measuring employer-based discrimination versus customer-based discrimination: the case of french...

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*Neil Longley is an Associate Professor in the Faculty of Administration at the University of Regina, in Regina, Saskatchewan, Canada. He would like to thank an anonymous referee for helpful comments made on an earlier draft of the paper. Measuring Employer-Based Discrimination Versus Customer-Based Discrimination The Case of French Canadians in the National Hockey League By NEIL LONGLEY* ABSTRACT. This paper examines alternative hypotheses as to why French Canadians are underrepresented on National Hockey League teams based in English Canada relative to their representation on teams based in the United States. Using panel data, the paper accounts for the idiosyncratic behavior of specific teams by using a fixed-effects model. With these fixed-effects accounted for, the paper tests the degree to which the representation of French Canadians on a team is related to that team’s location—either in English Canada or the United States—versus the degree to which the representation is related to the ethnic origin of that team’s coach and general manager. It finds the ethnic origin variables to be unable to explain the rep- resentational patterns, leaving the team location variable as the only significant explanatory variable. These statistical findings thus support a “customer discrimination” explanation of the underrepresentation, as opposed to an “employer discrimination” explanation. Identifying this source of any potential discrimination is important, since differ- ent sources will have different implications for the prospects of reduc- ing such discrimination. I Introduction RESEARCHERS STUDYING LABOR MARKET DISCRIMINATION have frequently focused on the professional sports industry to empirically test their American Journal of Economics and Sociology, Vol. 62, No. 2 (April, 2003). © 2003 American Journal of Economics and Sociology, Inc.

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Page 1: Measuring Employer-Based Discrimination Versus Customer-Based Discrimination: The Case of French Canadians in the National Hockey League

*Neil Longley is an Associate Professor in the Faculty of Administration at the

University of Regina, in Regina, Saskatchewan, Canada. He would like to thank an

anonymous referee for helpful comments made on an earlier draft of the paper.

Measuring Employer-Based DiscriminationVersus Customer-Based Discrimination

The Case of French Canadians in the NationalHockey League

By NEIL LONGLEY*

ABSTRACT. This paper examines alternative hypotheses as to whyFrench Canadians are underrepresented on National Hockey Leagueteams based in English Canada relative to their representation onteams based in the United States.

Using panel data, the paper accounts for the idiosyncratic behavior of specific teams by using a fixed-effects model. With thesefixed-effects accounted for, the paper tests the degree to which therepresentation of French Canadians on a team is related to that team’slocation—either in English Canada or the United States—versus thedegree to which the representation is related to the ethnic origin ofthat team’s coach and general manager.

It finds the ethnic origin variables to be unable to explain the rep-resentational patterns, leaving the team location variable as the onlysignificant explanatory variable. These statistical findings thus supporta “customer discrimination” explanation of the underrepresentation,as opposed to an “employer discrimination” explanation. Identifyingthis source of any potential discrimination is important, since differ-ent sources will have different implications for the prospects of reduc-ing such discrimination.

I

Introduction

RESEARCHERS STUDYING LABOR MARKET DISCRIMINATION have frequentlyfocused on the professional sports industry to empirically test their

American Journal of Economics and Sociology, Vol. 62, No. 2 (April, 2003).© 2003 American Journal of Economics and Sociology, Inc.

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theories. Relative to other industries, the professional sports industryoffers a number of advantages to researchers: for example, the extentto which minorities are represented can be easily and accurately monitored; employee performance can be objectively measured, anddata on such performance is widely available; information regardingemployees’ salaries are comprehensive and publicly available, and soforth.

This paper focuses on one particular sport—professional hockey.Unlike sports such as baseball, football, and basketball, for whichracial discrimination has been the primary issue, discrimination based on ethnic origin has been the issue examined in hockey. Specifically, researchers have examined whether French Canadians—a group of players that have had a long history in the National HockeyLeague (NHL), but that have always been in a minority status—havesuffered from discriminatory treatment. French Canadians possess alanguage and culture that is quite different from that of the Anglo-phone majority that has long dominated the NHL, and researchershave examined whether such differences have adversely affectedFrench Canadians.

