Nate Silver asks: Why hasn't a Canadian team won the Stanley Cup in 20 years?

[FBI]

One thing that might be off: wouldn't the avid fan hardly ever type "NHL" into a search engine since they would already have all their favorite NHL sites bookmarked?

[Mean Mr. Mustard]

For a large portion of that time there were only 4 teams that were competitive year after year; Detroit, Colorado, Dallas and New Jersey. That is in large part due to the Canadian dollar and luck with Quebec moving right before they win the Stanley Cup. That has changed in part since the first lockout with this being the first year that a team wins the Stanley Cup twice in that timeframe, but I wouldn't be shocked to see a Canadian team (my guess is Ottawa) challenge for the cup in the next few years due to the rapid turnaround of teams fortunes... look at LA where they went from being the fifth worst team in the NHL in 2008-09 to being the Stanley Cup Champions in 2011-12 and having a possibility of repeating. Boston fifth worst team in the NHL in 2005-06, Stanley Cup Champions 2010-11.

That is a relatively short turn-around for teams going from being in the bottom 5 to being a champion.

I also think that the pressure of winning in a Canadian environment results in teams not really rebuilding but rather trying to constantly retool in order to satisfy the fanbase... which leads to a cycle of mediocrity.

[Street Pharmacist]

Originally Posted by Meers

I understand the economics of the low Canadian dollar as the primary culprit through the early 2000s.

Nate's argument concerning the possible chief problem since then:

Finally, and related to the excess demand for hockey in Canada, Canadian teams routinely sell out their arenas at high ticket prices — whether or not they are any good. This may reduce their incentive to compete.

ignores that the principal financial incentive for on-ice success in Canada is additional revenue from playoff games.

Without salaries to pay, the owners make out like bandits from an extended playoff run.

So, there's still plenty of financial incentive for Canadian teams to ice a successful squad.

True, but their viability is not dependent on it. Losing money vs making money is a much more powerful pivot point than making money vs making more

[CaptainYooh]

At the other end of the fan-interest scale, it seems very difficult for N.H.L. teams with fewer than about 300,000 hockey fans in their media markets to turn a long-run profit under the league’s current economic system. One might hold out hope that the newer hockey markets in the United States will grow to provide more revenue for their teams, but the evidence has not supported this conjecture so far. Per-game ticket revenues for United States teams in nontraditional media markets have grown at a rate of just 1.4 percent per year (inflation-adjusted) over the past 18 seasons, compared with 2.6 percent annually for traditional United States hockey markets and 4.2 percent annually for Canadian teams. These struggling United States teams hurt the Canadian teams both directly by diluting the share of Canadian teams in the league, and indirectly by compelling a salary cap structure that is meant to protect the struggling American teams (but which has yet to make most of them profitable).

Excellent read! Thank you OP.

To me, the above noted quote was the most important part of the article, as other conclusions seemed somewhat obvious. Question remains: Bettman and other team owners are no dummies, financially. Why do they keep insisting on having hockey teams in soft markets? Desires of rich owners to have teams there for prestige only purposes are not the defining reason here, I don't think. What then? Side profits from "creative" leases? Other benefits? They cannot be that significant. I have always been and still am puzzled by this question. What does Bettman & Co. know about the secret benefits of NHL teams in non-hockey markets that we cannot figure out?

[Parallex]

Originally Posted by CaptainYooh

What does Bettman & Co. know about the secret benefits of NHL teams in non-hockey markets that we cannot figure out?

Nothing. They're large markets (but small "hockey markets") which means that they have large growth capacity and more importantly give the NHL a nationwide footprint for the purposes of getting a large national television deal in the U.S.

Personally I think Bettman and Co. are putting the cart before the horse with regards to franchise location and should aim to have financially solvent franchises first and foremost which means longterm support for the game of hockey in untraditional markets such to create a demand for an NHL franchise before creating the supply. I think the field of dreams method "If You Expand There, They Will Come" hasn't worked out to well.

