Hockey as a Business and as a Career
Publication
The Empire Club of Canada Addresses (Toronto, Canada), 21 Mar 1963, p. 240-251
Description
Creator
Campbell, Clarence, Speaker
Media Type
Text
Item Type
Speeches
Description
The unique sort of organization that is the National Hockey League. A description of the League, and a review of its business. Hockey as part of the entertainment industry. Some statistics. The costs of operation of hockey. Competition. Finding players. The pension plan. Incentives open to a boy to come into the National Hockey League. Conflicts with the community. Comparisons with the National Football League in the United States. Preventing any club from getting a corner or a monopoly on the talent. Spectators as participants.
Date of Original
21 Mar 1963
Subject(s)
Language of Item
English
Copyright Statement
The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Empire Club of Canada
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Fairmont Royal York Hotel

100 Front Street West, Floor H

Toronto, ON, M5J 1E3

Full Text
HOCKEY AS A BUSINESS AND AS A CAREER
An Address by CLARENCE CAMPBELL President, National Hockey League
Thursday, March 21, 1963
CHAIRMAN: The President, Mr. Palmer Kent, Q.C.

MR. KENT: On the eve of the play-offs to determine the winner of the Stanley Cup, emblem of World Professional Hockey Championship, it is a great pleasure for me to present to you as our special guest today, Mr. Clarence B. Campbell, M.B.E., Q.C., B.A., L.L.B., the President of the National Hockey League. You will be as surprised as I was to learn of his career. It is a story of repeated successes.

Born in Fleming, Saskatchewan, he graduated from the University of Alberta in 1924, and gained his Bachelor of Laws degree in 1926. In that year he was the Rhodes Scholar from Alberta. At Oxford University, he received his Bachelor of Arts degree in Jurisprudence in 1928 and was called to the Bar in Alberta in 1931. He practised law in Edmonton with the firm of Wood, Buchanan, Macdonald and Campbell until 1940. During that time he promoted baseball and hockey in Edmonton, played Lacrosse in England, refereed hockey at Olympic Games in 1928. Then refereed in the Western Hockey League, American Hockey League and in the National Hockey League.

In 1940, he joined the Militia as a private and was commissioned in the following year. He went overseas in 1942 with the 5th Canadian Anti-Tank Regiment of the Royal Canadian Artillery. Throughout the entire operations in North West Europe in 1944 and 1945, he commanded the 4th Canadian Armoured Division Headquarters and was mentioned in despatches. He joined the Canadian War Crimes Unit as a Lieutenant-Colonel in June 1945 and was associate prosecutor at the trial and conviction of Kurt Meyer. For his services, he was created a Member of the Order of the British Empire.

Since September 1946, he has been the President of the National Hockey League. In his active career, he apparently did not find time to get married until about 71/2 years ago.

I'm sure there are not many dull moments in the business of professional hockey in which he is now engaged. His subject is: "Hockey, a Business and a Career."

MR. CAMPBELL: I am not by nature an entertainer. Some people think some of the things I do are pretty funny, but I am sure you will understand the meaning when I say I am not primarily an entertainer. I am very delighted to have the opportunity to divulge, if that is the correct word, or disseminate some information concerning the business with which I am associated, which is frequently misunderstood. It is partly by reason of the nature of the business itself, which is a very compact group, and because perhaps of the extraordinary influence which our particular branch of our national sport, the Canadian national sport, the extraordinary amount of influence which we exercise with respect to it; not necessarily from our own choice, but from the nature of things which I hope will appear more obvious to you as I proceed.

Now, generally, I should like to give the background of the National Hockey League itself in order that you will have a better appreciation, or my audience will have a better appreciation of how the National Hockey League functions. However, in view of the broadness of the subject, I have decided that was to be curtailed. Sufficient to say that the National Hockey League itself is a rather unique sort of organization. It has no parallel that I know of anywhere, and even as a lawyer, I would find it difficult to define what it really is other than the fact that it is a name, the National Hockey League. It is not even registered any place.