Much of the early literature in the area focused on salary discrim-ination and entry discrimination.1 More recently, however, a differentform of discrimination has been examined—the segregation of FrenchCanadians to certain teams within the NHL. For example, Longley(2000) found, using a data set that spans the entire modern historyof the NHL, that French Canadians have generally been underrepre-sented on teams based in English Canada, compared to teams basedin the United States.

It is this underrepresentation that is the focus of this paper. WhileLongley’s paper uncovered the existence and magnitude of this under-representation, it did not statistically test alternative hypothesesregarding the causes of this underrepresentation. The purpose of thispaper is to conduct such statistical tests.

Using panel data, this paper analyzes whether such underrepre-sentation may be attributable to merely the idiosyncratic behavior ofcertain teams, rather than to any systematic discriminatory behaviorby a broader, and identifiable, group of teams. It also examines thediscrimination hypothesis and analyzes the extent to which the

366 American Journal of Economics and Sociology

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representation of French Canadians on individual teams may berelated to the ethnic origin of that team’s coach and/or generalmanager (GM), versus the extent to which this underrepresentationmay be attributable to fan preferences. In effect, it attempts to identify the extent to which any possible discrimination is “customer-based” versus the extent to which it is “employer-based.” Differ-entiating between the two sources is important, because the prospectsand means by which this discrimination can be eliminated will varydepending on the underlying source of the discrimination.

II

French Canadians in the NHL

FRENCH CANADIAN PLAYERS have been prominent throughout the historyof the NHL. Although always comprising a relatively small minorityof the total players in the League at any given time, French Canadi-ans have been some of the all-time great players in the history of theNHL—players, for example, such as Maurice Richard, Jean Beliveau,Guy Lafleur, Raymond Bourque, and Mario Lemieux.

Historically, a disproportionate number of French Canadians haveplayed for one of the two Quebec-based teams in the NHL (the Mon-treal Canadiens and the former Quebec Nordiques). Prior to intro-duction of an amateur draft in 1969, the NHL used a “sponsorship”system to allocate all amateur players to NHL teams. NHL teams wouldscout players across the various amateur leagues in Canada and wouldattempt to sign these players to contracts before other NHL teamswere able to do so. Players were then perpetually bound to theseteams.

One of the effects of this sponsorship system was to give the Mon-treal Canadiens, the province of Quebec’s only NHL team at the time,a distinct advantage over other NHL teams in being able to sign thebest French Canadian prospects. One important advantage of theCanadiens was that they were a cultural icon in Quebec, particularlyamongst the francophone population, and for young French Cana-dian amateur hockey players growing up in Quebec, playing for theMontreal Canadiens was often a lifelong dream. Furthermore, the fran-cophone society in Quebec has, at least in the view of some, long

Employer- vs. Customer-Based Discrimination in the NHL 367

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been an insular society, with both a language and a culture very dif-ferent from the rest of Canada (and, of course, the United States).Thus, for young French Canadian amateur hockey players in Quebec,playing NHL hockey in their home province of Quebec for the Montreal Canadiens was a much easier transition than playing for oneof the five other teams (in the United States and English Canada) inthe NHL at the time.

With the implementation of the amateur draft in 1969, the Canadiens’ institutional advantage in acquiring French Canadianscame to an end.2 The Montreal Canadiens became like any other NHLteam and were no longer able to effectively monopolize the top-quality French Canadian talent entering the NHL. While the Cana-diens have still shown a greater propensity (as did the QuebecNordiques during their time in the NHL), relative to other teams inthe League, both to draft French Canadians and to make trades forFrench Canadians, the majority of French Canadians in the NHL nowplay for teams outside of Quebec.

This paper takes this historical overrepresentation of French Cana-dians on Quebec-based teams as a given. Whether such an overrep-resentation is a reflection of discrimination by Quebec teams—i.e., ananti-Anglophone bias—or whether it is a legitimate and acceptableattempt to preserve a cultural heritage is an important question initself, a question that, perhaps somewhat surprisingly, has receivedalmost no consideration in the literature. However, this paper followsmore in the mode of Longley (2000), who takes the overrepresenta-tion of French Canadians on Quebec teams as a given and concen-trates only on the distribution of French Canadians on teams outsideof Quebec.

