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

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  • Angelo Cocco
  • J. C. H. Jones

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.

Suggested Citation

  • Angelo Cocco & J. C. H. Jones, 1997. "On going south: the economics of survival and relocation of small market NHL franchises in Canada," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1537-1552.
    • Handle: RePEc:taf:applec:v:29:y:1997:i:11:p:1537-1552
    DOI: 10.1080/000368497326363
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    Citations

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    Cited by:

    1. Humphreys, Brad R. & Zhou, Li, 2015. "Reference-dependent preferences, team relocations, and major league expansion," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 10-25.
    2. Barajas, Angel & Fernández-Jardón, Carlos & Crolley, Liz, 2005. "Does sports performance influence revenues and economic results in Spanish football?," MPRA Paper 3234, University Library of Munich, Germany.
    3. Humphreys, Brad & Zhou, Li, 2014. "Loss Aversion, Team Relocations, and Major League Expansion," Working Papers 2014-3, University of Alberta, Department of Economics.
    4. J. C. H. Jones & J. A. Schofield & D. E. A. Giles, 2000. "Our fans in the north: the demand for British Rugby League," Applied Economics, Taylor & Francis Journals, vol. 32(14), pages 1877-1887.
    5. Daniel, Rascher, 2008. "Franchise Relocations, Expansions, and Mergers in Professional Sports Leagues," MPRA Paper 25809, University Library of Munich, Germany.
    6. B Buraimo & R Simmons, 2006. "Market size and attendance in English Premier League football," Working Papers 574562, Lancaster University Management School, Economics Department.
    7. Thomas Cristofaro Warrener & Carlos Eduardo da Gama Torres & Igor Viveiros Melo Souza, 2022. "The relationship between financial and sporting performance of professional football clubs: empirical evidence from brazilian football," Textos para Discussão Cedeplar-UFMG 641, Cedeplar, Universidade Federal de Minas Gerais.
    8. Boris Helleu & Christophe Durand, 2006. "Sport collectif et compétitions internationales entre clubs : le cas des équipes canadiennes en Amérique du Nord," Post-Print halshs-02110675, HAL.
    9. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    10. John C. Leadley & Zenon X. Zygmont, 2006. "When Is the Honeymoon Over? National Hockey League Attendance, 1970­2003," Canadian Public Policy, University of Toronto Press, vol. 32(2), pages 213-232, June.
    11. Wade Poplawski & Michael O’Hara, 2014. "The Feasibility of Potential NHL Markets Under the New Collective Bargaining Agreement," Journal of Sports Economics, , vol. 15(1), pages 64-77, February.
    12. Narme, Thibaut, 2013. "On the dynamic of franchise (re)location in the North-American sport leagues," MPRA Paper 50873, University Library of Munich, Germany.
    13. Jeffery Borland, 2003. "Demand for Sport," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 478-502, Winter.
    14. Barajas, Angel, 2004. "Modelo de valoración de clubes de fútbol basado en los factores clave de su negocio [Valuation model for football clubs based on the key factors of their business]," MPRA Paper 13158, University Library of Munich, Germany.
    15. Barajas, Angel & Crolley, Liz, 2005. "A model to explain support in Spanish football," MPRA Paper 3235, University Library of Munich, Germany.

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