Boston Pizza Royalties Income Fund (BPF-U) and Sportscene Group Inc. (SPS/A) are among companies ramping up advertising and offering discounts to win back National Hockey League fans after a 17-week lockout that cost Canadian companies as much as C$800 million ($812 million).
Sportscene, which operates 52 Cage aux Sports restaurants in Quebec, cut prices this week on chicken kebab and steak while running television ads featuring Chief Executive Officer Jean Bedard. Boston Pizza, operator of about 350 sports restaurants in Canada, is retraining staff and planning promotions with Molson Coors Brewing Co. (TAP:US), maker of Molson Canadian and Coors Light beer.
“The economy isn’t as strong as in the last NHL lockout, so we’re doing our part,” Bedard said in a telephone interview. “I’m confident we’ll get people back. A 48-game season means that every game is important.”
NHL hockey resumes tomorrow for a shortened six-month season. Team owners locked out players on Sept. 16 for the second time in eight years in a dispute over revenue sharing, depriving Canadians of a pastime that prompted 64 percent of the population to watch the gold medal hockey game between Canada and the U.S. at the Vancouver Winter Olympics in 2010.
Douglas Porter, an economist at BMO Capital Markets in Toronto, estimates the halt in NHL operations trimmed C$700 million to C$800 million off economic output as consumers cut spending in sports bars near the arenas and fans bought fewer team apparel.
“The lockout wasn’t a huge deal for the economy but it was a big deal if you sold jerseys or ran a restaurant close to an arena,” Porter said in a telephone interview. “There was substitution from bars and restaurants that are close to arenas to other establishments away from the city center.”
Sam Yoges, general manager of The Office Pub sports bar in downtown Toronto, said he lost an estimated C$50,000 in sales since October as business dropped 25 percent to 30 percent. He got creative with the “Lockout Deal.”
“It’s a pint, a T-bone steak, chicken wings and onion wings for $20,” he said. “It was very popular.” Yoges said he will bring back the special to kick-start business now that hockey is back in Canada’s largest city.
Game-day spending at businesses near downtown arenas in five Canadian cities dropped 11 percent in October from the same period a year earlier, according to data compiled by Moneris Solutions, the country’s largest credit and debit card processor. The drop was steepest at bars in “close proximity” to arenas, where spending plunged 35 percent, Moneris said.
Passion for the sport runs deep in Canada, home to seven of the NHL’s 30 franchises and about 617,000 registered amateur players, the most of all countries tracked by the International Ice Hockey Federation. The U.S. is next with about 511,000 players, according to the federation’s website.
Molson Coors shares lost 6.9 percent of their value in New York from the start of the lockout through Jan. 11. Boston Pizza gained 2.6 percent while Sportscene declined 6.7 percent.
Montreal Canadiens President Geoff Molson, a director at the beer company, was one of at least three club owners to apologize to fans for the dispute.
“Everyone was a loser in this lockout,” Molson said Jan. 7, declining to provide specific figures on how much revenue the Canadiens lost. “We didn’t get to fill the Bell Centre. The bars and restaurants around the community were empty on Tuesday and Saturday night.”
Molson’s beer business felt the effects of the work stoppage. Molson Coors, the NHL’s official beer sponsor, said Nov. 7 its sales (TAP:US) in Canada dropped by as much as 9 percent in the first four weeks of the fourth quarter compared with the same period a year earlier. Canada accounted for 31 percent of the brewer’s $6.69 billion in sales last year.
To make up for lost business, Molson Coors plans to start running promotions in bars and arenas once the season starts, said Ferg Devins, a spokesman for the company’s Canadian unit.
The end of the lockout is “a negative that’s going away for Molson Coors,” Robert Ottenstein, an analyst at International Strategy & Investment Group LLC in New York, said in a telephone interview. “Hockey is an important beer-drinking occasion, and those lost occasions have got to hurt in the quarter they’re going to report.”
Molson Coors will announce fourth-quarter results Feb. 14. Excluding some costs and gains, the company is expected to report profit of 64 cents a share, the average estimate in a Bloomberg survey (TAP:US) of nine analysts. That compares with profit (TAP:US) of 97 cents in the same period a year earlier.
Sales at Boston Pizza are down 1 percent to 2 percent compared with last year’s hockey season, said Steve Silverstone, a spokesman. Boston Pizza, a name the original owner chose because of his love of all things Boston, temporarily changed its name to Vancouver Pizza in 2011 as the Vancouver Canucks battled the Boston Bruins in NHL’s Stanley Cup finals.
Boucherville, Quebec-based Sportscene said yesterday that net income for the quarter ended Nov. 25 fell 36 percent to C$637,000. The company blamed a 4.9 percent drop in revenue on the NHL lockout.
An expected increase in customer traffic at Cage aux Sports restaurants as play resumes “should allow to recover, in upcoming months, part of the revenue shortfall sustained,” Bedard said.
Teams in the U.S. are planning promotions to bring back fans. The Tampa Bay Lightning offered a $200 ticket for all 24 home games in the shortened season. Pittsburgh Penguins fans who come to watch Sidney Crosby can get free concession-stand items including hot dogs, popcorn and pretzels, plus 50 percent off souvenirs at the first four home games.
Bauer Performance Sports Ltd. (BAU), which makes helmets, sticks and skates used by some NHL players, also felt the lockout. “Fewer games means fewer broken sticks means fewer stick sales,” CEO Kevin Davis said on a Jan. 10 conference call.
Even with the lockout, fan interest for hockey remains high across Canada.
In Montreal, only eight of about 15,000 season tickets were canceled during the lockout, Donald Beauchamp, a spokesman for the team, said in a telephone interview. The Canadiens, who have about 4,000 people on a waiting list for season tickets, have sold out 333 consecutive games -- a string that stretches back to January 2004.
Peter Sergakis, who owns Station des Sports, a chain of six sports-themed restaurants in the Montreal area, hopes the trend is indicative of how casual fans will react. Business at the chain dropped 40 percent in December, leading him to cut jobs by 10 percent and reduce working hours by as much as 20 percent.
Sergakis said he’s started recalling staff and is proceeding with plans to open a seventh outlet in Laval, north of Montreal.
“When you are down 40 percent, you are way in the red, but that doesn’t mean it’s a lost season,” Sergakis said in a telephone interview. “Everybody needs an escape in life, and hockey makes people happy.”
To contact the reporters on this story: Frederic Tomesco in Montreal at firstname.lastname@example.org; Christopher Donville in Vancouver at email@example.com
To contact the editor responsible for this story: David Scanlan at firstname.lastname@example.org