University of Calgary PRISM: University of Calgary's Digital Repository Graduate Studies Master of Public Policy Capstone Projects 2019-08-31 The Price of the Puck: Recommendations for Public Financing National Hockey League Arenas in North America Puppa, Isabelle Puppa, I. (2019). The Price of the Puck: Recommendations for Public Financing National Hockey League Arenas in North America (Unpublished master's project). University of Calgary, Calgary, AB. http://hdl.handle.net/1880/111842 report Downloaded from PRISM: https://prism.ucalgary.ca MASTER OF PUBLIC POLICY CAPSTONE PROJECT The Price of the Puck: Recommendations for Public Financing National Hockey League Arenas in North America Submitted by: Isabelle Puppa Approved by Supervisor: Trevor Tombe Submitted in fulfillment of the requirements of PPOL 623 and completion of the requirements for the Master of Public Policy degree 1 | Page Capstone Approval Page The undersigned, being the Capstone Project Supervisor, declares that Student Name: _________________Isabelle Puppa has successfully completed the Capstone Project within the Capstone Course PPOL 623 A&B ___________________________________Trevor Tombe (Name of supervisor) Signature August 31, 2019 (Supervisor’s signature) (Date) 2 | Page Acknowledgements First and foremost, I would like to thank my supervisor, Dr. Trevor Tombe, for his support throughout the capstone process and enthusiasm throughout the academic year. Dr. Tombe, the time you spent providing feedback and guidance has been invaluable. You’ve allowed me to express creativity in approach. You’ve been a constant guide for how to tackle policy issues. Even from over 2000 miles away—or rather, 3218 km, you were always there to help me. To my MPP classmates, your friendship is something I will always cherish. From showing me how to hike up a mountain to never passing up a moment to celebrate—your ability to want to change the world and have fun doing it made me feel at home. Thanks for accepting me, even when I wore a snowsuit to class and brought out my southern accent. To the School of Public Policy, thank you for taking a chance on this American-Canadian with big dreams. I am grateful for the opportunity to meet amazing speakers, attend eye-opening conferences, and pursue topics of my interest. To the NHL, thank you for your support of my academic career with the NHL Alumni Scholarship program during my undergrad program. Back in Tampa, I never passed up a chance to attend a Lightning game. Last but certainly not least, thank you to my family. I could not have moved as far away as I did if it weren’t for your continual video chats and flying me home for holidays. Mom, thanks for always answering the phone even when I would forget about our time zone differences. Dad, thank you for instilling in me a love of hockey and education, and being a constant source of encouragement while exploring this topic. "You miss 100% of the shots you don't take -Wayne Gretzky” - Michael Scott 3 | Page Table of Contents Table of Contents Introduction ................................................................................................................................................... 9 The NHL Background ................................................................................................................................. 12 League Growth over Time ...................................................................................................................... 13 History of the NHL Arena ...................................................................................................................... 14 Public Funding ............................................................................................................................................ 16 Overview ................................................................................................................................................. 16 Funding for NHL Arenas ........................................................................................................................ 17 Direct Funding ........................................................................................................................................ 18 Indirect Funding ...................................................................................................................................... 20 Legislation Changes ................................................................................................................................ 21 Economic Theory ........................................................................................................................................ 23 Public Subsidization and Market Failure ................................................................................................ 23 Subsidization for Public Goods ............................................................................................................... 25 Future Value of Money ........................................................................................................................... 27 Demand for Arena: Sports Consumption ................................................................................................ 28 Demand for Arena: Voter Referendum ................................................................................................... 29 Game Theory: To Fund or Not to Fund .................................................................................................. 32 Literature Review ........................................................................................................................................ 34 NHL USA Teams ........................................................................................................................................ 34 Public Contribution by Direct and Indirect Funding Types .................................................................... 36 Public Contribution by Purpose of Arena Construction ......................................................................... 42 New Team, New Arena ....................................................................................................................... 43 Relocation Threats: Go Big or Go Home to another City ................................................................... 45 4 | Page Out with the Old, In with the New ...................................................................................................... 47 Public Funding: All or Nothing .............................................................................................................. 48 Public Funding by Metro Population Size .............................................................................................. 49 Canadian NHL Teams ................................................................................................................................. 51 Public Contribution by Direct and Indirect Funding Types .................................................................... 52 Public Contribution by Purpose of Arena Construction ......................................................................... 55 New Team, New Arena ....................................................................................................................... 56 Out with the Old, In with the New ...................................................................................................... 58 Relocation Threats: from Suburb to City ............................................................................................ 60 Public Funding: All or Nothing .............................................................................................................. 61 Public Funding by Metro Population Size .............................................................................................. 61 On the Bench: Teams that no Longer Exist ................................................................................................ 62 Public Financing and Team “Success” ....................................................................................................... 65 Discussion ................................................................................................................................................... 67 Public versus Private Ownership ............................................................................................................ 67 Popular Funding Tools ............................................................................................................................ 69 Location Matters ..................................................................................................................................... 70 Arena Purpose Considerations ................................................................................................................ 71 Conclusion .................................................................................................................................................. 72 Policy Recommendations ........................................................................................................................ 72 Bibliography ............................................................................................................................................... 76 Appendix A: USA Teams Fact Summary ..................................................................................................