Canadian Hockey League responds to Court Order
January 19, 2017 – In response to a recent Court Order, the Ontario Hockey League (OHL) and Western Hockey League (WHL) produced financial records for all 42 OHL and WHL member Clubs.
These records have been analyzed by both KPMG and Dr. Norm O’Reilly, a leading scholar in sports finance. Their reports validate our position that the majority of our member Clubs either breakeven or lose money on an annual basis.
KPMG found that if you removed the two most profitable Clubs as outliers, the remaining 40 OHL and WHL Clubs lose, on average, approximately $75,000 per season.
Dr. Norm O’Reilly, who is recognized as a leading scholar in sports finance has provided an expert report that involves a profitability analysis of the member Clubs of the WHL and OHL and an assessment of the impact of a minimum wage policy.
In order to complete his report Dr. O’Reilly was provided with a number of documents including the financial statements and tax returns for each WHL and OHL Club. Among Dr. O’Reilly’s findings:
(i) Ownership intent in sports clubs of all sizes is rarely profit-driven
(ii) Goals around asset appreciation are lower/limited in the CHL versus other major sporting leagues
(iii) Profitability is multivariate and as OHL and WHL Clubs are significantly smaller than NHL or other professional league clubs aggregate economic modeling therefore is not an appropriate method to assess the financial health of OHL and WHL clubs
Dr. O’Reilly also found that the implementation of a minimum wage policy, in addition to the current benefit package, would put significant financial pressure on many of the 42 WHL and OHL member clubs, such that many would have to consider:
(i) Cutting operating expenses and player benefits to offset the additional costs
(ii) Invest additional resources to maintain current operations and support the minimum wage policy
(iii) Ceasing to operate
Ultimately, the only way to assess the profitability of OHL and WHL Clubs is an empirical study based on real financial data over a multi-year period, which both KPMG and Dr. O’Reilly completed.
The Canadian Hockey League (CHL) and its member leagues, the OHL, WHL and Quebec Major Junior Hockey League (QMJHL), along with our 60 member Clubs, take great pride in ensuring our players receive a world class player experience. Collectively, we take pride in providing our players with the resources they need to be successful both on and off the ice.
We will continue to vigorously defend our position, our player experience, the opportunities available to compete at the highest level and amateur sports as a whole in Canada. The CHL is the world’s premiere amateur development hockey league and the number one supplier of player talent for the NHL, Canadian university hockey programs and Canada’s national hockey teams and the success of our players both on the ice and in careers outside of hockey is the only evidence we need to know that our system is meeting its objectives.