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Montreal Has The Market To Support Major League Baseball, But League Conditions Are Not Right

Montreal has the necessary market conditions in place today to be the home of a Major League Baseball franchise: it is both large enough and wealthy enough, and it has a sound corporate presence. In addition, the strong Canadian dollar would make a Major League Baseball team more competitive with U.S. franchises — in contrast to the weaker loonie that prevailed when the Montreal Expos departed for Washington in 2004.

Ottawa, July 8, 2011 – Montreal has the necessary market conditions in place today to be the home of a Major League Baseball franchise: it is both large enough and wealthy enough, and it has a sound corporate presence. In addition, the strong Canadian dollar would make a Major League Baseball team more competitive with U.S. franchises — in contrast to the weaker loonie that prevailed when the Montreal Expos departed for Washington in 2004.

But Major League Baseball (MLB) has the least level-playing field of the major North American professional sports leagues, which makes the long-term prospects suspect for any franchise to be successful in Montreal, according to The Future of Major League Baseball in Canada, The Conference Board of Canada’s latest briefing in its Playing in the Big Leagues series.

“Montreal has a long and proud baseball history. It was the city where Jackie Robinson broke the colour barrier in professional baseball. It was the first city outside the United States to obtain a major league team in 1969 and the first Canadian franchise to make the playoffs in 1981,” said Mario Lefebvre, Director, Centre for Municipal Studies.

“But Major League Baseball broke the hearts of Montreal fans in 1994, when the season was cancelled while the Expos had the best record in baseball. Major League Baseball has done little to change its business model so more teams can be competitive consistently. Without a more level-playing field, the Expos’ tri-colour caps are likely to remain collectors’ items.”

In a previous publication, Defining the Market Conditions for Success, the Conference Board identified four market pillars for a pro sports franchise to be financially successful. Montreal fares well on most of these factors:

  • An appropriate (and growing) population level – The Conference Board estimates that the fan requirement for Major League Baseball is 2.5 million people; the Montreal census metropolitan area is home to over 3.8 million people. Although Montreal has professional franchises in hockey, football and soccer, which could squeeze the sports marketplace, the population is sufficient to support a baseball team.
  • A relatively wealthy population –Montreal’s disposable income per capita is below that of other large urban centres in Canada, ranking eighth. Nevertheless, Montrealers have an appetite for entertainment and the financial means to offer themselves a night at the ballpark.
  • A sound corporate presence – Montreal ranks favorably among Canadian cities with respect to the number of head offices in the area. It was home to 98 of Canada’s 800 largest corporations in 2009, behind only Toronto and Calgary.
  • A level playing field – two factors come into play: the exchange rate and the competitive conditions in the league. Both had negative effects on the Expos’ viability. At present, one of these factors has changed; the other has not.

Team costs, notably player salaries, rose rapidly in Major League Baseball in the late 1970s and 1980s, (as in most other professional sports). However, for the Expos, the rise in salaries was even more pronounced given the steady decline in the dollar, first in the 1970s, and again in the 1990s. By the time the dollar started to climb in 2003 and 2004 toward its current state of parity with the U.S. dollar, the team was owned by Major League Baseball itself and on the verge of departing Montreal for Washington D.C.

League competitive conditions, however, have changed little since the Expos’ demise. Previous publications in this Conference Board series, Competitive Conditions in Pro Sports Leagues and Pro League Competitive Conditions and How the NHL Stacks Up have concluded that the playing field in Major League Baseball is the least-level of the four major North American sports. The lack of a hard cap on player salaries and massive differences in revenue (including attendance, sale of broadcasting rights, merchandise and other income) among franchises make consistent winning very difficult for all but a handful of rich teams.

A MLB franchise in Montreal would not be among the teams with the highest revenues, so individuals or corporations would be reluctant to invest in returning a franchise to Montreal. Moreover, a new stadium would be required, unless a new owner was prepared to put up with the many problems of the Olympic Stadium as a baseball venue.

The briefing also considers the status of the Toronto Blue Jays and concludes that the Blue Jays are a stable franchise in Toronto, despite uneven competitive conditions within MLB that force the Jays to compete with franchises such as the New York Yankees and Boston Red Sox. The combination of a solid market, stable ownership linked to broadcasting, and an attractive playing facility make the Blue Jays financially viable.

This is the sixth briefing in the Playing in the Big Leagues: What Makes a Professional Sports Team Successful in Canada? series, which will continue throughout 2011.


For more information contact

Corporate Communications
613-526-3280
corpcomm@conferenceboard.ca


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