Longley (2000) finds that French Canadians have been consistentlyand significantly underrepresented on English Canadian teams, rela-tive to U.S. teams. He argues that, even if language and cultural bar-riers make French Canadians less valuable to teams outside Quebecthan to teams within Quebec, such effects should be felt equally onEnglish Canadian teams and U.S. teams. He asserts that one must finddifferences between English Canadian teams and U.S. teams toexplain his results.

In this regard, Longley hypothesizes that the historical tensions

368 American Journal of Economics and Sociology

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between French Canadians and English Canadians may be at the rootof the issue. He speculates that these French-English tensions maycause fans of English Canadian teams to hold negative views ofFrench Canadians—views not held by the American fans of the U.S.-based teams. He provides support for this hypothesis by showing thatthe level of underrepresentation increases during periods when thepolitical threat of Quebec sovereignty is high.

While Longley has shown that underrepresentation has clearlyexisted, his hypothesis regarding the causes of this underrepresenta-tion need to be subjected to further statistical testing, along with possible alternative hypotheses. To this end, the following sectionexamines a variety of possible explanations for the results, whileSection IV conducts the actual statistical tests.

III

Possible Explanations for the Underrepresentation

IN EFFECT, the hypothesis offered by Longley to explain the under-representation is a “customer discrimination” argument (see Becker1957). Under this scenario, a firm’s customers (in this case, the fansof a team) are the discriminators, and the firm (in this case, the teams)must respond to the customers’ attitudes.

Even if this underrepresentation is, in fact, attributable to dis-crimination, it is possible that the source of this discrimination is not the team’s customers, but rather is the team itself. In other words, the discrimination could be employer-based rather than customer-based.

For example, if the coaching and management staff of certain teamshold negative views toward French Canadians, then French Canadi-ans are likely to be underrepresented on those teams. It would needto be the case that English Canadian teams are more likely, relativeto U.S. teams, to employ coaches and/or general managers (GMs)who have such negative views, if this argument is to explain Longley’sdata.

Let us consider the ethnic origin of coaches and GMs in the NHL.On both English Canadian teams and U.S. teams, English Canadianshave historically dominated coaching and managerial positions.

Employer- vs. Customer-Based Discrimination in the NHL 369

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However, this dominance is somewhat greater on English Canadianteams than on U.S. teams; no French Canadian has ever been GM ofan English Canadian team, even though there are a number ofinstances of U.S. teams having a French Canadian GM. Similarly,French Canadian coaches have been highly underrepresented onEnglish Canadian teams relative to U.S. teams (Longley 2000). Thepast two decades have also seen a number of Americans rise to headcoaching and GM positions in the NHL; the great majority of theseAmericans have been employed by U.S.-based teams.

To further illustrate this point, Table 1 shows the distribution ofNHL coaches by ethnic origin over a sample period of 1989–1990through 1999–2000. Over this period, there were 248 individual “team-seasons,” or the number of seasons multiplied by the number ofteams. The numbers in the cells of the table represent the distribu-tion of these team-seasons. Table 2 provides analogous informationfor NHL GMs.

Tables 1 and 2 show that English Canadian coaches and GMs aresomewhat more dominant on English Canadian teams than they areon U.S. teams. This dominance is particularly strong in the GM cate-gory, where English Canadians account for 88% (45/51) of the team-seasons for English Canadian teams, but only 68% (134/197) of theteam-seasons for U.S. teams.

In general, then, the U.S.-based teams have had more diversity—in terms of French Canadians and Americans, rather than just English

