Why did the CWHL close up shop?

The Toronto Furies faced the Markham Thunder in the last game of the CWHL season, with everything on the line for the Furies. It was a true must-win game. Win it, and they were in the playoffs; lose, and they were done, their season over. This wasn’t their first must-win game, either.

The Furies had turned what looked like a not-quite-good-enough season into a playoff run in mid-February, when they beat Markham twice in a row on the 16^th and 17^th. The Shenzhen Rays, home to the game-stealing Noora Räty, had suddenly stopped winning all the time, and the door had opened a crack.

The Furies beat the Worcester Blades 5-1 on the Saturday of the last weekend of the season. They did it again on the Sunday, and that set up the finale of a dramatic finish to a season that had seen the team in blue and white, Maple Leaf on their chests, never give up. They believed in themselves, and in their goalie and in the twists of fate that had given them the chance. It was the greatest hockey story in Toronto in February. But I never got to see it.

There was no broadcast, no stream, just bits of the final game Periscoped from someone’s phone. Those of us who don’t live in Toronto, or couldn’t get out to Etobicoke on a Tuesday night, huddled around Twitter and yelled out NURSE!!! when Sarah Nurse opened the scoring. We waited for the highlights to show up on Twitter, and even though we believed in Shea Tiley, we were on the edges of our seats, imagining this game in our heads like some mass delusion that might not have ever been real.

It will live on only in my imagination. I never saw Nurse in real time. I didn’t see Tiley’s saves. I felt the drama, but I couldn’t experience it. The greatest drama of the Canadian Women’s Hockey League season (for a Toronto or Shenzhen fan) and no one but a small handful ever saw it. Word was there was some problem finding a camera to record the game.

DIY Hockey

Long before that night, the Furies had forged their own deal with a streaming provider to help them get their games up on Youtube. The CWHL had its own streaming arrangement, with the games available on their site, but they only streamed select games. The Furies played most of their home games at the Mastercard Centre, a rink good enough for filming. But to bring the game to the fans every time they played, it seemed they had to do it themselves.

Like everything about the CWHL, if you weren’t in the know about what games were on where, you’d never know. The CWHL never listed the Toronto games on their streaming schedule, and they left promotion on Twitter up to the team account most of the time. Promotion outside of social media was unheard of. The league existed in such a small, closed world that the people in it couldn’t see the walls they’d built around themselves. They’d forgotten there was a world full of hockey fans beyond those walls.

And this is where I come in. Because I get to decide how much I and this site cover the CWHL and its teams like the journalists we aren’t. I have to draw the line between promoting the league and the women’s game and covering the league with a critical eye. There was a day where my finger hovered over the tweet button, and I questioned my choice to promote the Furies game when the stream might be broken or late yet again. I was not thrilled with their track record of coming through, and the CWHL itself was much, much worse.

But I want women’s hockey to be more than national teams and that USA-Canada rivalry that is intoxicating in its way, but not as satisfying as league play and team drama. There is nothing like making the playoffs on the last day after a long push to get the chance. I want to #growthegame even though that hashtag became a wagging finger of disapproval aimed at people like me who dared to question the CWHL and its choices.

I was angry about the broadcast decisions the CWHL made. I was angry at the Furies on that last day. “Go to fucking Ryerson and beg!” I said in a private comment. “Get on your damn knees and beg. This is the city of Toronto, someone has a camera, someone can get the game up on a stream.” And maybe the Furies GM Sami Jo Small did that. Or maybe she’d run out of the energy and the time to be hustling, all the time working it, and pleading, begging, cajoling, trying to get some cash or a favour or something they needed for free. It’s exhausting to type it out, far less do it on top of the rest of a managerial job.

In some ways the CWHL was always a hustle, and when the NWHL came and upped the ante on the moral suasion to pay the players — something long claimed as part of the CWHL plan but never implemented — they had to really hustle to come up with the money to meet that absurdly modest payroll. The addition of Chinese teams, who wanted Canadian hockey expertise and were willing to pay for it, was a hustle. And it worked for a couple of years.

But it was unravelling. I don’t find it hard to see the signs in retrospect. Anything that threatened the funding of the league would have stopped the hustle in its tracks. There has never been any security in the CWHL, even though it operated for 12 years in a fairly staid and typically Canadian bureaucratic fashion. They never had a certain future.