It is composed of six franchise holders, all independent corporations, all incorporated in different jurisdictions, which corporations have bound themselves together under the terms of a contract, which in point of fact is the constitution of the League. It only has one officer. I have the honour to fulfil the functions of the president, vice-president, and the secretary, and the treasurer. Some people have said what would happen if something happened to you. I have no doubt that the governors of the National Hockey League would be sufficiently resilient to be equal to such a situation.

As one of them pointed out to me when I came to the League, they said you have a rather difficult position to fulfil here, and of course you will be at loggerheads with one or more of us most of the time. Now, that is not going to be very important because it will be me today and Joe Blow tomorrow and Jim Smith the next day so that when we wind up you will probably be our unanimous enemy. But you will find as you go along, as long as you can keep the level of that animosity reasonably uniform amongst us, you will probably survive. But it is extremely important in giving you this that you don't cultivate or add anything that will destroy the partnership relationship as exists between the member clubs. It is the hard core of the success of the National Hockey League that it is in point of fact, while a competitive league in sport, it is a partnership in business and it is really a partnership of corporations.

So much for what it is. What is its business? We play hockey. But that is not quite sufficient. You have to go a little further than that. We are fundamentally involved in a fairly substantial segment of the entertainment business, and you must keep in mind constantly that while I think the people who direct organizations and participate are fundamentally sound sportsmen, they are also primarily interested in the entertainment business, and this will motivate a large portion of the decisions and the attitudes which they have to take from time to time.

Now, the National Hockey League by itself is only six clubs, but we have a wide variety of affiliations with other organizations, including three other professional hockey leagues: The American Hockey League which consists of nine professional clubs, the Western Hockey League which consists of eight professional clubs, and at the present time the Eastern Professional League which has four. It had six. That makes a total in all of twenty-seven professional clubs which constitute the hard core of our entertainment business.

These leagues all operate on what- are commonly known as professional bases. Now, in addition to that we have a very close relationship and a very friendly relationship may I say with the American Amateur Hockey Association, which has an overriding jurisdiction throughout the entire country; also with the Amateur Hockey Association of the United States, which has corresponding jurisdiction there. They combine with part of the continent of Europe and have a further organization called the International Ice Hockey Federation, which operates or conducts the socalled world championships which have just concluded. We have arrangements, we have agreements with them dealing primarily with our respective jurisdictions, dealing with players, and we also provide some measure of financial assistance for them.

We, of course, are very closely related to the Canadian Amateur Hockey Association through the institution of what is called sponsorship. This is a method by which professional hockey lends support for the conduct of amateur teams.

How this came about is too long a story to tell here, but it does play a very important part in the conduct of hockey in Canada, and that will be illustrated by this fact: Of all the players playing in organized professional hockey today, over ninety-five per cent of them came from amateur teams sponsored by professional teams; over ninety-five per cent of the players who play in organized professional hockey today came from professional league sponsored amateur teams. In other words, they do sponsor not only in the sense of providing coaching and things of that kind, but also financial assistance.

You may be interested since we are talking about hockey as a business or part of the entertainment industry how big is it? What are its genuine dimensions? As businessmen I think you will be interested in the dollars factor probably more than any other. There are, as I said, twenty-seven professional hockey clubs operating in North America. Nine m Canada, eighteen in the United States, and these twentyseven professional hockey clubs provide the basic revenue for the support of approximately $100,000,000.00 worth of buildings, and when I say that, this is constantly increasing. As you will learn from the fact that the new Madison Square Garden complex which is about to be built over the Penn Station in New York will cost approximately $85,000,000.00, you will have some idea of the extent to the financial interests of the parties involved and what the hockey revenues mean to these buildings. In addition, the revenue derived from the games in a season would be approximately $12,000,000.00, in addition to something in the vicinity of about $2,000,000.00 of taxes paidentertainment taxes of various kinds.