370 American Journal of Economics and Sociology

Table 1

Distribution of Coaches, by Origin: 1989–1990 to 1999–2000

Team Location: Team Location:Origin of Coach English Canada United States Total

French Canadian 2 8 10American 0 12 12English Canadian 49 177 226

Total 51 197 248

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Canadians—in their coaching and GM ranks than have English Canadian teams. Thus, not only do English Canadian and U.S. teamsdiffer in the composition of their fan base, they also differ in the com-position of their coaching and managerial personnel. This raises thepossibility that the underrepresentation of French Canadians onEnglish Canadian teams can be explained by the preferences ofcoaches and GMs, as opposed to fan preferences. If one assumes, forexample, that French Canadian coaches and GMs have a natural affin-ity for French Canadian players, then the greater prevalence of FrenchCanadian coaches and GMs on U.S. teams could account for thehigher representation of French Canadian players on those teams. Fur-thermore, it is also possible that English Canadian coaches and GMstend to hold more negative views (due to their upbringing in theCanadian climate of French-English tensions) of French Canadiansthan do their American counterparts (to whom the tensions withinCanada are presumably of little interest or importance). If this is true,then such differences in attitudes could result in U.S. teams (whichare more likely than English Canadian teams to have Americancoaches or GMs) employing a higher proportion of French Canadians relative to English Canadian teams.

These alternative explanations—customer-based discriminationversus team-based discrimination—can be subjected to empiricaltesting. In other words, to what extent might the underrepresentationof French Canadians on English Canadian teams be a reflection of the

Employer- vs. Customer-Based Discrimination in the NHL 371

Table 2

Distribution of GMs, by Origin: 1989–1990 to 1999–2000

Team Location: Team Location:Origin of GM English Canada United States Total

French Canadian 0 16 16American 6 47 53English Canadian 45 134 179

Total 51 197 248

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preferences of the (predominantly English Canadian) coaches andGMs of these teams, versus a reflection of the preferences of the fansof these English Canadian teams?

It is also possible, however, that the underrepresentation found byLongley can be explained by factors other than discrimination. Forexample, each NHL team has its own history, culture, and idiosyn-crasies. Over any given sample period, certain teams may under-employ French Canadians, not because of any discriminatorybehavior, but simply due to a set of variables that may affect that par-ticular team at that particular time.

This is particularly important to investigate, given that the samplesize of English Canadian teams is small, relative to the sample size ofU.S. teams. For example, assume two English Canadian teams andtwo U.S. teams exhibited idiosyncratic (but non-discriminatory)behavior that caused them to underemploy French Canadians. If,when modeling, all teams are then categorized as either English Canadian- or U.S.-based, this idiosyncratic behavior will be statisti-cally more important for the English Canadian category than for theU.S. category and may therefore cause an inappropriate acceptanceof the discrimination hypothesis.

IV

The Empirical Test

TWO TYPES OF TESTS ARE CONDUCTED: one that focuses on the overallrepresentation of French Canadians, as measured by the number ofNHL games that French Canadians play for English Canadian teamsversus for U.S. teams; and a second that focuses on the entry draftand the extent to which English Canadian and U.S. teams may differin their propensity to draft French Canadians.

Overall Representation of French Canadians

The test is conducted using panel data spanning 11 seasons—fromthe 1989–1990 season through the 1999–2000 season. The followingmodel is tested:

372 American Journal of Economics and Sociology

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(1)

where Git = the number of games played by French Canadianskaters for team i in season t

Lit = a dummy variable set equal to 1 if the team islocated in the United States and set equal to 0 ifthe team is located in English Canada

C-FRit = a dummy variable set equal to 1 if the coach ofteam i in year t is a French Canadian; 0 otherwise

GM-FRit = a dummy variable set equal to 1 if the GM of teami in year t is a French Canadian; 0 otherwise

C-AMit = a dummy variable set equal to 1 if the coach ofteam i in year t is an American; 0 otherwise

GM-AMit = a dummy variable set equal to 1 if the GM of teami in year t is an American; 0 otherwise

TREND = a year-to-year linear time trendSEAS95 = a dummy variable equaling 1 for the 1994–1995

season; 0 otherwise.

