On going south: the economics of survival and relocation of small market NHL franchises in Canada

Angelo Cocco and J. C. H. Jones

Applied Economics, 1997, vol. 29, issue 11, 1537-1552

Abstract: This paper considers the issue of team viability and professional franchise relocation, a problem common to all major sports leagues in North America. Specifically, using the National Hockey League in the 1990s as the analytical vehicle, the proposition that the viability of Canadian Small Market Franchises (SMF) is in doubt because of a combination of inadequate revenue (due to the quality of their locations) and escalating salary cost, is examined. Using game by game data for the 1989/90 season, revenue, costs and profits by team were estimated and it was concluded that Canadian SMF are indeed an endangered species. Several alternatives which might rectify the problem are considered (revenue sharing, salary caps, public subsidy), but none are as attractive or as realistic as relocating south to US cities. The behaviour of SMF in the 1990s is consistent with this prognosis.

Date: 1997
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DOI: 10.1080/000368497326363

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