I think this is at the core of the situation. It doesn’t take much arm bending to make Canadians watch hockey. Even without a team in Winnipeg fans there will be fans. Armed with that knowledge ‘the league’ has been pushing their boundaries. There could be a team on the moon for all we care so long as CBC is able to broadcast three or four games on a Saturday.

We’re loyal, even though we know we’re being used and that the revenue that Canadian teams are earning is being sunk into the Atlantas of the hockey universe. We’re loyal, even though the prospect of another Canadian team is being outright stymied by the powers that be. We’re loyal, even though the league’s commissioner carries with him a dodgy track record and a snakish capacity to manoeuvrer himself out of the tightest media quandaries.

I guess what I’m trying to say is that as fans, and as consumers we are letting this happen.

As Jeremy mentions hockey is a high revenue business. Decisions that don’t make hockey sense but make business sense are being made every day. NHL calibre players are playing with affiliate teams because of outright fiscal fandangling.

The salary cap is one such monolithic aspect of the corporate aspect of the league. When discussing anti-trust and competition law this pings far deeper for me: a group of affiliated but fundamentally independent companies come together and determine that they will limit the amount spent on their fundamental corporate asset (players) and in doing so restrict more affluent and savvy companies (teams) from excelling where very clearly they could seems like a slap in the face to meritocratic practises. Revenue sharing could easily be seen in a similar light.

Sadly I’m not the guy with the piece of paper that says I know what I’m talking about from a legal standpoint, so I will reserve judgement on these issues until later.

What I suppose matters is that these franchises believe, or at least give lip service to, the notion that in restricting and managing these assets under a collective banner they are creating a situation in which more overall revenue can be generated either in the now or the foreseeable future. By providing a code of mutual business practises they are taming what could be an ethical and financial maelstrom. They further assert that in creating an even keel between teams they can provide a product that is more likely to be consumed, and they are probably right.

I can illustrate two points in which lawlessness in the game has resulted in less than desirable results.

The first involves the case of Evan Pighin. Last year Pighin played for the Chilliwack Bruins in the WHL. He was getting major minutes and in the coming season was expected to play on the top line. At the beginning of the year though he did not report to Chilliwack despite the presence of a signed contractual agreement. Instead Pighin reported to the Victoria Grizzlies in the BCHL who had traded for his BCHL rights. Why do it? The Victoria Grizzlies will be hosting the RBC cup which is a large junior A tournament, and by hosting it they are automatically entitled to compete in it. Due to the elite nature of the tournament it will be well attended by scouts. To make a long story short Pighin was not released by Chilliwack, but has played games in the BCHL to the disgust of the Chilliwack management as well as the commissioner of the WHL. Ultimately this may well be settled by a court which will test the iron-cladness of his contract. It is worth noting that usually in cases such as this one it is a player jumping from the BCHL to the WHL, and that the issue is normally resolved by the WHL team writing a cheque for the BCHL team that continues to hold that player’s WHL rights.

The second case is that of Alexander Radulov who is currently playing in the KHL despite an NHL contract. There is more than enough news coverage of the Radulov situation so I will leave the details for you to google.

The similarities between the two are striking, however, despite the international nature of the second. Both illustrate the need for a governing body to prevent wanton decisions, and it is here where the NHL will argue the necessity of its salary cap and other protocols.

The tightening financial situation will play a heavy role in the future of sports entertainment, which is one that depends on the frivolity of their fan base to succeed. Sports are ultimately optional, and with the coming storm we can expect a sizable portion to back away from that option.

Though Bettman is unwilling to comment on any potential future hardships it is clear that his answers to questions have been calculated in such a way so as to emphasize the now. “[The NHL is] still in growth mode” he commented not too long ago. The numbers illustrate that he is correct, everyone has already bought their season tickets this year. As those assets have already been committed they paint a deliberately rosy picture of the league.

Let’s be honest though… it will be bloody, and there will be casualties. The Salary Cap protects owners from having over-invested in their assets to a degree, but as has been seen there are a number of teams this year that have managed to walk the line on the minimum amount that must be devoted to salaries. One could argue that this is an attempt to undermine the success of a team to ensure superior draft picks, but is it also a stop gap measure to minimize spending in light of an uncertain future as well?

Will franchises be closed at the end of the day? Minor markets will be buoyed by stronger ones, but even in Vancouver I could imagine a situation next year where ticket prices would have to be reduced and that there is an outside chance that tickets will have to be given away to ensure a sellout. More to the point, as other businesses struggle to stay black they will be withdrawing corporate support, which at the end of the day is an even more important aspect of sports sustainability. Revenue will be going down unilaterally.

What measures can the NHL take to roll with the punches? Well, I’m hardly an economist, but what I can do is go back and look at the last semi-major US recession during the early 80′s as a reference point. Leading up to the recession we saw the death and merger of the WHA, and during that time the Atlanta Flames and the Colorado Rockies changed ownership and were moved to other cities. I can only imagine that a worse depression which could verge on a multi-national depression would result in higher casualties. I doubt that any team would fold permanently, though should significant hardships occur we would be far more likely to see a Canadian relocation as a result, given that Canada is far more blue chip with hockey.

