Kukla's Korner Hockey

Kukla's Korner Hockey

Not Good News For The NHL, The Canadian Dollar Is Dropping

10/25/2014 at 9:05am EDT

from Pat Hickey of the Montreal Gazette,

The Canadian dollar has been steadily losing value vis-à-vis its U.S. counterpart. It dropped below 90 cents this week and economists see a further decline in the future. A CIBC report said the loonie could fall to 82 cents early next year.

What does this mean for the NHL?

The league has enjoyed a dramatic rise in revenues over the past decade despite two potentially devastating lockouts. We would like to give NHL commissioner Gary Bettman credit for growing the business, but the driving force behind the increase has been a healthy Canadian dollar. Canada bounced back from the recession faster than the U.S. and that was the result of a booming resource sector.

But oil prices have reached the stage where it is too expensive to extract the sludge from the Alberta oilsands. The dollar is dropping and every decline in the loonie’s value will have a largely adverse effect on the NHL.

We start by looking at those overall revenues. Upwards of one-third of the money that is used to measure hockey-related revenue in the NHL is generated by the seven Canadian franchises. If the dollar drops in value, so does the overall revenue.

Teams are expecting to have a little more cap money next season because the full value of the Rogers Canadian TV deal kicks in, but that deal will be worth a little less next year and the value could continue to decline.

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About Kukla's Korner Hockey

Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

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