Failing currency causing problems for Jays

[HERPDERP]

For the financially-minded, this is obvious. But if you're not:

 

http://www.thestar.com/business/2014/01/23/9_things_to_know_about_a_90_loonie.html

 

Now I don't know how the Jays deal with their contracts (fixed rate?) but I'm sure for this year it will hurt them tremendously. Don't expect the dollar to go up anytime soon. Analysts expect it to bottom at 85c

[ReturnOfTheYeti]

For the financially-minded, this is obvious. But if you're not:

 

http://www.thestar.com/business/2014/01/23/9_things_to_know_about_a_90_loonie.html

 

Now I don't know how the Jays deal with their contracts (fixed rate?) but I'm sure for this year it will hurt them tremendously. Don't expect the dollar to go up anytime soon. Analysts expect it to bottom at 85c

Not sure this is a huge issue. I expect that most corporations that deal cross border mitigate currency fluctuations with hedging strategies to limit exposure.

[ILDD]

For the financially-minded, this is obvious. But if you're not:

 

http://www.thestar.com/business/2014/01/23/9_things_to_know_about_a_90_loonie.html

 

Now I don't know how the Jays deal with their contracts (fixed rate?) but I'm sure for this year it will hurt them tremendously. Don't expect the dollar to go up anytime soon. Analysts expect it to bottom at 85c

 

Remember that the Jays are an international business. Currency fluctuations are very well known and are pretty easy to hedge against.

 

This will very likely be a complete non-issue.

[kgm1]

Costs money to hedge . At what $$ amt did they hedge at and did they hedge the whole budget ?

 

This may not effect this year that much but Next year could get ugly if the $ drops to 85 cents .

 

This is ECJF line of work . Can you weigh in on this East ?

[jaysfan2014]

Most teams hedge for currency moves. So it's a non-issue. Plus bear in mind we had the league's highest payroll in 1992/1993, when the dollar was MUCH lower than it is now.

 

The NHL on the other hand stands to lose big with a lower dollar, considering how dependent it is on Canadian teams.

[G-Snarls]

I have a sinking feeling about this season all over again...

[jaysfan2014]

Also, with the economic concerns in the US, there is no guarantee our currency will drop any lower than it currently is.

[kgm1]

I have a sinking feeling about this season all over again...

 

I personally think this is one of the causes of the soft cap after hearing all the s*** about the 150 .

 

Still lots to look forward to this year . I'm going to enjoy the season since I have less expectations than most . The Buffalo rotation and even Lansing,s excites me . Also it isn't that this team lacks talent . I don't buy into the Steamer s*** about an 85 win team I do think if everything goes right , we stay healthy and get real lucky on one of the many 5th starters we have suddenly finding it we can surprise people . Winning games in April and May can generate a lot if interest

 

Would love to see what the Zips projections say .

[saskjayfan]

Remember that the Jays are an international business. Currency fluctuations are very well known and are pretty easy to hedge against.

 

This will very likely be a complete non-issue.

 

You can hedge some of that risk for the near future, but the dollar is going to remain lower for the foreseeable future. This will be more than of an issue 2 years from now, but then if the team just started winning there are still tons of untapped revenue streams that could materialize...

[eastcoastjaysfan]

Again,

 

All it'll take for USDCAD to revert back to its mean from the past few years is a lousy jobs report or low inflation numbers out of the States. All of this talk of tapering will subside. The incoming Chair(woman) of the Fed is also a huge proponent of money printing ala Bernanke... so yeah... Don't expect the US dollar to take off for a while.

 

Short term fluctuation. No big deal. It's the hot topic right now. When your grandma (or Peter Mansbridge) starts talking about a certain economic trend, it's probably a good sign that its to reverse pretty soon so don't worry about it.

 

Since 2010 the range for USDCAD has been about +/- 15%. Compare that to other huge exchange rates (GBP/USD, USD/JPY) and you'll start to see how stable it is.

 

http://www.google.ca/finance?q=USDCAD&ei=5r_iUvCPNKGK6gHj5QE (Click the different currencies options on the chart to compare...)

[Anemic0ffense]

Socialism blows

[Olerud363]

Short term fluctuation. No big deal. It's the hot topic right now. When your grandma (or Peter Mansbridge) starts talking about a certain economic trend, it's probably a good sign that its to reverse pretty soon so don't worry about it.

 

Various old road apples told me to buy a house in late 2006. Same old road apples told me to get into stocks in mid 2007 (after the first few little bumps "great time to buy").

[JJippidy]

What scares me slightly is that I recall this being the same organization that ran into issues in the past with not locking in their next years payroll funds in US dollars early enough and then the loonie tanked.

 

Then again Godfrey was running things back then and was probably too preoccupied with torturing small animals.

 

Also, hello I am apparently still alive.

[Boxcar]

 

Also, hello I am apparently still alive.

 

Yayyyyy

[eastcoastjaysfan]

What scares me slightly is that I recall this being the same organization that ran into issues in the past with not locking in their next years payroll funds in US dollars early enough and then the loonie tanked.

 

Then again Godfrey was running things back then and was probably too preoccupied with torturing small animals.

 

Also, hello I am apparently still alive.

 

Wow it's been a while.

[jaysfan2014]

Hey, at least we're not in Argentina or Venezuela, where their currencies are set to plunge or are plunging because of their socialist policies blowing up in their faces. Argentina just devalued this week due to decreasing reserves to defend their currency.

 

Some of our currency decline is due to concerns about China, plus the fact the currency was overvalued at parity.

 

As for when Godfrey screwed up with the payroll, I believe that was in the early 2000s when the US dollar surged to $1.60 against the Canadian dollar. Don't expect a return to those levels, as once the Fed starts the printing press again, currencies such as the yen, Canadian dollar, Swiss franc, etc. will likely rise.

