Not Another Lockout Article!

There have been many articles that have been written about the economic impact of the NHL lockout on the owners and players. Unfortunately, these are the only articles that ever get posted, but TSN’s That’s Hockey gave me a little insight into another perspective regarding the economics of the current labor strife.The Canadian Dollar average in June 2004 was .736 USD compared to the current rate as of December 1, 2004 .843 USD. This is a rise of almost 15% since Tampa Bay’s Stanley Cup victory. The problem with the Canadian teams in the NHL is that all of their salaries are paid in USD but most of their revenue is in CAD. Although the 15% rise will not solve all of the economic problems that face cash strapped Canadian teams, but a 15% positive gain in the currency exchange rate is something that Canadian team owners are missing out on due to obvious reasons. The current trend of the CAD is to continue to rise against the USD further increasing margins. Obviously, this trend will level off and even fall off a bit but it is not expected anytime soon.

Glen Healy raised an interesting point regarding the advertisers that spend millions to the NHL to promote their product. For example, let us say Tim Hortons pays the NHL (Owners) $10 million per year to advertise. Since there is no NHL Hockey at the moment, Tim Hortons now have $10 million dollars to play with that would normally be paid to the NHL. The board of directors now must contemplate what to do with this extra money. Let us now fast forward to June 2005 and no NHL hockey has been played. Tim Hortons reviews their books and notices only a slight decrease in their profits and it is not enough to justify paying the NHL the $10 million for advertising so now there is even less money flowing into the NHL pocket books. Please keep in mind when the NHL resumes, there will be repercussions in the ratings so this will further justify advertisers to spend less money as there is now less interest in the NHL. You can follow this domino effect right to TV contracts.

We all know that Gary Bettman will not budge until he has a viable economic system in place. I have to agree in principle only but the lockout will do more harm then good. The longer this lockout continues, the less money to go around which will further drive the wedge between the NHLPA and the NHL. Both sides really don’t understand what they are really doing is shooting themselves in the foot. The owners think that locking out the players will save them money in the long run yet they are reducing the amount of money they can make. The NHLPA is whining about the players not having a fair financial assessment of their abilities if a cap was in place yet when hockey does resume, they will be paid much less then they would be in a cap system that was originally proposed before the 2004-05 season.

So when the dust clears and you notice that Bob’s Garage in Churchill, Manitoba is the main corporate sponsor, you fantasy pool now have additional points for a shootout goal, you wonder why the goalie is not touching the puck that is 6 ft away, and notice that there are fewer teams in the NHL, you can thank the hard work by the NHL and NHLPA.

Thank you Gary and Bob.

6 Responses to Not Another Lockout Article!

  1. Flyers_Fan_In_LA says:

    Ad sales is a topic I am pretty comfortable with as a publisher and you make an EXCELLENT point about those $$$ going away.

    Here is how the deal works. take Tim Hortons for example. They have a VP of advertising or marketing and he or she has a budget (the board might only approve the budget NOT the acutal buys) and he or she will need to spend that in places to acomplish their goals. If the NHL is no longer a place to spend they might try the Internet (and find it works alot better and has statisitcal accountiblity) or TV or newspapers or direc mail. As you can see there are endless places to buy ads and as the NHL will find out they will ALL make less money because those budgets have gone elsewhere and likely will NOT come back as easily as Bettman and Goodenow think they will.

  2. danbrave says:

    well thought out, simplyhabby! too bad bettman and goodenow are too thick-headed to see this. oh well…there’s nothing we can do but watch them as they ruin our game more and more…

  3. rojoke says:

    There is no doubt that certain advertisers will not return to the league when it resumes, but those are mainly the ones who came along in the last few years. Those who have been involved with the league for more than a decade will, for the most part, come back to the league. Unfortunately, you picked the worst example of all to illustrate a very valid point. Tim Horton’s has been involved in hockey from the minor level to pro. I don’t think that will change at all, especially in Canada.

  4. simplyhabby says:

    Tim Hortons, hockey, and beer go hand in hand with Canadian culture hence validating your point that Tim Horton’s will most likely still be a major advertiser in the NHL but they will definately be paying less for the same ad space.

  5. simplyhabby says:

    For real!. All I hear is Bettman stating they are doing this for the fans. He indicates this will allow all teams to play on a level playing field but how many teams will be left on tha playing field when all is said and done?

  6. Flyers_Fan_In_LA says:

    You guys are missing my point. If Tim Hortons, Hockey and beer go hand in hand then WHY advertise? Will sales go down? Will they lose marketshare? Unlikely.

    What they need to have been doing is building allainces like NASCAR where sponsors are willing to line up to reach their demographic. I mean who exactly is their demographic anyway? Canadians? Well thats a nice demo but who in america do they reach? Wealthy men? Young men? Women over 35? Who knows? But what we do know is whoever the NHL used to reach they will reach in FAR smaller numbers. That hurts your ad revenue.

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