Opinion : NHL lockout

By now, the NHL season is pretty much canceled. And I really love Hockey. As a fan, I am more worried about the long term survival of the league, however. The problem is that the economics of Hockey just don’t make sense.

The league has expanded rapidly in the last few years, and on the surface seems about the same as any other major sport, but the problems the NHL faces are unique. First of all, they have never been the most popular sport in the first place. NFL and NBA salaries have grown roughly proportional to their fanbase for many years now. The problem with hockey though is that its biggest support is in Canada, where they just don’t have the number of people compared to big league American cities. The NHL for its part recognized the problem and began moving teams out of Canada and into big American cities. (namely Denver, Miami, Carolina, and Dallas among others) The problem is that it is hard to draw new fans to a winter sport in a warm area and this goes back to the fundamental reason that the NHL lacked wide appeal in the first place. Meanwhile it alienated many of its biggest fans in places like Winnepeg, Hartford, and Minnesota. And this is only the beginning.

The next huge problem is player salaries. As in other sports, player salaries have grown wildly, but unlike football and basketball, they have been largely unchecked by official policies. Starting with the fall of the Soviet Union, there has been a flood of talent into the NHL from other countries. Instead of decreasing salaries (think more supply of talent and same demand), payrolls went from growing steadily to exponentially. This is just bad economics. To make matters worse, most teams tried to compensate for this by raising ticket prices just as fast, which had the consequence of chasing even more fans away from the game. The results have been obvious; I went to a bruins game at the Fleet center 2 years ago and it would have been generous to say the place was at half capacity. (and this was a first place team in a traditional hockey city mind you) One look at the ticket prices would explain the whole thing however. Who is going to bring their family to a game when seats on the first level will set you back around $80 per seat (and those are not even the most expensive ones).

Apparently, the NHL was trying to steer a course between the team independent policies of baseball and the parity of the NBA, but they ended up with the worst parts of both. In the baseball system, teams (read: Yankees) can speculate salaries all they want, but this system ensures that the teams with the huge payrolls are the ones that are also making the most money; whether you are a small team with a small payroll or a big team with a big payroll everyone wins(financially at least). In the NBA, there is revenue sharing and caps, so the teams all have about the same amount of money to spend on talent. The NHL tried to make a system that essentially allowed everyone to speculate salaries and buoyed this system by letting most teams in the league make the playoffs. This caused poor teams to have big payrolls and not surprisingly, 2 teams have already gone bankrupt and several claim to be on the edge. Yet the players union does not want to compromise and accept any policy that will both cut salaries and stop future growth, while the owners claim that their cant be a long term solution without both.

To be honest, I have to side with the owners on this one. Whether the league as a whole is losing money, the players are taking to much of it. Here are some suggestions for the NHL to get back on track: First, adopt an NBA style salary cap and salary maximums and reduce player salaries across the board by at least 20%. Second, make the owners swallow the current deficits and pass those 20% savings on to the ticket buying fans. Next either reduce the number of teams, or move at least 2 back to Canada. Finally shorten the season by about 2 months and cut the number of playoff teams in half. Whether the NHL will bounce back in the near future remains to be seen, but if they do, it will only be through huge changes