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Report On Business Looming Canadian playoff drought could be ‘a massive hit’ to Rogers

Josh Leivo (No. 32) of the Toronto Maple Leafs celebrates his goal on his back against the Nashville Predators during an NHL game at the Air Canada Centre on February 23, 2016 in Toronto.

Claus Andersen/Getty Images

For the first time in more than 40 years, the Stanley Cup playoffs may lack a Canadian team this season.

That's not only a major disappointment to Canada's devoted hockey fans — Rogers Media coffers could also suffer at the hands of the teams' lacklustre performances three years after the company made a big investment in Canadian hockey talent.

In 2013, Rogers Media purchased the exclusive national rights to broadcast all NHL games for a dozen years in Canada for $5.2 billion.

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This playoff season, the odds of even one Canadian team making the playoffs are slim. None of the seven teams currently hold playoff spots in the standings and Winnipeg, Toronto and Edmonton are at the very bottom of the 30-team league. The season ends April 10.

"The bottom line is: no Canadian team in these playoffs is not at all good news for Rogers," Marvin Ryder, assistant professor at McMaster University's DeGroote School of Business, said in an interview.

Last year, when five Canadian teams competed in the first round of playoffs, the company's gamble on hockey paid off. Ratings jumped 36 per cent over the 2014 post-season's initial match-ups, when only Montreal advanced into the playoffs, according to Numeris.

But after the second round, no Canadian teams remained in the quest for the Stanley Cup and ratings slipped, said Ryder.

So a looming Canadian playoff drought could spell trouble for Rogers, he said. The company depends on high viewership to be able to sell playoff advertising spots for hundreds of thousands of dollars or more. That revenue then helps pay for the yearly cost of its NHL broadcast rights.

Rogers declined to comment on the prospect of a Canada-free playoff season.

But Ryder predicts playoff viewership could fall by 25 to 35 per cent this year.

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"They're going to take a massive hit," said Detlev Zwick, an associate professor of marketing at York University's Schulich School of Business. He projects a viewership drop between 30 and 40 per cent — if not more — compared to last year.

"Simply, the product they sold to or they're going to sell to advertisers is just not worth as much."

If significantly fewer fans tune in, he said, it's likely Rogers will offer discounted ad space, while companies that have already purchased slots may try to re-negotiate the terms of their contracts.

It's quite possible, of course, that Canadian hockey fans will still watch the playoffs in significant numbers despite the absence of a Canadian team.

Rogers could help spur further interest in Canadian fans by highlighting homegrown talent playing for U.S. teams, said Ryder. Canada's golden boy Sidney Crosby, for example, may duke it out in the playoffs with the Pittsburgh Penguins.

But regardless of how the company positions the post-season, it's unlikely to replicate the ratings when Canadian teams compete for the cup, Ryder said.

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Others point out that the rights acquisition was hardly a bad investment for Rogers. The company is only a few seasons into a 12-year deal that's likely to have good performance over the long-term.

Zwick compares Rogers's investment to a portfolio that's likely to have some bumps over the years, but should lead to a strong profit overall.

Rogers can also hope that the poor performance of Canadian teams this season will position them favourably to make early picks at June's NHL draft. The teams could beef up their rosters and become more fierce competitors next season, said Ryder.

But if the low Canadian dollar weakens the ability of Canadian franchises to attract top talent, Ryder added, Rogers could be facing the same problem next year.

"If it became a new trend that suddenly this once-in-40-years is now the new standard ... then I'd be very worried about the rights I've acquired."

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