Hockey in Canada is a huge passion point for that country rivaling cricket in India, soccer in England, and rugby in New Zealand. It’s part of the country’s cultural fabric, reflective of its people and their history. Previous studies we’ve worked on show its strong association to the values Canadians cherish and a stable marketing platform where sponsors seek linkage.
For starters, consider these basic facts: The NHL, home to seven clubs in Canada, is hockey’s elite professional organization. Star NHL players inspire the childhood dreams of numerous Canadian kids and are treated like major celebrities wherever they go above the 49th parallel. Of Canada’s 33 million population, more than 500,000 boys and 200,000 girls are registered players in organized hockey with thousands more playing as adults. At night, a typical NHL broadcast will draw up to 2 million viewers as long as a Canadian team is playing.
Bottom line: Hockey is important in Canada.
But something isn’t right. On April 10, the day the 2015-16 NHL season ended, hockey in Canada was gutted as confirmation rippled across the provinces that not a single Canadian team — not one — made the playoffs (a first since the 1969-70 season).
And add this into the mix: No Canadian team has won the Stanley Cup since 1993. That means other than the NHL draft, there’s been little joy in the far north for the last 23 summers (when the Montreal Canadiens last brought the big trophy home). Sadly, the mighty Habs (winners of 22 Cups) sat first overall in the NHL earlier this season only to tumble into a long, painful slide.
So, in mutual commiseration, we started debating whether economics or tax codes were placing one country’s teams at a competitive disadvantage. It’s shameful, we argued (perhaps with a distinct Canadian bias), that in a full two-country league, only one country is still playing.
 |
The last Stanley Cup champions north of the U.S. border were the 1993 Montreal Canadiens.
Photo by: GETTY IMAGES
|
But why is it so?
First, the financial argument of the weak Canadian dollar and strong U.S. dollar has much less merit than it did two decades ago. Sure, Winnipeg and Edmonton may be feeling the sting on their local revenue, but Toronto and Montreal are among the strongest North American markets, and the NHL has moved to an increasingly successful revenue-sharing model that is measured in U.S. greenbacks. So, while there is something of note here, it shouldn’t drive a team’s on-ice performance.
A second reason is possibly tied to national pressure. It’s well-documented when team owners and general managers make irrational decisions, but in Canadian NHL markets, losing is an assault on the community’s self-identity. Think of it this way: If a Canadian team loses a lot, the team’s leadership will face fierce (and withering) rebukes. Daily. From everyone. Even from their own mothers.
Third, we were forced to put some thought into the Toronto market. Call this a mini-case study. The Leafs and their parent company, Maple Leaf Sports & Entertainment, are financial giants and a case study on how to build a real estate platform, create and foster a nation of fans, protect a market vigorously, and expand vertically and horizontally in and out of the industry. MLSE is an unequivocal business success. But on the ice, the Leafs have not won a championship since 1967 and have been perennially out of the postseason, including having numerous very poor seasons. This is perplexing, particularly with player salaries among the highest in the league. It led us to ask if there is a Toronto malaise spreading to the other six.
Fourth, when considering one sub-set, a smart analyst looks at the alternatives. What about the 23 U.S.-based clubs? Why are they (in general) performing so much better than their Canadian counterparts? We know that in most U.S. markets, NHL teams trail other sports and entertainment properties. That means selling tickets and sponsorships (and attracting viewers) is challenging but also a mandate. It means the administrative staffs have to be very polished and accomplished. In Canada, where hockey rules, the sale of tickets and sponsorships is perhaps an easier process, and so it might suggest that the need for a high-performing club is less necessary.
Some might debate this generalization, but the above points (and others) might warrant hard research by the league or North American sport management programs. To be blunt, here are a few hypotheses to test:
1. Professional hockey players, many of whom have careers that last but a few years, prefer markets where they can keep more of their salaries (i.e., where the income tax is lower), which is the case for most of the U.S. markets versus Canada.
2. The globalization of hockey means only 45 percent of players are Canadian, down from 90 percent a generation ago. Kudos to USA Hockey and the NHL for tremendous work in growing the game worldwide, but has this hurt Canadian NHL teams on the ice?
3. The rise and sustainability of regional sports networks in the United States means American teams have more incentive to win (and for their management to win) due to importance of RSN revenue. Does this mean Canada needs more regional sports channels?
Ultimately, regardless of research, the question hangs in the air: Does the NHL need to do something for Canada’s owners? Based on our cursory analysis, we think not. This inequality is likely a club management issue and not a league one.
Management of the seven NHL clubs in Canada starts with the owners. Perhaps these seven are failing to manage their on-ice hockey business in an optimal and efficient way. It’s easy to blame the economy, the exchange rate, the weather, the commissioner … but Canadian owners need to bring high-performance outcomes back. If they do, maybe Lord Stanley’s Cup will spend a summer north of the border again before 2020.
Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University. His parents are Newfoundlanders. Norm O’Reilly (oreillyn@ohio.edu) is the Richard P. & Joan S. Fox Professor of Business at Ohio University. He was born in Ontario.