The variable L denotes the location of the team and is intended tocapture the origin of the team’s fans—either English Canadian orAmerican. The variables C-FR, GM-FR, C-AM, and GM-AM identify theethnic background of each team’s coach and GM. The variablesTREND and SEAS95 are both control variables. TREND is included toaccount for the possibility that the influx of Europeans into the NHLduring the 1990s decreased the representation of French Canadiansin the NHL over this time period. SEAS95 is included because the1994–1995 season was an anomaly, as a labor dispute betweenowners and players shortened that season to only 48 games.3

Because panel data is used, the error term from the above regres-sion will actually have two separate components: the usual error com-ponent, and a component that captures the “fixed-effects” of eachteam. In this situation, such fixed-effects could be any factor that influ-ences the number of French Canadians on a team and that is not

G a b L b C FR b GM FR b C AM

b GM AM b TREND B SEAS

it it it it it

it

= + ( ) + ( ) + ( ) + ( )+ ( ) + ( ) + ( )

1 2 3 4

5 6 7 95

- - -

-

Employer- vs. Customer-Based Discrimination in the NHL 373

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accounted for by the independent variables (i.e., the location of theteam or by the origin of the team’s coach and GM) already includedin the model. These fixed-effects thus capture the impacts that anyomitted variables may have, and account for any idiosyncrasies in theplayer personnel decisions of a particular team. To account for thesefixed-effects, a dummy variable for each team is added to the abovemodel.4

Once these fixed-effects are accounted for, the results from themodel given in Equation (1) can then provide insight into the dis-crimination issue. The results will show the extent, if any, to whichthe underrepresentation is attributable to fan preferences, versus theextent to which to is attributable to the preferences of coaches andGMs.

Table 3 provides the results from this fixed-effects model.The results indicate that, even when fixed-effects are accounted

for,5 the variable used to identify team location, L, is still significantin explaining the representation of French Canadians on NHL teams.The positive coefficient on this variable indicates that FrenchCanadians are less likely to be found on any given team based inEnglish Canada compared with any given team based in the UnitedStates.

This result supports the “customer discrimination” hypothesis, and

374 American Journal of Economics and Sociology

Table 3

Variable Coefficient t-statistic

Constant 45.37 59.81L 64.01 2.46C-FR -17.35 -.76GM-FR -75.12 -3.18C-AM -10.40 -.53GM-AM -6.85 -.39TREND 1.99 1.50SEASS95 -28.62 -2.15

R2 = .46N = 248

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may be an indication that fans of English Canadian teams view FrenchCanadians more negatively than do fans of U.S. teams. Conversely,however, there seems to be no evidence to support the “employerdiscrimination” hypothesis. In other words, the fact that the coachingand managerial positions on English Canadian teams are more heavilydominated by English Canadians, compared to U.S. teams, does notappear to be able to explain the underrepresentation of French Canadians on English Canadian teams.

For example, both C-FR and C-AM are insignificant, indicating thatneither French Canadian coaches nor American coaches are morelikely to employ French Canadians on their teams than are EnglishCanadian coaches. Similarly, GM-AM is also insignificant, implyingthat American GMs are no more likely to employ French Canadiansthan are English Canadian GMs. The only variable of this group thatis significant is GM-FR, but the negative coefficient on this variable issomewhat counter-intuitive. This negative coefficient indicates thatFrench Canadian GMs were less likely to employ French Canadianplayers on their teams than were English Canadian GMs. Whateverthe specific reason for this result, it cannot explain the underrepre-sentation of French Canadian players on English Canadian teams,simply because all French Canadian GMs in the sample wereemployed by U.S. teams.6

In general, then, none of the four ethnic origin variables for coachesand GMs seem to be able to explain the underrepresentation ofFrench Canadians on English Canadian teams. This indicates thatFrench Canadian players are likely to be underrepresented on EnglishCanadian teams regardless of the ethnic origin of the coaches and/orGMs of those teams. It also indicates that English Canadian coachesand/or GMs for U.S.-based teams will tend to have a higher repre-sentation of French Canadians on their teams relative to their coun-terparts on English Canadian teams.7

This result should not necessarily be surprising, since, in the com-petitive world of professional hockey, coaches and GMs must con-stantly perform, or risk losing their jobs. This competitive environmentmay force coaches and GMs to be concerned only with a player’s on-ice capabilities and not allow them the slack to indulge any personalviewpoints they may have.

Employer- vs. Customer-Based Discrimination in the NHL 375

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Furthermore, team owners may discourage their coaches and GMsfrom indulging any personal preferences, since such indulgences canimpose monetary costs on the team. For example, Szymanski (2000)shows that teams on which minority-group players are underrepre-sented will, in a competitive labor market, be forced to incur higherpayroll costs for a given level of on-field performance.

