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.