Unprofitable, Non-Profits and For-Profits

The phrase “business model” has been bandied about ever since the statement from the CWHL asserted that theirs was unsustainable. It’s confused a lot of people, and in several places players, fans and media have conflated the business model of the CWHL with the corporate structure of the league.

The CWHL, which was begun by the players when their last league shut its doors suddenly, set up shop as a registered Canadian amateur athletic association (RCAAA), which is to most casual observers indistinguishable from a charity. They can raise funds from individuals and issue donation receipts, and the donors can claim that on their tax returns for a credit, just like money given to the Canadian Cancer Society. Beyond that, the CWHL was a non-profit in structure.

Now as soon as you read “non-profit”, you get some idea in your mind about how they won’t ever make money or that they are not allowed to, and that is flat out wrong. Non-profits, which are numerous, can absolutely generate more revenue than they spend. They can build up cash reserves to cover their future losses, or they can give that money away or they can invest in their own operations to expand.

Non-profits don’t (in most cases) have owners or shareholders like you think of a business as having. They have members who collectively are responsible for the operation of the non-profit, and they do that via an elected board of directors.

The problem the CWHL was facing was their RCAAA status. Jayna Hefford talked openly for the first time about this in an interview with BNN Bloomberg, although she conflates the RCAAA status with the underlying non-profit in a way that isn’t very helpful. She states that the CWHL could not, as in: was not permitted to, pay the players more than the small stipend they had been receiving to cover their expenses this season. RCAAAs are not allowed to be organizations for professional athletes:

To be registered as a Canadian amateur athletic association, the association that is applying must be created and resident in Canada and it must have the promotion of amateur athletics in Canada nation-wide as its exclusive purpose and exclusive function. It must also devote all its resources to that purpose and function.

The option open to the CWHL was to drop the RCAAA status, stay a non-profit, and then they could absolutely pay the players whatever they had the funds to afford. The difficulty there is that the revenue streams to the CWHL would have been in jeopardy if their RCAAA status disappeared. Corporations can expense gifts to charities or RCAAAs, but not to random organizations they just want to support. Charitable foundations must give their money to other charities or similar “qualified donees”. This, it is now clear, is the reason the CWHL shut up shop, because without the RCAAA status, the appeal of giving them money was gone.

For-profit businesses are not dramatically different from a business run as a non-profit. They pay tax on their profits, and they have shareholders not members, but within the business, you still have to pay your bills and generate revenue to do that with.

Being a non-profit did not stop the CWHL from earning enough revenue to pay the bills. Their RCAAA status was the thing that allowed them to leverage the self-interest of their sponsors to establish revenue streams in the first place. Their problem was that the business the CWHL ran was unprofitable and always had been.

Women’s hockey does not make a profit. It never has.

Sponsors, Revenue Streams, and Making Ends Meet

The CWHL paid their bills because they had sponsors and donors that gave them money, goods or services. The revenue they earned — from ticket sales, merchandise sales, advertising or broadcast deals — was never close to meeting their costs.

This breakdown of their revenue from 2016-2017 as published in their annual report tells the tale:

Sponsorships and donations were driving the bus. The total revenue that year was over $2 million for the first time, and because the CWHL succeeded at continually upping the take  they hustled for, that number grew in subsequent years.

But it was never not a hustle. It was never not a fundraising machine that allowed a hockey league to run on what got churned out the other end.

Sponsorship looks a lot like advertising revenue, but it isn’t. The CWHL never delivered an audience to see the parade of logos on their annual reports or on their website, and donations are not earnings, even though you have to work damn hard to get them.

Look at it this way: If a young person is living in Toronto and working at their first job, and they pay their bills every month and have enough left over to go to a CWHL game once a week, but only because their parents are paying their rent, they aren’t making ends meet. The CWHL never made ends meet, not even close.

The NWHL, Angels and a Distinction Without a Difference

In 2015, Dani Rylan was negotiating with the CWHL to form a team in New York, and then she changed her mind, walked away, and formed an entire league instead. The NWHL has about the same number of teams as the CWHL had, albeit playing a lot fewer games, and they aren’t a non-profit, they are a private business.

