In 2012-13, the NHL owners and players could not reach an agreement and the owners declared a lockout which meant the NHL didn't play the first 40% of the season. The owners wanted a better revenue split between players and owners, stricter free agency rules, and to eliminate salary arbitration. Use the expected value of a work stoppage model to answer the following:

a. Suppose the owners normally make $250 million but they estimate they will gain $300 million from the lockout. If there's a lockout, the owners could make $150 million from renting out arenas but they may lose $50 million from fan discontent. If the owners feel that there is 2/3 chance of getting what they want from the players, what's the expected value of a lockout to the owners and should they pursue it? b. Suppose many players, fearing a lockout, sign contracts with hockey leagues around the world that would pay them well. How does this change the calculation for the owners?