Thus, while the team-based discrimination argument cannot besupported, the results are consistent with the customer discriminationhypothesis. The positive and significant coefficient on the variable Lmay be an indication that coaches and GMs for English Canadianteams, regardless of their own origin, face pressures to underemployFrench Canadians. English Canadian NHL fans may have preferencesthat are sufficiently strong enough to compel the teams to respondin some way, or risk losing those fans.

The Entry Draft

One reason why French Canadians have been underrepresented onEnglish Canadian teams is that these teams tend to draft fewer FrenchCanadians than do U.S. teams. While the draft is certainly not the onlymeans by which teams acquire players, it is perhaps the most impor-tant means, since it is he mechanism by which all of the top youngamateur players are allocated to NHL teams.

Longley (2000) found that the tendency for English Canadian teamsto draft fewer French Canadians is particularly prevalent in the lowerrounds of the draft (after the 100th overall selection). A similar ques-tion to the one posed above can be examined. Is this drafting behav-ior solely a reflection of the team’s location, or is it also influencedby the ethnic origin of that team’s coach and/or GM? In other words,do English Canadian teams draft fewer French Canadians in responseto fan preferences, or do they draft fewer French Canadians becausethese clubs are more likely than U.S. teams to have English Canadiancoaches and GMs?

Analyzing the drafting behavior of teams may be a purer measureof the influence of coaches and GMs than the results of the previousanalysis. In the previous section, the number of games played byFrench Canadians for a particular team was the focus variable.

376 American Journal of Economics and Sociology

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However, at any particular point in time, the total number of FrenchCanadians on a given team may, at least in part, be a reflection of ateam’s previous coach or GM. For example, assume a French Canadian GM was new to his position and had a definite preferencefor French Canadian players. Such a preference may not becomeevident for a number of seasons, as the GM gradually makes per-sonnel changes to reflect his preferences. To continue the example,assume the French Canadian GM was now fired and replaced by an English Canadian GM who had negative views of French Canadians. The English Canadian GM will not be able to immediatelyalter the composition of the roster, and, in the short run, may beforced to continue to employ an above-average number of FrenchCanadians.

However, by focusing on the drafting behavior of teams, some ofthese potential problems are avoided. Draft decisions of a team inany given season are solely a reflection of the decisions of those man-agement personnel employed by the team at the time of the draft.

To empirically examine this question, panel data from the 1989–1990 season through the 1997–1998 season are analyzed. All draftpicks (by either English Canadian or U.S. teams) subsequent to the100th overall selection in each season are included in the data set,whether or not that player ever played in the NHL. Over the sampleperiod, each U.S. team drafted an average of .40 French Canadiansper year, while each English Canadian team drafted an average ofonly .23 French Canadians per year.

The following model is tested:

(2)

where Dit = the number of French Canadians drafted by the i th teamin the t th season, and where the independent variables are definedanalogously to that of the previous model. As in the previous model,fixed effects are accounted for by including a dummy variable foreach team, thus capturing any idiosyncrasies in the player personneldecisions of a particular team.

The variable L is again used to denote teams based in the UnitedStates, and is included to ascertain whether English Canadian teams

D a b L b GM FR b GM AM b TRENDit it it it= + + ( ) + ( ) + ( ) + ( )1 2 3 4- -

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are any more or any less likely than U.S. teams to draft French Canadians. The possible influences of a team’s management person-nel are denoted by GM-FR and GM-AM and capture the degree towhich French Canadian and American GMs, respectively, draft dif-ferently than English Canadian GMs do. The ethnic origin of a team’scoach is not included, since it is assumed that draft decisions are pri-marily the purview of a team’s GM, not the coach; the latter isassumed to be primarily preoccupied with managing the team’scurrent group of players, as opposed to being heavily involved inanalyzing possible draft prospects. The variable TREND is a controlvariable, and is included to account for the fact that the influx ofeastern Europeans into the NHL during the 1990s may have decreasedthe number of French Canadians drafted.

