Monday, December 1, 2008

The Loonie Nose Diving=Next Labour War?

1) Amid the recent Bettman denials that the league is worried about its fiscal health with the current economic down turn/recession, one of his owners up North is apparently not drinking the Bettman Kool-ade. That owner is Montreal Canadiens owner Pierre Boivin. In a recent interview given to TSN the owner of one of the premiere franchises in the NHL said that he fears that "the sagging Loonnie could send Canadian NHL teams spiralling back into the dark economic days that preceded the lockout."

2) Before we go further, we want to remind our readers who might have heard such dire predictions recently. Yes, it was here! In that post we detailed what such a correction in the worth of the Canadian currency might mean to the six franchises up north who reportedly garner up to 1/3 of the entire NHL revenue!

3) Boiven pointedly states that "We better not return to a 78-cent Canadian dollar because we'll be in the same position we were before the work stoppage". To that we respond: Its now quite clear that the salary cap did NOT alleviate many of the economic ills as was promised. It seems the recent surge in Canadian revenue was almost all tied to the improved exchange rate, NOT the salary cap (for which we lost a season of hockey). If we calculate it against an 80-cent dollar, we're not any further ahead than we were before the lockout," said Boivin, who believes the 'Loonie' must be at par with the U.S. dollar for Canadian teams to remain competitive. The problem is that a par currency situation is the aberration NOT the norm!

4) Of course Boiven had to say the salary cap is helping (His rhetoric doesn't add up), but he also added that he said there are still aspects of the cap that are "not working well......we need to look at what's working well, what's not working well and get prepared for the next round (of negotiations)." Does that sound as ominous to you as it does us? Yes, another labour war folks is going to happen, the only question that remains is when. The ground work is already being set. WE have long been on record saying what we believe the next owners target will be: guaranteed-contracts-. We have little doubt that the NHL (like the Democrat president/congress) will use the economic situation to attain additional concessions/power. Count on it!


oilcanner said...

Most people say the league won't see much affect until next season. I doubt the players and owners would want to stop working when things are bad off. Both sides are going to have to give in some for the league to continue.
Here the economy is also being hurt by the price of oil. It was booming until this summer, now lks are wondering if we aren't going to be introuble soon.

DanNOLA said...

If I read the conversion chart from correctly, the Canadian dollar is worth .8022 to the American, the lowest since Spring '05, and has taken a nose-dive since this past spring when it was 1.03. If this trend continues, what will the league revenues be at the end of this season? And what will this year's numbers look like in relation to last years? I guess what I'm trying to get at is will a sustained and significant drop in the value of the Canadian dollar mean that there will be a drop in the salary cap next year and posibly more in the future? And how will that effect teams (like most of the league) who are near the top of the cap level? To be honest with you, it may not effect me as much (since I'm an Islanders fan and we're closer to the cap bottom with room to spare) but there could be some serious problems if half of the league needs to shed salary if there is a drop in the cap. Of course, this may be moot because I doubt the league would drop the cap even if the revenues drop (which is what they promised to do).


1) Oil: yes, Alberta is understandably not doing too well right now. But who is? However, we disagree with the thought that both sides will give a little. Where did the owners 'give' last time? They smell blood and will ask for more under the pretense that the economy is so dire
2)Dan: You are right the CN dollar has lost 20% of its value. Its not at historic lows, but if the teams up north need the currencies to be equal to survive that doesn't bode well since historically the two currencies are not equal!
3) IF the salary cap suddenly declines teams would be forced to 'waive' high salaried players and we might see quite a few talented players in the AHL making millions of dollars riding buses
4) Dan if revenues drop the cap has to follow. Its part of the agreement. Owners are not going to allow the cap to stay static if their incomes are going down. The two are directly tied together.

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