Over the last two years I have done a lot more team consulting. Not solely on the player recruiting side of organizing the team growth plan, but on the actual team management side of the plan. That consulting has been with teams in the United States, and more often lately with teams in Canada.
Organizations in Canada are run so much differently from those in the United States I am still shocked by what I see sometimes.
The largest difference is in how the money flows. In the United States it flows up, and in Canada if flows down. I will explain the differences here very briefly.
In the U.S. team finances are generated primarily from sponsorship, tryout camps, and then ticket sales. Usually in that order, sometimes though camps and sponsorship can flip flop.
In Canada, team finances are generated from sponsorships or fundraising, ticket sales, and then tryout camps. Some teams do not even look at camps as an income source.
Recently, Canada Junior A, or Tier II has adopted a pay to play, or limited pay to play policy to make up for budget shortfalls. Smart business people do not run with deficits that the consumer is willing to bear the cost of, for a good product.
That said, consumers also want to know the business they are investing in, is spending its money wisely.
The most dramatic difference between Canadian Junior A/Tier II and the United States Tier II or USHL is how teams spend money. The difference is shocking really. The system is set up for it too, and the loopholes to manipulate it are just as shocking.
Understanding the system. PDF = Player Development Fee
A very big problem with Canadian Junior A hockey and the Canadian system in general is the Player Development Fee.
I watched a trade where multiple players were traded for a Player Development Fee, the total fee amounting to $15,000.00 knowing that two of the players involved would be released, or sent back to the team that traded them because the trade was really only for one player.
But because there is a rule limiting compensation to $5,000.00 per player, the other two players were used as “throw in” players to boost the compensation beyond what the rule allowed.
Essentially one team paid another $15,000.00 for one player. I know of many trades like this. Sometimes the trades are staggered so they don’t draw as much attention.
I am aware of teams actually budgeting $50,000.00 to “buy” players during the season. If that doesn’t shock you, not much will. $50,000.00 to buy players is something you will never see in the United States.
Yet these same teams budgeting all of that money to buy players will only charge players a token fee of $100.00 to attend “camp”. Some charge less, and some don’t even charge players they have already carded or contracted with. Money going down, without money going up.
In the United States though you see players spending $300 to $400 or more for a team camp. You see them attending an average of six camps per player according to tracking numbers we have developed. That is money moving up without money moving down.
The other major difference is scouting budgets.
In Canada, many teams I have consulted with have $5,000.00 or less in their scouting budget. In the United States, the average team has $20,000.00 or more. The differences in tryout money and scouting money are significant because that money is what should flow together.
While teams in the United States raise upward of $150,000.00 in tryout camp fee’s annually, Canadian teams raise around $10,000.00 or less. Generate more income and you have better scouting which in turn continues to generate more income.
Anyone who has graduated from High School with a basic understanding of accounting and budgeting can see that the Canadian way of spending is not supported by their way of generating income.
When you hear of teams having $90,000.00 in debt forgiven by a city, or a team continuing to accumulate debt totaling more than $150,000.00 you have to question the people operating the club. Do they really know what they are doing?
While no system is perfect. There are solutions that can be developed and implemented that can help teams recover from those spending patterns. I recently worked with one team and over the course of two seasons, through changing habits and beliefs, we took them from nearly a $100,000.00 loss to a break even situation.
So, the next time you hear your local team complaining about finances, look at their budget. Look at their spending habits. Don’t feel sorry for anyone who refuses to address core business problems.
Joseph Kolodziej
