These Towns Aren’t Big Enough for NHL : Nordiques Sold, Moved to Denver as Small-Market Struggle Intensifies

Horse-drawn carriages clatter down narrow streets, passing sidewalk cafes where customers linger over creamy pastries and the delicious aroma of cafe au lait .

For more than three centuries, Quebec City has preserved its French heritage and Old World charm. But the stone fortifications of North America’s only walled city couldn’t repel the modern economic pressures that drove away its only major league team, the NHL’s Nordiques.

On Thursday, the club’s five shareholders, after failing to get the government of Quebec to build them an arena and provide extensive economic support, sold the franchise to COMSAT Entertainment Group of Denver. COMSAT, which also owns the Nuggets of the NBA, paid about $75 million for the Nordiques and will house the team at McNichols Arena in Denver until a planned $132-million arena is built.

With about 170,000 residents in the city and 500,000 in the metropolitan area, Quebec City was the smallest market in a league dotted with small and medium-sized markets. Hockey has deep roots here, as in the seven other Canadian cities represented in the NHL, but tradition became a casualty in the clash between rising player salaries and limited revenues. The Nordiques projected a loss of $10 million this season and $12 million to $14 million next year had they stayed.

“Quebec City will become a cemetery, with [Premier] Jacques Parizeau as the caretaker,” said Claude Larochelle, a columnist for the newspaper Le Soleil.

Said Michel Cloutier, who attended the Nordiques’ final game at the Colisee on May 14: “They cannot stop the increase in salaries throughout the NHL. If there is no ceiling, it will be impossible for teams to do business. Today, it’s us. Tomorrow, it will be somebody else.”

Many miles to the west, on the Canadian prairie, the Winnipeg Jets nearly became that somebody else. Like the Nordiques, they are a small-market team whose arena is structurally sound but lacks revenue-producing luxury boxes. Like the Nordiques, they lost huge amounts of money as the average NHL player’s salary rose from $201,000 to $520,000 in the last six years. Like the Nordiques, they said they would move if they did not get a new arena.

The Jets were on the verge of being sold and moved to Minneapolis a week ago, but the deal fell through when Jet owner Barry Shenkarow learned he might have to repay $11.7 million paid by the province of Manitoba since 1991 to cover the team’s losses. That would have cut into the $45 million former health-care executive Richard Burke had agreed in principle to pay Shenkarow.

The threat of losing the Jets motivated the city of Winnipeg, the provincial government and the federal government to promise $94 million of the anticipated $111-million cost of a new arena. Fans and private businesses have raised an additional $60 million for operating costs (part of which would buy out the current owners), but Manitoba Entertainment Complex, the group heading the fund-raising, must come up with about $30 million more by Aug. 15 to cover the club’s future losses.

Similar efforts in Quebec City failed, at least in part because it is home to few major corporations that could have contributed toward a new arena. Quebec City is the capital of the province of Quebec and its main industries are tourism and government.

Fans had long expected the Nordiques’ departure and only about 300 people attended a save-the-team rally at the provincial legislature last week. Nor did the Nordiques sell out the 15,399-seat Colisee for their last three playoff games against the New York Rangers.

“Hockey players are superb athletes, but their salaries should not be so high,” said Denis Paradis, a Quebec City cabdriver. “Teams must raise ticket prices to pay their salaries, and no one can pay the price anymore.”

But among executives of NHL clubs, seeing Canada lose the Nordiques--and very nearly lose the Jets--creates doubt about the league’s ability to balance history and its bottom line.

“It’s a blow to Canadian hockey and a blow to where the roots of the game were,” said David Poile, general manager of the Washington Capitals. “You wish things in life were more fair, but everything in sports has become a business. It’s just not right. But it’s not my money and I have no say. And if I was the [Jets’] owner, I’d be doing the same thing.”

Said Rene Paquet, a member of the group that founded the Nordiques in 1972: “The question is, has hockey outgrown small markets? Has hockey become a sport presented for television and located in large markets?”

The NHL’s problems are chiefly in Canada because (a) the country has fewer large markets than the United States and (b) there is a disparity between Canadian and U.S. dollars. The unfavorable exchange rate means, for example, that to match the St. Louis Blues’ budget of $24 million for player salaries, a Canadian club would have to spend more than $33 million. Canadian clubs get their revenues in Canadian dollars, but many players demand they be paid in U.S. dollars. Canadian franchises must also pay travel expenses in American dollars when they’re in the United States. The NHL lets Canadian clubs pay league dues in Canadian funds, but those amounts are small compared to salaries and other expenses.

