October 10 2008 06:58AM
Unless you’ve been living deep underground in some sort of bunker complex for the past two weeks, you’re well aware that the world has been sucked into a financial crisis of almost unprecedented scale. The Dow Jones Industrial Average has lost 25 per cent of its value in the past 14 days and the US announced that 159,000 jobs were lost in September alone. In response, the Federal Reserve and the US Treasury have injected over $1 trillion into the American economy—the largest amount of money we can recall being spent since the NY Islanders signed Rick DiPietro through the year 3014 a few years back.
This DiPietronian amount of money has yet to show any real positive effect and the crisis—decidedly an American problem in its early days—has spread quickly throughout the globe. Governments around the world have been forced to inject billions of dollars into their economies in an effort to keep credit moving freely, or face the spectre of their economies seizing up entirely.
Iceland was forced to borrow $6 billion from the Russian Government to be able stave off financial collapse. How on earth the 15 inhabitants of Iceland managed to screw up their economy that badly is anyone’s guess, but you can bet that Moscow is calling the shots in Reykjavik from now on.
Canada has been largely spared from the worst of the destruction for the time being, though we could see restrictions on consumer and business credit availability in the near future. This would limit loans for mortgages, car loans and investments and could throw a blanket over the coveted oil sands projects here in Alberta. But for now the Canadian government is playing their cards conservatively and a panicked call to Russia at 3am to see if they can spare a few billion is not in the immediate plans.
Now this is a hockey website not a financial site, so who cares, right?
It’s more than likely that the financial crisis will impact the NHL in some way. As hockey fans who care about the game, the finances of the NHL are very much a topic we should all follow. Financial instability could lead to teams being forced to quickly pare back their salaries, move to a more financially healthy markets or could even cause teams to cease operations altogether. The precious CBA that was so violently fought over a few years back could be thrown out the window if teams are unable to meet the salary floor due to sharply declining revenues.
In celebration of global financial collapse, OilersNation is running a four-part story on the potential impacts of this crisis on the National Hockey League. The NHL is a business has risen from its humble beginnings to become a billion-dollar portfolio of companies with interests in media, internet properties and licensed apparel as well as its core business of selling game tickets. With the absence of a large national TV deal, the NHL is much more reliant on these ticket sales than the other Big Four Sports Leagues which makes it much more vulnerable to fluctuations in the economy.
Like every business excluding debt collectors, the NHL is vulnerable to the spreading financial planetary shit storm. The financial stability of its owners, franchises and revenue-generating fan base will come under fire in the next while and the very game could be left in a substantially different state if measures aren’t taken to mitigate the problems that are cropping up.
What if things got so severe that no one could afford to go to games? What if Charles Wang’s bankers decide there are better things he could be doing than pissing millions of dollars away on his power play? Could there be a financial crisis on the horizon so severe that it could force a team to cease operations? What can the NHL do to mitigate these risks?
As usual, we promised ourselves that we would write this series article exactly how we want and we must stress this is only our opinion. We want to encourage discussion and have everyone contribute their two bits—if you still got ‘em. In these uncertain times there are no right and wrong answers and no one has a crystal ball. All companies can do is think about the different scenarios that could occur, weigh the likelihood that they’re to occur and then develop strategies to minimize the impact on the bottom line. Then batten down the hatches and ride out the storm.
All we can do is sit back and read and discuss. Oh we can also listen and watch, cause we are adding in YouTube music videos to enjoy while reading. Why?
Because, Nation, when the going gets tough, the tough bump tunes.
Stay tuned over the coming weeks as Wanye Gretz spells out the impact of the current financial crisis on the NHL—in four parts:
- Part one: An overview of the NHL’s finances and potential risks to the operations
- Part two: The Good, the Bad and the Ugly: Three potential scenarios facing the NHL
- Part three: The potential impact on the Edmonton Oilers
- Part four: Looking ahead to the future