Does a falling Canadian Dollar affect the future of the CFL?

[firstdown45]

I thought this time I would ask a good, juicy question that everyone can sink their teeth into.

Does the falling Canadian dollar affect the future well-being of the Lions and the CFL from a financial point of view?

I believe the majority of the players are paid in U.S. and revenues come through in Canadian?

So if the dollar hit 50 cents, could this throw the League into jeapordy?

And how does, or does, a falling Canadian dollar affect the Salary Cap?

So I hope you like this question.

[Bosco]

I am shocked that this question has nothing to do with noise, attendance or Casey Printers.

That being said, CFL players and coaches are paid in Canadian dollars. The NHL, NBA and MLB pay their players in U.S. funds.

[Solar Max]

It could adversely affect an Import who is offered a roster spot on a CFL team, but then discovers that a (as of today) 79 cent dollar means a 26 per cent reduction in real purchasing power, compounded by a higher cost of things in Canada over the US, if only by a small margin.

Some few might elect to stay home, but not many, IMO.

[Blue In BC]

The sky is falling, the sky is falling.

[Hambone]

It could adversely affect an Import who is offered a roster spot on a CFL team, but then discovers that a (as of today) 79 cent dollar means a 26 per cent reduction in real purchasing power, compounded by a higher cost of things in Canada over the US, if only by a small margin.

Some few might elect to stay home, but not many, IMO.

That's about the only impact I see. Might contribute to some extra costs for any scouting activities that involve travel south of the border. Could also be somethings like equipment purchases that are negatively impacted by a decline in the loonie. But in the grand scheme of what is now an annual budget of over $10 million impact will be negligible. All revenues are in $CDN and almost all expenses remain in $CDN. As such it also would have no impact on the SMS.

The NHL on the other hand could see a huge impact. Salaries are paid in $USD. Supposedly the Canadian teams provide a disparate percentage of revenues and their revenues are in $CDN. If the loonie causes a significant dropoff in Canadian NHL team revenues I can't see how it wouldn't impact their salary cap.

[Toppy Vann]

The CFL gets no advantage from a falling Canadian dollar! It doesn't export anything other than TSN broadcasts into the USA and mostly they are black outs. Nothing good is coming from a lower dollar with less purchasing power that I can see. Revenues won't now see a huge cross border surge of ticket buying fans. If they buy equipment for next year they are doing so with a lower Canadian dollar - how can that be good?

I think Premier Campbell's announcement yesterday pretty much summed up how dire this latest crisis could and might be if governments like BC's don't step up to the plate and keep this economy and the taxpayers in good shape.

Have you flown on a plane lately and noticed the fuel surcharges?

Negotiating contracts and paying players from the south what they feel they are worth is a huge challenge. If a player has a choice between NFL and CFL, you think the lower CAD$ will keep that guy here. It would be a negative factor if the player was like a Clermont and was thinking hey, I should give this another go. One year or more of $US would be huge when our dollar is in the low .80s.

It sure doesn't make the players who are effectively taking a pay cut with the falling dollar happy. It is like any work force. How happy can you be when you see your pay pack fall regardless of how it happens. If the US players need to spend that money in the US, they got a pay cut. If some non-import player wants to go Disneyland, he can choose to go or go elsewhere if he doesn't like the exchange rate.

This doesn't threaten the CFL but it might affect some guys wanting to sign up here if they have other career options after university.

I posted that article quoting some Stamps on that issue and how it affects their cost structure personally. (Note to Soundy and BC Lions16- get out your statements that anyone on the internet can quote anything from a discredited source) .

Sponsors who provide revenue aren't benefiting unless they export things and right now the US market is not as strong and won't be for some time. Many major corporations with foreign subsidiaries might benefit and be hurt at the same time.

The Bank of Canada is no doubt going to drop another 25 or 50 basis points in December and again this puts pressure on the CAD dollar and none of this is positive that I can see for the CFL. Commodity and oil prices falling off will ensure our dollar stays down well into 2009 they say. I'd cut and paste a quote from some banks but Soundy and BCLions16 will be all over me for that.