Buffeted by those forces, Edmonton Oiler owner Peter Pocklington threatened to move his club to Minneapolis last year. Pocklington, who has sold or traded the high-salaried players from his five Stanley Cup-winning teams, stayed only after he won major concessions from the Northlands Coliseum. Those concessions included using public funds for building renovations and giving him shares of concession and parking proceeds. In return, he agreed to pay $2.4 million a year in rent and promised not to move for 10 years.

In the United States, the Hartford Whalers were teetering before new owners stepped in last year. The state of Connecticut provided financial aid in return for an agreement by Peter Karmanos, the Whalers’ chief executive officer, to keep the club in Hartford for four years.

As for Thursday’s sale, NHL Commissioner Gary Bettman could only say: “We understand that every alternative was explored to keep the Nordiques in Quebec City, but that the club had no choice.”

That rankles Poile, who would prefer the league concentrate less on plans for an Olympic Dream Team and European super league and more on helping its failing Canadian members. “Somebody in there with a great plan is hoping they’re replaced with cities like London,” Poile said.

Slowing the rise of salaries to help small-market clubs remain competitive was a key issue in the lockout instituted by NHL owners on Oct. 1. However, the agreement that ended the 103-day dispute didn’t include team salary caps and didn’t expand revenue-sharing, which is practiced with TV and merchandising income. It also didn’t address equalizing U.S. and Canadian currency disparities, although a draft report on the matter has since been prepared.

Even if revenue-sharing had been extended, it wouldn’t have come in time to help the Nordiques and it wouldn’t have had significant impact. Because of its small markets and low ratings, the NHL’s network TV deal is minuscule compared to those of the NBA, NFL and major league baseball: The NHL’s five-year, $155-million deal with Fox is 10% of what Fox paid for the NFC rights alone.

“It’s not a game now. It’s a matter of generating enough revenues,” said Jean Martineau, director of press relations for the Nordiques. “We’re now at a time in some markets where the government has to get involved. Here, it must decide whether to keep in Quebec an institution that is generating revenues for the government, not generating expenses. People say things like schools and hospitals must come first. But if you let the team go, you’re losing revenues that could be used to help hospitals and schools.”

The Nordiques this season paid the city about $3 million rent at the Colisee, which was built in 1949 and renovated in 1981. They wanted to occupy a new building rent-free and have the government absorb all their future losses. That was a lot to ask in a province that has cut social services and two weeks ago announced the closing of nine hospitals, but Martineau said the club pumped $50 million into the local economy each year and provided 600 jobs.

The Nordiques maintained that a new arena could have been constructed without cost to Quebecers, who already pay 13.5% in taxes on goods and services and high personal income taxes. The Nordiques advocated building a casino adjacent to the arena to finance its construction and support the team, but Parizeau opposed that for fear it would have hurt profits at a casino in the nearby Charlevoix region.

Parizeau proposed a plan in which the government would have paid $17 million to become a shareholder in the club and would have covered $14 million in losses the next two seasons while it studied the feasibility of constructing a new arena. The Nordiques, claiming they needed a long-term solution, rejected that last week.

“We tried to come up with a reasonable proposal. It didn’t work,” Parizeau said. “I deplore it, but the episode is closed.”

Marcel Aubut, the Nordiques’ president, said: “Unfortunately, the offer of aid we received from the government was not in line with what it takes to keep a professional NHL club in Quebec City.”

But Paquet, an attorney and businessman who heads Quebec City’s bid to host the 2002 Winter Olympics, said the price of keeping the Nordiques was too high.

“If you were sentimental, you would say, ‘I don’t want the Nordiques to leave Quebec,’ ” he said. “But if private enterprise does not want to step in, we can’t survive financially in a small market. Can you expect government help for a hockey team in a period of time when all governments are in difficult situations to provide services to their citizens? That is the responsibility of government, to determine priorities.”

Bettman has said his priority is to ensure that the 26 existing teams in the NHL are stable before it expands again, but league sources say expansion will add six teams by the year 2000.

By then, will the Whalers still be in Hartford and will Pocklington have kept his promise? Will the economic pinch have endangered medium-sized markets, which are the NHL’s backbone?

“We as a business enterprise, a league, have to control our costs for the sake of the league and to keep this game going,” said Pittsburgh Penguin General Manager Craig Patrick, who says he’s concerned about his franchise’s future. “We can’t keep asking fans to pay for it. We might have to let players go, to keep things in order. It’s out of order right now.”