Friday, 18 November 2016

You Were Warned

As the news broke late last night about the NWHL cutting players salaries by a reported 50% in order to stay financially solvent, there was one thing that rolled through my head. As I sat here today reading report after report about what this means to women's hockey and the NWHL, one constant continued to work its way into my thoughts. While this news shouldn't surprise anyone if you've been following this league's questionable business practices, one gets the feeling that one reaps what one sows when the house of cards finally falls.

But don't say you weren't warned that this would happen.

I made a comparison in August of 2015 where I spoke of the CWHL-NWHL situation and how it seemed similar to what the NHL and WHA went through when it came to paying players big money in markets that really had no established fanbase. What the WHA did, however, is move the needle on player salaries, and it appears that the NWHL did the same thing with regards to women's hockey salaries.

But I wrote the following passage as a cautionary message.
Where the NWHL may find itself in trouble is that they may be committing a massive error in judgment just as the WHA did when it was getting itself off the ground to rival the established league. We've heard NWHL Commissioner Dani Rylan explain that the NWHL teams will have a salary cap of $270,000 annually, and that players would be able to negotiate their own pay within that salary cap structure. The problem is that no one knows where this money is coming from since there are officially no owners at this time for any of the four teams. The league is generating some merchandise, but they need over a million dollars just for player salaries, and I'm pretty sure that they haven't generated that in merchandise sales. So where is this money tree they seem to have growing?
The sustainability of the league and its financial backing was never established, so the NWHL would only exist as long as there were "pennies from heaven", so to speak, that would keep this machine running. If the money dried up, as it apparently has, this league would struggle to stay afloat. Welcome to present day where money has dried up and the NWHL is making drastic changes to remain afloat.

The number-one reason that startups fail in the first year of operations? Lack of capital.

Don't say you weren't warned.

There have been many questionable business practices employed by the NWHL in its short existence as well. From contracts that never existed for arena usage to unpaid contractual agreements to simply walking away from valid and binding contracts, the NWHL seems to believe it operates in a world without consequences.

Has anyone bothered to ask why three of the four teams moved to new rinks this season? Did anyone bother to ask about why they changed merchandise manufacturers? The short answer is no. The reasons why no one asked will never truly be revealed, but having spoken to a number of people who have been left in the NWHL's wake is a sobering experience on how this league was being run.

I have reached out to the NWHL for answers to these questions repeatedly only to find zero responses to my questions. I get that the NWHL may not like some of the articles that have been written on this site, but not responding to emails that are asking for clarification of a situation is the opposite of transparency and makes it look like the league is hiding something. It turns out that it has been hiding a very big secret.

Don't say you weren't warned.

Some of those who have a working relationship with the NWHL have excused the above indiscretions as "pretty normal". The problem with that statement is that it's the acceptance of a worrying trend shown by the league to not pay creditors and partners the money they are owed. The writers of the linked article attribute the missed payments to being typical "of youthful startups," but the league was already part-way down the rabbit hole when it came to backing out of established contracts and missing payments with key vendors. This was a major blip on the radar that caught the attention of many thanks to the anonymous email sent to various outlets, but few bothered to look deeper.

We can't just excuse the actions of Miss Rylan when it comes to her contractual obligations like some have. She took money from one investor before the relationship she had with him broke down and he began the process to seek compensation for his investment. She took money from another investor who was once a friend, and he is now seeking compensation for his investment after he was excused from the organization. She never made clear to four other investors what their investment in the league was worth regarding shares or ownership, and they have since settled and walked away from the league. There are at least two additional companies that are considering legal action to collect monies owed to them.

This is a worrying trend if Miss Rylan is seeking additional investors for her league. Why would anyone who can use a search engine even consider putting dollars into this league when it is clear that time and time again that this league nor its commissioner have any interest in honouring deals signed in good faith?

Don't say you weren't warned.

To hear Miss Rylan summarize this in her conference call today as the league falling short on some projections isn't even in the same ballpark as the tangled web she's weaved over the last two years. The sponsorship dollars from Dunkin' Donuts was laughable when it was lauded by most as a major turning point for the league. There have been no major TV deals signed by the league, and the lack of exposure outside the northeast US makes it hard to call this league a "national" women's hockey league.

If you've read this far, you're probably in the belief that I'm entirely against the NWHL. The truth is that I feel for the eighty-some players who will suffer with the decision by Miss Rylan to cut their salaries while she still sits atop the mountain without having to sacrifice any of her "hard-earned" dollars. For every Hilary Knight, Amanda Kessel, and Brianna Decker who earn sponsorship dollars and a bit of money from USA Hockey, there are players such as Morgan Beikirich, Rebecca Russo, and Maggie Taverna who are able to play hockey at a high level against some of the best in the world AND earn a little cash doing it. Those are the players I especially feel for because they had no doing in this latest revelation. They just want to play hockey.

I will go on record to say that I believe this setback is entirely on the shoulders of Dani Rylan, and she should be blamed for the financial mess in which the NWHL finds itself. To excuse what has happened is condoning her actions when it comes to not honouring contracts and obligations, and everyone who is reading this knows that is entirely wrong. Some 100 people will take the fall for her complete and utter ignorance of business ethics, and those are the people who will suffer the most if, and most likely when, the NWHL collapses.

People are only as good as their word, and Dani Rylan has shown that her word means very little when it comes to honouring contracts. The current situation the league finds itself in is the result of many poor decisions she made over the last two years. You can say that she made mistakes early on, but those mistakes became a pattern that she couldn't resolve once she began down that deep, dark hole. Lies begat lies as she built her empire on false promises.

Again, you can say Miss Rylan made mistakes, but that rationalization is not going to fly after two years of the same "mistakes" being repeated over and over again. You can say that perhaps she got in over her head with a lack of funding as Miss Rylan alluded to in her press conference, but the growing number of lawsuits being filed against her and the league isn't a money problem. In the end you can say whatever you want to try and rationalize the NWHL's decision to ultimately hurt its most marketable assets in its players, but there's really only one finality that should be reached when looking at the evidence above.

Don't say you weren't warned.

Until next time, keep your sticks on the ice!


Unknown said...

Great read!! You are spot on, The Commissioner is incompetent and corrupt!! Time for her and Skillen to GO!!

Michael Holubowich said...

Great read!! This Commissioner is incompetent and corrupt!!