[Jason Jiménez]

I thought this time I would ask a good, juicy question that everyone can sink their teeth into.

Does the falling Canadian dollar affect the future well-being of the Lions and the CFL from a financial point of view?

I believe the majority of the players are paid in U.S. and revenues come through in Canadian?

So if the dollar hit 50 cents, could this throw the League into jeapordy?

And how does, or does, a falling Canadian dollar affect the Salary Cap?

So I hope you like this question.

Great question!

This topic has been talked about a lot at practice lately. We're paid in CDN $, so it won't have much affect, if any, on the cap. It will have an affect on those players that don't live in Canada year-round. A lot of us got spoiled in the past two seasons with the Loonie being at par with the greenback. Oh how I wish for those days to make a quick comeback!

[Solar Max]

I thought this time I would ask a good, juicy question that everyone can sink their teeth into.

Does the falling Canadian dollar affect the future well-being of the Lions and the CFL from a financial point of view?

I believe the majority of the players are paid in U.S. and revenues come through in Canadian?

So if the dollar hit 50 cents, could this throw the League into jeapordy?

And how does, or does, a falling Canadian dollar affect the Salary Cap?

So I hope you like this question.

Great question!

This topic has been talked about a lot at practice lately. We're paid in CDN $, so it won't have much affect, if any, on the cap. It will have an affect on those players that don't live in Canada year-round. A lot of us got spoiled in the past two seasons with the Loonie being at par with the greenback. Oh how I wish for those days to make a quick comeback!

Let's all hope that we can see a higher loonie sooner rather than later.

A question, Lion 60: Were you fresh out of university, drafted low in the NFL draft or not at all, but on a Neg List for a CFL team, would the value of the Canadian dollar be a large consideration, considering that most of your purchases would be here and not in the US as they once were?

Would you disregard that exchange to come here, if you did not know the game as you do now? Would it be much of a factor?

Sorry for all the hypotheticals. 8)

[notahomer]

...
Correlation does not imply causation,...

I find myself saying this to others on a variety of topics (not usually topics that are CFL/BC Lion related). I feel sorry for the American player taking a whack on the paycheque due to this dollar falling.

[Lionheart]

Yes

The league will fold next year.

[KnowItAll]

canucks on the other hand.......

[Hambone]

Let's all hope that we can see a higher loonie sooner rather than later.

That really all depends on the business a person is in. The higher the loonie the better it is for anyone who might be earning their bucks in Canada and spending them on the other side of the border. For anyone earning their bucks in greenbacks and spending them in loonies it's the opposite. The latter scenario covers huge percentage of our manufacturers who rely on the export market. Their costs are in Canadian bucks but their products are sold in US dollars.

The collapse of the US housing industry has devestated the forest industry but rising loonie was just as much of a factor in all the mill closures that have in some cases all but wiped some towns out. As someone who spent 32 years working in the forest industry I've come to appreciate first hand the impacts of a high Canadian dollar on the industry. Lumber and pulp commodities are sold in $US. Labour and most other costs are in $CDN. Every time the loonie raised in value against the greenback companies in the forest industry took a hit on the bottom line. For my long time employer, Canfor, the old rule of thumb was every $0.01 increase in the value of the loonie = $10million hit to the bottom line. That was back in the mid 1990s before they nearly doubled in size by acquiring Northwoods and Slocan. The impact now is likely closer to $18 million per penny increase. $.80 to par? Bye bye $360 million and that's just for one company.

[Solar Max]

Well said, Hambone.

But the other side of the coin are the imports that we bring in from the South, cars, food, manufactured goods, etc.

A higher loonie means a cheaper cost for the consumer on imported goods, and a higher standard of living. Conversely, if you are an export based company such as Canfor, a higher dollar makes your product that much less desirable price wise down south.

Canfor is getting it both ways, as the housing markets in the US slump, and the dollar remains above its 63 cent low of just a few years ago. I'd guess that the reduced demand for lumber is hurting US lumber companies as well as Canadian ones more than the currency issue is, but you would know better than I.

Now if we had free trade with the US vis-a-vis lumber exports, the situation might be better here in BC, but we all know the power of the US industry with their government.