billion in lottery revenues have been produced, based on the results of NHL games. A number of Canadian industries—television, film, aerospace technology, to name a few—have benefited and thrived in Canada, working in partnership with government entities to everyone's mutual benefit.

We hope this subcommittee will acknowledge that more than just a sport and a part of Canadian culture, NHL hockey represents an important industry, a significant and vital part of the Canadian economy, particularly in the cities in which our teams are located.

The burdens under which our teams operate are many, and we hope the considerations of fairness and competitiveness, particularly with respect to the treatment of other Canadian industries, will lead to further discussion. We would like to work with you and we pledge our cooperation. Thank you again for your time and attention.

The Chairman: Thank you very much, Mr. Bettman.

We will now begin with questions. Mr. Manning.

Mr. Preston Manning (Calgary Southwest, Ref.): Mr. Chairman, I'd like to thank the commissioner, the owners and the managers who are here for their presentation and their willingness to dialogue.

On a personal note, I should say that hockey has created some political problems for me. My family was raised in Edmonton. I lived in Edmonton. We have five children. They're all fanatical fans of the Edmonton Oilers, but I represent a Calgary constituency.

When I take my two boys to Harley's building they cheer for Glen's team, and this costs me about 300 votes a game, I estimate. I cope with this in a typically honourable political fashion. I wear a baseball cap and dark glasses and hope that my constituents don't recognize me with these fanatical Oiler fans.

I'm sure I'm saying this on behalf of all of us. You are here not just among friends but you are also here among fans. No matter where we come from in the country, all of us have a deep commitment to hockey and we could share stories with you similar to the ones that Harley shared with us.

I'd like to get right to the point. A number of you referred to the need for a level playing field—I don't know what the hockey equivalent is, Mr. Chairman, a level rink perhaps—and the need for doing away with the Canadian disadvantage. That seems to focus at on least two areas, one on taxes and one on subsidies.

I know you've touched on this in your brief, but could you elaborate a little bit more on how big is the competitive disadvantage to the Canadian clubs as a whole from the tax standpoint? If you had one single recommendation for fixing that, what would it be?

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Mr. Gary Bettman: I believe there's a chart in the submission we made that indicates on average the tax differential between what is paid by an average Canadian team and an average U.S. team. It's approximately $7 million a year. I would venture to say that no U.S. team comes close to paying the average 40% of gross revenue dollars off the top that these Canadian teams pay.

We're not prepared at this point to offer a recommendation on subsidy or approach. We think it would be a terrific starting point if first there were a recognition that, more than a sport, we are an important industry; and secondly, that our teams in Canada are operating at a burdensome, unfair and uncompetitive disadvantage. If that is the beginning of the dialogue, we believe we will have taken an enormous first step.

Mr. Preston Manning: You will find a large number of members of Parliament who think the tax levels in this country are too high. They're killing jobs, and not just jobs in your industry; they're killing business in other areas as well. But the great thing about hockey is that large numbers of Canadians who won't pay attention to this argument when it's made in relation to other industries will pay attention to it when it's made in relation to hockey. So you ought to put that chart on Hockey Night in Canada.

My second point is the same question in relation to subsidy. I know you have covered this in your brief, but I think it's important for you to have a chance to say it orally. If you could summarize, exactly how big is this competitive disadvantage of Canadian clubs due to the subsidy question—the aggregate? How big a barrier are we talking about here, and is there any specific recommendation you have for coming to grips with that?

Mr. Gary Bettman: The subsidization of building arenas and the infrastructure attendant to the construction of those arenas is probably the biggest issue. That's not to say there aren't, in a couple of the larger cities, privately built arenas. But the fact is that these six teams in the 1990s have spent collectively almost $1 billion for the construction or renovation of arenas and for the attendant infrastructure improvements. I don't think there's any arena in the United States where infrastructure has been paid for privately.

The most oft-cited example here in Ottawa of the interchange being paid for by the arena and the team is virtually unheard of anywhere else. I believe in some measure, either through bonding, direct grants or interest-free loans, there has been a great deal of assistance given to buildings in the United States. Teams in the United States construct these new buildings because there is a real sense and a reality to it that arenas are good for the communities they're in.

It's more than the 41 or 50 nights of hockey. It's family shows, concerts and conventions. There's a whole host—between 150 and 250 nights of the year—of activities that are attendant to having an arena, and that spawns a whole host of other economic activities. Communities, states and other municipalities have recognized the benefit of that.

I noticed in the Toronto newspaper on Friday there was some discussion about whether or not the Toronto Maple Leafs and the Air Canada Centre should pay for a $40 million improvement to the new subway station because they have to enlarge the subway platform to handle all the people going to the game. That dialogue is something I don't think would even be uttered in the United States, because the cost of subways, roads and attendant infrastructure is borne by the municipalities.

Mr. Preston Manning: One last question, Mr. Chairman.

It seems to us there's no way Canada will be able to match the subsidy levels in the United States. You know our two countries have tried, through NAFTA, to work at eliminating or reducing subsidies. If these subsidies were paid by the national government they would be subject to NAFTA rules and there'd be a dispute settling mechanism. Those subsidies would either be eliminated or there would be some subsidy equalization program worked out to establish the level playing field.

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Again, focusing on the subsidy problem, if Canada won't be able to match those levels and get competitive that way, do you have any suggestions? You have a currency equalization program. Do you have some proposals for a subsidy equalization program that would at least establish a level playing field, no matter what the different levels of subsidies were in different markets or in different countries?

Mr. Gary Bettman: I don't believe we're looking to have the government in Canada, at any level, equal what's going on in the United States, not just for hockey but for all sports. The gentlemen up here with me today believe the burdens that are being imposed upon their teams and their buildings after the private investment is made are, first and foremost, major problems for them. It is not a burden in terms of not subsidizing these teams and buildings to the extent the United States is. You're very heavily taxing the private investment for what are public facilities.

I think that begins to state the problem, to the extent that there would be a sense of fairness and equity that Rod Bryden shouldn't pay for a piece of the highway; the Maple Leafs shouldn't pay for a subway platform; the Calgary Flames shouldn't have had to pay $42 million to acquire and renovate a building they don't even own; or the Montreal Canadians, while they were constructing the building, shouldn't have had to pay parking meter revenue that was lost at the construction site.

There is a whole host of things that have made the environment less hospitable. Having said that, to the extent that people think this is really unfair and they want to go further, it is not a dialogue we would discourage.

The Chairman: Thank you very much, Mr. Manning.

Mr. Coderre.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): First of all, you'll allow me, Mr. Chairman, as a fan myself, to congratulate the Canadiens on their fine victory last night. I'm a bit sad to see that Ken Dryden is no longer with the Maple Leafs, since I'm a former goalie and he was one of my idols. But he's going to remain one, since we can talk about the 1970s.

I'd also like to congratulate the Edmonton Oilers because it was announced yesterday that their governors have accepted the offer made by the community. We have to emphasize the efforts made by people who get involved locally. When I hear this sort of thing, I think it's important for us to evaluate the whole question of partnerships between the government, the private sector and professional sport.

Environment conducive to investment and cooperation: these are the words that came to mind when I heard the governors. For me, Mr. Chairman, saving professional hockey means saving our identity. It's also important to understand that it's through this committee that we can finally adjust our clocks and say that professional hockey is a job-creating industry, which makes money for the government, money which is used to pay for hospitals and social programs. Maybe it's time people stopped continually saying it's just a bunch of young millionaires playing around with a little puck, without any real economic impact.

I'd like to ask Mr. Bettman and Mr. Corey a question. If we talk about building a partnership and concluding a tax pact, are you prepared on your side to show your books, to sit down with us and take a clear and concrete look at what a professional hockey team brings in and what the revenues and expenditures are? We could, in keeping with the transparency you demonstrated yesterday, let Canadians know what the situation is. We talk about a relationship between governments and governors and their professional hockey teams. I think that the people are also entitled to some transparency when it comes to your books.

