Introduction

Since 1917, the National Hockey League has been the premier league for hockey players, coaches, and fans alike. Hundreds of thousands flock to stadiums across the United States and Canada to catch a glimpse of their favorite hockey team fight for a chance to win the Stanley Cup. With such a large and dedicated following, millions of dollars in revenue are brought in by ticket sales, advertisement, and other revenue streams. Because of this revenue, NHL teams such as the Boston Bruins follow the same economic principles as businesses because after all, they are a business. In a bid to understand these economic principles, a storied team like the Boston Bruins can be analyzed as they exemplify the nature of the NHL market. As a firm, the Bruins operate in an industry that is shaped by industry structure, the level of competition, supply and demand, and the elasticity of demand.

Industry Structure

The first critical microeconomic element of concern for Boston Bruins is the industry structure in which it operates. As a sports team, the Bruins have a unique industry structure that is generally only found in the entertainment industry. The Boston Bruins do not produce a product or service for customers, however the sellable output for the Bruins and other teams in the NHL is the game and its live action. When two teams play, the home team sells tickets for admittance. With 31 teams in the league, many games are played on a weekly basis across the NHL. The total ticket revenue in the industry is determined as the number of seats sold for each game and the number of games played in a season. “The structure of the league comes into effect when certain assumptions about the teams are made” (Sloane, 23). The first assumption is that each team, for instance, the Boston Bruins has a primary motive of profit maximization. The second assumption is that the league is designed in a way that it “seeks to enhance the material gains of the members and therefore requires that the clubs operate jointly in a bid to maximize the profitability” (Jones, 10).As there is only one premier league in the NHL, the industry operates as a large oligopoly with the 31 teams operating jointly to run the market. However, the “existence of opposing forces in the industry which shifts the clubs from one optimum to another, the joint profitability is attained in the industry”(Jones, 10). The position of the industry becomes one which seeks to ensure continued viability i.e. the continuity in the operations of the league. It means that the structure of the league is based on mutual dependence, where a single team will not survive in an environment where the rest have gone under. The action of each team within the industry is limited to the operational needs of continuity of the league, therefore one team will not attempt to run another team out of the league. With regards to the industry’s equilibrium, it can be described as one in “which the clubs are earning profits that are sufficient to keep them in the league and so preserve the viability of that organization” (Jones, 16). This institutional framework of the league and its industry structure does not change. This ensures that its profitability and existence continue for years to come.

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Supply and Demand

The second element that is critical to understanding Boston Bruins’ economic theory is the demand and supply within the industry. Each team operates with an intention of maximizing their income through profitability. In order to achieve maximum profitability, the Bruins must understand supply and demand. The demand, which elicits sales, is a function of fan’s taste, ticket prices, and league competition among other factors. “The competition between the teams has an influence on the demand of the products that are sold” (Davenport, 23). The demand for the product is dictated by the level of competition and winning exhibited by the team.   For example, when the Bruins are duking it out with the Montreal Canadiens, the thrill and excitement of these games add to the number of people (demand) who want to attend the matches. As the intensity and importance of the games rise, demand for tickets also increases, which lead to higher ticket prices and sold-out matches. All factors held constant, the demand for the matches is influenced by the media coverage and the position of the teams in the league. When a game between the Boston Bruins and Tampa Bay Lightning is a top of the table clash with playoff implications at the end of the NHL season, it is expected that the stadiums will be full, and sales will be at its peak. The high demand translates to higher revenues for the teams involved and the entire league. “It works in line with the industry motive of profit-making” (Demmert, 34). On the supply side, the Bruins are