Thursday, November 3, 2016
WHL Teams Ordered To Reveal Finances
Canadian and Western Hockey League teams have been ordered to reveal their finances in a players’ class-action lawsuit for allegedly failing to meet employment standards.
IIn a win for the major junior players — including those from the WHL’s Victoria Royals — Alberta Court of Queen’s Bench Justice R. J. Hall said the teams must produce evidence to back their claims that their financial straits are so dire they can't afford to pay more.
The leagues argued the disclosure order was too broad and the money numbers should not be revealed until after the lawsuit is certified, but the judge disagreed.
He said the league must prove its assertions that the players’ demands would have such a bad financial effect on the clubs some would be forced to close.
“[The order] short circuits the necessity for a sham examination on affidavits before the application is brought, and conserves court time and litigation expense,” Hall ruled. “Having placed the clubs’ and leagues’ financial viability squarely into issue, the CHL, the WHL and the clubs must produce their financial documents as potentially proving their position, or placing their evidence into dispute.”
Neither league responded to a request for comment. While some teams in the leagues that provide NHL apprenticeships might be teetering financially, big-market teams are believed by some to be earning large profits.
Vancouver businessman and developer Graham Lee, owner of the Victoria Royals, is overseas this week and couldn’t be reached for comment.
But Lee did comment about the issue in general, and defended the status quo, when in town for a Royals game last week.
“We [WHL owners] don’t do it typically for the money,” Lee said.
“It’s mostly to develop the game and produce an environment where young players can achieve their goals and become better people and better community people. It’s not about the minimum wage. [I] am not doing it for money. It’s how it’s been done for so long and is something that works to help develop players.”
Asked about the Royals financial situation, Lee replied: “We’re not in trouble.”
Besides tickets and concession earnings, the teams make money on merchandise sales, television rights, NHL payments, video-game licences and other revenue streams. Some are businesses worth tens of millions of dollars.
Meanwhile, the 16- to 20-year-old players are billeted and paid small stipends. They can earn scholarships that provide a year of post-secondary schooling for each year played, if they dress for enough games and meet other criteria.
“When the players told me they were getting $50 a week, I couldn’t believe it,” said Toronto lawyer Ted Charney, who is stickhandling the class-action suits.
The players have been referred to in league documents and contracts as “professional.” They have been issued T-4 slips. Some have obtained work permits, and the U.S. National Collegiate Athletic Association considers them to be professionals.
The teams and players have been found by the Tax Court of Canada to be in an employee-employer relationship.
However, the leagues maintain the players are “student athletes” and WHL clubs persuaded the B.C. government to exempt them from the minimum-wage and employment-standards laws — without examining their finances.
Major junior clubs were similarly successful in persuading Saskatchewan, Nova Scotia and Washington state to do the same.
“I just wish that the three legislatures and the state of Washington had an opportunity to review all these financial statements before they legislated us out of our class action,” Charney said.
“We’re pleased with the judge's decision. It will give us an opportunity to weigh the statements that the commissioners have made with respect to the financial strength of the leagues against what the actual financial statements and league-wide profit-sharing agreements reveal.”
Led by Langley’s Lukas Walter, former players are seeking millions in lost wages and holiday pay. In the future, they want the league to pay the minimum wage and respect employment laws.
The Alberta suit, which has yet to be certified, is a mirror of litigation launched in Ontario, also still to be certified, against the major junior teams of Eastern Canada.
While Hall’s order applies to the WHL and Ontario teams, because they filed affidavits in the Alberta litigation, it does not apply to CHL teams in Quebec and the Maritimes.
Hall ordered the clubs to produce financial statements and tax returns from 2011 to the present. He ordered WHL commissioner Ron Robison to produce all revenue-sharing agreements showing how the Canadian Hockey League, the umbrella organization for 60 teams from Victoria to Halifax, earns revenue.
He also ordered Robison and CHL president David Branch to provide documentation for the financial claims they made.
“I would have thought the commissioners and the CHL and the WHL would have welcomed this ruling, because it will give them an opportunity to reinforce what their previous statements have said,” Charney said.
“Presumably, they are of the opinion these documents will back them up. I’m surprised they haven’t voluntarily produced them and that it took us having to go to court and obtain a court order. You can put: Sarcasm emphasized.
“In my 30 years of practising law, and in all of my years conducting class-actions, I’ve never come across a case where the defence was: ‘Please don’t certify this class-action because I’ll go broke if you do!’ ”
A four-day hearing into the matter has been set for Calgary in February. A three-day hearing is scheduled for Toronto in March.