Mr. Ronald Corey: Mr. Coderre, thank you for your question. Obviously, for the Canadiens' hockey club, if the committee proceeds with its work, it will have to look at our books, and we will be happy to show them. Transparency is absolutely mandatory in this matter. We are a public company and everyone knows what our profits were last year: after debt service and taxes, they amounted to some $5.5 million, with an investment of $270 million.

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Within a couple of months, when we've compiled the figures, you'll be able to find out the profits we made during the year that's just ended. As far as I'm concerned, yes, you're welcome, yes, we're going to show you our books and, yes, we're going to share all this information with the members of your committee.

Mr. Denis Coderre: Thank you. Now, there's talk of a certain fragility; they're saying that if we don't settle the taxation issue, we may lose some franchises. A number of American cities are just waiting for the chance to pick up our Canadian franchises. If the government agreed to conclude a tax pact with you—because I don't think we should talk in terms of direct subsidies, but rather in terms of a tax pact—do you think you could guarantee us that the franchises would stay in Canada?

[English]

Mr. Gary Bettman: We have consistently opposed and discouraged the relocation of franchises. While unfortunately in the last few years we have had two franchises move from Canada to the United States, we've also had two franchises move within the United States to other locations. Our efforts, particularly in Edmonton, have been well chronicled, and I am delighted that it appears we have been successful in keeping the Oilers in Edmonton.

We are open to any dialogue. Our goal is to make sure we have six strong, healthy, vibrant and very competitive Canadian teams in the NHL. We want to make our league even stronger in Canada. Certainly we do not want to do anything that would cause it to diminish.

[Translation]

Mr. Denis Coderre: Mr. Bettman, if we don't make this tax pact in the next five years, what teams are going to remain in Canada? Of the six franchises in front of me, which ones will stay here and which ones will leave us?

[English]

Mr. Gary Bettman: I am not prepared to suggest that a less than receptive response to the issues we're raising will spell the end of our franchises in Canada, because I am not in a position, nor is anyone, to answer that penultimate question. However, I think it's clear the economic condition of all our Canadian teams will continue to deteriorate, and to paraphrase Ken Dryden's eloquence, the teams will be less competitive than they should be. Frankly, we think the country for which hockey is the national sport deserves better.

So I am not here to either suggest or threaten that we see the end of hockey in Canada, but hockey at its highest level will not be able to thrive as we believe it should.

[Translation]

Mr. Denis Coderre: It's clear that the question of players' salaries doesn't do any good. As far as perception goes, I think we're doing a big job this morning, adjusting our clocks. The professional sports industry must be considered like any industry that makes big dividends for the government, that creates jobs and has some important spin-offs for cities.

Nevertheless, it's clear that when we bring up the question of salary caps, most of the time, we hear people say you mustn't invest in professional teams because you can't control the revenue, indeed, because of these salaries. Now, I'm all in favour of a tax pact and I have promoted it repeatedly. However, there may be a catch. Maybe it's the weak link in the chain. It's the anti-trust law in the U.S. Is there at present a specific way to negotiate a salary cap with players? I get the feeling that players among themselves and the players' union can talk to each other and agree every day. A player can call up and say to them, “Look, I just signed my contract and I got $300,000 more,” while two owners can't talk to each other. They'd even run the risk of ending up in jail. Isn't there some way of dealing with this problem, with regard to the U.S.?

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[English]

Mr. Gary Bettman: Hopefully not at the risk of imprisonment. But the fact is that you raise a very important and difficult issue. There is no question that players' salaries are escalating quickly, although it is not happening just for the Canadian NHL teams. It is a league-wide issue. It affects all of the teams. It particularly affects small-market teams in the United States as well. Salaries are rising in all professional sports. The NBA, which has a salary cap, just announced it is reopening its collective bargaining agreement because that system apparently is not working as well as the NBA would like.

The issue of our relationship with our players is difficult and complex, and it is one that we have to deal with our players on across the bargaining table. It's not something that we can unilaterally deal with. It's not something—at least I haven't been able to envision this—that a legislative body could order, unless, of course, you could figure out how to make it applicable in both countries, and that might make things easier.

But seriously and to the point, we have a collective bargaining agreement that is giving the league stability, and hopefully, for a period of time, will avoid the repetition of a lockout like we saw in 1994 when we lost almost half of the season. If this collective bargaining agreement, over time, does not work as well as it should, if it does not let our teams control their salaries as much as they should, as necessary, then we will have to deal with that across the table when this collective bargaining agreement is up. And we will have to make sure we have a system going forward that we can live with as teams, a system that can keep all of our teams healthy. If that requires us to have difficult negotiations again, and even if the spectre of another work stoppage rears its head, that is something we'll have to deal with at the time.

Salaries, though, are one element of a complex economic picture, and it's not one that we run away from.

[Translation]

Mr. Denis Coderre: I understand, Mr. Chairman, that the video music was from the Titanic and that reference was not being made to the film but to the love story. Thank you very much.

Some hon. members: Oh! Oh!

[English]

The Chairman: Thank you very much, Mr. Coderre.

I just want to say this to members: shorter preambles. And just so everybody understands the rules here, I'm moving back and forth, with ten minutes for the opposition and ten minutes for the government.

Mr. Proud, you still have three or four minutes left in that first ten minutes, and then we will go to Madame Tremblay.

Mr. George Proud (Hillsborough, Lib.): Thank you, Mr. Chairman.

Gentlemen, I welcome you here today. This is a very special day. As Mr. Manning said, most of us around this table, I would say, are hockey fans, as am I. Most people around the table wouldn't believe it, but I can remember the days before television when Hockey Night in Canada was one of the most important things you grew up with. Harley gave a us throwback to those days.

Unlike most of my peers in the town I grew up in, who were Toronto Maple Leafs fans, I was a Montreal Canadiens fan, and still am—

Voices: Oh, oh!

Mr. George Proud: —and I have paid for that in various ways throughout my years.

Gentlemen, to talk about the serious issue that we're here to talk about today, which is hockey and the outlook for the Canadian teams, we have people appear before us, university professors and such, and now there's a book out on the market telling us that the things you're talking about and the things we always believed—that there's a great economic impact because of hockey franchises in the city—that this isn't the case. We're seeing more and more newspaper stories and TV stories to this effect.

This is a charged issue. For instance, last week the United States ambassador to Canada said that Canada should join the subsidies. There's been a recommendation for taking the issue to NAFTA.

We're talking about the issue of economic benefit and the justification of government subsidies. With all of the priorities of governments today and all of the ways that governments have to get around paying off their debts and their deficits that we've run up over the last 30 years, my problem, I guess, in selling to my colleagues and to my constituents this business of government....

If I can just go back for a minute, when we were kids growing up, we thought all these people who owned NHL teams had a bottomless pit of money and it was no problem for them, and I think the general public today still feels that way.

I probably agree that we have to do something to save them, and I know we have to do something to save this great game that is so Canadian. My problem is how I am going to sell to the general public that we need to do certain things. I agree; one of the best things I've heard yet is that you're saying you should be treated like other businesses. I'll ask you to reply to that.

• 1030

Mr. Gary Bettman: The issue as you frame it is really the point. I've been in professional sports for more than 20 years and I've heard the economists spout their theories on a whole range of issues generally contrary to the interests of management and the leagues, be it in player relations or in issues such as these. The best empirical data we have, which is on the basis of the conduct of a great number of cities in North America, is that cities are prepared to make investments in acquiring and attracting major league sports teams because they think it's good business.

In addition, there is less marketplace, if you will. The Province of Alberta, under Premier Ralph Klein, in 1994-95 commissioned a study on the economic impact of having the Edmonton Oilers and the Calgary Flames. I believe we refer to this in our submission. The economic impact of the Flames was somewhere approximating $70 million a year and the economic impact of the Oilers was around $60 million a year. This is from a study commissioned by the Alberta government. We believe our teams and their arenas are economic engines. They provide jobs, they provide a traffic flow of commerce in the areas they inhabit.

