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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

KHL teams want to keep Ovechkin, Kovalchuk rather than return 'em to NHL?

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11-15-2012, 08:13 PM
  #176
NORiculous
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Quote:
Originally Posted by Theokritos View Post
You forget NHL pressure. If you have to choose between two Russian stars participating and the whole NHL participating, what would you pick?
I don't think they the need to pick one or the other.

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11-16-2012, 12:01 PM
  #177
indigobuffalo
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While it would suck to lose capital talent from the NHL to the KHL, I would like to offer a different perspective.

As a preface, I know that the Sunbelt Teams and the general concept of expansion into non-traditional hockey markets is about as popular among hockey fans (especially Canadian hockey fans) as the idea of using anything but curd cheese on a poutine (which let's be honest, is blasphemy), but I want to talk about the benefits that this plan has for hockey, and I will relate that benefit to the KHL, and the potential departure of Ovechkin, Kovalchuk and Malkin.

Building the Game:
Part of the mandate of the NHL is to build the game of hockey. Let's be clear, this is just plain and simple business sense. If you are in the business of selling something, you want that something to be successful.

For hockey, that doesn't just mean going after the people who already want your product. It means tailoring your product just enough to reach the people who don't traditionaly buy the product, while keeping your true and loyal customers happy.

Breaking into non-traditional markets enhances the value of the product because you can start to create greater interest in your brand and product by increasing the size of your potential market.

Benefits:
The short-term? Well, it isn't really a short-term system. Building a business takes time, and people who aren't interested in having a strategic outlook for their business are usually very good at not being in business, or at least not in successful, thriving businesses.

By expanding into non-traditional markets, they started to change the culture of those markets. This is where the true benefit lies. By building (gradually) the game in non-traditional markets, more and more of these markets will start to become consistent and, eventually, loyal customers.

And there's a trickle-down effect there because that means that kids will start to want to play hockey and there will be a surge in the demand for rinks, surges in the development systems and eventually, a surge in NHL-calibre player development, as more and more regions begin to develop quality players.

Which brings me to my next point: Supply and Demand

Hockey, like just any product, is based around supply and demand. By increasing the number of teams and expanding into non-traditional markets, the NHL created a huge surge in supply of teams, with the hope that demand would follow. But they did something else, too.

From the the 1960's and particularly in the 90's, the NHL increased the number of franchises, generating an overall decline (or dilution) of the talent in the NHL, as development programs struggled to keep up.

The 1970's and especially the 1980's were particularly egregious examples of this process, mainly due to the added pressure of the WHA in the 70's and it's eventual (partial) merging with the NHL.

The supply for players did not meet up with the demand for them, leading to inferior quality players mixed in with superior quality players. No one can deny that Gretzky had exceptional talent, but he also benefitted from a diluted competitive field. A modern example is the NHL players going overseas, such as Kovalchuk's current pace of 1.59 PPG.

We've started turning the corner though. Hockey Youth development programs are thriving. The USNTDP (United States National Team Development Program) and Hockey Canada aren't the only beneficiaries. European countries are seeing greater and greater demand for players (and more openness to importing talent as xenophobic presumptions wane in the face of a supply need).

A greater number of countries are now considered powerhouses in international competitions, and the gap is shortening between the powerhouses and other competitors, such as Switzerland and Germany. This is a result of supply catching up to demand. Without the demand set so high, however, there would not be a reason to justify expending resources to increase the supply.

So what the NHL has done has been an integral part in building hockey on, not just a national (read North America) scale, but internationally.

Nowadays, the quality of NHL players is spectacularly high, probably higher than it ever has in the history of the sport. But a new event looms on the horizon.

The KHL, Euro-NHL and Made in China:
So we get to the crux of the matter. The KHL is gaining steam in Europe, and with the lockout, they've managed to benefit from a boost in returning and, much more interesting, imported players. Certainly, Radulov, Kovalchuk, Ovechkin and Malkin are great for the KHL and it's fanbase, but North-American stars are also joining the KHL ranks (certainly on a temporary basis... for now...).

But what the KHL is doing, behind the scenes, is exactly what the expansion era and WHA brought to the NHL in the '70's and '80's. Dilution. As the KHL becomes a stronger business, they'll have more and more ability to keep Russian talent from bolting overseas. Eventually, as they grow, they'll be able to lure more and more of Europe-born players to join the KHL rather than the NHL, bolstering the league even further.

And eventually, the NHL will see a shortage in the supply chain, as they will no longer have a deep pool of players to draw from overseas. But that's not a bad thing. At least not in the long-term. Of course, short-term it will mean a diluted product, with plenty of schlubs playing meaningful minutes in the NHL. But the legitimate superstars will benefit, scoring goals a-plenty as the quality of defensive corps go from Lidstroms to Ledbas.

Long-term, eventually the supply will catch-up. There's 1.344B people living in China, and 1.214B living in India. Neither of those countries are traditional markets for hockey, but as the demand for quality players increases, supply networks will grow internationally, and eventually these markets will be tapped to produce athletes for the hockey ranks. But we're decades from that happening. Aren't we?

Probably not. China already invests heavily into sporting development programs. Increasing the hockey youth development programs in China won't be as complicated as one would think. They already have a national team, and all it really takes is money. And when the NHL starts to feed it's need for players by going into China, that will kick-start the process into overdrive.

Conclusion:
The exodus of Russian-born players to the KHL will be bad for the NHL in the short-term, and great for the KHL. As the KHL grows, and as the further deplete the talent pool in the NHL, the international demand for professional athletes increases, thereby increasing the need for development programs. That in turn (gradually) increases the output of professional athletes and opens the door for expansions into non-traditional markets.

Which will, eventually, mean a stronger product. A better product. One that unifies us all and really exemplifies the entire concept of Canadian culture. A mosaic of cultures and nationalities united funder one banner.

The love of great hockey.

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