Tanking Canadian Dollar Impacts NHL More Than You Know

(Photo via business.financialpost.com)

Professional sports and the economy go hand­-in-­hand, but the falling Canadian dollar will affect the NHL more than we realize.

Without money, players cannot get paid. Simple as that. But what happens when the Canadian dollar starts to fall? Hockey is Canada and Canada is hockey. On the professional level, the Canadian teams make up a little under 25% percent of the league, but they account for about 38% of all hockey-­related revenue (HRR), as Sports Illustrated reports.

From January 2015 and on, the Canadian “loonie” has started to drop. This isn’t the first time that the dollar has dropped in relation to a George Washington. Before the salary cap era at the turn of the millennium, the “loonie” dropped to %.65 cents US. This impacted every Canadian franchise, except for the Toronto Maple Leafs, since the revenue they were earning was Canadian dollars, but they were paying their players in American money. This is a system than the Canadian teams might have to adopt if this continues. In January, when the dollar started falling, the Canadian dollar dropped to $.82 against the American dollar, and continued to fall. To put it into scope with the league, if the Canadian dollar is at $0.82 to the US dollar, the cap ceiling for the 2016­-2017 season would only raise to $72.2 million (this year’s cap for 2015-­2016 was $71.4 million). If the loonie dropped two more cents, to $0.80, the salary cap would drop to around $71.6 million. That’s only a two cent drop, folks. A recent report from Goldman­Sachs believes that the Canadian dollar could drop as low as $0.71 USD (Sports Illustrated).

Lets look at the bigger picture here. First, players: the UFA market of Steven Stamkos, Eric Staal, Anze Kopitar, Andrew Ladd, Mark Giordano, Jakub Voracek, Kyle Okposo, and others may be effected if such cap projections come to be true. Other measures may have to be taken, too. Revenue from “Stadium Series” games, television deals, and ticket sales may be altered to adjust for the increase bump in the 2016-­2017 salary cap.

The Habs and Maple Leafs will be fine. They have enough in their pockets and are a deep enough franchise. But smaller markets like Ottawa and Winnipeg might be impacted much worse. Let’s not forget about this team expansion debate from this past summer. The slumping dollar makes Las Vegas look like a better destination for the expansion team, despite the desperate hopes of bringing an expansion team to Quebec City for the first time since the 1995 departure to Colorado (bring back the “Diques,” PLEASE).

It’s a problem that we hopefully don’t have to see. We didn’t want another lockout, and we do not want a tanking Canadian dollar.

– M. Fritz

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