How a Weak Dollar Helps the Canadian NHL Teams

For years, the Canadian NHL teams were short of cash. Teams were moving from north of the border to "greener" pastures (both literally, as in Phoenix and figuratively, as in "greenbacks.") The exchange rate was killing Canadian hockey.

The NHLPA knew the situation and demanded their players be paid in American dollars, so the effect on the Canadians was twofold: attendance was being paid in lower valued Canadian "Loonies" and paying for their labor in higher valued Dollars.

The current drop in the valuation of the American Dollar presents problems for those of us earning them in the United States; for instance, Oil is a dollar denominated commodity and when demand is high (as it currently is) and the dollar is low (as it currently is), the price per barrel becomes even more expensive to those of us earning dollars - the price inflation is compounded more in our economy than in others not using dollars.

This situation, however, finds the Maple Leafs, Canadiens, Canucks, Oilers, Senators and Flames in an enviable situation now of having the fandom cough up their hard earned Loonies for admit while the organization pays off its players in script valued less for the first time.

The effect of this is great. No longer are the teams paying a 40% premium on labor costs as a percentage of their gate. Ten years ago, the Dollar to Canadian Dollar exchange rate was $1 (US) to $1.41 (CAD). Now, for every $1 (CAD) received at the gate, they're now receiving $1.01 (US) of value. In November, it was as high as $1.09 (US) in value. Then, for each Canadian Dollar, it was $0.70 (US).

In 1998-1999 the Ottawa Senators lost about $813 - largely due to exchange rates. In 1999-2000, the Montreal Canadiens reported financial losses as well, partially as a result of player salary and the weak Canadian Dollar. Paying out a 40% premium will do that to an organization. The Quebec Nordiques packed up and left Canada for Colorado in 1995, the Winnipeg Jets followed them very far south to Arizona.

Maybe we will see a revival of Canadian hockey? Probably not to the scale with which teams vacated the country. The currency rate is still too nominal to be of significant difference - for the 1% more the currency exchange gives the Calgary Flames, with an average attendance of 19,289, and an average ticket price of $41, a whopping $7900 increase in exchange rate value, in the course of the season that's just over $323,000 (US) in positive exchange. Since they pay their other employees and operating expenses in the Loonie, this is only a boon if they're buying anything (read here labor) in USD. You won't sign too many players at $300,000.

The playing field - or should I say the playing rink - is now more or less leveled, and after all, isn't that all a Canadian hockey fan could ask for?