Competitive Balance in the National Hockey League and the Effect of the 2004-05 Lockout
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This paper examines the economics of competitive balance in the National Hockey League (NHL) with specific emphasis on the effect of the 2004-05 season lockout and subsequent Collective Bargaining Agreement (CBA). The CBA introduced a variety of new measures with the goal of increasing the overall economic stability of the NHL, as well as decreasing the growing competitive imbalances between top and bottom teams. Economic models concerning competitive balance will be used and related to data gathered from teams before and after the 2004-05 season lockout. The analysis will explore the causes which led to the lockout and the benefits of the new CBA to the NHL as a league, as well its team owners and players. Sports economics models used in this paper demonstrate the potential results of new measures directed towards competitive balance. The data consists of 10 years (9 seasons, 2000-2009) of information for the 30 teams that make up the NHL. Using the models ·and collected data, it is concluded that the new CBA resulting from the 2004-05 lockout has provided increased competitive balance with benefits to overall league welfare. These areas include potential for increases in profitability for many large market teams, viability for small market teams, and overall player welfare.