Sunday, June 14, 2009

A Look at Hamilton

The fate of the Phoenix Coyotes continues to play out in Judge Redfield Baum's bankruptcy courtroom, and the focus of the many of the arguments has been the viability of Phoenix as a hockey market. Potential acquirer Jim Balsillie has proposed to purchase the club and move it to Hamilton, assumed as fact by those that want to relocate the club that the city and surrounding areas will be a solid and profitable hockey market. Perhaps so, but it is interesting to look at Hamilton the city as a potential hockey town from an economic, demographic, and quality of life standpoint to determine the validity of that argument.

Hamilton is geographically located on the western end of the Niagara Peninsula in southern Ontario, and is almost equidistant between Toronto and Buffalo (approximately 70 miles from each city). Hamilton has a population of 504,559; its metropolitan area has 692,911 residents. The area from Oshawa, ON to Niagara Falls is known as the "Golden Horseshoe", and has 8.1MM residents in that region. Hamilton sits at the geographic center of the Golden Horseshoe. The major industries in this area have traditionally been steel and manufacturing, and the Toronto-Hamilton area is the most industrialized area in Canada. 60% of the steel produced in Canada is produced in Hamilton, primarily by Stelco (owned by U.S. Steel) and Dofasco (an subsidiary of Arcel Mittal, the largest steel producer in the world). With the global recession, the Hamilton area has suffered economically, with 20% of the local populace below the poverty line as established by the Canadian government. According to the latest numbers I could obtain, which were for year end 2007, the unemployment rate in Hamilton was 6%, although that number is continuing to grow according to a news story form the National Post. The local government has made a concerted effort to broaden the economic base of the city into health care and entertainment. The Hamilton Health Sciences Corporation now employs 10,000 and the Hamilton Film and Television Office has been successful in drawing film and television crews to the area for filming and production. The average income in Hamilton is $57,664, although the suburban community of Oakville has an average income of $101,675. This compares to an average income in the entire province of Ontario of $66,836. 61% of Hamilton's labor force commutes to a job outside of the City of Hamilton.

Interestingly, the fastest growing demographic group in Hamilton is the cohort aged 75 and over, which grew by 21% according to the last census. The group that was in greatest decline was the 25-34 age group. The population of the entire province of Ontario grew 9.9%, while the population in Hamilton grew 4.6% (data as of 2001 census numbers). The city projects a population of 532,380 in 2011, a growth rate of 5%. There are 135,985 family households and 55,525 non-family households in Hamilton.

Hamilton is home to a number of colleges and universities, prominent among them McMaster University with an enrollment of 22,000. Mohawk College, a college of applied arts and technology, has 10,000 full time students; 40,000 part time students, and 3,000 apprentices. Also, Hamilton is home to the Royal Botanical Gardens; the Canadian Warplane Heritage Museum and the Canadian Football Hall of Fame. The other professional teams in Hamilton are the Tiger-Cats of the CFL and the Bulldogs of the AHL.

As compared to Hamilton, Nashville has 619,626 in Davidson County and 1,521,437 in the metropolitan area. The largest population cohort in Nashville is the 35-54 age group, comprising 29.6% of the populace. Population growth in the metro Nashville area has averaged a growth rate of 25% annually. The median income in Nashville was $49,317 for a family, and 13% of the population was below the poverty line. Health care is by far and away the biggest engine of the economy in Nashville, with entertainment, state government, and printing and publishing predominant. Nashville and the metro area is home to 21 colleges and universities.

One of the arguments for a franchise in Hamilton is that the average ticket price will be lower than the league leading average price of a ticket to see the Maple Leafs, which is $76.15. Even at the League average of $49.66 per ticket, it remains to be seen how attractive a ticket will be to the average Hamiltonian. The Balsillie camp has not been willing to comment on ticket prices. Given the economic and demographic make up of Hamilton, it becomes apparent that the team will have to draw extensively from surrounding areas like Kitchner and Waterloo to support the team, much like many teams, such as the Predators, draw from surrounding communities in their Metro area. This is where the attraction of hockey to most Canadians works in the favor of a team in Hamilton.

Unknown is the appetite for the City of Hamilton to fund improvements to the existing Copps Coliseum or construct a new facility. Balsillie has said that he is willing to fund an immediate $20MM to bring Copps up to minimum NHL standards. He has asked the city to fund an additional $120MM through the issuance of bonds for additional improvements. The mayor of Hamilton has expressed his support for this, but it still has to go through the legislative process for final approval.

Whether the Coyotes remain in Phoenix or relocate to Hamilton is in the hands of the bankruptcy court. The success of an NHL team in Hamilton depends upon the ability to attract fans not only from Hamilton, but especially the surrounding areas around the city. A hockey mad market bolsters those efforts.

*Sources: City of Hamilton statistical abstract
National Post
City of Nashville statistical abstract

1 comment:

  1. Toronto and area will likely be the No. 1 source of fans for a Hamilton franchise. I imagine that'll mean tickets well over the NHL average price.