[jaysfan2014]

It should be noted the time the dollar was at $1.60 was about the time Delgado was a Jay, and the Skydome was falling apart due to the bankruptcy of the building's owners, as it's part of the reason Rogers got the Skydome so cheap.

[JJippidy]

I'm not really worried about the dollar.

 

The new revenue sharing formula which is set to take full effect in 2016 is far more of an issue.

 

Still Jays are positioned decently here by owning the broadcast channels, they can potentially cut a huge chunk of what they may otherwise be forced to pay into the shared pool by selling themselves their rights at the bottom of the MLB formula.

 

In the end it's the same f***ing story as it's always been, team needs to win, that solves everything.

[jaysfan2014]

The reason for the payroll difference was due to JP Riccardi being a tightwad, lower revenues and different revenue sharing at the time, and we were rebuilding. Outside of the Yankees, most team payrolls were much lower than they are now.

[Cooler Heads Prevail]

The day Delgado signed with the Marlins, the Canadian dollar was 0.81 USD. the payroll in 2005 was $45.7M. Today it's 0.90 USD. The payroll in 2014 will be $130M+.

 

Clearly, the dollar has profound implications on our ability to spend money on baseball players.

 

Except that it doesn't.

 

The US "recovery" was built on massive printing of US dollars. Common sense dictates that a "stronger" US dollar has no legs for numerous years.

This is a trading cycle not anything built on fundamentals. Here's the reality, Rogers is one of many corporations that are making out like bandits the last few years. It's been a corporation friendly environment, with relatively cheap labour and they are in businesses that are somewhat recession proof ( everyone likes cable TV ).

Edited January 24, 2014 by Cooler Heads Prevail

[FireAlexAnthopoulos]

Well, now AA and Beeston have their excuse for this year - the currency. Wonder what the next lame excuse will be?

[Key22]

I teach in Hong Kong and have student loans to pay off in Canada - so personally I want to see the Canadian dollars drop to .60 like back in the early 90s - That sure would help me.

[reedjohnsonfan]

For the financially-minded, this is obvious. But if you're not:

 

http://www.thestar.com/business/2014/01/23/9_things_to_know_about_a_90_loonie.html

 

Now I don't know how the Jays deal with their contracts (fixed rate?) but I'm sure for this year it will hurt them tremendously. Don't expect the dollar to go up anytime soon. Analysts expect it to bottom at 85c

 

They definitely hedge their money in many ways. Considering the Jays are a small fraction of Rogers, I can't say that a falling loonie matters AT ALL.

[flafson]

Jays are probably around 1% the size of Rogers, so fairly small.

[Dick_Pole]

Take it from a guy who works finance for a competitor of Rogers. If they were stupid enough not to hedge, they have MUCH bigger problems than paying baseball players. Most handset manufacturers have agreements with the Canadian telecom industry in USD except Apple. Even Blackberry prices in USD not that they matter anymore. My company hedges all of our Q1 2014 USD needs and half of it for the remainder of the year and I just calculated an additional $30-$75M of costs we have to absorb for 2014 because of the CAD tanking from 96 to 90 cents lately a couple of days ago.

 

Rogers moves more phones than us, so their risk is much bigger. Now none of these telecom companies can afford to report a miss on their earnings forecast for 2014, so guess who's gonna absorb the cost increase of these devices for 2014! Hope none of you have a contract expiring this year lol

[Anemic0ffense]

Well, now AA and Beeston have their excuse for this year - the currency. Wonder what the next lame excuse will be?

 

When isn't money the excuse?

[Gorlak]

Except that it doesn't.

 

The US "recovery" was built on massive printing of US dollars. Common sense dictates that a "stronger" US dollar has no legs for numerous years.

This is a trading cycle not anything built on fundamentals. Here's the reality, Rogers is one of many corporations that are making out like bandits the last few years. It's been a corporation friendly environment, with relatively cheap labour and they are in businesses that are somewhat recession proof ( everyone likes cable TV ).

 

I disagree

[Gorlak]

The question is how much they hedged and how much they need for normal business operations. Also important how long they think this will last, Since it will be used on mandatory spending in U.S. dollars. Thinking this is not a problem is just as ridiculous as thinking this is a none issue, Unless you know the inner working of Rogers expenses and Liabilities.

[reedjohnsonfan]

The question is how much they hedged and how much they need for normal business operations. Also important how long they think this will last, Since it will be used on mandatory spending in U.S. dollars. Thinking this is not a problem is just as ridiculous as thinking this is a none issue, Unless you know the inner working of Rogers expenses and Liabilities.

 

I don't think you need to know their expenses/liabilities to say at least it's "very likely" a non-issue. I'm sure they have several assets that are in U.S. currency and seeing as the Jays are a not a huge part of Rogers, there's no way this should be used as an excuse for decreasing payroll. Then again, large corporations can make terrible mistakes too, so nothing is certain unless you're an insider- I can agree on that part.

[kgm1]

Canadian Oil Companies love a low dollar . They pay their expenses in CAD and sell their product in US . The Jays are the exact opposite .

 

Since I suspect each division of Rogers is run on it,s own merits then stating that the Jays are only 1 % of Rogers doesn't affect this. Most agree the jays will have hedged at around 96 cents . Hopefully they hedged most of this years budget .

 

Like a lot of posters I think this affects next years budget more than this year with the $ expected to remain low for 2015 . I seriously doubt Rogers or the Jays have hedged any for 2015 ? so at the current rate that would cost then 10.72 % making 135 mil US about 149 CAD.