Nhl Case Analysis

Topics: National Hockey League, 2004–05 NHL lockout, Income Pages: 2 (493 words) Published: April 1, 2013
A. -------------------------------------------------
Introduction/Statement of the problem:
Within six months, the executive director of the National Hockey Leagues Player’s Association (NHLPA), Bob Goodenow has to come up with a communications strategy that could effectively communicate the position relationship between NHLPA and player’s regarding the salary cap issues while avoid losing loyal hockey fan. Bob is facing a possible lockout if the NHLPA and NHL did not reach an agreement. The main reason causing NHL to lose is due to the high salary paid to player’s which adds up to 75 percent of the total revenue.

B. -------------------------------------------------
Analysis:
The owners of the teams believe that player’s salaries do not match the performance in the game especially for the smaller team. In another word, the salaries were escalating to levels that were not sustainable for the future. At the same time, with the emerging of the league-based markets, smaller teams are not able to afford high salary of the player and therefore begin to lose their talented players to wealthier teams.it was indicated currently that the cost to retain the players adds up to 75% of the total revenue which is far higher than those others old professional sports leagues. There is also a report written by Arthur Levitt support that NHL suffered a loss of $273 million during the 2002/03 season

C. -------------------------------------------------
Alternatives:
1. NHL putting a salary cap on players by limiting revenue share up to 50%, Since it was stated that the player’s salaries is currently accounted for 75% of the total revenue which is a tremendous amount of company’s income. By doing this, it prevents large market team spending a huge amount of money as a competitive advantage to purchase talent players from other teams. This will create a fair chance to play in the league for the small team. 2. Revenue Sharing will be increasing the taxes on...
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