The Business Behind the IIHF World Junior Championships
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Executive Brief: Today’s newsletter discusses the history of the IIHF World Junior Championships’ business and its growth alongside TSN. I discuss how the enterprises grew together, how they impact other international hockey properties and provide comments on how the money flows. Enjoy!
A Brief History of the World Junior Hockey Championships
December 26th marks a special place in the hearts of hockey fans, the start of the World Junior Hockey Championships (World Juniors). This year, both American and Canadian fans are off to a happy beginning as their teams took care of business on day one. The tournament has become a holiday-period television tradition in hockey-loving families across the world.
The tournament unofficially started in 1974 and officially began in 1977. Since then, it has matched the best under-20 hockey players worldwide. While most of us are decorating our homes for the holidays, the best young hockey players in the world are intensely preparing to represent their countries at the historic tournament.
Following Canada’s disqualification from the 1987 tournament, the Program of Excellence propelled the country’s team to success by winning gold in 1988 and 1990, further growing the interest in the high calibre play of junior hockey in Canada. At the same time, a Canadian sports network was finding its footing in Canada’s entertainment space. The Sports Network (TSN) was growing in popularity at the time but was still a fringe channel with little compelling content, meagre ratings, and a tight budget. Following a change in policy by the Federal broadcasting regular at the time, TSN moved to basic cable, which instantaneously increased its potential audience significantly. The network now needed good content to fill its airwaves.
Enter the World Juniors. As the TV rights to the World Juniors became available, TSN was in the position to acquire an affordable sports property. After negotiations, TSN signed a five-year deal with CADA to bring the World Juniors to TSN as one of its first major properties. The big reveal came during the 1991 tournament held in Saskatchewan, a win-win situation for TSN and Hockey Canada. Team Canada’s success on the ice was the perfect ingredient to build exposure and excitement about the tournament. From 1993 to 1997, Team Canada won five straight gold medals. The World Juniors tournament quickly became synonymous with Canadian success and patriotism.
At that point, CAHA and TSN realized their potential for business with their relatively new media property. So, the entities started optimizing the product to focus on creating revenue from the tournament:
In 1996, the World Juniors moved away from a round-robin-style tournament and started a playoff-style tournament.
In 1998, CAHA and Hockey Canada merged to create one unified hockey governing body.
In 1999, Team Canada signed a merchandising deal with Nike.
All three moves quickly generated more money for Hockey Canada and ultimately TSN leading to an increasingly popular and successful enterprise.
The Money Behind the Tournament
The two biggest money-makers for the International Ice Hockey Federations (IIHF) are the World Championship, and the World Juniors when held in Canada. When Canada hosts the World Juniors, 50% of the profits go to Hockey Canada, 35% to the Canadian Hockey League (CHL), and 15% is split between local organizing committees, provincial amateur hockey associations where the event is held, and the International Ice Hockey Federation (IIHF). Players, as you’d expect, get zero percent of the profits.
An interesting wrinkle to the almost-cancelled tournament last year is that the IIHF uses the revenue from the World Juniors and the IIHF World Championship to support all the 30-plus tournaments that the IIHF folds each year. The primary reason the organizers didn’t cancel the World Juniors last year is that the IIHF and Hockey Canada would have suffered incredible TV revenue losses, on top of the already-projected losses of ticket revenue without fans. Cancelling the World Juniors would have made hosting the other 30-plus tournaments extremely difficult. We should not underestimate the economic impact of the World Juniors.
In 2006, Canada hosted in Vancouver, British Columbia (BC). According to an Economic Impact Assessment, the financial breakdown looks like this:
The organizing committee incurred $22.8 million in operating expenses for the tournament.
Of the $22.8 million in expenses, $8.1 million went to wages and salaries in BC by creating 275 jobs.
The tournament generated an estimated $41 million in economic activity for BC.
The total GDP generated by the event was more than $21.7 million through BC.
The event produced over $2 million in tax revenues for BC.
The event produced over $2 million in tax revenues to the Federal government.
The event produced over $565,000 in tax revenues for the municipalities.
These numbers are all 15-years-old, though. The tournament has continued to grow year over year and has become a revenue-generating monster relative to the time commitment for the tournament being a couple of weeks.
In 2014, TSN and Hockey Canada signed a TV deal estimated to be $20 million annually, giving TSN the right to broadcast all Hockey Canada events and games. In 2020, the two sides agreed to a long-term media rights agreement that extends through the 2033-2034 season, continuing the partnership that started in 1991. Financial metrics are not disclosed.
The 2022 tournament is currently happening in Edmonton and Red Deer, Alberta. Based on average ticket prices for each venue and the number of games to be played, I estimate that the tournament can generate approximately $40 million in revenues before it sells a single corporate sponsorship package, advertisement, or jersey. When you factor in those additional revenue streams, the TV deal, and advertisements on the boards, jerseys, helmets, post-game press conferences, etc., you’re talking north of $50 million in revenues. These metrics don’t include title sponsorship for Team Canada’s training camp, their pre-tournament series against other countries, and the other various avenues for money-making.
In recent years, the tournament has also generated around $100 million in economic spinoff benefits for the host cities via money flowing to cab drivers, hotels, restaurants, bars, merchandisers, and other hospitality sectors.
Final Thoughts
It takes a lot of time and investment to start and sustain a sports league, much less a tournament over 30 years. However, the almost perfect synergy of growth between Hockey Canada’s success and TSN’s success has organically built a substantial business property with the World Juniors.
Over the years, Canada has won 17 gold medals at the tournament, leading to significant advertising money, NHL-sized rinks filled, major TV deals, and a gold-or-bust mentality for the Canadian junior hockey players. As the pressure on the players mounts, revenue gets better and better for Hockey Canada, the IIHF, TSN and other strategic partners.
While I appreciate the business aspects of the relationships, I can’t help but consider the ridiculous pressure placed on these teenagers without them directly receiving a dollar of the profits. Many of the players will play in the NHL or other professional leagues, but there will be players who don’t make it but still play in this tournament. While it can be the highlight of a hockey career, players should still get a cut of the direct proceeds. Yes, money goes to the CHL, Hockey Canada and the IIHF and ultimately gets funnelled down to leagues and players. Still, I am pessimistic that these players who directly create this revenue receive a proportionate return on their investment from the indirect flow of funds.
As athlete rights in the US continue to progress, pay close attention to how tournaments like the World Juniors and their governing bodies treat players. Hopefully, they will pay players directly for their services rendered in these tournaments.
Thank you for reading. Have a great day, and we’ll talk next week!
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Kendal
Question of the Day
What is your favourite World Junior Hockey Championship moment?
Games of the Week
NBA
Thurs, December 30th: Philadelphia 76ers @ Brooklyn Nets at 7:00 p.m. (ET.)
Sat, January 1st: Golden State Warriors @ Utah Jazz at 9:00 p.m. (ET.)
NHL
Wed, December 29th: New York Rangers @ Florida Panthers at 7:00 p.m. (ET.)
Sat, Jan 1st: NHL Winter Classic: St. Louis Blues @ Minnesota Wild at 7:00 p.m. (ET.)
NFL
Sun, January 2nd: Kansas City Chiefs @ Cincinnati Bengals at 1:00 p.m. (ET.)
Sun, January 2nd: Arizona Cardinals @ Dallas Cowboys at 4:25 p.m. (ET.)