Yahoo Finance Exclusive: Hockey Canada reveals it's lost almost $24 million in sponsorships this year
Hockey Canada has lost $23.5 million in sponsorships that have been either suspended or cancelled since revelations emerged this summer that the organization that oversees amateur hockey paid millions of dollars in settlements for sexual misconduct claims going back to the 1980s.
“The loss of Hockey Canada’s sponsor support has been significant,” the organization said in a statement to the Financial Post confirming the figures, which have not been previously reported.
As the headlines grew progressively negative, sponsors such as Bank of Nova Scotia, Telus Corp. and Restaurant Brands International Inc.’s Tim Hortons put their financial relationships with Hockey Canada on pause or insisted that their contributions be used only for women’s hockey.
In October, Canadian Tire Corp. Ltd. cut all ties with Hockey Canada, saying that the organization was resisting “meaningful change” and therefore “we can no longer confidently move forward together.”
The tally of Hockey Canada’s sponsorship losses come from the organization’s Business Development & Partnerships department, which accounted for 43 per cent of Hockey Canada’s sources of funds in the 2020-2021 fiscal year, according to the most recent annual report. Hockey Canada said in its statement to the Financial Post that the percentage of corporate sponsorship funding lost following the revelations surrounding the settlement of sexual misconduct claims won’t be calculated until the current fiscal year ends on June 30.
Last year’s annual report lists more than two dozen corporate sponsors of Hockey Canada, which also receives funding from the federal government and member fees. The organization said corporate contributions represented a higher-than-usual share in 2020-21 due to sporting activities put on hold by the COVID-19 pandemic. It was 38 per cent in 2019-20 and 36 per cent in 2018-19.
Demands ‘have been heeded’
Hockey Canada’s statement added that a number of recent steps have been taken to respond to the concerns raised by sponsors — including changes to the organization’s leadership.
On Oct. 11, the organization announced that chief executive officer Scott Smith would be leaving immediately, and that the entire board of directors had agreed to step down to make room for a new set of directors. The board overhaul is scheduled to be completed Dec. 17 when members select the new slate during a virtual election.
“The demands of Canadians, echoed by sponsors, for leadership change have been heeded,” Hockey Canada’s statement said.
In June, Bank of Nova Scotia chief executive Brian Porter published on open letter saying the bank would be pausing its sponsorship of Hockey Canada until it was “confident the right steps are being taken to improve the culture within the sport — both on and off the ice.”
Other sponsors followed with pauses and cancellations — now up to a dozen, according a list compiled by the Canadian Press on Oct. 11. Hockey Canada faced renewed criticism as recently as a month ago from sponsors as well as Prime Minister Justin Trudeau, who said that not enough was being done to address concerns.
The renewed condemnation followed an appearance by interim board chair Andrea Skinner at the standing committee on Canadian Heritage, where she resisted the argument that Smith and the Hockey Canada board should be replaced “on the basis of what we consider to be substantial misinformation and unduly cynical attacks.”
Skinner resigned less than a week later. Hockey Canada officials are scheduled to appear before the heritage committee again on Nov. 15.
Costs pile up
In addition to the management and board changes announced since the October committee appearance, Hockey Canada earlier this month released the final version of an independent governance review completed by Supreme Court of Canada Justice Thomas Cromwell and Borden Ladner Gervais LLP.
The independent governance review found that Hockey Canada’s National Equity Fund (NEF) was used as permitted to pay out some claims linked to sexual misconduct, but that members did not receive adequate information about the funds and their use.
Canadian Tire's break with Hockey Canada shows it's no longer just a store for guys
Canadian Tire permanently cuts ties with Hockey Canada over sexual assault allegations
Heavyweight sponsors distance themselves from Hockey Canada amid sexual assault scandal
For example, according to the report, Hockey Canada’s members and participants may not have been fully aware of the scope of claims that would be funded by the NEF, “namely claims linked to sexual misconduct beyond the name perpetrators specifically excluded from liability insurance coverage.”
The Cromwell report recommended that Hockey Canada take steps to provide timely disclosure to its members regarding ongoing and potential claims. Once a settlement is reached, the report recommended that Hockey Canada disclose all publicly available information. If there is a non-disclosure agreement in force precluding the release of the settlement amount, Hockey Canada should still inform its members of the nature of the claim, the fact that a settlement was reached and how the settlement would be funded.
The NEF was used to pay out $7.6 million related to 10 sexual assault claims since 1989, according to Hockey Canada, which said sponsorship funds are not used to fund the NEF.
Hockey Canada has racked up about $6 million in additional costs to manage fallout from the crisis that began in May, when TSN reported that a woman had alleged in a civil court filing that she had been sexually assaulted in 2018 by eight players including members of Canada’s World Junior team, following a Hockey Canada Foundation gala.
Costs associated with the external governance review, which Hockey Canada made public on Nov. 4, exceeded $1.7 million. In addition, Hockey Canada has paid more than $1.6 million to Navigator Ltd. for communications, stakeholder management and research assistance, and nearly $3 million for other legal and communications costs including retaining the services of Longview Communications Inc.
• Email: bshecter@nationalpost.com | Twitter: BatPost
