Question

How will oil production in Saudi Arabia, affect competition for the Stanley Cup in 2015-2016?

Answer 1

Powerhouse Blackhawks appeared to be heading for a especially difficult off-season due to reasons of macroeconomic origin, and coming from all over the globe from Saudi Arabia's oil production policies and their consequent effects on oil prices The recent slow wage cap growth was somewhat unexpected before the 2014-15 season. The NHL signed the biggest television contract in league history with Rogers in late-2013 – a contract that was widely expected to significantly increase the revenue-linked salary limit beginning with the 2015-16 season.

Nevertheless, the dramatic fall in oil prices in late-2014 and early-2015, triggered by the massive change in oil supply in Saudi Arabia and OPEC (as well as other factors), had important consequences for the NHL wage limit. The decline in oil prices, the subsequent recession in the Canadian economy and other macroeconomic developments contributed to a major weakening of the Canadian dollar over the same period. The value of the TV contract (dominated in Canadian dollars) dropped considerably, along with the value of other NHL-received Canadian dollar revenues

Nevertheless, the sluggish rise in the salary cap had heterogeneous impacts on NHL teams. The perennially productive Chicago Blackhawks had already made significant financial arrangements for the 2015-16 season before the crash in oil prices. We had signed in particular their pair of forwards superstars, Jonathan Toews and Patrick Kane, in July 2014 to very lucrative contract extensions. Although Toews and Kane were fairly underpaid during the 2014-15 season – which had allowed the Blackhawks to sell a strong and talented roster – the rise in their individual cap hits for the 2015-16 season significantly surpassed the overall NHL salary cap rise.