Now, as to the dimensions of the individual operation, and this will probably influence your thinking somewhat in connection with where major league hockey can operate, the break-even point for the operation of a National Hockey League team at the present time is approximately $800,000.00 per season exclusive of entertainment tax. Our costs of operation are increasing and have increased for the past fifteen or sixteen years at approximately two per cent per year. From these figures I believe you will have a better idea of the dimensions of the business, and perhaps there is not very much more that one can say about it as a business except to remind you that it is part, a very important segment of the entertainment field not only in Canada but in the United States. The degree of success which has been achieved will perhaps be indicated by the fact that in the current season we will have public support to the degree that we will have ninety per cent in rated seating capacity occupied for every game in which we play. Ninety-two per cent of our rated seating capacity, and that will produce for us approximately 2,700,000 spectators exclusive of the players. I am sure I am not telling you any secret when I say that the two Canadian arenas have not had an unsold ticket in seventeen years.

The six franchise holders, or twenty-seven, if you want to look at it that way, provide this form of entertainment through the medium of players. As staff, twenty-seven professional teams require approximately 550 professional hockey players all the time. These turn over at a rate of approximately fifteen per cent to twenty per cent per year so that we have to have a new supply of hockey players of approximately eighty-five to a hundred and twenty every year. This used to be a relatively simple matter when the National Hockey League was the only important professional hockey league operated. It was quite simple to man four teams of twelve to fifteen players each. They were just picked up quite casually as the cream of the crop of any particular year came to the top, and these were engaged and nobody was seriously affected by it.

As the costs of operation of hockey increased tremendously, the young boy who wanted to run the team found he couldn't do it. The corner grocer who used to support the local team in the black sweaters-the players' parents provided all the other equipment-soon found he couldn't do it. Then larger industrial organizations began to sponsor teams they said on the employment of the players in their plants even this became somewhat beyond them, so of necessity it became necessary, because absolutely necessary for the professional teams and particularly National Hockey League to come to the rescue of these small teams, leaving them primarily in control of their operation, the day to day control of their operations, but to provide them with financial assistance. This has now grown to quite enormous amounts of money, of which I will speak later.

Also we have run into the competition of every other form of distraction and employment, or I should say employment and distraction. The emphasis which has been placed postwar on the concentration of education has of course substantially reduced the crop of available players, and so this in turn has increased the necessity for greater and greater and greater incentives in order to induce the players to take up hockey as a career.

Let us see how far these incentives have gone. Where are we as of today? Well, there are approximately one hundred and twenty jobs available at any time in the National Hockey League. There are approximately one hundred and eighty jobs available in the American Hockey League; another one hundred and sixty in the Western Hockey League, and let us say there are eighty, seventy-five or eighty in the Eastern Professional Hockey League.

In the National Hockey League for the current season the base salary for players, the average base salary of those players is $13,215.00. That is the base salary. In addition to that the League provides $220,000.00 of incentive money which goes to some of those players. Not all of them, but depending on their success and their skill. $220,000.00. That is another $2,000.00 per year. The League spends in addition to that on players' pensions alone $102,000.00 a year. $900.00 per man.

In addition to that the clubs themselves provide on the average additional personal bonuses of various amounts of an addition of a further $1,000.00 so that you have, if your arithmetic corresponds with mine, something in excess of an average of $16,000.00 per man per year for players who play regularly in the National Hockey League. In the American Hockey League the average salary would range from $5,000.00 to $10,000.00. In the Western Hockey League probably from four to eight, and in the Eastern Hockey League about three to six.

