Thursday, February 9, 2017

WHL in court: More facts and figures from big business of junior hockey


F J.T. Barnett (Vancouver, Kamloops, Everett, Kelowna, 2008-13) has signed a contract for the rest of this season with Timrå (Sweden, Allsvenskan). This season, he was pointless in one game with CSKA Moscow (Russia, KHL), had seven goals and three assists in 24 games with Zvezda Chekhov (Russia, Vysshaya Liga, CSKA farm team), and was pointless in three games with Amur Khabarovsk (Russia, KHL). . . . He was traded by CSKA to Amur on Dec. 13, then released by Amur on Jan 30.
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I was wrong — oh, was I! — when I wrote earlier in the week that the biggest story involving the WHL over the next while would involve the future of the Kootenay Ice in Cranbrook and the City of Nanaimo’s desire to build a new arena.
No . . . no . . . no!
The biggest story — and it’s huge — continues to unfold in a Calgary courtroom.
If you’re late to this, about 400 present and former major junior hockey players are seeking certification for a class-action lawsuit that, if successful, would result in WHL and OHL teams, which operate under
the CHL umbrella, having to pay minimum wage and assorted other benefits such as vacation pay.
This week, lawyers have been arguing both sides in a Calgary courtroom. Early on, Justice Robert Hall ordered the unsealing of financial statements and tax returns once certain personal information has been redacted, a process that now is underway.
In the meantime, some information is starting to trickle out.
On Thursday, we got our first glance at a tax-related document when Justice Hall gave permission for the media to look at and report on the Portland Winterhawks’ tax return for the period June 1, 2015 to May 31, 2016.
For that period, the Winterhawks declared gross revenues of US$5,657,050 and a net loss of $191,955, numbers that didn’t sit well with Ted Charney, a lawyer representing the players in this case.


According to the Form 1120 filed by the Winterhawks, they paid $382,568 in “compensation of officers” and $1,737,330 in salaries and wages. All told, $771,409 was paid in rent and $1,671,881 went to “other deductions,” for which there isn’t an explanation provided.
Total deductions added up to $5,607,710, leaving that net loss of $191,995.
According to the WHL’s attendance report for 2015,16, the Winterhawks drew 252,124 fans to 36 home games, an average of 7,004 per game. Only the Calgary Hitmen, at 8,217, had a higher average attendance.
Late last year, Justice Hall ordered teams to produce financials and tax returns for five years, starting with 2011.
In 2014,15, Portland’s average attendance was 6,980, while it was 7,329 in 2013-14, 6,687 for 2012-13, and 6,075 for 2011-12.
We haven’t yet seen earlier tax returns, but according to a report for the plaintiffs by forensic accountant Ronald Smith, the Winterhawks, under “compensation of officers,” paid out $263,025 in 2012, $292,375 in 2013, $354,781 in 2014 and $393,468 in 2015.
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Included in the same Ronald Smith-prepared chart that contained Portland’s “compensation of officers” were annual “management fees” paid by the Red Deer Rebels.
According to this chart, the Rebels, starting in 2012 and running through 2016, paid “management fees” of $652,600, $400,000, $700,000, $725,000 and $1,490,000, respectively.
Smith wrote: “Based on the large increase in the fiscal 2016 management fees, it appears that a significant portion of those management fees may be a distribution of profit.”
Red Deer management — the franchise is owned by Brent Sutter, who also is the team’s general manager and head coach — hasn’t commented.

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Rick Westhead, a senior correspondent for TSN, was tweeting again (@rwesthead) Thursday. Here are a few:
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After perusing all of these numbers and more, Ken Campbell of The Hockey News wrote:
“We’re beginning to see why the Canadian Hockey League was so desperate to keep the details of its financial situation away from the prying eyes of the media and public. But if you’re going to pay the vast majority of your employees poverty wages, you’re also going to have to justify it by opening your books for all to see.
“And what we’re seeing so far doesn’t look great for the CHL.”
As all of this continues to unfold in that Calgary courtroom — it had been hoped things would wrap up today (Friday), but they now are expected to run through Wednesday and perhaps longer — people are learning that major junior hockey is big business.
“In the coming days,” Campbell wrote, “we’re about to find out that there is some big money out there in junior hockey and not much of it is going to the players. We’re going to learn that teams are paying their non-playing employees hundreds of thousands of dollars, even more than a million dollars, while many of the players earn $50 a week. For most teams, the amount they pay in salaries and benefits to non-players dwarfs the entire expense budget (which includes equipment, travel and scholarships), and in many cases is double the entire amount they spend on players.”
There was some interesting news involving the Kelowna Rockets, too, as Campbell pointed out that Smith’s report indicates the Rockets “have a wholly-owned subsidiary that provides the team with bussing services, which means transportation costs are being paid to a company that the Rockets already own.”
Smith wrote: “We do not know if the subsidiary is profitable or not.”
In the coming days, we are going to learn that nothing is cut and dried about any of this business. The more we hear and read, the more we realize that major junior hockey is a large, multi-faceted business with a whole lot of layers. What you are seeing when you walk into an arena and the puck is dropped is only the tip of the iceberg.
Campbell’s complete piece is right here.
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JUST NOTES:

The Prince Albert Raiders have lost F Jordy Stallard, 19, for the rest of this season after he underwent shoulder surgery on Monday. The Brandon native is at home recovering. . . . Jeff D’Andrea of paNOW reports that the Raiders have more injury issues, too. “Rookie Carson Miller missed Wednesday’s 3-2 defeat to the Medicine Hat Tigers,” D’Andrea wrote, “and will be evaluated for a shoulder injury on Friday. Drew Warkentine was withdrawn from Wednesday’s game due to a lower body injury.” . . .
Meanwhile, the Saskatoon Blades have one forward ready to return from injury, with another close to getting back in the lineup. F Mason McCarty has missed 27 games with a knee injury but should play tonight against the visiting Moose Jaw Warriors. McCarty had 14 goals and nine assists in 26 games when he was injured on Nov. 25. . . . Meanwhile, F Markson Bechtold, who was injured in his third game after being acquired from the Spokane Chiefs, is close to returning but isn’t expected to play tonight. . . . However, Ryan Flaherty of Global-TV in Saskatoon tweeted Thursday that F Caleb Fantillo was “hurt at practice today. Blades back down to 19 skaters.” . . . 
F Michael Rasmussen, a 32-goal scorer and a projected first-round selection in the NHL’s 2017 draft, has an undisclosed injury and isn’t expected to play tonight against the host Seattle Thunderbirds and may also miss Saturday’s game in Spokane against the Chiefs. . . .
The Vancouver Giants, coming off a 3-2 shootout victory over the Cougars in Prince George on Wednesday, are scheduled to meet the Rockets in Kelowna tonight. The Rockets have beaten the Giants in each of their last 21 meetings in Kelowna, going back to March 19, 2011. . . . The Rockets likely will be a little ornery, having lost 6-0 to the host Kamloops Blazers on Wednesday.
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THURSDAY GAMES:

No Games Scheduled.
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FRIDAY’S GAMES (all times local):

Everett at Brandon, 7:30 p.m.
Medicine Hat at Calgary, 7 p.m.
Regina at Edmonton, 7 p.m.
Vancouver at Kelowna, 7:05 p.m.
Prince Albert at Lethbridge, 7 p.m.
Spokane at Portland, 7 p.m.
Swift Current at Red Deer, 7 p.m.
Moose Jaw at Saskatoon, 7:05 p.m.
Tri-City vs. Seattle, at Kent, Wash., 7:35 p.m.
Kamloops at Victoria, 7:05 p.m.

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