Saturday, December 19, 2009

Exchange Rates, Canadian NHL, and Making Payroll

Canadian teams have learned to protect themselves by hedging their bets on swings in foreign exchange rates. This often involves buying contracts to purchase United States dollars at different levels, up to several years in advance. This helps insulate the teams from big changes in the exchange rate. But it also means that the current rise of the Canadian dollar may not translate into a gain for teams, or as large a loss when the Canadian dollar slips.

The effect of the fluctuating dollar also hits N.H.L. players. Ottawa Senators forwards Mike Fisher and Daniel Alfredsson were with the team early this decade when the Canadian dollar was weak and team finances were shaky. “Quite a few of us even bought season tickets to help out,” Alfredsson, the team’s captain, said. Fisher said that once the paychecks arrived late.
“We were on thin ice for a few years,” Alfredsson said.

I highly recommend checking out this really interesting article in the NYTimes about  how fluctuations in the exchange rate affect payroll for Canadian NHL teams.  It all makes sense when you think about it, but I certainly never had before.

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