Now, I mentioned briefly in the course of my last few remarks about our pension plan. This is the most generous pension plan in the world without exception. Players contribute $900.00 a year, which is tax exempt, and the League makes a matching contribution of $900.00. That is for each year of service. That produces for the recipient a pension of $1,800.00 a year payable for life and guaranteed for ten years payable from commencement at age forty-five. I don't want to get too complicated about this, but let us take the case of a player who plays ten years in the National Hockey League. He will have contributed $9,000.00, which in terms of take home pay will have cost him not more than $6,000.00 because it is tax exempt. He will have a pension of $1,800.00 a year or $150.00 a month at age forty-five. Translated to age sixty-five, his normal time of retirement, that pension has increased to $400.00 per month. $400.00 a month, but now remember he has paid $6,000.00, but he has better than that. This pension is fully funded, and it carries with it full death benefits to the total value of the amount of the funds required to sustain his pension, so that by the time he reaches the age of forty-five he will have accumulated for himself a fully paid up death benefit of $32,500.00; equivalent to $32,500.00 fully paid up life insurance. By age sixty-five, if he defers that money, which he can do, and that is the last date he can defer it, he will have then a fully paid up death benefit of between $63,000.00 and $64,000.00. If you are not sufficiently impressed by that, now let me add this: Those are guaranteed pensions. As of last October 1st we declared a thirty per cent dividend on top of that.

These are the incentives that are open to a boy to come into the National Hockey League. True, it is a case that many are called and few are chosen. We have found we had to provide this degree of incentive in order to enable us to have a supply of talent that is necessary to carry on our business. We are no different than any other place of business. We must keep our clients and personnel up to the highest possible standard, and when the normal source of supply which would be applicable in some other sports broke down we had to substitute our own resources and enter actively into the full development of player talent at lower levels so as to ensure that we would be able to carry on our show.

This has brought us in conflict at various times with some other elements in the community, many of whom are not too well informed. Yesterday one of your local pundits quoted a legislator I believe as saying that professional agents go to the door of the youth of sixteen with $100.00 and get him to sign contracts. I don't know where that gentleman has been for the last thirteen years. On May 20, 1950, this was made impossible. No player can sign any obligation at any time, nor can any club acquire the benefits of any agreement that is made before he has attained his eighteenth birthday.

There is nothing unusual about a boy of eighteen years being employed or entering into an agreement for his employment. We have no apology to offer for this at all. There is another aspect of this. Since education is so important and since the period of training, the period of development overlaps to some degree with the educational period, it is altogether natural that parents of these young boys are primarily concerned with the education of these boys. This is where a large portion of our contributions to player development goes. National Hockey League, member clubs, spend over $500,000.00 a year in sponsoring fifty sponsored clubs throughout Canada, and the largest portion of that money is spent in providing the living expenses, the tuition and the books of the boys who go to these various schools. If anybody thinks we are serving with one hand and taking back with another, let us acknowledge that not all of those who attempt to be hockey players and to complete their education are completely successful.

I am sure that you as parents must have realized before now that there are other distractions besides hockey that will take young boys away from their books. They used to play in pool halls and now they play in hockey clubs, the National Hockey League.

However, let me claim for ourselves some fair measure of credit for this educational programme which we do conduct and which is demonstrative for anybody, any fairminded person who wants to learn about it. The large majority of our sponsored players are being kept in school at our expense. The large majority of them. As proof of this fact, just take the case of those who have passed through our ranks as a result of our sponsorship.

Newsweek conducted a survey of American colleges last year, a little earlier than this last year and they discovered that there were between 300 and 400 Canadian students in those universities there on hockey scholarships. How did they get there? They certainly had to pass through the qualifying period that coincided with the training period which is part of our sponsorship.

Right today there are 123 players who were active playing members of the sponsored teams in the last five years who are presently in universities in either Canada or the United States, a large majority of whom would never have had the opportunity to ever go to university at all if it hadn't been for this. While we don't claim to be a mealy-mouthed institution at all, we do claim that there are some credits which we should be given with respect to this.

Now I should remind myself of that admonition of an old proverb, and I don't know where it comes from, he who is giveneth an inch and taketh a yard should be kicketh by the foot. As of now you are free, Mr. President, to apply the foot, and I will try to bring these somewhat rambling observations into focus. We have been accused, and I am speaking of the National Hockey League or professional hockey leagues generally, of trying to dominate and control the game of hockey. This is not our wish at all. Any degree of control which has been accumulated has been the product of the fact that the former source of supply of material for us, which came to us gratuitously, has come about by the recognition that we, by reason of the fact that we have achieved or have earned or have been afforded such tremendous public support, we have a responsibility to put some money back into production of our own raw material. This is not an unfair and it is not an unusual approach to the matter, but I sure that no one will quarrel very seriously if we should express the opinion that this money can be more effectively and efficiently expended under our direction than under somebody else's. That is all that has happened.