In discussions I've had over the year, including with Mayor Duerr of Calgary, he has equated, not just to me but publicly, a team and an arena with the anchor tenant in a shopping mall. I believe his background is real estate development and shopping mall development, and he said sometimes when you're building a large shopping mall you give a favourable deal to the anchor tenants because that's what fills out the mall and that's what makes the mall viable. We believe our teams and their arenas are that type of economic engine in their local communities, and that's without talking about the civic involvement, both in hockey and in charitable causes, that goes on at all levels.

I believe the testimony before this committee previously was that major, junior, and minor hockey is a $1 billion industry in and of itself. These individuals and the people they represent have made a $1 billion investment in this decade. The issue is whether you think that is an investment that is worth while. We're not asking this committee to make the investment. These gentlemen made the investment because they thought it was good business. The issue is what burdens they're being asked to carry, having already made that investment.

Mr. George Proud: Thank you.

The Chairman: Madame Tremblay.

[Translation]

Ms. Suzanne Tremblay (Rimouski—Mitis, BQ): Good morning, gentlemen. First I would like to congratulate you on the quality of the documents you have submitted to us in both of Canada's official languages. It's very pleasant to see that. There's only one hitch: I just got them this morning. I'll read them and ask you supplementary questions when I've analysed them. For the time being, I have to base my comments on what I've learned up to now and what I've been able to gather from listening to your presentations.

I too would also like to reset the clocks and say to these gentlemen that the committee has taken no position. The committee has a very active lobbyist in the person of Mr. Coderre, but we haven't taken any position one way or another. We haven't yet submitted our report and made our recommendations.

I appreciate your transparency, Mr. Corey. I understand your discouragement about making profits of $5 million when some of your players are making a bit more than that. Your profits amount to $5 million Canadian, which isn't very much compared to the salaries of some players.

I have the good fortune to come from a city where hockey is very popular, since I live in Rimouski. Probably, in your next draft, we'll see one of our good players leave, Mr. Corey, even if he's no match for some of the killers in the National League. You should sign up this defence player, because he's the most brilliant one I've seen in the past 20 years.

• 1035

[English]

The Chairman: That is definitely a conflict of interest.

[Translation]

Ms. Suzanne Tremblay: I was told he was good, but too small.

[English]

The Chairman: Excuse me, Madame Tremblay. Would you like to mention this? I think many people would like to hear the name of this particular person you're talking about.

[Translation]

Ms. Suzanne Tremblay: It's Walser, the one who broke the Major Junior League record.

Mr. Rod Bryden, of the Ottawa Senators, talked about two factors that were killing them. I'd like to address my remarks to the President of the National League and to you all, gentlemen. I think there's something you've forgotten: we've put more and more clothes on the players and hockey has become more and more violent. When we watch goalies fighting together, it's a far cry from the days of Ken Dryden.

Also, Jean-Marc Pelletier, the Rimouski goalie, looks like you a bit, physically. Still, he's too young to have seen you play, so he doesn't put both his hands on his stick the way he might.

Players are paid a lot of money now just to injure others. Could the National League show some imagination and change the rules? I was all over my riding for two weeks during the Easter recess and I was there again yesterday and I gathered a lot of ideas. People tell me that it should be like in some other sports: if a team scores a goal when it's shorthanded, it counts for two points, and if it scores a goal on a penalty shot, it counts for three. As was suggested on television, maybe a player who injures another one should be suspended until the injured player comes back to the game so that the National League can get back its credentials.

I'm crazy about hockey, you know, and I'm crazy about the Canadiens. My family lived in the same alley as Mr. Butch Bouchard's family. My older brothers skated in the alley with Butch Bouchard. Hockey's something I've known about for a very long time. I was at the Forum for the riot in the stands. There were lots of us because it only cost $1 to go to a hockey game in those days. We're a long way from those days.

Hockey has to restore its reputation and clean up its act. As Mr. Coderre said, an agreement really has to be reached on salaries. Maybe a maximum could be set per team, like in the National Basketball Association. Some players might have to accept a salary cut so that their team could attract a star and win. Also, something should also be done to prevent a wealthy owner who has a company other than hockey that brings him extraordinary revenues from going and buying players like that.

Your frequent participation in committees doesn't seem to be producing results. Hockey should be made more dynamic. Is it really possible to settle the issue of salary caps?

[English]

Mr. Gary Bettman: I am fascinated by some of your suggestions, and maybe at another time I'd like to discuss the game and some of the other ideas you have for modifying the rules.

With respect to the fighting point, over the past few years fighting has consistently been de-emphasized with a series of rule changes. We are probably the only sport now where you do not see bench-clearing brawls any longer. Fighting is actually down this year. We average less than one fight a game. It has been an incidental part of the game, but it has been a longstanding part of the game. How our fans react to the game is always important because it is important that our fans watch on television and fill the arenas.

Some of you may have heard that I gave a speech to the Canadian Club in Toronto a couple of weeks ago and I was asked a very similar question. I asked for a show of hands as to how many people in the room felt we should get rid of fighting and how many people felt we should leave fighting the way it is. That may have been a slightly skewed audience, but it was probably about two-thirds to one-third to leave it the way it is. Having said that, that part of the game has been de-emphasized, and bearing in mind that we have a very physical game, occasionally there is an outbreak of fighting.

• 1040

On your question of salaries, after the NFL's new television agreements, I believe we will have the lowest average salary per player of the four major professional sports. That doesn't necessarily mean that our salaries aren't too high, but relative to the systems that are in place in the other sports, our system still provides the lowest average salary.

As you may recall, in 1994 we made a number of suggestions as to what types of systems we might put in place for our players. This is a matter that we must collectively bargain. The result was a 100-day-plus lockout and no hockey for half the season. We believe we have a system that enables each of the teams to set a payroll level that they want to be at. There is nothing in this system that is inherently inflationary, but our teams are competitive and they bid on each other's players, notwithstanding the fact that we have the most restrictive free agency system of all the sports. There is generally a trade-off between player movement, restrictive free agency and whether or not there are other artificial restraints that can be put in place.

If the system we have doesn't work over the next few years, then we will have to do something about it—and we will. If that means we must have difficult negotiations with our players association, that is not something I would look forward to but it is something that, having had a long period of labour peace, which this sport will have had by the end of this collective bargaining agreement—if we need a new system then we will get a new system, and we will do what we have to do to get one.

[Translation]

Ms. Suzanne Tremblay: You said that there was less fighting. I recognize that you play a physical sport, but it seems to me that, this year, the list of serious injuries was very long. There are far too many concussions and that remains an extremely important question.

To get back to the question of salaries, people can't take it seriously when the Ottawa Senators give a contract like the one they signed with Alexandre Daigle, who at age 18 had never played. It's not surprising that the franchises have trouble. I watch the young player from Rimouski who at 18 plays extremely well for $50 a week. Maybe that's much too little, $50 a week, but if he were signed up for $15,000,000 next year, that would be just as exaggerated.

That's why it's hard for ordinary people to understand why we'd even think about helping you. Notwithstanding the fact that you say it's a big industry, nobody buys it. What people remember is that we're thinking about helping millionaires, while there are people who go hungry, children at school who go hungry. If the government has money, it should be using it to help these people. It shouldn't be giving it to people who already have too much. We have the impression that, since your players are already well paid, we wouldn't really be helping you, because if we helped you and you didn't cap your salaries, you'd have to give them even more. You'd come back to see us and tell us we didn't give you enough.

In a society, it's to be expected that those who have a bit of money share the taxes. When we pay income tax, it's because we've got money. People who are poor don't pay income tax. I know your players pay taxes, but me too, I pay them.

I won't come back to a comparison with the Americans and NAFTA, like Mr. Manning. Something else has got to happen before we give you any money.