I think I’m spinning my wheels, so I’m going to call it here. By the way, I figured your picture was some hackneyed Photoshop job, and didn’t want to do you the disservice of mentioning it.

Seriously, I think you are opening up some alternative options. The new market generation theory would probably be a valid defence to an accusation of anti-competitive behaviour. And of course, realistically, the NHL is the umbrella company and in the end neither the Competition Act (Canada) nor the Sherman and Clayton Acts (U.S. Antitrust) would apply.

But let’s move forwards now. We are looking at a high-revenue professional sports league where the most culturally invested audience feels as though it’s being short-changed, which colours the reception of the product.

The talent pool is diluted, which damages the product itself.

The Corporation – as it is best to think of it (and I don’t meant that in a negative way; simply as an academic paradigm) – needs to grow its product, and improve revenues.

Would a team in Hamilton increase revenue? Balsillie is willing to take that chance. I don’t see any reason to deprive him of it EXCEPT…

the league is not expanding, and for the reasons of talent dilution mentioned above, further expansion is not a good idea. So we’re back at the question of moving a team…

Which denies an opportunity to develop an as-yet untapped market which would, in turn, broaden the cultural-impact base through minor league development.

So what do we do? The league is in trouble in the eyes of people in those culturally entrenched markets – all Canadian markets and the major U.S. ones.

In other words, we don’t want to see our game turn unwatchable.

The League, however, knows they’ve got us regardless. Look at Toronto. Perennially one of the lousiest teams in the NHL, as long as I’ve been watching hockey (which dates back a couple of decades at least), they have a broad and loyal fan base who will pay outrageous ticket prices for a second-rate (i.e. losing) product. Montreal stuck by its team during losing years (the upswing seems to have begun for mes Habitants). Vancouver bandwagons around its team year after year, even though we’ve yet to bring home Lord Stanley grail. And Edmonton fans are in a class of their own for hockey passion.

Let’s suppose the League sees a drop in major market revenues – Canadian and major U.S. – through secondary sources (advertising and merchandise). What could it then do?

Or is that so utterly unlikely that the gamble to expand and try to drive untapped markets like Nashville, Phoenix, Dallas, Raleigh, Tampa Bay, etc. has no risk but its direct cost of investment?

The NHL talent pool has never been spread so thin. When teams are fielding 9 players under the age of 22 (Phoenix Coyotes) in their 23 man roster with St. Louis not far behind them and we have two captains in the league who are among the youngest 5 captains of all time in Toews in Chicago and Crosby in Pittsburgh there is clearly something going on here.

Either the young guns coming up are better than they’ve ever been in ages or players are being pushed into the roster too soon because there is a lack of middle-high end players to fill the gap. I strongly believe that it is the latter, and while I like to watch the young guns go I know for a fact that players like Versteeg in Chicago wouldn’t remotely see the light of day if there were less teams in the NHL.

The rise of the KHL has created a trickle of talent drain from the NHL, but while few players have transitioned from the NHL to the KHL there is an intangible number of good players that _could_ have played in the NHL should the KHL never have come into existence. This further spreads out the potential talent in the league.

With this pinch for quality we have seen a lot of players get into the NHL who probably have no right being there. You only have to look at the number 5 and 6 Defencemen on teams who are allegedly deep in defence to see the talent crunch in action. Talent-wise that position wallows in mediocrity.

So where is the solution here?

We can reduce the number of teams in the league, and seeing some of the weaker teams in the league (cough… cough… Leafs – man, I’m so glad I get to get a dig in on them) this would be a sensible fix. Doing this though reduces league revenue and reduces the face time that will continue to be important for the league to grow.

A better fix, or at least a more long term approach would be to promote the game in untapped markets so that more young players pick up the game. In time some of these will reach an NHL calibre and there will be a larger pool from which to draw. Having a professional team in an additional Canadian market will have a minimal impact on the gross population of hockey players. Hockey is an integral part of Canada; whether or not your town has an NHL team there will still be a substantial number of kids who play the game.

A franchise in a backwater community like Nashville allows for the formation of a brand new minor league – Before the Coyotes came to Arizona how many people do you think played hockey in that state. How many do now? Now that the Hurricanes have a Stanley Cup to their name how do you think that has affected the sport there?

I know you want more Canadian franchises. I want them too, but the future of the game and its continued expansion and frankly its financial well being requires a foundation to draw from that can support it.

There are a huge number of US players that have begun to emerge over the last 5 years. Some of these players are coming from bizarre home towns. The NHL’s investment in far off non-hockey towns has already begun to pay off, though the true results won’t be seen for another 5 years yet. I have met drafted players from Texas through my brother’s involvement in the BCHL, and it warms me to think that the game is getting to more people, even if it is moving quite slowly.

According to Wikipedia there are 377 active Canadian players and only 153 players that hail from the US. One need only look at the relative populations of the two countries to see the growth potential.

So this gets us back to the crook of the debate… should we be opposing teams moving from financially unstable markets to areas where their profits are practically assured? Short term says no, but long term is another story.