The Canadian Hockey League is comprised of three member leagues: the OHL, QMJHL and the WHL. There are 51 Canadian Antitrust Lawsuit Alleges Major Junior Hockey Cartel
By Jon Heshka
A class action lawsuit was filed last month in the Southern District of New York alleging that the major junior hockey system in the United States and Canada violates U.S. antitrust law.
The 106-page federal complaint, brought by the World Association of Icehockey Players Unions (WAIPU) North America Division, the World Association of Icehockey Players Unions USA Corporation, and two former players, Tanner Gould and Isaiah DiLaura, accuses the defendants the National Hockey League (NHL), Canadian Hockey League (CHL), the Western Hockey League (WHL), Ontario Major Junior Hockey League (OHL), the Quebec Maritimes Junior Hockey League (QMJHL), and the 60 teams which comprise the WHL, OHL and the QMJHL of being a cartel that systematically exploits players and conspires to price fix what players earn while making hundreds of millions of dollars a year in revenue for themselves.
The complaint alleges that the defendants are in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. In the usual pastiche of claims alleging violations of the Sherman Antitrust Act, the plaintiffs say players are systematically exploited and abused [1], players’ “involuntary and non-negotiable contract terms are little short of indentured servitude” [28], and that the defendants’ cartel “artificially suppresses and standardizes compensation by denying Players their freedom of choice, freedom of movement, and freedom to play” for the team of their choice. [21]
Teams operating in nine provinces and nine are American teams operating in four states: Washington, Oregon, Michigan and Pennsylvania. The CHL is the world’s largest development hockey league and self-proclaimed top supplier of talent to the NHL (36% of the 224 picks in the 2023 NHL draft came from the CHL, down from 81% in 1969).
Major junior hockey is a profitable enterprise, earning hundreds of millions of dollars annually [26]. The CHL has more than nine million ticket holders each season and its clubs are the top-ranked sports property in 46 Canadian markets. The most valuable franchise in the CHL was worth $50 million in 2016 and the WHL-based Seattle Thunderbirds was sold in 2017 reputably for $12 million.
In the CHL, players from the U.S. and Canada are assigned to one of the three leagues based on where they live, meaning players who want to play in the CHL cannot choose among them. The plaintiffs claim that the major junior defendants (the CHL, WHL, OHL, and QMJHL) have not only agreed to eliminate competition among the three leagues for players by allocating markets but have also agreed to further restrain competition among the teams within each of the leagues by having each league operate an involuntary entry draft for all players [8]. It’s further alleged that the major junior defendants have conspired to restrain competition in this labor market by contractually prohibiting players from providing their hockey services to any team other than the one that drafted them, until they reach the age of 20.
The plaintiffs claim that there is no competition among the major junior defendants to source or sign players, that teams are insulated from competition for players through their territorial allocations, their involuntary drafts, and their rules and contractual provisions that bind players to their teams for a term of five years [13]. As a result of these allegedly illegal agreements, players are paid a mere fraction of what they would earn in a competitive marketplace. For example, player compensation in the WHL is fixed at $250.00 per month while it’s $470 per month in the OHL. These price-fixed terms are set forth in each and every player’s Standard Player Agreement and are provided for in the rules of each League. [156] By comparison, the average salary in the American Hockey League (AHL) developmental league is more than $5,000 per month, and the average salary in the East Coast Hockey League (ECHL) developmental league exceeds $2,800 per month. [157]
The NHL is named as a defendant because it’s alleged that the league and its constituent clubs exert substantial influence and control over the major junior defendants, thereby facilitating its conspiracy-fueled cartel. The plaintiffs allege that the source of the NHL’s influence and control is the multi-million annual funding it gives to the major junior defendants plus transfer payments of as much as $175,000 that teams receive when their players are selected in the NHL draft. [193] No other developmental league in North America receives similar payments and funding from the NHL. [24]
It’s interesting that the World Association of Icehockey Players Unions, the self-proclaimed “worldwide representative organization for all professional icehockey players” based out of Switzerland to which the WAIPU North America Division belongs, aren’t really labor unions and aren’t certified to represent CHL players.
Also, a hurdle the plaintiffs will have to clear is to disavow the fact that major junior hockey players are considered student athletes and not employees. As the CHL said in a 2020 statement after agreeing to pay $30 million Canadian to settle three class-action lawsuits filed by current and former players for minimum wage, back pay and overtime: “All Canadian provincial governments [plus Washington and Michigan] reviewed the issue of player status and clarified in their legislation that our players are amateur student athletes and not employees covered by minimum wage or employment laws.” The Province of British Columbia, for example, passed a cabinet order in 2016 which said that its Employment Standards Act “does not apply to a player on a major junior ice hockey team” thereby effectively freeing them from the future risk of having to comply with rules on minimum wage. These statutory exemptions only apply to states and provinces’ employment standards statutes. It is possible, as the lawsuit posits, that players could organize under collective bargaining legislation but after several failed attempts to organize CHL players, this would be a hard row to hoe.
The plaintiffs seek an award of damages, to be automatically trebled under federal antitrust law, for the alleged harm and injunctive relief to effectively end the major junior defendants’ anti-competitive practices and an injunction against the defendants boycotting or otherwise retaliating against any player who complaints about league practices or participates in the lawsuit. Lastly, WAIPU plaintiffs, “on behalf of their members,” seek an injunction “in their representative capacity” prohibiting the WHL, OHL, and QMJHL from conducting entry drafts in the absence of a valid collective bargaining agreement. [32]
None of the defendants have yet to file a defense.
Jon Heshka is a professor specializing in sports law and adventure tourism law at Thompson Rivers University in Canada.
