Hockey Lockout, History Of The Nhl Economics Essay

1974 words - 8 pages

Argument: The causes of the NHL lockout and how it could have been prevented. This is significant because Lockouts are reoccurring in every sport. So if you learn the causes of them you can also learn how to prevent them which can save that sport billions of dollars.

On September 15, 2004, the National Hockey League was officially locked out. Arenas laid there empty, referees and arena staff were jobless, and diehard fans were left without games to cheer for. These were dark days in hockey, as players were suddenly reminded that they weren’t able to play the sport they loved because of the nature of the multibillion-dollar hockey business. Money had become the driver of the sport and bottom line of the business. Billions of dollars in revenues were lost, and to make matters worse, this continues to be a reoccurring theme in the battle for more money between the owners and the players. The damage could be immeasurable for hockey, which already has limited appeal in the United States (Staudofor, P. D. (2005, December). The hockey lockout 2004/05 season went down in history as the first professional sport to lose an entire season. Where did the league wrong? The players’ demands for higher salaries were too great for the leagues to be able to accommodate them. Additionally, the league’s inability to effectively plan for wages of this magnitude led to the cancellation of the season.

The National Hockey League (NHL) is ranked as the fourth most popular professional sport in the USA(n.d.). Sporteology.com). Increasing general interest, and thereby revenue, has always been an important focus of the NHL owners and the organization as a whole (Staudofor, P. D. (2005, December). However, due to a cost sharing agreement between teams, losses must be subsidized by the whole league. Teams’ poor business decisions had to be accounted for somehow. As a result, NHL owners made the decision to increase the interest in hockey through expansion (Paul D. Staudohar, California University, 2005). However, the league approached the idea of expansion irrationally. They expanded in locations that already had minimal interest in hockey. Furthermore, league owners decided to accept the franchise interest in the Sun Belt cities, such as Phoenix and Florida(Paul D. Staudohar, California university, 2005) . The NHL mistakenly thought that expanding a winter sport in desert areas would be a good idea.
The league proceeded by adding nine new franchises (Peter King an (n.d. 2005 ), expecting each franchise to be able to support the salaries of players in places that already weren’t attracted to hockey as a sport they were interested in watching. In addition, teams were expected to pay 50-70 million dollars just to become a part of the league (Paul D. Staudohar, California University, 2005). This entry fee would prove to be quite substantial, as there were many other fees involved in starting a new team, such as building a top class rink. Here, one problem led to...

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