[English]

Mr. Gary Bettman: Let me try to answer your points one at a time. Injuries are always a concern for us. I believe the injury rate this season is consistent with prior seasons. The issue of concussions, however, is one that is getting a lot more attention. We have a panel of doctors that has implemented a program for the treatment and study of concussions and whether or not they are a problem. That committee told me as recently as 10 days ago that their belief is that the incidence of concussions is no greater than it has been, it is just being better diagnosed and treated.

In the old days, even when Ken or Glen were playing hockey, if you were subject to a hit that would result in a concussion, you might sit on the bench for an extra shift, and then you would go out and skate.

• 1045

Our doctors are being much more conservative and forthcoming in the treatment of concussions. In addition, we are not quite sure—that is one of the reasons for the study—what is causing the concussions. We now have a rule to get all of our players into certified helmets, but the helmet and the hit to the head itself may not be the cause of the concussion. It may be a hit to the jaw, or it may be that we now need mandatory mouthpieces. This is something that is a major concern to us and it is something we are continuing to work on. We are studying footage and reporting incidents, and the doctors are quite vigilant in this regard.

With respect to Mr. Daigle's contract, and I don't mean to pick on Mr. Bryden, there were a lot of people in the league—probably the people on the 25 other teams—who questioned whether that was a sensible contract. However, one of the results of that contract was that we did get a capped or restrictive system for entry-level players. There is now a limit on how much salary a player can be played in his first three years in the league. We have been able to negotiate improvements in the course of collective bargaining with the players, so we haven't yet seen a repetition of that kind of contract.

In the final analysis, any system we want in place to govern how much our players get paid...and please remember that our players are world-class athletes and we are in the entertainment and sports business, and even though we have the lowest average salary, they are still high salaries by ordinary standards, and we recognize that. The fact is that entertainers and athletes are generally well compensated. In part that reflects the fact that they have a very short period of time during which they can earn these large sums of money.

But any system we would want to put into place must be collectively bargained with the players. The players association, on behalf of the players, would have to agree to it. The last two times this league negotiated with its players association, work stoppages were the result—one in 1992 during the play-offs, and the lockout in 1994. My hope is that either this system will work and we can continue to march off into the sunset in peace and tranquillity and salaries will begin to slow, or we will be in a situation where we need a more restrictive system.

I am not overly optimistic that will come without a price, but if that is what is necessary at the time, we will have to deal with it then. As I said before, we will do what it takes. When this collective bargaining agreement is over and we have all the data in terms of whether it worked or didn't work, we will do whatever is necessary to make sure we have a sensible system going forward, whatever that system is.

The Chairman: Thank you, Mr. Bettman and Madame Tremblay.

We will split the next 10 minutes with Mr. O'Brien and Mr. Iftody.

Mr. Pat O'Brien (London—Fanshawe, Lib.): Thank you, Mr. Chairman.

In the spirit of declaring our hockey loyalties, since the Montreal Canadiens were founded by Ambrose O'Brien, O'Briens everywhere are or should be Montreal Canadiens fans, and we consider Ken Dryden a Canadien on loan to Toronto.

Some hon. members: Hear, hear!

Mr. Pat O'Brien: Having said that, Mr. Chairman, this subcommittee exists to look at the business side of sport, and specifically hockey today. From a business point of view I am hearing that it doesn't make a lot of sense to have an NHL franchise in Canada. I hope that is wrong, but that is the implicit message one could draw from the whole consideration of the matter.

As a teacher of history, from a business point of view this country has never made sense, and it exists despite the bottom-line business point of view. Just as government supported the CPR and the St. Lawrence Seaway because the bottom line ultimately did not matter—otherwise we would be part of the U.S.—I have no hesitation in saying that I think government has to be involved in financially supporting sport in this country, including professional sport, and specifically today the NHL, in whatever way we can.

Mr. Bryden put it very well—we need to have a level rink, a level ice surface, for NHL franchises so that they operate on a competitive level or under the same set of rules as do other businesses in Canada.

• 1050

I'd like to ask both Mr. Bryden and Mr. Dryden what federal government help they see in helping to level the rink. Most of the initiatives I have heard about are local or municipal, or state or provincial. Specifically, what can and should the federal Government of Canada do? Besides being a Canadiens fan, I am now an avid fan of all Canadian franchises, and I would hate to see any more of them lost.

Specifically, what should the federal government do? Ken Dryden spoke of minimizing the Canadian disadvantage. How specifically can the federal government do that?

Mr. Rod Bryden: I'll make the first comment.

I believe that while taxation isn't the only problem, it is the most effectively and appropriately applied solution. It's not always the case that you solve a problem by working away at the problem. The solution isn't always exactly where the problem came from. However, I believe it should be a national policy, as it is with every other industry.

The City of Kanata, for example, doesn't subsidize Nortel to put its facilities in Kanata. There is no question that the City of Kanata and the Ottawa region benefit more than does Newfoundland, for example, from a national policy that supports technology, research and development. That's a fact. But you don't ask the municipality where the business happens to land to pay the bill.

It is a national issue. The single biggest problem right now is the exchange rate. That's a national issue. We are in an international business where our entire business is dominated by international trade factors, but we pay GST.

As you know, one of the driving forces behind getting rid of the manufacturers sales tax and going to the GST was to ensure that companies that were internationally competitive didn't have a tax imposed on them at home that propped up the price of their products internationally and made them uncompetitive. Yet in a highly internationally competitive business, we pay GST on our tickets, on the revenues from our suites, on our signage, and on our advertising.

So I believe the right place for the solution to be defined and negotiated is the Government of Canada. I believe it should be participated in by the provinces in some fashion, much as other national programs usually are.

I also think it's important that we have something that resolves the problem before all the teams become uncompetitive. I shudder at the prospect of a multi-sector, tri-level—some property tax, some GST, some sales tax, some lottery.... I shudder at how long it would take to sort that out.

I believe the appropriate approach—this is my personal position and not the league's; Gary is probably shuddering and wondering what I am going to say now—is that it should be led by and principally paid by the Government of Canada. I believe the simplest way to apply it is to assess a percentage against revenues, because revenues have to be generated from the local community you're trying to sell your product to. It would mean that if a community can't provide the revenue base to make it viable, with this regime in place, it automatically doesn't have NHL hockey.

If it's a matter of making payments, how do you decide how small is too small, and how big is too big? I suggest that we have a percentage applied to revenues generated from all sources of the enterprise. An absolute maximum should be set on how much in any single enterprise—combining both the team or two teams and the building—could be recovered under that, much as there is in many other tax credit programs, and that this credit would be calculated and deducted from federal or provincial taxes otherwise payable from any source. It would leave all other tax regimes in place. It would simply make a judgment and have a basis on which to calculate it and subtract it from your federal or provincial taxes payable.

As you know, the municipalities have suffered from being at the bottom of the pyramid. Each level of government has pushed its problems down to the next level. There wasn't anywhere else to push it at the municipal level, and they don't have any money. That's one reason why they're not going to solve the problem, as well as the fact that it is out of sync with other industries that the local municipality pay for a national policy.

Mr. Ken Dryden: Beyond the specifics that Mr. Bryden offered, I think what the federal government can do is what it is doing with this committee and with what will flow from this committee. This sort of discussion would not have happened at a provincial level, or it would have an audience that would only be a provincial audience. It wouldn't happen on a local level.

• 1055

I think the way in which you characterize the country is certainly my understanding of this country. It is a place where we make it make sense, and what we have learned through our history is that we don't have the luxury of proceeding in strictly a private-sector-generated way or in a strictly government-directed way. We find a way. If one doesn't quite offer enough, the other pitches in. It's the history of our local lives, and in smaller communities it's our history across the country. I think that what is very useful, and what I found most useful about all of this, is to try to find some kind of hook, some kind of understanding of this, that allows us to proceed most easily to focus on what is needed.

I think that perhaps that focus, as Rod Bryden said earlier in his remarks, is to think of this as an industry. All of our lives we grew up with sport with the idea that sport was a world apart, sport was something different. It was something that was purposely different, something that we wanted always to be different, something that involved our kids, something that involved a different set of rules, a different code of behaviour, something that we wanted separated from the rough and tumble of the rest of the world.

