Quote:
Originally Posted by Enoch Root
That's not how it works. They would have hedged this season's expenses last summer, once they determined their expected revenues and salary structure.
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There is not one magic time of year businesses decide to hedge their exposure. It is a complex decision. Nor are you limited to hedging one year out. You could do more or less depending on your appetite for risk. But even following your example, if the Flames decided to cover their next year F/X risk in the summer, this summer's forward rates are likely going to look pretty grim.
You can't say the Flames aren't exposed to foreign currency risk because "hedging". The difference in the US and Canadian dollars will remain a fundamental component of the Flames business unless one day player salaries are no longer paid in US dollars or the Canadian dollar gets pegged to the greenback.
That's like saying EnCana isn't exposed to price of oil because they can hedge.