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Cup belongs in Canada: not this year Lord Stanley

30 years and counting: is it rigged?
Fan reacts as Leafs tie it up | Graham Wood
Fan reacts as Leafs tie it up | Graham Wood

Let's start by being completely clear. It's not rigged. It's not organized so that American teams make the finals, and Canadian teams tease their fan base and fall short year after year. 

Like most conspiracy theories, this one doesn't pass the basic conspiracy theory smell test: how many people would need to hide it for it to work? Far more than can keep the secret of the average surprise birthday party...and for much longer.

So, no, the refs don't call every grey area in favour of the US-based team, or at least not on purpose. The players don't show up without the fire in their bellies to win deliberately; the coaches don't fail to motivate or mismatch line mates because they plan to lose. In the back offices and on the ice, every team is doing everything it can to win as much as it can. Even when teams could benefit by tanking to get a draft pick, the players have trouble not giving their best.

These are competitive people. Their incentives are aligned: more success on the ice, bigger paycheques, longer in the playoffs, and more bonuses. To give as level a playing field as possible to small and large market teams, there is even a cap on total team salary, the same for Canadian as American teams.

Yet it has been 30 years since Montreal beat Los Angeles for the Stanley Cup in 1993. Canadians are 40 times more likely than Americans to watch hockey (and Quebecers are twice as likely again), yet there are only 7 teams in Canada and 25 in the United States. Let's repeat that: four times as many hockey fans are watching in Canada as in the US, even though we have one-tenth the population and less than one-quarter of the teams.

Half the players come from Canada too, and many of the other half are from Sweden, Russia, Finland, Slovakia, the Czech Republic, and so on.

There are many strong Americans in the league, but hockey ranks about 6th on a list of four in terms of sports that capture American interest.

The economics are tough: Canadians are subsidizing American teams financially. We have higher ticket prices and more TV revenue. The NHL's revenue sharing system means when you pay your cable bill or go to a game, you are helping a kid in Phoenix, Arizona, walk up and afford a day-of-game centre ice seat for maybe a quarter of what you paid in the regular season at least. In 2010, some two-thirds of all NHL revenue came from Canada, and we doubt much has changed since then. Yet we have fewer than one-quarter of the teams. Our money supports the rest.

The NHL has long been committed to the American market. It makes sense, even though their success has been limited, and we Canadians are subsidizing this effort. The fact is, the NHL, like any business, wants to grow. It can't grow much in Canada. Sure, studies have shown that Canada could support at least 12 more economically viable teams than Phoenix, none needing league subsidies.

But there are only so many Canadian fans. A fan in Quebec City is already watching hockey. Giving them their own team does not create a new customer, except at the ticket window, not the all-important regular TV viewership. On the other hand, if Dallas makes the Stanley Cup final, people who have never watched hockey might tune in, then they might buy the odd ticket next year: they are new customers.

Actually, this is debatable. I was in Texas the night Dallas won the Cup on the "was Brett Hull's skate in the net" goal. I was at a large party. No one even knew the game was being played that night. But that is the theory, and with patience, it is probably right. Businesses need net new customers to grow. And Canadian fans apparently love and care about hockey so much that we are ready to keep funding this NHL strategy as long as it takes.

Toronto Maple Leafs Skate | Janet Bedford
Toronto Maple Leafs Skate | Janet Bedford

Of course, Canadian TV viewership drops a lot once Canadian teams are not in contention. But that doesn't cost the NHL anything. It has already been paid for its TV rights by Sportsnet. It's apparently a fixed fee. Sportsnet stands to win big if Canadian teams, especially the Leafs or the Habs, go deep in the playoffs since their ad pricing could increase with increased viewership, and their costs are controlled. But it does the NHL no good - the opposite, in fact. A Toronto-Edmonton final might be a dream for many Canadians and even Sportsnet, but it's likely nightmare material for NHL top brass.

More teams in Canada would increase the odds of Canadian teams winning the Cup, but again, under the current contracts, it seems that helps Sportsnet, not the NHL. If Canadian teams go deep, it means fewer American fans are watching, so it means less potential US TV revenue and fewer new customers who might come back next year. (Another good reason for putting teams in weak US markets instead of strong Canadian ones.) Because of revenue sharing, ticket sales are not a factor. In the playoffs, it doesn't really matter where the games are played for ticket revenue: even rinks that are half empty most of the regular season will fill up at playoff time, and prices will be strong even in the weakest markets. 

On a recent night when many hoped the Leafs would play a game 6 against Florida, the CBC, perhaps knowingly, filled the time slot with the movie Bon Cop, Bad Cop. It is an entertaining film about a by-the-book Toronto cop and a renegade Montreal cop being forced to collaborate on a case. The villain is a Canadian hockey fan who is convinced his birthright is being sold down the river to drive US broadcast revenue and wants to kidnap the fictional league president, Buttman. His anger is triggered by the trade of a great Canadian player to Los Angeles.

It appears the NHL sees Canada as a saturated market to be milked to drive long-term growth in the US. One of the most public efforts to woo the American fan base was the last time a Canadian team did win the Cup, in 1993. A lot had to happen for Wayne Gretzky to move from Edmonton to Los Angeles: a superstar known even to non-hockey fans going to a big market city. A strange billionaire called Bruce McNall, Canadian comedy star John Candy, and the financial challenges of Oilers owner Peter Pocklington - all these elements brought The Great One to the biggest stage, and Hollywood celebrities came out to watch. 

It was the perfect scenario to grow the American audience, a superstar in a major market not yet sold on hockey. Can you imagine how bad it would have been for the NHL's goal of growing revenue in the US for the '93 Stanley Cup to have featured Montreal versus Toronto? NHL brass must have breathed a sigh of relief when LA defeated the Leafs that year. (We are not saying that referee Kerry Fraser felt that pressure from his employer and let it cloud his judgement when the high-sticking non-call contributed to averting what would have been a major marketing fail. That would be conspiracy thinking.)

However, justice, it is said, must not only be done; it must be seen to be done. 

The worst possible financial outcome for the NHL would seem to be two Canadian teams in the final. The best, two large market American teams. Those are the optics that lead to hashtags on Facebook and Twitter like #nhlrigged.

There's no conspiracy here. This is just business. But it's never good when the incentives of the people who run a business are not aligned with those of the customers.

Maybe Sportsnet could cut a deal where the increased revenue they would get if Canadian teams went deep would also mean more revenue for the NHL. That would take the wind out of the conspiracy theorists. It might even tilt the economics to favour more Canadian teams, upping the odds of one winning the Cup.

If more Canadian teams did get through, even sharing the benefits with the NHL, Sportsnet might do even better, as audiences stick with the playoffs longer and ad revenues grow. It might be a win-win for the NHL, Sportsnet, and, finally, for the long-suffering Canadian fans who pay for all this.