The fact of life of the last 50 years, and most visibly and most clearly in the last 10 and 20 years, is that sport is very much part of the mainstream of the rest of the world that goes on. It lives by the same rules, the same laws apply.

In terms of the comments that Madame Tremblay made earlier in terms of salaries and caps and so on, the fact of life is that once players were attached to teams for their entire careers; then players in recent years have become part of the regular labour market. You can come when you want; you can go, to some extent, when you want. It's far more restrictive than in regular circumstances but still much more the way things are in that larger world.

I think what becomes important in that regard is that if in fact sport offers all of those things that we want it to offer on the one side, what the infrastructure for it is, what allows it to be what it is, is the fact that it is very much part of the regular economic and social world. To think of it that way, to use our imaginations in that way, to use our experiences that way, as governments, as business and so on, so that we don't get caught in the problem of sport being something different.... No, it isn't in its infrastructure, and so we need to approach it in that way and, as you said, make it make sense.

The Chairman: Thank you very much, Mr. Dryden. Thanks, Mr. O'Brien.

Now, Mr. Iftody. And the clock is pushing us here, so I'd ask for a short question and shorter answers, and then we would move to Mr. Riis.

Mr. David Iftody (Provencher, Lib.): Thank you, Mr. Chairman. Thank you, gentlemen, for your presentation and your accompanying documents.

I represent a community just outside of Winnipeg, and like many Manitobans, of course I was very disappointed at the loss of our hockey club. Notwithstanding some interventions in that particular scenario from the Government of Canada for infrastructure funding for a new proposed $125 million arena, we still lost the club.

In the primary discussions at that time—and it was around the time of the salary negotiations in the NHL—there was a concern, I think, among Manitobans in particular about the competition and our ability or inability within that market to compete with escalating salaries in the NHL.

• 1100

I previously drew to the attention of John Tory, the commissioner of the CFL, that at the same time as we were losing our hockey club in Winnipeg, Chris Walby, a 14-year veteran and one of the senior veterans of the Canadian Football League, a Canadian born and raised, had a salary—the top salary in the CFL—of $70,000. That same year a young gentleman whose father is also a member of Parliament joined the Winnipeg hockey club at 19 years of age, and his salary was $900,000 U.S. One of my questions is how do we as a community deal with these rising salary costs?

I notice in Mr. Sather's presentation he mentioned that his tax rate—

The Chairman: Mr. Iftody, you have to have shorter questions, in fairness to the opposition.

Mr. David Iftody: My question is, if you gentlemen are here today and want to engage in a dialogue, Mr. Bettman, with the Government of Canada with respect to taxation, then I would support that. But we need to talk about a trade-off. If your costs are 80% to 85% salaries, and these are moving up and up and up, we can come in on the bottom half of that to alleviate that problem. But if those salaries are continuing, any tax relief from the Canadian people—for example, my club in Winnipeg—is not going to help. How do we deal with that problem? Would you be willing to talk about a trade-off in terms of taxation and changes in your salary negotiations?

Mr. Gary Bettman: Let me try to answer a very complex question as briefly as I can. First of all, nobody regrets more than we do the fact that the Winnipeg Jets moved. In the final analysis, that relocation came about because nobody was prepared to own the franchise any longer in Winnipeg. We could not secure a local owner, which is part of the issue in terms of the burdens and the economics of operating in some of our markets in Canada. We are in an industry where our collective bargaining, the rules governing what players make, is something that we have to agree to with the players association. We had difficulty achieving a system we were comfortable with in our last round of negotiations and it resulted in a 100-day-plus lockout.

This system that we have now, whether or not salaries abate in their rise, as we hope they will, or whether or not they continue to escalate, is not forever, and at some point in time we are going to have an opportunity to look at the system and decide what needs to be done. But the problem, if it is a problem, with players' salaries, is not peculiar to the Canadian teams. If you're operating a team in Buffalo or a team in Tampa Bay, or Miami or Washington, or St. Louis or Pittsburgh, you're going to have the same problems. All of our clubs have that burden. We know there is a currency differential. The league has a currency assistance plan, which all of the teams fund to help the small-market Canadian clubs. In the burdens our clubs have, their inability to be competitive transcends the salary issues and goes to issues beyond that, including the fact that these teams have made tremendous investments with private funds and are taxed quite heavily.

The Chairman: Thank you very much, Mr. Iftody. We will now move to Mr. Riis.

Mr. Nelson Riis (Kamloops, NDP): Thank you very much, Mr. Chairman.

My question is very brief. This morning has been a very valuable session, very informative, particularly with some of the specific suggestions for further consideration. I noticed there was a common theme in almost everybody's presentation this morning, and that was a reference to the escalating salaries. We have heard the same concern around the table. The realistic aspect of ourselves as politicians and parliamentarians is the trade-offs that we have to make in our decision making. I think this reflects a real problem, Mr. Bettman. So it's a message that someone can take back to the players, that we have to deal with this quickly.

• 1105

In terms of the level playing field, I'd like to get your reaction to an idea that was presented to me by some of my constituents who know that I sit on this committee. Their view was that when we're paying players such large salaries, then so-called subsidies from the taxpayer are probably not on. I suspect there's a great deal of truth in that.

I wonder if we can't be really bold. As Ken in his presentation reminded us twice, hockey is rather a different business. Sport is different. It's a part of our cultural fabric. I don't have to elaborate on that, as he did it so eloquently.

During wartime, when we needed to raise funds, we issued war bonds. In the United States some years ago, when they got into some agricultural problems, various states issued agribonds. In other words, it's a tool to raise money for those people interested in that sector. Those funds were then dedicated to helping out that sector.

Why couldn't we do something similar here in Canada and issue a sports bond? I don't know if we can get away with a hockey bond. That would probably be too restrictive, let alone a professional hockey bond. It would be a sports bond so that people investing in the markets would have one more vehicle from which to choose. Those moneys would go into assisting us in developing sports across the spectrum, including the kind of problems you folks are reminding us of today. Is there any reason why we couldn't pursue that?

Mr. Gary Bettman: Yes, actually, my understanding is that this is a project that the Province of Alberta is working on. I don't want to shoot from the hip and give you an immediate reaction, but we are open to any dialogue.

I'd like to rephrase the issue as you phrased it. We're not here saying that this sport needs to be subsidized, because when people think of subsidization, that connotes visions of moneys not going to schools, hospitals, or other places. This is what we're talking about here today. When you hear the facts about how this industry has to operate, the question is whether or not this industry is being unfairly burdened. If the answer to that is yes, then we'd like to have a dialogue, and if sports bonds are the answer, let's have that dialogue.

If there's another way to approach the problem—people recognize that it is a problem—then we're all in favour. We're open-minded. We haven't come in here with an agenda asking for a handout. What we're really looking for is a recognition of the fact that this is an important economic industry that is being burdened. If we can have that first step, then having a dialogue about sports bonds or anything else is the next step that we would love to take with you.

Mr. John Solomon (Regina—Lumsden—Lake Centre, NDP): I co-sponsored the bill, which Mr. Riis introduced, to make hockey our national sport. I've been involved in hockey for many years at an amateur level. My 13-year-old son is a hockey player, and he's very excited that I'm involved with this committee in particular with respect to hockey.

My question pertains to the taxation system. I have a couple of questions. One relates to the teams in your municipalities. What responses have the municipalities given you when you raised these issues about the unfair comparison of property taxes levied by, for example, American municipalities versus Canadian ones? That's one question.

Second, does the NHL have an equalization program like that of the NFL in terms of various centres having very profitable teams and then other teams perhaps not being as profitable? You would be pooling some of your money for that purpose.

I have a final question after those two responses.

Mr. Gary Bettman: I'll response to the second one first, and then I'll ask Mr. Corey and Mr. Bryden to respond the reaction they've had from their local municipalities.

