Quote:
Originally Posted by Cleveland Steam Whistle
Aporeciate the explanation (truly). Question, I assume (potentially incorrectly) that future expenses, I.e. Next years contracts, or at the very least new contracts can't be hedged until signed? If so, would it be fair to suggest that the owners will be less able to protect their margins moving forward should the dollar remain weak?
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It would usually be done on a more general level, i.e.: we expect our salary structure to be between $55m and $60M, so let's hedge $50M (or whatever is deemed appropriate and sufficient).
As for the other question, teams would run on annual budgets, so they would know their ticket prices and expected revenue, and they would know their expected salary structure, so they could - and would - hedge prior to the season, for the season.
The problem with a declining currency is that
next year, you have to hedge at the new, weaker level. However, it would be assumed that league revenues, and thus salaries and budgets, would also be subject to, and reflective of, the new lower currency rate.
This is one reason why the cap system is so important for Canadian teams