Tuesday, May 24, 2011

History of hockey: has George Bush saved Canadian professional hockey?

Some of the public-policy papers of the Mowat Centre, a University of Toronto thinkthingee, have struck me as of the Fraser Institute kind -- where the press release has been drafted before the research has been done.  But its study of the economics of Canadian teams in the NHL -- Canada can support twelve teams instead of the current six, it concludes -- is impressive.  Read or download it from here

It is also instructive on how hockey mirrors national and even world history.  There is reason to believe that the NHL's Southern Strategy was always doomed: demand for hockey in the American South was always thin, and the league was wrong to conclude that providing a supply of hockey would eventually create the demand.   Since the NHL depends heavily on gate revenues (more than most other sports leagues), it has to put its teams where the demand is -- and the Mowat study powerfully demonstrates demand for hockey tickets is far greater in small Canadian cities than in much larger American ones.

But there's also a massive historical trend underpinning the death of the Southern Strategy.
 Teams moved from Winnipeg and Quebec to the American South not only because the NHL leadership wanted that to happen, but also because of the low Canadian dollar and weak Canadian economy of the 1990s.  The Mowat study reminds us that situation has reversed.  It appears the American economic weaknesses  --- massive public debt, inadequate tax revenues, infrastructure decline, huge foreign trade imbalances -- set against the Canadian situation of less public debt and a stronger economy (mostly a petro-economy, but still) mean that the strength of the Canadian dollar against the American dollare is likely to survive quite a while.

In other words, we can actually thank Ronald Reagan and George Bush for the coming renaissance of professional hockey in Canada.  Their world-historically significant destruction of American economic strength is the key underlying factor in the defeat of the NHL's Southern Strategy, and the coming rise of Canadian teams. The Canucks' Stanley Cup victory in a few weeks will be the icing on the cake.
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