We share what we call our league-wide or nationally generated revenues equally without regard to market share. For example, as for national television, without regard to the number of times you're on television, all teams share that equally.

Our equally shared revenues are more than they've ever been. We believe they will continue to grow, but they are not as large as that of the other three major professional sports. Hopefully, and to the extent that we can further generate revenues, say, from network television in the United States, those are all incremental dollars that we send equally to the Canadian teams as well. So we are optimistic that those revenues will continue to grow.

We also have two forms of subsidization that were geared for the Canadian teams. One is a currency adjustment equalization payment that's based on the differential between Canadian dollars and U.S. dollars. That's a payment that Ottawa, Edmonton, and Calgary are eligible for. In addition, we have, under our system of player movement, what's called group two. If a player is under 31 years of age and another team wants him, they make an offer and his prior team has the right to match or the right to first refusal. If a Canadian team is given an offer from a U.S. team on one of their players, the Canadian team can match in Canadian dollars and the league pays the difference between the U.S. dollars and the Canadian dollars. This is so that our teams in Canada are not preyed upon by the U.S. teams in that context.

• 1110

On the tax issue, Ronald?

[Translation]

Mr. Ronald Corey: As far as the city's reaction goes, on Monday, on the front page of the daily newspaper La Presse, I think, a statement by Mayor Pierre Bourque, saying that the tax problem for the Molson Centre or the future Expos stadium would certainly be resolved. He agreed that there shouldn't be any tax to pay if, obviously, the provincial government contributed its share.

I don't have to explain to you here how it works. I think that, at both the provincial and municipal levels, everyone acknowledges that the tax bill for the Molson Centre is far too high. That's obvious.

As I said in my presentation, there's no comparison. We're the only private entertainment centre, built with private funds. All the other buildings, including the Olympic Stadium, do not pay a penny in taxes. It's really a unique problem.

I think that this meeting of the committee may make it possible for us to share information and look at the situation individually. Personally, as I said to you, I think that transparency has to be the order of the day. Solutions have to be found for each case, factoring in, of course, all the other problems you've had a glimpse of. As they say, quite rightly, moreover, some people have lots of other priorities.

You know, I'd have preferred to be here this morning talking about the club's win yesterday against Pittsburgh. Unfortunately, we have to discuss this financial problem. I have full respect for people. I know they all have problems and I can tell you I understand the situation very well.

At the same time, we have to consider the sports industry situation. I think that the whole debate this morning boils down to asking you to consider sport as a large industry, at the very least. It's not possible to make investments worth a billion dollars in Canada without anyone taking that into account.

The world of entertainment in general has also changed and evolved enormously in recent years. With regard to the Molson Centre, another question has to be asked. Without the Molson Centre, who would take over everything it means to community life, to the lives of people in Montreal? That's a good question to ask.

I think that if the Molson Centre hadn't been created by the Molson company, someone else would have had to do it, because sooner or later, this building would have become a necessity in Montreal, right downtown in Montreal.

To answer your question quickly, everyone recognizes that the taxes are high. Furthermore, we are protesting through the normal channels and I'm hopeful that, with everything we're going to discuss in the coming weeks and months, we'll be able to work something out that everyone is happy with.

[English]

The Chairman: Thank you, Mr. Corey.

Mr. Solomon, we still have other members who haven't an opportunity to ask a single question.

Mr. John Solomon: I have one quick one with no preamble.

The Chairman: You have a short one. Let's go.

Mr. John Solomon: I come from Saskatchewan, and we're big fans of Pavel Bure. We're wondering if Pavel's going to be returning next year to the Vancouver Canucks. Could you tell us about that, Mr. Bellringer, please?

Mr. Stephen Bellringer: You'll have to ask Pavel that. He's still under contract for another year, but I think that's probably symbolic of the issues we've already discussed.

Pavel is a very highly paid individual. Sometimes we talk about salaries in U.S. dollars and forget that we have to pay him in Canadian dollars.

Again, I think the whole issue of player salaries is a bit of a bogus issue, with the greatest respect. It only impacts about 2% of the jobs we create. I know in our operation, at least publicly, I have not heard a discussion where we talk about subsidies to other entertainment businesses, of which there's been a substantial amount just recently. We don't talk about highly paid actors or actresses. What we talk about is the average person who works by the given day or the given hour in our organization.

I think the whole idea with Pavel and other players is that we're really concentrating on the wrong issue.

The Chairman: Thank you, Mr. Bellringer.

Mr. Bélanger.

[Translation]

Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): I'd like first to say, Mr. Corey, that it's pretty hard for a French Canadian to grow up in this country without being a Montreal Canadiens fan. I was one, but I have to confess that Mr. Bryden is giving you a bit of competition now.

[English]

To you, Mr. Bryden, I want to congratulate you and your team on the season and wish you luck. Perhaps some day we'll have the Montreal Canadiens and the Ottawa Senators face off in the play-offs. That would just cause some new existential problems for some of us. We'll deal with it then.

I'm quite sympathetic to quite a lot of what I'm hearing, but I would like to perhaps ask for more information.

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You asked that hockey be treated as an industry and you give comparisons, but you compare it to the States mostly. You compare Canadian teams to American teams. That's a valuable argument in and of itself, but it would be perhaps very useful also if the league could give us comparisons or compare itself to other Canadian industries. We, as a government, can regulate within our own boundaries, if you will, and then we have to get into some international agreements when we're talking about something else. But within our own geography, there may be other industries where you could illustrate some very favourable examples.

There are some huge salaries being paid in other industries as well. Some can think of the bank presidents, for instance, and perhaps vice-presidents, and who knows how far down the chain you can go. There, the return on equity is nowhere near what it is in hockey. It's reaching about 20% now. A few years back, the Government of Canada granted them substantial grants through IRAP, the industrial research assistance program.

So maybe the league could spend a bit of time and effort comparing its industry, if you will, to other Canadian industries, perhaps even the cultural ones. The entertainment aspect essentially of the cultural industries might provide fodder for your cause.

I would perhaps invite some comments on that. It's as simple as that. It's shifting your focus away from comparisons to the Americans only so as to make comparisons with other Canadian industries.

Mr. Gary Bettman: It's an excellent point. If we've got you too focused on comparing these six clubs to the twenty U.S. clubs, then we need to hit the point a little bit harder. Our belief is that, as an industry, this one isn't being treated fairly relative to other Canadian industries, particularly an industry, as we said, that has the tax burden that this one has, and maybe the infrastructure—meaning arena investments—of a billion dollars that this one has. Also, it has provided the lotteries with a billion dollars in revenues based on the results of our games, and it has 11,000 direct and indirect jobs, and on and on.

There are a variety of subsidies. This can be agricultural, non-agricultural, the transportation industry, or Bombardier. Rod Bryden referred to what Nortel didn't have to do but what the Corel Centre did have to do. If it would be helpful for this committee for us to do some research and get you some more of the specifics, we would be delighted to do that.

Mr. Mauril Bélanger: Canadians are eminently fair. To get over the hang-up we all have with salaries being paid to players, you'll have to provide some fodder to show that indeed, as an industry, you've not been treated fairly and that you're being penalized. If you do that, I would suspect you'll be quite successful.

The Chairman: Thank you very much, Mr. Bélanger.

We now go to Mr. Muise.

Mr. Mark Muise (West Nova, PC): Thank you, Mr. Chairman.

I'd like to start by thanking our presenters today. I think it was very informative. I'll make my preamble very short.

Here's my question. Remembering that the Voyageurs played in Halifax—I remember Mr. Dryden being there—I'm wondering what future you see for Canadian hockey teams, particularly the ones that serve the smaller centres.

Mr. Gary Bettman: We spend approximately $4 million a year on major junior hockey, as you heard. That's in terms of direct payments and subsidies. Many of our teams have minor league affiliates.

