J.C.H Jones's article 'The Economics of the National Hockey League'

Essay by scott hoUniversity, Bachelor'sA-, February 1997

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J.C.H. Jones's article 'The Economics of the National Hockey League' (1969) purpose is to

explain through simple micro economics that the prime motive of professional hockey team owners

is profit maximization. The owners argue that their main interest is 'for the love of the game,' not the

financial benefits of owning a professional sports franchise and to avoid government regulations such

as the Combines Act (note 1).

An article written in 1982 by J.A. Schofield entitled 'The Development of First Class Cricket in

England,' states the behavior of sport cartels. Three hypothesises are used to explain the behavior

described by Schofield, number two being developed by J.C.H. Jones (1969). (1) The profit

maximization hypothesis. (2)The joint profit maximization hypothesis that the entire cartel (league)

strives for. This hypothesis does not incorporate non profit objectives that influence group behavior.

(3) The utility maximization model that allow for many possibilities usually compromising arguments

such as the success of the team at a given year and paid attendance for the team's venue.

By explaining the frame work of a professional sports league Jones introduces us to factors that

make an organized league function, which seems quite familiar to any other monopolistic markets.

Since no team can create any revenue by themselves they must form a coalition with another club to

produce a profit generating output, namely a hockey game. Other clubs enter this coalition thus

creating a formal league which we call the National Hockey League. Jones then states how revenue

is generated in the N.H.L and how it is affected by certain factors.

A theoretical model of the N.H.L is created by Jones with all things being equal, creating an

equilibrium amongst all clubs. The model is then adjusted to real life variables that turns his

theoretical model into what...