The NWHL does not make a profit. It never has.

The NWHL is structured more like an internet startup than a sports league, and it was funded in the beginning by what are often just called investors. Sometimes the more accurate term “angel investor” gets used. An angel investor is someone who gives you money for your business without necessarily expecting to get it back or to end up with shares that are worth something. If you are the startup that succeeds out of a lot of failures, they make out big. Otherwise it’s often money given for reasons beyond monetary gain. If that sounds like a sponsor or a donor, it’s because it’s essentially the same thing most of the time. But the hope is there, that the investor might hit the lottery on your startup.

The NWHL is a private company and is not required to produce an annual report, but we do know that prior to now, the NHL was giving them $50,000 per year and Dunkin’ Donuts was previously their biggest sponsor, giving them more than that. The NWHL is currently negotiating another year of that sponsorship.

The NWHL has expenses broadly similar to the CWHL, and its salary cap per team is similar. The money they pay players is a stipend, not a living wage. The NWHL owns all its teams save the Buffalo Beauts, who were purchased by the Pegula family (owners of the Sabres, Bills and everything else not nailed down in Buffalo). Some NHL teams have partnerships with NWHL teams offering unknown levels of support in a mirror of the relationships the CWHL had with some teams.

Rylan keeps this unprofitable business afloat while she tries to build towards sustainability by hustling for investors and sponsors so she can make ends meet. Look beneath the superficial differences in corporate structure and you see the same business model as the CWHL: An unprofitable business that hopes to someday be able to pay their own rent.

Hopes and Dreams

Both the CWHL and the NWHL hoped to grow the game enough to fund their operations through their earned revenue. The CWHL decided they were never going to get there and were stuck in a bind of their own creation because of how they’d chosen to raise funds in the beginning. When they closed up, the NWHL immediately announced expansion plans and called the extra $50,000 from the NHL a significant commitment. Always be hustling.

It’s really not reasonable to expect any sports league to be built from the ground up and to earn a profit on day one. After all these years, there’s NHL teams that lose money every year. I don’t think the Arizona Coyotes have ever made ends meet. But in the NHL, the franchise has value as an asset, and as of the best figures available, all the teams save the Coyotes are actually worth more as an asset than their debt load. If they were sold, there’d be money left over just like there was when the unprofitable Carolina Hurricanes changed hands. The previous owner would then make that profit he never made on the income minus expenses of his yearly operations.

The teams in the women’s hockey leagues have little to no asset value, and none of them save the one in Buffalo have independent owners. Whatever the Pegulas paid for the Beauts is really just sponsorship dressed up like something else. The CWHL got money from Chinese companies Kunlun and Vanke for the teams in China. That was a greyer form of revenue because China was buying some expertise, but it’s still not fans opening up their wallets and paying for a ticket or a jersey or a TV broadcast.

To get to the point where women’s hockey makes ends meet, there has to be a lot of growth in the money the fans will pay, and in the sheer numbers of fans. Can this even happen? There are a lot of examples of sports leagues of all sorts where it has worked. There are a lot of big splashy multi-billion dollar failures too. There is no sure thing in business, but women’s hockey is caught in a catch-22. They need buzz to build a paying audience, and they need a credible audience to induce television broadcasters to put the game on the air.

What women’s hockey has always had is the players. They’re right there, ready, willing and very able to produce an entertainment product that has potential. There is buzz right now over the women’s game like never before. The challenge is to build a sustainable model that is funded well enough and for long enough to bridge the gap between passionate hopes that spring from the love of the game, through the long hustle to build the audience, and into a truly sustainable business model: non-profit, for-profit or a group of franchises — it doesn’t matter.

Building that bridge to the future takes a lot of money. The CWHL with its sub-one-million per-team cost was running on a shoestring that was worn thin. To compete with NCAA teams for the best coaches and staff, to have the best, or even just enough, equipment, to get in a decent amount of practice time, that all costs a lot more. Oh, and then, for real now, the players need to be paid meaningful wages. There has never been enough money for that.

So what if your parents pay your rent?

Women’s hockey in the rest of the world doesn’t make money either. In most of Europe, the teams are part of the club system, and at the top of each club is a men’s team at an elite level generating ticket revenue and television broadcast dollars that help fund all of the club’s activities.

