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Why are junior hockey operators so insistent on keeping their finances private?

Ken Campbell
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Why are junior hockey operators so insistent on keeping finances private?

News

Why are junior hockey operators so insistent on keeping their finances private?

Ken Campbell
By:

We'll find out next Tuesday whether teams in the Ontario and Western Leagues will have to make their financials public.

Canadian Hockey League president David Branch has often publicly stated that people don’t get into the junior hockey business to make money. He has also said that about one-third of the teams make money, one-third break even and one-third lose money and those teams are interchangeable based on where they are in their franchise-building cycle.

We have a pretty good idea that the owners of teams such as the London Knights and Quebec Remparts (which are owned by Quebecor, the company that owns The Hockey News) make gobs of money, but nobody really knows how much. We’re also pretty sure that small markets such as Swift Current, Owen Sound and Baie Comeau face some pretty stiff and unique financial challenges, but we have no idea to what extent. We also know that, judging by the ticket prices and beer lines, the World Junior Championship is a major cash cow for the CHL, even when it’s bungled as badly as it recently was in Toronto and Montreal, since the junior leagues get one-third of the profits. We also know that franchises in the CHL are bought and sold for millions of dollars. We know that the Sudbury Wolves were purchased by Ken Burgess in 1986 for $250,000 and the team and its marketing arm were sold for about $11 million last summer, meaning it appreciated in value by about 4,400 percent in 30 years.

We know the players are paid a relative pittance for their work in addition to having their room and board covered by the teams. The CHL often crows about its scholarship program, claiming that it pays out millions of dollars per year to assist former players with their post-secondary education.

That’s pretty much all we know. And if the CHL has its way, that’s all we’ll ever know. Because when it comes to actually opening its books and proving to people that junior hockey is by and large a Mom and Pop operation, well, that’s where the flow of information is reduced to a trickle.

The question is why? If junior hockey leagues are so quick to claim that having to pay its players minimum wage would cause financial calamity, why do they not want their financial information to be part of the public discourse?

But the hundreds of players who hope to launch a class action lawsuit against the CHL want to change that. Next Tuesday, the two sides will argue before R.J. Hall, a Justice of the Alberta Court of the Queen’s Bench in Calgary, the CHL’s motion to have a sealing order placed over all financial records, scholarship data and revenue sharing agreements for the 42 teams in the OHL and Western League. The CHL was ordered to turn over that information last October as part of the class action lawsuit brought against the WHL for minimum wage.

The documents were filed as part of a certification hearing that’s scheduled to be held in Calgary in February. Once those documents are filed in court, they become a matter of public record unless they are sealed by court order and the CHL wants them to be sealed. “That way no one will have access to them except the judge and parties to the litigation,” said Toronto lawyer Ted Charney, who represents the plaintiffs. “I don’t want to comment on the merits of the motion because it’s coming up in court next week. All I can tell you is we intend to oppose it.”

The CHL originally argued back in October that only the WHL teams for which the plaintiffs played should have to submit their financials. But Justice Hall ordered all 22 WHL teams to provide the information, as well as the 20 teams in the OHL, since the defendants chose to file affidavits from the OHL, arguing that paying minimum wage would have the same adverse effects to OHL teams and, by extension, the entire CHL.

This is all very important to the future of the case because this is evidence that will be used in the certification hearing, at which time Justice Hall will decide whether or not the lawsuit merits being considered a class-action lawsuit. If he decides it does, hundreds of former players who have registered to join the lawsuit would be included. If not, the lawsuit will be restricted to the handful of former players who have come forward.

And if Justice Hall decides next week that two-thirds of the junior hockey operators in Canada must live with their books being open for the public to see, then perhaps we’ll have a better idea whether the former players have a case or Canada’s junior leagues would actually be crippled by having to pay their players minimum wage.

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Why are junior hockey operators so insistent on keeping their finances private?