The Effects of the NHL Playoffs in Canada

NHLThe NHL regular season concludes on April 9th, which means that the most exciting time of the season is almost here: the playoffs.  Last year, the NHL experienced a playoff picture with no Canadian teams, but this year there is a possibility that five of the seven Canadian NHL teams will be back in Stanley Cup contention.  Canada is the world hub of hockey; therefore, it impacts the everyday aspects of life, but will the inclusion of these teams in the playoffs bring economic prosperity to their city?

winnipeg-jets            In the short term, there is no denying that consumption will boom, but when the playoffs are not reached an economy will not falter significantly.  Let’s take the Winnipeg Jets for example.  This year, they will unfortunately miss the playoffs leaving hometown fans at a loss for springtime hockey.  For the most part, regular attendance at a Jets game comes from the people that live in and around the area, so there is not a huge influx of consumption by foreigners.  These local fans, to keep busy, will most likely divert their ticket purchases to other forms of entertainment around the beautiful city, and it will not be significantly less than normal.  For Winnipeg this spring, people will spend on their everyday lives and the economy will not bust.

During a playoff run, individual teams will increase their ticket sales, concessions, and merchandising.  Ticket prices are escalated in the playoffs and teams can expect around $16 million for a seven-game series, or about $4 million per home game.  Local bars and restaurants will be at full capacity eating and drinking for all the games.  Hotels will also experience and increase in capacity from  opposing team fans.  In some instances, businesses will have to hire more employees in order to cover shifts and accommodate the burst in attendance to their business.  Each city will be buzzing at game time and for the duration of their teams stay in the playoffs.

Possibly the biggest beneficiary from Canadian hockey teams making the playoffs once again will be Rogers Communications.  Last season with no Canadian teams in the playoffs, their viewership was estimated to drop around 30%.  This year, their ratings will spike for playoffs, especially if we have 5 Canadian teams, and this spike will come with great implications.  The company can raise its rates on television advertisements where they can make an estimated $5 million per game.  Expect Rogers Communications to experience a huge increase in revenue and ratings in the craziness that will ensue if five Canadian teams make the playoffs, and expect even more if they find success in the early rounds.

The effects of the playoffs will not show up in GDP measurements very much, but will show up in small business performance.  Revenues will increase for those included, and those excluded will most likely remain the same.  In the short run, aggregate demand will increase, but by the end of the playoffs, those lucky enough to have experienced a playoff run, will fall back to a normal rate for the hockey-less summer months.

Sources:

http://news.umanitoba.ca/the-economics-of-missing-the-nhl-playoffs/

https://ca.sports.yahoo.com/blogs/eh-game/canadian-nhl-playoff-success-a-boon-to-the-economy-172716378.html

http://www.cbc.ca/news/business/how-dearth-of-canadian-teams-in-nhl-hockey-playoffs-will-hit-local-economies-1.2612167

http://www.huffingtonpost.ca/2016/02/24/looming-canadian-playoff-drought-could-be-a-massive-hit-to-rogers_n_9306398.html

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7 thoughts on “The Effects of the NHL Playoffs in Canada

  1. tswats18

    While like you said it will not likely increase GDP very much, I do think that a solid amount of Canadian NHL teams making the playoffs has to be a win overall for Canada. However, I wonder what the NHL thinks overall and if they would rather have these teams make and do well in the playoffs than some of their bigger market American teams, such as Los Angeles. I could see them being a fan of it because a lot of these Canadian teams have the most loyal fan bases and it would be giving playoff hockey to a larger overall area (across two countries). However, I am curious what the ratings were overall for last year’s playoffs (between both the U.S. and Canada) with no Canadian teams and if the league will notice a difference in its viewership this year.

    Reply
  2. Victor Matheson

    Nice post. These type of sports “mega-events” are my main area of research. Most economists find very little in the way of an economic boost from a team making the playoffs but there can be some localized effects. Exactly as you noted.

    Reply
  3. jacknedorostek

    Great post Nick! I find it really interesting that Canada’s return to the NHL playoffs will have no impact on GDP. However, it will be neat to follow individual teams, like Edmonton or Toronto, to see the effect on their local economies. I wonder if the Stanley Cup Finals had a preset location how the effect on the economy would compare to the Super Bowl or The Masters?

    Reply
  4. mattfitz87

    Very well written post, Nicolas. What about the differences in playoff effect between hockey-crazed Canadian cities and smaller-market American cities (e.g. Columbus, San Jose, etc.)?

    Reply
  5. rjdowd19

    Great blog Nick! I was surprised at just how much money Canadian communications companies make during a demand surge to watch their hometown teams in the playoffs. Sports broadcasters rely heavily on ratings, large audiences, and advertisement revenue. It is interesting how much these companies are affected by the outcomes of the NHL playoffs depending on what city and team their viewers support.

    Reply
  6. timhaemmerle

    I did not think of how this would affect the ratings and viewership for Rogers Communications. I found it interesting that they could be the ones that benefit the most economically from the success of the Canadian teams this year. Although, since Canadians are such big hockey fans, I thought most of them would end up watching the playoffs regardless of their teams contending for the cup of not.

    Reply
  7. mikelaffin22

    Great post, Nick. I agree with your comments about how the Canadian NHL teams making the playoffs will not boost GDP a great deal, but will have potentially large effects on the local market of each team. Feeding off of the comment above, I believe the NHL loves the fact that all these Canadian teams have made the playoffs this year because of their loyal fan bases, including two of the original six teams: the Montreal Canadians and the Toronto Maple Leafs. Having these teams competing for the Stanley Cup this year will help the popularity of the NHL and have some very positive effects in the local areas of these teams over the next few weeks.

    -Michael Laffin

    Reply

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