We certainly do not voluntarily assume the responsibility of this $500,000.00 per year in sponsorship, plus the support of the organizations, amateur organizations all over the country on an informal basis, plus an annual contribution to the Canadian Amateur Hockey Association, and its counterpart in the United States, the A.H.L. in the United States, $42,000.00 a year for their administrative purposes. We have paid to these two organizations since the end of the War three-quarters of a million dollars to assist in the development of their activities, in the development of hockey. Obviously of course for our purposes to develop hockey players.

If we were located in the United States, operating in the United States or was in an indigenous game in the United States, we would be so fortunate. Look at the position of the National Football League where they have graduating from college literally thousands of fully-developed players produced at the expense of the state or the alumni ready to walk in. This would be wonderful for us. The same as basketball. Unhappily we are not like that. We are like baseball. We have to develop and contribute to the development of our own talent.

Well, the N.H.L. today is in the strongest position it has ever enjoyed both as a business and as a spectator. As a money-making enterprise and as an attractive medium of public entertainment. How has this come about? Well, there are a number of basic principles, the first of which is all of the clubs in our league own and control the buildings in which they operate. In other words, they are anchored to the location where they are with the dire necessity of running their business successfully or losing the building. The building can't pick up and walk away. You can't shift franchises around from one place to another. That building has to stay where it is because you can't move it, and there are no corresponding buildings elsewhere.

Then we have what is in sport a very unique arrangement by which we prevent any club getting a corner or a monopoly on the talent. Once per year every club has to say what its playing roster-what they plan their playing roster to be for the forthcoming year, and every other player in which they have a proprietary interest at all is subject to claim by their partners at a reasonable figure. A medium figure actually for the value of any player worthy of playing in the National Hockey League.

Then perhaps by far the greatest thing of all contributing to our success is that hockey is the greatest natural show game in the world. It is the greatest for about four or five reasons and I do think perhaps you won't mind if I mention them. It is, for instance, a game which humans play, participating without mechanical assistance. By reason of that speed and the fact that it is a bodily contact sport produces a degree of violence of bodily contact which has excitability plus an element of danger. People like to participate or to watch things that have an element of danger.

Skates are potentially dangerous and the sticks are potentially dangerous. Perhaps the most important thing of all is that there is a wall around the participants. You can't run down and touch them in a hockey game. Then it has another quality that arises from the fact that there is a wall around the participants, and that is the capacity to transfer some of the spirit of the competitors to the spectators.

That does not express it very well. One of my predecessors in my office expressed it very well when an American fan once asked him, "why do you people have that silly arrangement with two intermissions?" Every other sensible game only has one. He said, "we have two to enable the customers to rest up."

There is a lot more to it, to that statement than appears on the surface. Hockey fans are participants. They are not spectators. They are fundamentally participants. You go to a hockey game and watch the reaction of the crowd. Many of them do need a rest when they go home.

Altogether we feel this is a business which is conducted on a pretty high plane. We put a dollar on muscular skill and we demand from those to whom it is paid that they will react cleanly and decently in their obligation to produce for you, the customer, sixty minutes of sustained speed in action.

THANKS OF THE MEETING were expressed by Dr. Clarence Crummey.

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Hockey as a Business and as a Career


The unique sort of organization that is the National Hockey League. A description of the League, and a review of its business. Hockey as part of the entertainment industry. Some statistics. The costs of operation of hockey. Competition. Finding players. The pension plan. Incentives open to a boy to come into the National Hockey League. Conflicts with the community. Comparisons with the National Football League in the United States. Preventing any club from getting a corner or a monopoly on the talent. Spectators as participants.