David Staples: Edmonton Oilers, at $3.53B, not just competing with U.S. rivals — crushing them

What would you say if an Edmonton business started up with a $25,000 investment in 1971, then grew in value to Cdn$3.53 billion today?

What would you say if that same business had successfully fought off American competitors to rise up and dominate its U.S. foes. If it had found a way to work with government, both in the obvious self-interest of the business itself, but also for the greater public good? And if it inspired such devotion that many of its customers got the corporate logo tattooed on their bodies?

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I don’t know about you, but I’d call that business a rip-roaring success. I would call it a model for how Edmonton, Alberta and Canada can take on the world.

That’s exactly what the Edmonton Oilers now represent.

Founded in 1971 by Dr. Charles Allard and hockey booster “Wild” Bill Hunter for a franchise fee of $25,000, Forbes magazine now values the Oilers at more than US$2.45 billion.

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Fuelled by revenues from its Stanley Cup run, the Oilers were the top earning team in the NHL in 2023-24 at $388 million, which is more than the Toronto Maple Leafs at $308 million, even as the Leafs are the top-valued team at US$3.8 billion.

The Calgary Flames’ revenue was $191 million, not even half of what the Oilers made.

Some of the increase in Edmonton’s franchise value is due to the arrival of Connor McDavid and Leon Draisaitl. Some is due to the $600-million-plus deal worked out in 2012 with Stephen Mandel’s city council to build a new Downtown arena, which has spurred on more than $2 billion in private investment in Edmonton.

But most of the credit goes to the team’s loyal supporters, the cult of Edmonton hockey. The Oilers owe their existence and business success to their fanaticism.

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In 1979, Molson Brewery, owner of the Montreal Canadiens, refused to accept Edmonton and three other World Hockey Association cities into the NHL. At once, fans in Edmonton, Winnipeg and Quebec City boycotted Molson beer, which pushed Molson to change its vote.

When the team’s owner Peter Pocklington sold off Wayne Gretzky and Mark Messier, then derided Edmonton as a small market, a ma-and-pa corporate town and a bad place to do hockey business, the fans again stood up. One of them, businessman Cal Nichols, led a successful charge to sell season tickets and prevent Pocklington moving them to the U.S., as had happened in Winnipeg and Quebec City in the 1990s.

Out of Nichols’ season-ticket campaigns, he found the 30-odd Oilers fanatics and community leaders who would buy out Pocklington in 1998 and keep the team here. That same group realized in 2007 it didn’t have the ambition or energy to push ahead a Downtown arena project, so the consortium sold the team to another diehard fan, Daryl Katz.

Through the long Decade of Darkness-plus, Edmonton fans filled the old arena while Katz and city council beat each other up while negotiating the Downtown arena deal. Many locals hated the deal as a hand-out to millionaire players and a billionaire owner, a fair critique. But the deal advanced because it offered a way to secure the Oilers in Edmonton and revitalize the Downtown.

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Katz has become Edmonton’s secret weapon, an owner who has demonstrated repeatedly he’s all-in with financial support for the Oilers, whether it comes to spending to the upper limit of the salary cap to lock up stars like Draisaitl and Ryan Nugent-Hopkins, or buying out expensive contracts of under-performing players.

Investment in the Ice District has also been a driver of Edmonton’s success, including the new arena with its state-of-the-art training facilities, the NHL’s top dressing room and a community practice rink, all of which makes life better and sweeter for an NHL player in Edmonton.

Can Katz’s winning streak with the business of the Oilers continue? The NHL salary cap is going to rocket up to US$113.5 million in 2027-’28 from US$88.5 million. And while some Canadian teams might well fear they’re going to have a hard time managing that increase, the Oilers are as well placed as almost any NHL team when it comes spending to the upper limit of the cap, at least if the bottom doesn’t fall out of the Canadian economy.

Canadian teams takes in Canadian dollars, but must pay their biggest expense — player salaries — in U.S. dollars. This will be a challenge if the economic slide seen under the Trudeau Liberals keeps eroding the nation’s efficiency, industry and prosperity. That could prove an ugly obstacle. But there’s little else stopping Edmonton’s most beloved business from charging ahead on the ice and in business.

dstaples@postmedia.com

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