NOBODY BUYS THESE NUMBERS
With a lawsuit on the line, junior leagues release pretty flimsy financial statements
The fight over whether major junior hockey players in this country should be paid some sort of wage has been argued in court for a couple of years now, but the question has been around much longer than that.
A landmark moment in the battle came last week in an Alberta court, when a judge ruled the financial statements of Western Hockey League and Ontario Hockey League teams would be unsealed as part of an attempt to have a class-action lawsuit brought by former WHL players certified. The defence against paying players has always been the teams could not afford it. These documents would finally allow the public to know if that is true.
But the moment has ended up rather less revelatory than thought. Now the numbers are out, neither side can agree on what they mean.
The financial statements themselves remain under a publication ban that should be lifted this week once certain personal information is redacted, but it is fair to say the plaintiffs — the former players — are not all that pleased with what they have been provided. The teams have largely not provided formal documents such as tax returns, but internal statements that in some cases amount to little more than a few columns of numbers on a page. If you asked me to provide income statements for the past five years and I gave you a page with five numbers on it, you would be right to be skeptical.
The defence — in this case the WHL — commissioned a report of their financials from the consultancy KPMG, and the plaintiffs had a forensic accountant, Smith Forensics, assess the report and the underlying financials.
The whole exercise is attempting to determine if the teams would be bankrupted, or close to it, if they had to pay players something equivalent to minimum wage for the hours they work. The main conclusion of the forensic report is this line: “It is not possible to properly determine what the impact on the teams individually or as a whole would be if they had to pay the players minimum wage.”
So, not a terribly successful exercise so far. Smith Forensics says there isn’t enough information to properly assess the true earnings of the teams or their actual expenses. There is also a subtle indication that the league and its teams weren’t all that interested in providing a complete picture.
“It appears that the skill set of KPMG was greatly underutilized due to the inherent limitations associated with the assignment that they were asked to complete,” the report says.
I am no accountant, but that sounds like accountant trash talk.
There are other curiosities raised by the numbers provided. If the teams on average lose money every year, why is it that five of them — two OHL and three WHL — have been sold in the past few years for between $6 million and $10 million? Why would money-losing teams not show a decline in value over several years of reported losses?
There’s another question that the forensic report doesn’t ask, but it was mine upon reading it: If the major junior system is as financially strained as the teams seem to indicate, why aren’t the leagues desperately trying to fix it?
After the disaster that was the Toronto Argonauts’ first season at BMO Field, it was not unexpected that the CFL would torque the schedule in its favour in 2017. On the list of excuses provided for the team’s weak attendance in its new home, a poor schedule with many weeknight games was often mentioned. The CFL wants the Argos to succeed, so it responded with a dream schedule: one Monday night, one Thursday, and the rest on the weekend. The final five home games are all on a Saturday, as are their final two road games, so from mid-August through early November the Argos will only play on Saturdays.
Toronto is being spoon-fed this team: Look, the games are on Saturday, so try to watch.
Naturally, bending the schedule toward so many Saturday games in the fall for the Argos has an impact on the other teams. The Ottawa Redblacks play 17 weeks in a row, then have byes in two of the final three weeks of the season. The Hamilton TigerCats have zero afternoon games at home. Both franchises have had great attendance in new stadiums, and so the league isn’t worried about them.
Ottawa general manager Marcel Desjardins, who also isn’t pleased about the lack of days between games in parts of their schedule, noted last week that he knew “that football wasn’t the predominant factor in the decision making.” Zing!
There’s certainly an argument for trying to give the Argos a marketing-friendly schedule, but it is more than a little awkward that the result is a schedule that clearly benefits the team from a competitive standpoint. Also awkward: that the team is part-owned by the league’s official broadcaster, which pays the CFL a lot of money.
A week after the Super Bowl, the thought still occurs: Did that really happen? We went through the backlash to Atlanta’s coaching decision, and then the backlash to the backlash, much like what happened to Seattle Seahawks head coach Pete Carroll two years ago. But like it did with Carroll, history will settle on the conclusion that Dan Quinn and staff blew that game in a remarkable fashion.
At multiple points in that fourth quarter, the Falcons chose to run plays that introduced the possibility of disaster, and disaster occurred. Quinn is clearly an effective coach who turned the Falcons around quickly, and the players respond to his endless reciting of bumper-sticker slogans. But you never know how good a coach is at grasping late-game management until he screws it up.
If I was a GM hiring a coach, I’d think about making 80 per cent of the interview simply questions of what they would do in certain fourth-quarter situations. Punt on fourth down at the opponent’s 35-yard line? Thanks, we’ll be in touch.