Wednesday, 17 October 2018

Follow The Money

See these ladies? They're paid by the NHL. Before you start emailing, tweeting, and commenting how I know nothing about hockey and how the NHL doesn't have any female players, let me assure you that I know these two facts. Yes, I know nothing about hockey and, yes, I know the NHL doesn't have any females who play the nightly games. There's an explanation here that needs to be told, and it will come as a bit of shock that the money actually does tell a story. I'll make a few assumptions here and I'll point those out, but things make more sense once you see the paper trail.

We'll start with the claim that was put forth in an article published yesterday by Associated Press writer John Wawrow. He writes,
The NHL's support of women's hockey included the league stepping in at the last moment to end a wage dispute between USA Hockey and U.S. National team women players threatening to boycott the 2017 World Championships on home ice. Two people familiar with the situation said the NHL agreed to pay USA Hockey to help fund the four-year agreement. The people spoke to AP on the condition of anonymity because the league and USA Hockey have not made that information public.
Ok, so there's always some uncertainty when it comes to anonymous sources, but the Associated Press has some pretty stringent rules for its writers when it comes to using anonymous sources. I will assume that Wawrow and his news manager have vetted the material presented in Wawrow's article, and will stand by its veracity. Note that I am assuming this entire article's base on the Associated Press having done its due diligence regarding anonymous sources. There's some danger in this, but we'll press on.

If the above is true, it seems that USA Hockey doesn't want egg on its face in trying to explain why they had the NHL pay the American women in their demands for better wages as Olympians similar to what Canadian Olympians get. The NHL obviously doesn't want to embarrass one of its partners in USA Hockey with whom it has a solid relationship. Keeping this deal quiet works for both sides, and no one needed to be the wiser about where the money came from to pay the American Olympians.

Except someone talked, and Wawrow published it. This, as you probably can imagine, set off the women's hockey world.
I'm not going to start splitting hairs here, but anonymous sources can't really be your lede as it calls into question all sorts of credibility. Hearsay is not what the Associated Press deals in when it comes to writing articles. You probably want a tabloid for that.

In any case, there was all sorts of outrage and disbelief and gasping and general shock that something like this could ever happen. Rather than taking a look at the actual news and trying to verify its truth, it seems the women's hockey bloggers and writers needed time to continue to build the necessary outrage when it comes to the NHL doing anything positive for women's hockey, let alone their vaunted and idolized gold medal-winning US Olympic women's hockey team.

Here's where thing become a little easier to digest: there has to be a paper trail for this transaction. The NHL and USA Hockey both file tax returns, and, in the case of USA Hockey as a public entity, they post their financial audits on their website. That means there should be some information in there about the NHL dumping some cash on USA Hockey to resolve the players' demands for livable wages similar to their Canadian counterparts.

Before we get into the auditing of the audits, there are a few details I need to spell out here. First, USA Hockey paid the women in the national team program $1000 per month for a six-month period every Olympic year prior to their new agreement. Yes, that's ridiculous for women who are expected to compete at the highest level every four years, so I'm glad that the American women won this battle. They sought fair treatment during the three-and-a-half years between those Olympic camps, and they got it.

While the actual details on what pay and benefits they receive have not been released (nor should they be), let's assume that the agreement they made continues with the same pay from USA Hockey as they received for the six months leading up to the Olympics. That is, let's assume that they'll earn $1000 per month for every month they are part of the national team program. A reasonable assumption, right?

The women were going to boycott the 2017 IIHF Women's World Championship that was being held at the end of March 2017, so we can also safely assume that the deal reached between USA Hockey and the US women's national team would need signatures and ratification by both sides. If we believe that there would be a reasonable time period in which this happened, let's say that this new agreement began in May 2017 after one month of time in which both sides got everything signed, sealed, and delivered. Again, a reasonable assumption, right?

Assuming that the rate of pay and the time period needed to ratify the agreement are true, we should be able to find proof of this infusion of cash into USA Hockey's pockets from the NHL. The next place we should look? Hockey USA's financial statements.

Because this happened in 2017, there is an audited financial statement on Hockey USA's website for that year. Let's get the shovels out and dig into this, shall we?

I might be a little rusty with my accounting skills here, but it seems that the NHL increased its total payment to USA Hockey by $200,000, pushing it up from $9.2 million in 2016 to $9.4 million in 2017. That's a significant amount of money that the National Hockey League is pouring in when you consider that the only larger contribution to USA Hockey's bottom line was "Membership registrations and dues" from programs across the United States.

There is a curious addition to the NHL's line on the statement that reads "Note N". What does Note N state?
Wait, do mine eyes deceive me? Does that note state that the NHL specifically provides cash for initiatives involving women's hockey? Indeed, it does, and that would mean that the balance of the money left over once USA Hockey spends money on "existing costs associated with the national team development program and junior officiating development program", the rest goes towards initiatives that include women's hockey.

You might be asking how this relates to the US women's national team and their fight for livable wages. We'll take those fair assumptions made above and work the numbers at this point.

If there are 25 women on the national program's roster at any one time and they earn $1000 per month each, the total per month that Hockey USA would need to pay the team would be $25,000. If the agreement started in May and ran until December 2017 in terms of the 2017 financials, that would be eight months of pay that the women would receive. Eight months of $25,000 in wages would be $200,000 in total wages for the remainder of 2017.

Assuming the NHL didn't demand a reduction in spending by USA Hockey on "existing costs associated with the national team development program and junior officiating development program" nor a reduction in spending on offsetting "costs associated with new
initiatives, specifically the American Development Model, Women's Hockey, and membership development, plus support for the United States Hockey League and College Hockey Inc.", this $200,000 increase in funding from 2016 to 2017 wouldn't just be some arbitrary funding increase without some sort of impetus for the increase.

What if the impetus was $1000 per month for 25 players until the end of the calendar year? Coincidence?

Let me go on record and state that none of this is concrete evidence. Perhaps there was another reason altogether for the increase that USA Hockey received from the NHL in terms of its financial support. However, it states very clearly in USA Hockey's financial audit that the NHL does provide monetary support for its women's programs, including the US national women's team, and it appears that support is significant based upon the report filed by John Wawrow.

If the NHL is funding the costs for the national team program and the junior officiating programs, this $200,000 increase would perhaps fall under that jurisdiction since the US women's national team would possibly fall under that "national team program" purview. As stated in the audit, "[t]he balance is to be directed to offset costs associated with new initiatives" after those costs for the national and officiating programs are paid, and I cannot see the NHL arbitrarily tossing more money into USA Hockey's remaining pile of money for new initiatives without USA Hockey making a clear case on where the money is going. That's the entire point of accounting - tracking where the money is spent.

While a detailed financial audit would certainly provide more answers than the financial audit posted on USA Hockey's website, there are simply too many puzzle pieces that fit together nicely based entirely on the idea that the US women's national team is earning $1000 per month, similar to their Canadian counterparts. Again, I made assumptions that make the narrative in this article work, but these are reasonable assumptions based on past events.

Maybe I'm entirely wrong. I can accept that. It's the downside of making assumptions, and I prepared to live with that if that's the case. Maybe my understanding of accounting practices is completely out of touch with actual accounting practices, and I can admit that reading financial statements is as much fun as watching paint dry. But if John Wawrow is standing by what he wrote regarding what his sources told him, I feel fairly confident in this breakdown of why the US women's national team is on the NHL's payroll.

All one had to do was follow the money.

Until next time, keep your sticks on the ice!

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