The idea that the NHL itself, or its member teams, should subsidize women’s hockey is very popular. But let’s back this up and look at the scale of things again. The CWHL was running the entire operations of itself and all its teams with less money than Nazem Kadri makes in a year. The NWHL is doing the exact same thing on a very similar budget.

The NHL can definitely afford to fund a women’s league from now to profitability. But as Pierre LeBrun reported on Insider Trading, the NHL might not see the NWHL as a sustainable model any more than the CWHL was. The NHL won’t act until someone does the hard work for them of creating a league that they see as a good risk.

The alternative to a single big money funding source is another round of hustling for corporate sponsors and donors who might like to see their logos on things, but aren’t really paying Kadri wages for the privilege, not when the audience women’s hockey delivers is tiny.

The empty seats no one wants to talk about

Very few fans or media covering the women’s game really like to say right out that too few people are going to the games or watching the streams or giving the television stations in Canada a reason to broadcast the games.

The attendance at most CWHL games is a few hundred. The NWHL, with the US tradition of NCAA hockey to get fans in seats for women’s hockey does better; their top drawing team averaged 1,200 fans over their home games. There were 175,000 viewers of the most recent Clarkson Cup, the championship game of the CWHL.

That’s chump change. All of that. The ticket sales, the television viewership, the merch sales, it’s all negligible money. Make no mistake, the road from where we are today to a sustainable business is a long one, but then, when all those new economy billionaires started in their garages building computers or mail-order businesses, they made chump change too.

The problem is a hockey league is a hard thing to start out small with. The NWHL has a genuine credibility problem playing only 16 games a season. A league might do better in smaller cities like the ECHL or some other sports leagues have opted for, but that only works if there’s enough money to pay real wages for players. There’s a reason why NHL teams are starting to directly subsidize ECHL teams — they often don’t make money. And minor league hockey teams frequently fail financially with attendance figures well in excess of anything women’s hockey can boast. The range of average attendance in the ECHL this season was 2,232 to 7,871.

Social good is a good enough reason to subsidize the game

There’s an argument to be made that having a place for women to play post-college, to have a real league, not just some national teams that play every four years, is a social good, and the responsibility of some of our wealthiest actors in the hockey world to bring to fruition.

The CBC is meant to be our national broadcaster, not our most profitable broadcaster, so I’m left wondering why they aren’t broadcasting and streaming women’s hockey now, regardless of the money to be made on advertising.

The NHL exists because Canadians play hockey religiously. And more and more Americans have caught the bug, which is what is driving the NHL growth and that astonishing fee for expansion. The NHL owes hockey-playing people its existence, and they have an obligation to promote the girls’ game as much as they like to do with the boys’ game in hot parts of America. Perhaps it’s fair to say they have an obligation to fund the endgame of women’s hockey too, not just the early years. The existence of a professional women’s league will do more than any learn to skate program will ever do at driving girls into hockey or sport in general.

They have said they want to do this. They have done virtually nothing.

There’s a big reticence amongst the former players of the CWHL to “hand the keys” over to the NHL. That’s something we can likely all understand, and I’m not convinced the NHL wants the keys. But someone has to take the wheel.

The players are the obvious choice to build the base of a viable and sustainable league that the NHL might be interested in funding. The players are passionate, talented and committed, and they want a league that won’t vanish on them again after a decade of hustling on a shoestring.

If I can presume to give any advice to the players here it’s this: play the game to win it. Don’t settle for just being in the game. Don’t settle for another round of playing for chump change in a league that’s one step ahead of folding unless the hustle pays off for another few thousand by the end of the week. Find a backer who can win it long term.

The time has come for women’s hockey to grow up and get out their on their own, and while it might take longer than it will for our imaginary Torontonian to pay her own rent, it can be done. Surely the WNBA is proof of concept enough to try it with a pot of money big enough to cover the losses for a reasonable period of time.

Lean on the NHL, the CBC, and the rest of the world that profits off of the love of the game to pony up some real cash. But don’t give them the keys. Keep the power to shape the league in your own hands. At the very least, the price of McDavid per year should get Sarah Nurse back on the ice where she belongs. Imagine what you could do with the price of McDavid plus Tavares?