Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries

As private enterprises in the U.S. and Canada, franchises in the National Hockey League (NHL) can be presumed to be firms pursuing maximum profits. Part of this pursuit involves the negotiation between NHL players and management of player salaries, which (among other things) must be consistent with the productivity level of each player. This educational note endeavors to empirically identify key, quantifiable factors that reflect individual NHL player productivity and as a result help to determine the regular season salary structure for individual NHL players, whether they be goalies, centers, wingmen, or defense-men. Ideally, such information can be useful for the student of private enterprise insofar as it provides insights relevant to free market decisions and outcomes involving marginal revenue product. Thus, this educational note demonstrates to the student of private enterprise how systematic measures of player productivity help to explain NHL player salaries.