We believe in grassroots efforts at the civic and charitable level and at all levels of hockey, be it through the centre of excellence or working with the CHA. We know that having hockey strong at all levels is important to this country and vital to the National Hockey League. One of your great natural resources is the 60% of our players who come from Canada. So we're committed to keeping hockey strong.

Mr. Mark Muise: Thank you.

The Chairman: Mr. MacKay.

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, PC): Thank you, Mr. Chairman.

Again, I'd like to thank the panel. I'd like to say to you, Mr. Dryden, specifically, that if you're interested, and if you like Parliament Hill, we in the Conservative Party would still be interested in having you come to play for us.

I wanted to follow up on a question that my colleague Mr. Muise had asked. It's along the same lines.

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We all know that the NHL participated in a big way at the Olympics at Nagano this year. In particular, I would say that the collective psyche of the nation was shaken based on what happened to the Canadian performance. I just wanted to ask you collectively as a board, or maybe as the individual Canadian team representatives, what you see as the future for NHL players participating in the Olympic Games, and what you, as a league, may have discussed or may put forward as ideas. This is along the lines of what you're saying about the financial commitment that's been made to the development of junior hockey. In particular, would there be a commitment made specifically to the Olympics?

Mr. Gary Bettman: The verdict is still out. We have said repeatedly that not until we completed this season, including the play-offs, and we got to the summer could we sit down with the players association, which is our partner in this endeavour, to fully evaluate the wisdom of Olympic participation. First and foremost, we have to be concerned about our hockey season. So this is still a work in progress.

By and large, we think it was a very good experience. The tournament was great. We thought the impact on the national psyche of most of the participating countries was quite good without regard to the individual performances of the clubs. It's something that we take very seriously.

It was a very difficult undertaking for us to do, and doing it halfway around the world made it even more difficult. So we're going to look at Salt Lake City very seriously.

I will say that there's probably not a unanimity of view outside of the NHL as to whether or not you should have professionals at the Olympics. Murray Costello, for one, is somebody who has been very concerned over time as to whether or not this was a good thing or a bad thing for the national program.

I think the IOC's position is that basically, since professionals are in every other sport, they might as well be in hockey. I think it's probably good, at an abstract level, for hockey to be played at the Olympics by the best hockey players in the world, but there are a lot of ramifications that we're not done studying.

The Chairman: Thank you very much, Mr. MacKay.

Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Ref.): Thank you very much, Mr. Chairman.

Thank you to the presenters. It's an honour to have you here today. We're all hockey fans.

I just want to make a comment. It seems to me that the fact that Canadian taxes are about 50% higher than those in the U.S. has to be one of the major issues. Wouldn't it make more sense to bring in broad, sweeping tax relief to bring our tax levels in line with those of the U.S.? In doing that, we could decrease the difference in exchange rates. Of course, one of the primary reasons that our exchange rate is so out of whack with that of the U.S. is because our taxes are much higher, which affects productivity and things like that. Wouldn't it make a lot more sense, instead of trying to target tax relief at National Hockey League teams, to bring in this broad tax relief that would benefit everybody? This would leave more money in the pockets of fans so they could come out to more games and that kind of thing. Wouldn't that be a better approach?

Mr. Gary Bettman: You're looking me, but I think that, of the seven of us, I'm uniquely disqualified from answering that question. I'll defer to Mr. Bryden, if you like.

Mr. Rod Bryden: Sure.

The Chairman: Excuse me, Mr. Bryden, this should be a short answer, please, because we have some other members from the government side who still want to make a couple of comments.

Mr. Rod Bryden: I think one of the keys to surviving in many businesses, including the National Hockey League, is that you never make a big problem out of a small one. While many Canadians, I'm sure, would like to have lower taxes, I don't know that the overall fiscal position of Canada could be affected in order to accommodate the National Hockey League. So while it might be more desirable, I suspect that this problem will become much more acute long before that matter would be resolved.

I would prefer to focus on a specific action dealing with this industry in relation to other industries.

The Chairman: Now we'll have short comments. I have short comments from Mr. Coderre, Mr. Proud, and Mr. Cannis.

[Translation]

Mr. Denis Coderre: Mr. Corey, I'd like it if we could come back to the situation in Montreal. Next week, we're going to welcome some representatives from the Montreal Expos. Mr. Brochu, in his requests for a new stadium, is asking not to pay property taxes, amusement tax, and so on. Are we to think that what's good for the Expos should also be good for the Montreal Canadiens since, as you showed us, their situation is just as precarious?

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Mr. Ronald Corey: To my mind, this is something to be examined by the authorities so as to take very fair stock of both situations. Clearly, in Montreal, we've made the investment. We did it in 1990, when things were much different.

As far as I'm concerned, I expect both teams' cases to be considered. The Expos have to be treated, like the Canadiens, in a way that means they can deal with their problems. I think the solution will arise from good dialogue and consideration of each team's situation.

There are also revenues attached to the leagues that go to the teams. These revenues may be very different from one league to the next. I think that these figures concerning leagues are public property. One thing that hasn't been mentioned this morning is that hockey remains the fourth largest major sport in the U.S. The revenues earned by the National Hockey League from national television rights are much lower than what the other leagues can earn.

I think the whole envelope has to be evaluated and that the Canadiens should be treated fairly, like all the rest. The two cases should be considered differently, in my opinion.

[English]

The Chairman: Mr. Provenzano, did you have a question?

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): No, I didn't.

The Chairman: Okay. Mr. Cannis?

Mr. John Cannis (Scarborough Centre, Lib.): Thank you, Mr. Chairman. I'll be brief.

Let me first welcome everybody who is here today—all the presenters. I'm not going to open up, gentlemen, with any political policy statement.

I'm very pleased that you're here today because of the good work of this committee. I think what we've done is created dialogue, which I think is the first and foremost thing that will eventually get us to some solutions for the benefit of sport in general, whether it be amateur, professional or what have you.

I'm very curious, because I sense from all the notes I took that the exchange rate seems to be the biggest obstacle, as far as what most of the presenters indicated. I have one question about ticket prices. If this is factual or not, please let me know. For example, for a $70 ticket in the U.S. to watch a hockey game or a baseball game, we pay $100. Is there some kind of equalization balance or some kind of formula that goes into that? I'm not sure. I've heard talk about that.

The other question I have, more for the Vancouver franchise, is that if it's financially not viable, why are American interests acquiring the franchise?

I also have one suggestion, and I'll close with this, Mr. Chairman. We've grown up with this wonderful sport, and other sports, in Canada. I recall playing against Doug Seymour, who played Canadian football, and Neil Lumsden, Peter Mueller and names like that. I used to enjoy going to the football games because I wanted to see these people. The hockey league was the same. We grew up with people who played in the local junior teams, and people would drive from out of the city to come to Maple Leaf Gardens to see these young men who grew up in the system.

I have the greatest respect for athletes coming from outside North America, but there's a system in other sports—I refer to soccer specifically—where teams are restricted to x amount of players per team.... Is there a possibility, Gary, that teams could look at that and say each team is restricted to four players or five players, so that indeed the investment the parents are putting in, as you've talked about...to raise a skilled, talented hockey player who has indeed the opportunity to make it to the show, to the big leagues? Otherwise, if we're going to continuously have an open market where we allow athletes, hockey players specifically, to come from outside the country, then what will be the motivation for our junior leagues to continuously work to develop these players?

Mr. Gary Bettman: The influx of additional players from outside of North America, or even outside of Canada I believe, coupled with expansion, means that the number of Canadian players in our league actually has not diminished since 1990, when we went through the last wave of expansion.

I believe there is a whole host of legal issues—and they're going through this in Europe as well—in terms of whether or not you're allowed to have quotas and limit how many players or people from certain countries can come in and play in your league.

For better or for worse, the NHL is the gold standard of hockey, and it's the pinnacle that the best hockey players in the world aspire to. While we sometimes get criticized for creating too many jobs, fortunately the Canadian presence in absolute numbers has not diminished.

