The Dollar's Fall is the Jays Gain

It’s hardly news to anyone who follows the market that the U.S. Dollar is having a bad year and a horrible September. In fact, the only entity I can think of that has had a worse month than the greenback is the team that wears green in South Bend. Unfortunately for U.S. travelers and fans of the Fighting Irish, neither entity is likely to have much success in the foreseeable future.

So you might be thinking – why is the Holic writing about foreign currency? Well, here is the answer. It struck me this morning that the dollar’s collapse could have an impact on the American League East for years to come. The reason being – the Canadian dollar this week reached parity with the American Dollar. In other words, one Canadian Dollar is now equal to one American Dollar. The practical effect is Canadians now have as much purchasing power in the States as they do in Canada. This comes after years (and decades) of having a dollar of their currency fetch sixty or seventy cents in the states.

So how does this impact the AL East? Well, if the trend holds and/or extends, it should give the Toronto Blue Jays a significant financial boost that they can now use to raise payroll. For years, the Jays have been at a big disadvantage to U.S. clubs since they collect revenue in Canadian Dollars but have to pay players in U.S. dollars. This is a problem when the exchange rate is so distorted. But now that we have parity, the Jays are no longer forced to pay what amounts to a foreign exchange tax. So, in essence, the Jays will now be able to get a dollar’s work for a dollar’s pay, not a dollar’s work for a dollar and twenty cents in pay.

The impact could be significant as the Jays have put together a solid foundation that could use another twenty million in spending authority to compete with the division’s heavyweights. At the very least, this development should help the Jays better absorb that horrible contract they gave Vernon Wells and ensure that it is not a fiscal carnivore when it begins to mature in 2010. In the meantime, perhaps the Jays could use some of this financial largess to get a short-term closer and lock in some young talent like Alex Rios (even though he is still three years away from free agency).

I am not going to sit here and tell you that I know where the Canadian Dollar will be three years from now but based on where it sits today, the playing field in the American League has become a little bit more level. And if this fed continues down a path towards lower rates, who is to say the dollar won’t fall further and the playing field will soon tilt towards Toronto.