[Locke]

But what are his opinions about Dogs and Jesus?

Yes, I know one is Sliver and one is Silver. Made joke anyway.

[SebC]

Originally Posted by FBI

One thing that might be off: wouldn't the avid fan hardly ever type "NHL" into a search engine since they would already have all their favorite NHL sites bookmarked?

For the purposes it's used for here, it seems to work - the results corroborate anecdotal evidence (e.g. Miami is low, Canadian teams are high). And it has predictive value for an NHL team's profitability. You could rename the "avid fan" statistic "Index X" and it wouldn't change anything in the analysis.

[TurnedTheCorner]

Originally Posted by troutman

The Avid Fan tables are interesting.

The data suggests Halifax has twice as many avid NHL fans than Nashville.

Six small markets in Canada have more avid fans than Seattle.

This measure of hockey fans does a very good job of predicting each team’s profitability. The 13 teams with 700,000 or more N.H.L. fans in their markets all made money and totaled $357 million in operating profits. The six teams in markets with fewer than 300,000 fans all lost money, totaling $77 million in operating losses. The teams between 300,000 and 700,000 fans had varied results but roughly broke even, on average. (This is the range in which a quality of a team’s management matters, along with other factors like per-capita income in the region and a team’s appeal outside its immediate metropolitan area.)

Six of the seven Canadian teams are above the 700,000-fan threshold (and therefore made money). So did Winnipeg, with roughly 560,000 fans. In total, Canadian teams brought in $219 million in operating profits in 2011-12 — whereas the American teams made a net of just $31 million. (Outside of the highly profitable Rangers, in fact, the United States-based teams lost money that year.)

Oh ####, here we go with more "Move teh teams to Canada!!1!' bull####

[Enoch Root]

Fantastic article - thanks to the OP.

One other consideration that I would like to throw out there is cyclicality.

In the late 80s / early 90s, Edmonton, Calgary and Montreal were all strong teams and were due for a period of rebuilding, which, due to the dollar, came at a very unfortunate time. As a result of financial constraints, those recovery cycles were severely challenged, deepened, and lengthened. As mentioned, then came the cap - also very unfortunate timing.

- - - - -

Even though there has been a cap for the past 8 seasons, there have still been 4 Canadian teams in the finals in the last 9 years and, as the author said, 3 of them went to game 7. So a bit of bad luck there and it probably isn't as bleak as the headline of 20 years would suggest.

[troutman]

I have seen it predicted that the Canadian $ will be down to 0.90 by the end of the year. Could it fall even further in the next five years?

[Enoch Root]

Originally Posted by macrov

As amazing at Nate Silver is, and as good as his analysis is, he does make some pretty obvious mistakes when analyzing his thesis that "Canadian teams have more fans, and are profitable, so don't need to field teams that are as good"

1) In his regression of US VS American teams, he shows a positive relationship between on ice performance and profitability. There is no such positive statistical relationship in Canada. Ok...that's great on first glance. But, Silver also explains that all the Canadians team make an operating profit but not all US teams do. So, by extension, Canadian teams can spend more equal amounts on payroll, while some US teams will be constrained to spend by their revenues (Ie - Nashville, Florida). As a result, there would per a correlation between profitability and performance in the US, because more profitable teams can spend more on payroll. In Canada most of the teams can spend up to the Cap if it makes sense for them to do so.

2) His argument is weaker when you consider that to become a contender, you often need to pick up top 5 overall draft talent. Toews, Kane, Crosby, Malkin, Fleury, Doughty, Schenn, and Johnson were all top 5 talent playing for 1 of the 4 final teams. How do you get top 5 draft talent? By being really bad. Which teams can afford to be bad - teams in market with lots of hardcore fans? Or teams in markets with a lot of fickle fans? Arguably its the former. Which suggests that teams with more fans should end up with better draft picks because they can afford to think more long-term.

3) He ignores that for many owners, the primary reason of owning a team is not the money - Tampa, Calgary, Ottawa, Buffalo, Detroit come to mind as the most obvious. So incentives for winning are aligned regardless of fan intensity or number of fans.