The results are presented in Table 4.The results are analogous to those found in the previous subsec-

tion. The coefficients on both GM-FR and GM-AM are insignificant,indicating that neither French Canadian nor American GMs exhibitdifferent propensities to draft French Canadians than do English Canadian GMs. The location variable is, however, again significant (itapproaches significance at approximately the 5% level), indicating thatteams based in English Canada are, all else equal, less likely to draftFrench Canadians.8 These results lend general support to the earlierresults and are again consistent with a customer discriminationhypothesis.

378 American Journal of Economics and Sociology

Table 4

Variable Coefficient t-statistic

Constant .13 .21L 0.67 1.89GM-FR -0.12 -0.43GM-AM -0.31 -1.46TREND .02 .84

R2 = .16N = 203

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V

Conclusion

IN ATTEMPTING TO EXPLAIN the underrepresentation of French Canadians on English Canadian NHL teams, the empirical results ofthis paper lend support to the customer discrimination hypothesis.The preferences of fans, as measured by whether the teams arelocated in English Canada or in the United States, is the only variablethat seems able to explain this underrepresentation. As for alternativehypotheses to the customer discrimination argument, neither theethnic origin of NHL coaches and GMs nor the idiosyncratic behav-ior of specific teams is able to adequately explain the results.

Identifying the source of any potential discrimination is important,because different sources will have different implications for theprospects of remedying this discrimination. In particular, customer-based discrimination may be the most difficult to overcome, becauseit involves changing attitudes and preferences of a wide group of individuals, not just a few key decision makers that operate NHLteams.

Notes

1. For salary discrimination, see, for example, Jones and Walsh (1988) andLavoie and Grenier (1992). For entry discrimination, see, for example, Lavoie,Grenier, and Coulombe (1987) and Walsh (1992).

2. The NHL began phasing out the sponsorship system in 1963, when itheld its first draft of amateur players. However, players already signed toteams through the sponsorship system were “grandfathered,” and there-fore only unsigned players were eligible to be drafted. Drafts were held annually after 1963, but it was not until the 1969 draft that the effects of this grandfathering ended. Hence the 1969 draft is considered the first “true”NHL draft, as it was the first time all draft-age players were eligible to bedrafted.

However, the beginning of the draft era in 1963 did not immediately end the Montreal Canadiens’ institutional advantage in acquiring French Cana-dians. From the 1963 draft through the 1969 draft, the Montreal Canadienswere allowed to protect two players of French Canadian descent from thedraft, in an effort to preserve the French Canadian flavor of the team. These

Employer- vs. Customer-Based Discrimination in the NHL 379

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“cultural protections” were particularly important in the 1969 draft, since thatwas the first year that the sponsorship system was no longer impacting thelist of eligible players. The two best players eligible for the 1969 draft, irre-spective of player origin, just happened to be French Canadians. This coin-cidence effectively allowed the Canadiens to secure the two best NHLprospects that year.

3. For all other years in the sample, the number of games played by eachteam ranged from 80 to 84.

4. Two teams—Philadelphia and Vancouver—are designated as the basecases, and hence have no dummy variables.

5. Seven of the fixed-effects team variables had coefficients that were sta-tistically significant. Of the seven, five of these had a positive sign (Chicago,Colorado, Los Angeles, St. Louis, and Toronto), while two (Florida and Wash-ington) had a negative sign.

6. One possible explanation of these results is that French Canadian GMsare influenced by the dominant group; in effect, French Canadian GMs, tomaintain their position, are forced to be more “English” than their EnglishCanadian counterparts.

7. To illustrate, French Canadian players for English Canadian teams withEnglish Canadian coaches averaged 66.98 games per season over the sampleperiod. Conversely, French Canadian players for U.S. teams with EnglishCanadian coaches averaged 109.52 games per season.

8. Only three of the fixed-effects team variables teams had coefficientsthat were statistically significant. All three (Carolina/Hartford, Minnesota/Dallas, and Boston) had negative signs.

References

Becker, G. (1957). The Economics of Discrimination. Chicago: University ofChicago Press.

Jones, J. C. H., and W. D. Walsh. (1988). “Salary Determination in the NationalHockey League: The Effects of Skills, Franchise Characteristics, and Dis-crimination,” Industrial and Labour Relations Review 44: 592–604.

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