CSPA files $40-million lawsuit against current and former Canada Soccer board members

The Canadian Soccer Players' Association (CSPA), the union representing players on the women's senior national team, has filed a $40 million lawsuit against 15 current and former Canada Soccer board members who signed a media and sponsorship contract in 2018 with the private company Canadian Soccer Business (CSB).

The CSPA filed a notice of application against Canada Soccer on Feb. 16 and a statement of claim against the 15 current and former board members on Feb. 20. Both documents were filed in Ontario Superior Court in Toronto.

The statement of claim lays out the CSPA's arguments for the current and former board members’ alleged negligence. The notice of application is a request to the court to allow the CSPA to sue those board members on behalf of the federation itself.

Named defendants include Steve Reed, who was Canada Soccer’s president from 2017-20; Nick Bontis, who was a vice-president with the federation from 2017-20 before becoming president; and Charmaine Crooks, who has been a board member since 2012 and is now Canada Soccer's president.

A lawyer for the CPSA declined to comment.

“We have been made aware of a legal proceeding filed by the Canadian Soccer Players’ Association, against the members of the 2018 Canada Soccer Board,” a Canada Soccer spokesperson wrote in an email to TSN. “Our organization is currently seeking advice on this matter.”

The lawsuit alleges board members breached their fiduciary duty to Canada Soccer when they approved the CSB media and sponsorship deal in 2018 and seeks to hold them personally liable for damage caused to Canada Soccer.

“Each of the 2018 Canada Soccer directors owed Canada Soccer a fiduciary duty... to act honestly and in good faith with a view to the best interests of Canada Soccer,” the statement of claim says. “Instead of considering the best interests of Canada Soccer in approving the CSB Agreement, however, they focused on the best interests of CSB, a private, for-profit company.”

According to the statement of claim, the board failed to canvas the market for competing bids, failed to conduct appropriate diligence with respect to the fair market value of Canada Soccer's media and sponsorship rights, failed to make adequate disclosures to the membership of Canada Soccer, and failed to follow necessary approvals processes.

“The CSB agreement has a direct and negative impact on the budget, support and programming for the senior and junior national teams and has resulted in the unauthorized use of national team player names, images and likenesses by Canada Soccer sponsors, all without any direct benefit flowing to Canada Soccer, the national teams, or their members,” the lawsuit says.

The women's national team plays its first game in the CONCACAF W Gold Cup tournament on Thursday and has qualified for the Paris Summer Games this summer, where Canada will compete as the defending gold medallists.

The legal case marks the latest development in what has been a protracted war between national team players and the federation and comes nearly a year after the women's team players said they were going on strike over their compensation agreement with Canada Soccer. (Players backed down less than 24 hours later when federation officials threatened to sue players individually for not playing.)

According to court documents, lawyers for the women's team players wrote to Canada Soccer on Dec. 19, advising the federation that if appreciable progress were not made towards amending the controversial CSB deal, players would claw back their name, image and likeness rights from the federation on Feb. 1.

Canada Soccer, the letter warned, would then be obliged to advise its sponsors – a group including CIBC, Nike, Telus, Visa, and Toyota – to stop using players' names, images, or likenesses in any advertising.

On Jan. 30, a lawyer for the CPSA wrote Canada Soccer again and gave the federation a 14-day deadline to take legal action against its 2018 board, the lawsuit says. When the lawyer received no response from the federation, the players decided to move ahead with a lawsuit against the current and former board members.

“To date, despite a request from the Players' Association for information, Canada Soccer has failed to confirm definitively which of the proposed defendants was in fact responsible for approving the CSB agreement, and whether any of the proposed defendants voted against approval of the CSB agreement," the lawsuit says.

The Canada Soccer-CSB contract, first publicly detailed by TSN in July 2022, came under withering criticism during a series of Standing Committee on Canadian Heritage hearings in Ottawa last year.

The agreement obliges CSB, which is collectively owned and controlled by Canadian Premier League team owners, to pay a guaranteed fee to Canada Soccer annually between 2019 and 2027 in exchange for the rights to sell both broadcasting and corporate sponsorship rights to the men’s and women’s national teams.

In 2019, that fee was $3 million, according to a copy of the contract obtained by TSN. The guarantee climbs each year, topping out at $3.5 million in 2027. The contract, which was signed by Reed, says CSB has the right to extend the deal for an additional 10 years and if it triggers that extension, must pay Canada Soccer at least $4 million per year from 2028 to 2037.

"The CSB agreement provides Canada Soccer with no opportunity to participate in the growth of revenues generated by the success and popularity of the national teams, or of the popularity of the game in Canada," the lawsuit says. "There is no provision in the CSB agreement that would require its financial terms to be revisited during its nearly 20-year term."

Members of Parliament have repeatedly pressed Canada Soccer for answers about why the organization handed away such valuable rights for 20 years at a time, particularly after Canada had agreed in April 2017 to join the U.S. and Mexico in what would become a successful joint bid to host the 2026 World Cup.

Canada Soccer negotiated the CSB deal in late 2017 at a time when many in the media reported the U.S., Canada and Mexico were favourites to secure the World Cup ahead of a rival bid from Morocco.

Winning the right to co-host the 2026 World Cup, which will be the largest ever with 104 matches, up from 64 during the 2022 event in Qatar, has significantly enhanced the value of Canada Soccer’s media and sponsorship rights.

Momentum by the time the CSB deal was signed was already significant.

According to the statement of claim, Canada Soccer said in its annual reports that sponsorship revenue climbed 25 per cent in 2014, 56 per cent in 2015, and 15 per cent in 2016.

"It was against this backdrop that the CSB agreement was negotiated and entered into," the claim says.

The statement of claim also says that by September 2018, after “serious concerns” were raised by some members of Canada Soccer's board about the proposed media and sponsorship agreement, a negotiating team was formed to further discuss terms of the prospective deal with CSB.

“Notwithstanding their mandate to do so, Canada Soccer's negotiating team never recommended to the 2018 Canada Soccer board that the CSB agreement be approved,” the statement of claim says. “The CSB agreement was executed by a single signatory of Canada Soccer (contrary to Canada Soccer's bylaws) in January 2019, without any further steps having been taken by the 2018 Canada Soccer Board to obtain proper approval of its terms.”

After members of Canada Soccer's board retroactively approved the CSB agreement in February 2019, five members of the board are reported to have taken the position that the CSB contract was never properly approved, the statement of claim said.

Despite repeated public assurances from Canada Soccer officials that CSB has agreed to “modernize” their contract, no tangible offers to retool the contract have been presented, a source familiar with the matter told TSN.