----

I think the issue with the Canadian teams has more to do with the first part of his argument - in the mid 1990s to early 2000s, Calgary, Vancouver and Edmonton couldn't really field competitive teams. As a result their were only 3 teams that could seriously compete.

This is data mining.

Unless you can show that geography impacts how many top 5 picks each team gets, it has to be assumed that they are distributed evenly with respect to geography and therefore is irrelevant (certainly, management ineptness would be a factor in the distribution, but I doubt there is a correlation between ineptness and geographical location).

[Enoch Root]

Originally Posted by troutman

I have seen it predicted that the Canadian $ will be down to 0.90 by the end of the year. Could it fall even further in the next five years?

Predicting future currency levels is a pointless exercise.

[CliffFletcher]

Originally Posted by CaptainYooh

Why do they keep insisting on having hockey teams in soft markets? Desires of rich owners to have teams there for prestige only purposes are not the defining reason here, I don't think. What then? Side profits from "creative" leases? Other benefits? They cannot be that significant. I have always been and still am puzzled by this question. What does Bettman & Co. know about the secret benefits of NHL teams in non-hockey markets that we cannot figure out?

The pot of gold at the end of the rainbow for NHL owners is a big, fat, national U.S. TV contract. That has been the driving motivation behind every franchise expansion in the last 30 years. They look at the map of the 50 biggest TV markets in the U.S., and they want to plant an NHL franchise in as many as possible.

[CaptainYooh]

Originally Posted by CliffFletcher

The pot of gold at the end of the rainbow for NHL owners is a big, fat, national U.S. TV contract. That has been the driving motivation behind every franchise expansion in the last 30 years. They look at the map of the 50 biggest TV markets in the U.S., and they want to plant an NHL franchise in as many as possible.

I understand this motivation. But the reality must suck - what good is an advertising contract for the show that nobody is watching over there? TV time is expensive and advertising dollars are not unlimited. Advertisers want to advertise during popular programs.

[Sainters7]

I think he's pretty much bang on, especially about the uneven economics pre-lockout. Until then, anyone not named the Leafs didn't even have a shot unless they caught lightning in a bottle, like we did. Since then, there's been 4 Canadian teams in the Finals, 3 who went to game 7. It's only a matter of time..

And am I the only one who doesn't really care it hasn't happened in 20 years? It's mostly Canadians on the U.S. teams anyways. Pre-lockout I was all about pulling for the Canadian teams in the dance due to the whole David vs. Goliath economic thing, now I could really care less. In fact, I almost selfishly pull against them now, because I want the Flames to be the one to break the streak.

[Tinordi]

How would you test the reverse theory that many are saying in this thread? That the competitive pressure is too high in Canadian markets which ends up being self-defeating?

[Kjesse]

Originally Posted by macrov

3) He ignores that for many owners, the primary reason of owning a team is not the money - Tampa, Calgary, Ottawa, Buffalo, Detroit come to mind as the most obvious. So incentives for winning are aligned regardless of fan intensity or number of fans.

Great post, but I'm going to take some issue here. While we're all grateful for Calgary's ownership group, they're not in it for charity. Their operating losses have to be considered in light of their capital gains combined with tax consequences. I don't know for sure but I'd suggest they've greatly improved their asset position as a result of being owners. While many of them have philanthropic tendencies, those tendencies do not include their business with the Flames.

[saskflames69]

I know how to solve that. Simply add another half dozen Canadian teams and we'll be winning the cup on a regular basis.

[Ice]

Originally Posted by troutman

The pressure to win in Canada forces teams to concentrate on short-term plans, rather than long builds.

This is my answer. For whatever reason the Canadian teams are very hesitant to rebuild and that hurts them. It doesn't help that Edmonton finally decided to give it a try and has mismanaged their rebuild so badly it probably scares off Canadian organizations even more.

[hwy19man]

Blame the CBC.