Hockey Night In New York

The hockey business is a great example of what economists used to call the labour theory of value. The idea that products could be used and traded because they were transformed by human labour was common to Adam Smith and David Ricardo, as well as Karl Marx.

Socialists drew the conclusion that if human hands made something it belonged to those who did the work. Liberals tried to apportion out the share of the proceeds from market transactions according to the amount due to land and business owners, and workers. For this they needed prices, including for labour, just as for carrots or potatoes, not a debate over who created value. But that debate has a way of slipping back into conversation.

Nobody goes to a hockey game to see owners. Hockey hardly belongs to the NHL. It is the game itself, and its players that make hockey an attractive spectacle, one people are willing to pay to see.

The regular NHL season is 82 games, of which one-half are home games with the gate receipts going to the local ownership. Each team has about 20 players under contract to the big club. Assume all expenses are covered by broadcast revenue and concession sales. The arena seats about 20,000. Sell seats for $100 each on average, with sell-outs, the team takes in enough to pay each player $4,000,000 a year.

Players are paid less than $2,000,000 (U.S.) on average. So there is a lot left over for the owners. But the league they own wants more, so from head office in New York comes the announcement: the league has locked out the players.

The story is well known to sports reporters, who may be the only Canadian journalists who get capitalism. In order to build American television revenue, the NHL expanded to hockey hotbeds such as Nashville, Columbus, Phoenix, Florida, etc. Each new franchise had to make payments to existing owners. Each new team needed to ice star players, those with drawing power. So player free agency helped the new teams, and the older teams were compensated when a player left for another club after serving out his contract requirements.

Unfortunately, the television revenue never materialized. The growing number of teams bidding for star players increased salaries, but diluted the talent pool. Needless to say, the home games featuring Nashville, Columbus, etc., were poor draws at $100 a ticket. So many fans stayed home, until the playoffs.

Are the players overpaid? Not with respect to bank presidents, other pro athletes, or entertainers. And many hockey careers are short, lasting a few years only. But now the owners want a salary cap, and, effectively, an end to free agency.

Is the game over-priced? Absolutely. It left the realm of family entertainment long ago. Today, it is the corporate hospitality dollar the NHL wants, not the traditional father and son combination.

The way out for the league is fairly straightforward: revenue sharing is what is needed. Throw all (or some) of the receipts in a pot and share them out team by team. The National Football League has something of this nature in place. But it means the rich share with the poor, so it will not happen soon, despite the fact that competition for players becomes more fair under such a system, the league gets balance, the average players are better off under revenue sharing, and there is less incentive to charge high ticket prices.

Hockey Night in New York is not going to recognize that socialism is a superior form of operation to capitalism. But ethics and economics do go together as Molson discovered when a business decision about hockey cost them the loyalty of brewery patrons. As the non-season continues, expect the fans to take a closer look at what the owners are saying.

The NHL needs a new business plan. With revenue sharing the owners would be unlikely to keep weak franchises open. Now the NHL is counting on people not understanding that they, not the players, went after the television revenue, and came up short.

Let the U.S. teams sell their broadcast right in local markets, and put the Canadian teams on national television in Canada. A Canadian division, and American divisions, with a limited interlocking schedule, would give the fans something to look forward to from the NHL.

In the meantime, there is some good amateur hockey being played, by women as well as by men.

Duncan Cameron - duncanc@rabble.ca ? writes from Chelsea, Quebec. His column appears weekly on rabble.ca. It is reprinted here with permission.

Note: Hockey Night in New York duncanc@rabble.ca