Why is the NHL leaving Canada? It’s the Economy, Stupid.

Why is the NHL leaving Canada? It’s the Economy, Stupid.
by Mike Madias, Clinical Sociologist and Columnist

May 15, 2003

Columnist Mike Madias Once upon a time, hockey was a Canadian sport. Most of the teams of the NHL were either located in or near the US/Canada border. The world looked to Canada for hockey players. Even if they played in Chicago or New York, the guys were all Canucks. All was well, and Tim Horton was a hockey player and not a jelly doughnut. Ah, but times have changed.

A lot of sports writers have written about the decreasing number of NHL franchises in Canada. Old teams are leaving venues in Canada and they have been replaced by newer teams located in the sunny climes of the USA. The lake does not freeze over when it is winter time in Anaheim, California. But we are all painfully aware that Anaheim is a hockey town.

The sports writers complain that the sport was stolen. They say that wealthy American corporations front NHL teams and lure Canadian hockey talent. One newspaper, the Financial Times of London, suggested that when the American national anthem was booed at a Montreal hockey game, it was not because the US was about to go to war in Iraq, but it was because the corporations in the US were taking over professional hockey. The Canadian fans were booing American greed.

Horse Puckie! Some of the very factors that make a healthy economy and keep unemployment low in Canada also act to shrink revenues away from owners
of Canadian teams. Yeah, an economically healthy Canada is not good for local teams. And conversely (and perversely) a weak Canadian economy takes pressure off of the owners of Canadian NHL teams. Here’s how it goes down. According to the contract the players must be pain in American dollars, not Canadian dollars. So an owner in Toronto has income in local currency, but has to pay a good portion of his expenses (player salaries) in American dollars.

Now if the major international bankers, including the bespeckled gnomes in Zurich, think the economy of Canada is faltering, the value of the Canadian dollar will go down on the international currency markets. When the value of the Canadian dollar sinks, the price of Canadian products (like Labatt’s beer, or auto parts) goes down relative to American products (Bud or auto parts) or German products (like Heineken and auto parts). So beer drinkers will order Labatt’s and eschew the Buds and Heinies. And, when a guy orders a Blue instead of a Bud it is good for the Canadian economy.

The Swiss gnomes notice this and the value of the Canadian buck goes up when compared to the US dollar. Crazy stuff isn’t it?

If you don’t get it, don’t worry. Just see that the comparative value of the Canadian dollar goes up and down. A weak Canadian dollar is good for the Canadian economy. A strong Canadian dollar is bad for the economy and good for Budweiser.

But if you get weak Canuck dollars in, and you have to pay strong American dollars out, you are stuck between a rock and hard place. A weak economy means expenses go down, but unemployment is up, and less folks go to the games.

Now the guys that own hockey teams are not exactly candidates for the Nobel prize in economics. And American owned teams do not have this problem of
currently value fluctuation. Income is in US dollars and expenses are in US dollars.

So, it is easier for an NHL team owner to make money in the United States than it would be for the owner of a comparable franchise in Canada. This is so true that a team like the Mighty Ducks, who are probably still a bit of a novelty in Southern California, can make the big bucks. But a franchise in the heart of hockey country Canada will tend to be strapped for cash.

So it is not that greedy American billionaires are stealing hockey from Canada. There are plenty of greedy Canadian billionaires. A big reason that the NHL has moved south is that it is easier to make money here.

Don Cherry says, “Play hockey. That’s where the money is.” With all due respect Coach, I say go where the money is, and that is where you play hockey. ***

Photo of Mike Madias courtesy of the author

A clinical sociologist living in the Metropolitan Detroit area, Mike's work has appeared in The Detroit News. He may be reached by e-mail at DetroitHardball@hotmail.com.