Hockey In Canada Essay Research Paper Cater

Hockey In Canada Essay, Research Paper

Cater Crouch

First year Program

Dr. Joseph Jockel

March 29, 2000

Hockey in Canada

Ice hockey has in the last hundred years evolved to become international. Canada is in jeopardy of losing its six teams. Tradition run deep in all of the cities and also professional hockey teams create thousands of jobs and help out in the communities. Teams in the Canadian market are having trouble keeping their programs in the black because of higher taxes and a weaker Canadian dollar. In order for professional hockey teams in Canada not to relocate to United States, it is necessary for Ottawa to provide tax cuts for them.

Professional hockey has been around in Canada for over one hundred years. Tradition runs deep in programs like the Toronto Maple Leaf’s and Montreal Canadians, which have been located in those towns since the creation of the NHL. In 1917 the NHL had its first full season and all of the five teams were from Canada. By 1934 there were only two

teams left in Canada but those two teams (the Montreal Canadians and the Toronto Maple Leaf’s) are still in the NHL after 93 years.

Privet research firms have done studies for professional sports franchises to see if moving their franchise is more profitable than their current location. Currently three of the six Canadian markets are more profitable than the open locations in the United States (Dryden 2). A study done by J.C.H. Jones and D.G. Ferguson has come to the conclusion that the quality of a location directly affects a teams profitability. Also take into the consideration that the quality of a location also impact the quality of the athletic talent.

“Finally, the one pervasive element in the empirical analysis is the significance of a Canadian location. The “hoser” variable is simultaneously a proxy for Canadian sporting culture and a talisman for franchise survival. It is probably no accident that, at the entrance to the Canadian Pavilion at the World Fair of 1986, there is a single ikon which presumably described Canada to the world-the largest hockey stick and puck in the world. Seemingly, everyone recognizes that in Canada, “Hockey is King” (c1).

These teams have made a home for themselves in their towns and if these two franchises are up rooted from their communities they may not be gained much of an advantage even with the lower taxes (Dryden 2).

One of the fundamental problems with Canadian hockey teams competing with their American counterparts is that Canadian teams pay all of the player’s salaries and travel are in American currency. However, all the revenue from ticket sales, concessions and advertising is in Canadian currency. American teams have an advantage over their Canadian counterparts because all the money that was created from ticket sales, concessions and selling advertising is one-third more than what Canadian teams will make. This is because of a weaker Canadian dollar, 69 cents to one American dollar, means that Canadian franchises will always make one-third less from basic franchise profits as long as the Canadian dollar stays the same. “The teams are among Canada’s fewest businesses that pay most of their salaries and expenses in U.S. dollars out of revenue earned in depressed Canadian dollars” (May p 2). This is a problem because the weaker Canadian dollar makes it harder for these franchises to run day-to-day operations (Duhatschek 7). “The result is uneven playing field between 22 U.S.-based franchises and six in Canada”(Duhatschek 7). The weaker Canadian dollar and higher taxes is forcing Canadian franchises to look south for better opportunities.

The National Hockey League needs to make it so teams in profitable areas could help out teams in lower profit markets by sharing some of their profit. By sharing profits this could help Canadian teams with high taxes. Unlike the NBA or NFL the NHL does not have a lucrative TV contract with a network to help some teams with the inflated taxes. The NHL also does not share its gate receipts with its other members (c1). That means that teams like the Detroit Red Wings, which is one of the most profitable teams, does not share any of its gate receipts with teams that aren’t profitable like the Calgary flames. This system is used in the NBA and teams in markets that are not as profitable are still able to compete against teams in cities such as New York and Los Angeles(c1).

Many Canadian corporations get government funding to be competitive with the American market because of the higher taxes (Duhatschek 7). Much like the hockey issue these corporations need government funding so that they can be aggressive against their American counterpart. The Canadian government has given money to multibillion-dollar corporations so that these companies can be competitive in the American market. The Canadian government has given money so that Canadian production companies can make films. “The government provides financial support to a number of projects that would not be produced if making a profit were the only incentive.” The film industry is like professional sports in many ways, they’re both providing entertainment for viewing audience and both Corporations have to pay their employees a large sum of money. “For the past nine years, the Canadian federal government has provided massive subsidies to rich owners and h