Monday, October 15, 2007

Canadian Funding

In what has become a rather under reported story in the NHL is the continued strength of the Canadian dollar. For the first time since the 1970's, the Canadian Dollar reached parity with the U.S. Dollar almost a month ago and is actually worth more than a U.S. Dollar.

Now, I'm not an economist by any stretch of the imagination and I'm sure there are plenty of you out there willing to correct me on this but with the Canadian Dollar trading over the U.S. Dollar, the impact for the Canadian franchises in the NHL is huge.

While the Toronto Maple Leafs will continue to be strong no matter what happens, teams like Calgary and Edmonton will find themselves on better financial footing because while Canadian franchises bring in revenues in Canadian Dollars, they pay their players in U.S. Dollars. When the Canadian Dollar was weak, the Canadian franchises (especially in the small markets) were at a distinct disadvantage. Now that disadvantage has been erased and as a matter of fact has turned into a minimal advantage.

How long this will last is anybodies guess, but what this does mean is that Canadian franchises for the time being cannot lean upon a weak Canadian Dollar as an excuse for insolvency and go looking for a handout to get by.

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