Macroeconomic Forces, The National Hockey League, And Winning The Stanley Cup Harvard Case Solution & Analysis

Macroeconomic Forces, The National Hockey League, And Winning The Stanley Cup Case Solution

Ans no 1

Since the beginning of the 2005-2006 season, the NHL had been operating with a salary cap. The collective bargaining agreement (CBA) stated that NHL’s new system would be reflected as a new hard salary cap which meant that team would not allow having a roster whose total salaries exceed the cap. On the other hand, soft salary cap, by paying a financial penalty the team could choose to exceed the cap. The soft cap system was used in the National basketball association and major leagues baseball. By abiding by the same salary cap, the sew system would force teams and general managers to be mindful of their payrolls and especially signing and trading the players.

Ans no 2

The Canadian economy is sensitive to oil prices because the cost of production in Canada is high eras compared to other countries. In the 1st quarter of 2015, Canada’s GDP fell largely due to falling activity and investment in the oil and gas sector. In 2015 by the senior analyst of Canada estimated that as contrasted with 2014, the investment in equity would decrease by 33%, the well drilled in Canada would decrease by 30% and exploration of oil would decrease by 46% due to heavy drop in oil prices. From the last quarter of 2014 till the first quarter of 2015, the expenditure on O&G would drop by CA$ 6.5B, 29.6% drop. Crude and Bitumen was considered to be the largest export.1

Ans no 3

The economic shocks greatly affected the exchange rate of Canadian dollar which was influenced by the Oil’s price and the economy of Canada. Due to which the Canada’s government had to intervene through the Bank of Canada. The Bank of Canada announced that

in response to the heavy drop in price of oil, they are lowering their target by 1/4 of 1% point to 3/4 %.2

Ans no 4

Bowman and Chicago's black hawks once again winning the title of the 2014-15 Stanley cup. Due to the economic changes faced by Canada just a year earlier, the NHL players associated announced that the salary cap for the upcoming season would be $71.4 M only a $2.1 M increase far below the $74.8 M cap which was expected a year back in 2013. Black hawks players had also earned a combined $750,000 in bonuses from the 2014-15 season which would be applied against the team salary cap for the 2015-16 season compared with the previous season.3With the salaries of Toes and Kane combined increase by $8 M which is 29% of the team’s salary cap, Bowman faced a great challenge. Twelve players from the successful team were not signed for the forthcoming season including some important players like Antoine, Vermette and Brandon Saad...........................

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