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With respect to the currency assistance plan, I'll give you a brief answer, and if you want a supplemental follow-up in writing we can provide it.

We have basically two currency adjustment plans that the league funds to help the Canadian clubs. One of the funds all six teams are eligible for, and only the three teams in the smallest markets are eligible for the other fund. But all told, I believe there's up to $20 million available to help offset some of the currency differential.

Steve, do you want to respond to the question?

Mr. Stephen Bellringer: In terms of the current ownership of the Vancouver Canucks and the Orca Bay group, you have to put it in the setting of what was taking place in Vancouver about three years ago. We had a longstanding family, the Griffiths, who controlled the franchise for many years. They began building an arena and also secured an NBA franchise. There were heavy financial commitments.

If the current U.S. owner had not come in in the middle of that process—he began with a less than 10% ownership—and supported the Canadian sport, we would probably have a half-finished stadium now in downtown Vancouver. We probably would have had to send the NBA franchise back to New York City. I think the half-built stadium in downtown Vancouver, during various international events that are held there, would have been not only a Vancouver and British Columbian embarrassment, but it would have been a national embarrassment. I think sending the NBA franchise back after various commitments would have been a national embarrassment.

To some extent we have to be thankful a U.S. owner—recognizing that Vancouver is only one hour north of the U.S. border—came forth to support the team. I would make a comment that because it is the only U.S. owner of a major Canadian sports team—I won't get into it today—that particular owner is actually being penalized under Canadian tax law in his transactions to attract talent and develop his investments in Vancouver. If we are going to treat this business like any other business, we have to be conscious of treating U.S. owners as supportively as Canadian owners, if the U.S. owner is truly there trying to support our national sport.

The Chairman: Thank you very much, Mr. Bellringer.

Ms. Lill, a short comment.

Ms. Wendy Lill (Dartmouth, NDP): Thank you. It is great to be here. I won't elaborate on that.

I am very interested when I hear Mr. Dryden and Mr. Hotchkiss talk about the memory of hockey. We have Roch Carrier in the beginning of your document.

Many people are still sitting around coffee shops talking about hockey, but they are talking about the price of the hot dogs, the huge salaries and the opulence of the arenas. I know a lot of the romance has gone out of hockey and the heart has gone out of it, so we have our feet in two places. One is the business of hockey, which you people are here today to talk about, and the other is the heritage of hockey.

I want to know how putting more money—we are the heritage committee—now into the business of hockey will bring back the heritage of hockey and the heart of hockey for Canadian people.

Mr. Gary Bettman: Ken.

Mr. Ken Dryden: As I said in my earlier comments, life in this country has changed. One of the changes is simply the fact that there are many more things to do—many more activities and things. Probably 30 or 40 years ago, whether you were big or small and liked it or not, if you were to be involved in some sort of outside activity it would have been a sport and it would likely have been hockey.

Now, if you are small or of dimensions that don't fit very well with hockey, you have lots of other activities—sports or non-sports. That's the nature of life in this country. I don't think hockey's monopoly will ever return, and in only a small part has that to do with hockey itself; it has to do with a more affluent, developed country.

I would also say to your comment that we've also grown older. There is no time like the time of our childhoods when we think of things. Nothing can compare to that time. As we have gotten older we have less time to watch games, and there are more games to watch. One thing you always hear from somebody over the age of 40 is, “I can't keep track of the number of teams; with 6, I always used to follow, but now with 26, I can't.” It takes a lot of time when you're 40 years old to follow 26 teams.

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What I would say to that, however, is ask a 10-year-old, ask an 11-year-old, ask an 8-year-old, and somehow the 10-year-old has a pretty good grasp on 26 teams. I'm not sure how, but it happens.

What I'm not entirely clear about is the validity of all of our memories—and I feel the same way. I think we're comparing how we felt to how we feel now at a different age and stage of our lives. If we compare apples to apples, and compare our 10-year-old selves to the 10-year-old others that we see now, I'm not sure hockey has too much of a different part of our heritage.

I did a series for CBC about seven or eight years ago on hockey in this country. Living in Toronto for about ten years before that time, I would hear—and this was at the time of the full bloom of the Blue Jays—how baseball is taking over; hockey isn't the same as it was.

Step outside the boundaries of downtown Toronto, move into the suburbs of metropolitan Toronto, and then move anywhere else outside of a major metropolitan area in this country and you get a very different story. I think those of us who live in downtown areas don't spend enough time outside those downtown areas listening to voices. I think if we did, we would be surprised at what we would hear.

I think that part is changing, the country is changing, but still it is a very significant part, ongoing and into the future of our heritage.

The Chairman: Thank you very much, Mr. Dryden.

Mr. Harley Hotchkiss: Mr. Chairman, could I just add a comment? Part of that was addressed to me.

The Chairman: Yes, Mr. Hotchkiss, of course.

Mr. Harley Hotchkiss: Ken has said it far more eloquently than I can, but I think the heart is still there, and I think you do see it out in the small communities.

I see it when I come back to southern Ontario, as I said. I see it in my grandchildren when I watch them play, when I take them to a Maple Leafs game. They have the same feelings as I had. It's a much different environment and there are many more choices, but I think the heart is still there. It's still there in our urban areas, out in the communities, as Ken has suggested. So I think while we look back at those memories, at a different time, I believe strongly that the heart is still there.

The Chairman: Thank you, Mr. Hotchkiss.

Mr. Proud.

Mr. George Proud: Thank you again for coming here this morning.

I want to wind up with something we've heard. We've had a lot of suggestions put to us today, and we've heard a lot of talk about the salaries. I want to say something along the lines of what Mr. Bellringer mentioned a while ago.

The salaries are high today. Whether they're too high or not, I don't know. But I remember the fellows who went before that. I have friends today who played in the NHL, who left it in their thirties, who were disabled, whose knees are all busted up, who never got any compensation, and who probably never made $12,000 a year. So whoever started this, the Doug Harveys and the Ted Lindsays who started this move to get these higher salaries and better compensation, we don't want to forget those fellows who went before them.

Thank you.

The Chairman: Thank you, Mr. Proud. Mr. O'Brien, a short comment.

This will be the last speaker.

Mr. Pat O'Brien: I have a very brief question to Mr. Bellringer.

Having said that I'm totally supportive of governments in Canada supporting Canadian sport franchises, obviously including the NHL, I think Mr. Bellringer is the perfect person to answer this question. Given the economic realities that you've addressed very well today, how do we explain to the Canadian public that we have two NBA franchises being set up? They face the same economic disadvantages that Ken Dryden spoke of. I think we have to bring the public onside to a recommendation that government support the NHL Canadian franchises in some fashion.

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Can you speak to that experience, though, vis-à-vis the NBA franchises in Canada?

Mr. Stephen Bellringer: I think, Mr. O'Brien, when we were here last week we clearly indicated that the NBA in Canada is still a reasonably new sport at the professional level, even though it's growing at the amateur level.

With the Toronto Raptors and the Vancouver Grizzlies, we're still trying to better understand our business, and therefore we were very careful when we were here last Thursday—those members who were here—not to ask for any support at that time and to say that really what we are trying to do is to monitor the situation.

I think it is entirely different in the hockey world. Hockey has been here for decades and decades, the NHL has been in Canada for decades and decades, and the entire fabric of amateur hockey in Canada has been here much longer than basketball has. So I think hockey is in a slightly different situation than is basketball.

The Chairman: Thank you very much. Is there another comment?

First of all, I'd like to thank members of Parliament for their cooperation this morning. Obviously everybody had to give up a little bit. It's such an exciting topic.

I'd like to say to you, Mr. Bettman, thank you and all your associates for coming before us this morning. You've given us valuable insight, valuable information. Before our report is finalized in the fall, we may come back for more specific information.

We made special note of the fact that Mr. Corey had said the books would be open for analysis for some of the rationale we would be developing, and we thank you for that.

On behalf of all the committee, thank you all very much for coming.

This meeting is adjourned.