Breaking the Ice

The development of a players’ union in the National Hockey League lagged behind the organization of unions in the other American major team-sport leagues by a decade. Moreover, the union leadership was ineffectual until Bob Goodenow succeeded Alan Eagleson as the head of the NHLPA in 1992. Under Goodenow the players used strikes and the threat of strikes to leverage mobility rights including unrestricted free agency and salary arbitration, all of which substantially and steadily increased salaries and the players’ share of revenue for more than ten years. In 1995 ownership locked out the players, a radical move at the time as it was the first owner-initiated work stoppage to cancel scheduled games. The lockout enabled owners to roll back some of the mobility concessions gained by the union. Yet, the league was unable to implement a desired salary cap and player salaries continued to grow. Nine years later a second lockout resulted in the cancelation of the entire 2004–2005 season. The outcome this time was very favorable to owners including a hard salary cap and a limit on individual player salaries. In this chapter the NHL eras before and after the salary cap are compared. Competitive balance and payroll dispersion across teams are examined empirically through means tests. The analysis indicates that the players’ share of revenue is much lower under the salary cap and that payroll dispersion across clubs has diminished. The results also show a significant improvement over three different dimensions of competitive balance. Finally, it is anticipated that owners will continue to leverage their bargaining position and gain more concessions.

This chapter tests the argument that fighting in minor league hockey is a profit-maximizing strategy, using the American Hockey League (AHL) as an example. It could be that hockey players in the AHL have differing motivations for aggressive play than players in the senior NHL. Players in the AHL earn much lower salaries than their NHL cousins, so being promoted to the NHL results in significant financial rewards. Some AHL players might use an aggressive style of play as the ticket to the NHL, believing that there is a role in the NHL for tough players to protect the more skilled players from intimidation by other teams. Alternatively, fighting in the AHL could be the result of owners and management encouraging aggressive, physical play to attract fans to games. This chapter attempts to determine why fighting is more commonplace in the AHL than the NHL using an econometric model.

Research in labor economics has examined many determinants of earnings, including whether an individual is left or right handed. Sports economists have recently shown that in the soccer labor market, being able to kick well with both the left and the right foot is rewarded with a salary premium. This paper examines pay and performance for hockey players that shoot left-handed versus those that shoot right-handed. We find that after controlling for goals and assists, time on the ice, player size and age, and team and season fixed effects, players are paid differently by position, and players playing the same position may be paid differently because they shoot left versus right handed. These results suggest that the hockey player labor market is inefficient.

We analyze the performance outcomes of National Hockey League (NHL) players over 18 seasons (1990–1991 to 2007–2008) as a function of the demographic conditions into which they were born. We have three main findings. First, larger birth cohorts substantially affect careers. A player born into a large birth cohort can expect an earnings loss of roughly 18% over the course of an average career as compared to a small birth cohort counterpart. The loss in earnings is driven chiefly by supply-side factors in the form of excess cohort competition and not quality differences since the performance of players (as measured by point totals for non-goalies) is actually significantly greater for players born into large birth cohorts. Performance-adjusted wage losses for those born in large birth cohorts are therefore greater than the raw estimates would suggest. Second, career effects differ by relative age. Those born in early calendar months (January to April) are more likely to make it into the NHL, but display significantly lower performance across all birth cohorts than later calendar births (September to December). In short, those in the top echelon of NHL achievement are drawn from fatter cohorts and later relative age categories, consistent with the need to be of greater relative talent in order to overcome significant early barriers (biases) in achievement. We find league expansions increase entry level salaries including the salaries of those born into larger birth cohorts, but they do not affect salaries of older players. Finally we find that the 2004–2005 lock-out appears to have muted the differentials in pay for large birth cohort players relative to their smaller birth cohort counterparts.

The chapter reviews studies investigating salary discrimination in the National Hockey League. The vast majority of studies concentrate on potential discrimination of French-Canadian players compared to English-Canadian players with some also taking salary differences between US and European players into account. The findings presented in the available studies differ considerably and are, therefore, difficult to reconcile. There is limited evidence for salary discrimination of French-Canadian players playing for English-Canadian teams. While some studies do find support for salary discrimination, others fail to find statistically significant salary differences that can be attributed to a player’s ethnicity.

This chapter reexamines the impact of cultural and language diversity on the production of winning hockey games to discern the underlying source(s) driving the effects. It makes inferences based on various analyses of micro-level data that include information relating to player interactions, which suggest that the diversity effects are a result of lower off-ice communication costs rather than reduced cultural dominance of the domestic group or on-ice synergies amongst homogeneous players. The inferences are of general interest to managerial economists who can increase firm-level productivity by hiring employees that speak similar languages and share ideas regardless of their cultural background.

Previous research on referee discrimination in penalty calling has been based on relative comparisons across race/ethnic groups, and does not discern whether the findings are based on players of a different or the same race/ethnicity. This paper tests for team-level discrimination amongst professional hockey referees, and finds that French-Canadian referees favor teams, in the form of fewer penalty calls, that have more French-Canadian players. The analysis is undertaken at penalty level to account for additional within-game referee biases and varying costs of player infractions across score margin game states.

During the 2012–2013 lock-out in the National Hockey League a number of especially European NHL-players signed temporary contracts with European hockey clubs. While the sporting abilities of these players are unquestioned, the attendance effects for the teams signing these players have remained unclear. This chapter analyzes game-level data from the German and the Czech premier hockey leagues to capture attendance effects of these “stars” usually playing in the NHL. We find positive attendance effects for NHL players in the Czech Extraliga, especially if they are on the away team’s roster. For the German DEL the impact is considerably smaller and a positive impact can only be found for NHL players on the home team’s roster. These results can be explained by differences in the importance of the sport in the two countries and the ensuing differences in the awareness of potential attendees.

Dynamic pricing of tickets to NHL games are studied through data from three teams that adopted that practice in 2013–2014. Dynamic ticket pricing differs from variable ticket pricing in that prices are allowed to fluctuate throughout the season based upon supply and demand. Through a regression model, it is discovered that the greatest impact on dynamic ticket prices is due to popular opponents. Uncertainty of outcome is only found to be significant in a “non-traditional” hockey market with many entertainment substitutes. Other factors such as weekends and monthly effects due to playoff races are also shown to be important.