What impact does a sinking loonie have on the return of MLB to Montreal?


In the last month, we have seen the Canadian dollar, or the loonie is it is known here, go for a deep dive with no bottom in sight.  The loonie is at its lowest point since the Great Recession of ’08-09.  Since that point, it has enjoyed being above or near parity until recently.  As I write this, the loonie is trading near 78 cents compared to the US Dollar.  How low can it go?

For those of us longing for the return of major league baseball to Montreal, we cannot help but ask: Will a falling Canadian dollar hurt our chances to not only get a team, but ensure its’ viability?  I think that this is a legitimate question.  It goes without saying that a Canadian team’s payroll will be paid in US dollars.  So at the outset, Canadian teams are at a disadvantage with a sub-par loonie.

On the revenue side, revenue sharing, the team’s percentage of gate receipts during away games will be paid in US dollars.  Also in US dollars will be any revenues derived from streaming media such as mlb.tv.

Gate receipts, revenue from concessions for home games will be in Canadian dollars as well as any revenue from Canadian broadcasters.

Canadian teams in other professional sports have and will continue to live through fluctuations in currencies.  A sinking dollar by no means spells the end of baseball dreams in Montreal.  Do not think for a moment that any would-be ownership group is not aware of this.  Like any other business, you have to consider any external factors that are beyond your control and plan accordingly.  Business plans will change as any internal and external factors change.

How low can the loonie go?  Some have pegged it at 71 cents by the end of 2016.  It’s easy for these geniuses to make such assumptions when a currency appears to be in free fall.  I have always believed that the loonie’s “natural” exchange rate to be 75 cents compared to the US dollar.  For the last several years we have all enjoyed cheap trips south of the border and that will no doubt change.  The stronger loonie was mainly due to high oil prices and to some extent a weaker American economy.  Now the Americans got their mojo back and the price of crude oil is falling.  To me, this is the “perfect storm” for a falling loonie and also simply the return to “normal” with respect to where the Canadian dollar should be valued.

So fear not Montreal baseball fans, there will still be plans for a MLB team to land here at some point, regardless of the state of the loonie.  When there were solid plans to build a baseball stadium here in the early 2000s, the loonie was worth about 65 US cents.  The exchange rate was not the factor to why we now see condos in the place where a baseball stadium should have been.  It was a myriad of other factors, mostly political.

Forget about the exchange rate and on April 3 and 4, go watch our native son Russell Martin and the Toronto Blue Jays play the Cincinnati Reds at Olympic Stadium.  Contrary to what I said in a previous post, the are still tickets to be had.  You can get tickets for as little as $22 on the evenko.ca web site.

Let’s fill up the Big O and show Rob Manfred, MLB’s new commissioner, that baseball is in our DNA.

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