National team success could compound Canada Soccer’s financial woes

If Canada’s men’s national soccer team beats Trinidad and Tobago this Saturday, the Canadians will advance to play in the Copa América tournament this summer against some of South America's soccer giants.

But in a bizarre twist that is linked to Canada Soccer’s media and sponsorship contract, it's possible that the better Canada performs in the Copa, the more it could accelerate the federation’s path towards insolvency.

Thanks to an agreement reached between the union representing the men's national team players and the federation a year ago, each of the 23 players on the team is paid a $9,000 bonus for each win, a source familiar with the matter told TSN.

That means if Canada beats Trinidad and Tobago and goes on to win two games in the Copa, it will cost Canada Soccer more than $600,000 in player bonuses, in addition to at least $500,000 in expenses related to travel costs and staging a pre-tournament camp for players and coaches.

“We would be looking at far more than $1 million in costs if Canada makes the Copa and gets at least a few wins,” the source said. “The uncomfortable truth is, the better our players do on the pitch right now, the worse financially it is for the federation, which is running on fumes right now.”

Prize money for this year’s Copa has not been announced by CONMEBOL, which governs soccer in South America. Argentina took home $6.5 million for winning the last Copa in 2021, while second-place Brazil got $3.5 million. Teams that made the quarter-finals that year were paid $1.5 million, while countries that did not advance out of the group stage did not receive bonuses.

New Canada Soccer general secretary Kevin Blue, whose first day on the job was last Thursday, is joining an organization that is navigating unprecedented financial and political crises.

TSN reported on Feb. 21 that a union representing players on Canada's senior national women's team have filed a $40 million lawsuit against 15 current and former board members, including current board chair Charmaine Crooks.

(According to an agreement Canada Soccer reached last year with women's national team players, the federation pays them $1 million per year, the source told TSN. It's up to the players to decide how to split up that money.)

The Canadian Soccer Players’ Association alleges that Crooks and other board members were negligent and breached their fiduciary duty to Canada Soccer in 2018 when they signed a media and sponsorship contract with the private company Canadian Soccer Business (CSB), which is controlled by owners of Canadian Premier League teams.

In exchange for an annual flat fee of between $3-4 million, the national federation signed over all of its media and sponsorship rights to CSB, potentially through 2037. (Football Australia, by comparison, generated about $28 million (Canadian) in sponsorship and TV revenue in the year ended June 2023. 

Despite repeated public assurances from a number of Canada Soccer officials over the past year that CSB had agreed to “modernize” their agreement, no tangible offers to retool the contract have been presented, the source told TSN. 

“Clearly there’s some financial misalignments that need to be addressed,” Blue said in an interview with TSN on Thursday. “The aspiration that I have is for us as a soccer community in Canada to build a more robust commercial and philanthropic structure for the sport and to up-level the aspiration and the conversation beyond the singular issue of the CSB [Canadian Soccer Business] partnership.”

Blue said he understands how important it will be to rebuild trust with the public and with players on both national teams. He said that he has already sent a note to players to introduce himself.

“Throughout my career, I’ve been able to demonstrate to athletes a level of empathy and understanding of their experience,” he said. “I’m not attempting to cast blame on anyone or in any direction... The players are obviously a critical and important stakeholder in what we do.”

Blue said he has met with CSB officials to talk about the controversial contract.

“They have expressed agreement in helping and being part of the solution to improve the broader commercial and philanthropic landscape for the sport in Canada,” he said.

Canada Soccer officials over the past year have asked CSB to sign new sponsorship deals in the airline, hotel and logistics sector, and commit the funds from those agreements to junior and senior national team programming, the source said.

CSB has countered, the source said, by suggesting it pursue a sponsor deal in the gambling sector, with some of the proceeds from a contract going to Canada Soccer.

“We are excited about Kevin’s appointment and hope he brings the vision, leadership, and stability the sport needs in this country,” CSB spokesperson Laura Armstrong wrote in a statement to TSN. “We look forward to working with him for the long-term benefit of all stakeholders in the Canadian soccer ecosystem.”

Former Canada Soccer interim general secretary Jason deVos told TSN in an interview in June 2023 that the federation was investigating how bankruptcy protection works because its finances were so troubling. While he subsequently said the federation was not actively considering a bankruptcy filing, Canada Soccer remains on a course for financial catastrophe, the source told TSN.

Even with public funding (the federal government provided the federation with $5 million in 2022), Canada Soccer is burning through its cash reserves.

The federation reported a $4 million deficit in 2022, according to Canada Soccer’s financial statements. The source told TSN that the federation recorded a deficit of more than $3 million in 2023 and that it projects a budget deficit of $4 million this year.

The 2023 financial statements won't be made public until Canada Soccer's annual general meeting in May.

“We are talking about an organization that is on pace to burn through more than $10 million in cash reserves in three years,” the source said. “That's unsustainable. Canada Soccer has never been in a financial crisis like the one it's in right now.”

Blue acknowledged the financial situation.

“I’m certainly cognizant of the direction of the finances as far as deficits are concerned," he said. “I can’t speak to the precise accuracy of the numbers that you’ve cited, and making sure that we are able to correct the directionality of those finances is a significant priority as we move forward.”

Canada Soccer executives have privately acknowledged the stakes in recent meetings with provincial and territorial soccer federations.

In December, federation officials floated the idea of increasing the annual fee for player registrations from $9 to $15. That 60 per cent increase is necessary to help to avoid a bankruptcy filing within the next year, the provincial and territorial organizations were told, according to the source.

The provincial and territorial federations are expected to vote on the request in May at the 2024 AGM.

(Federation executives in recent months have also discussed requiring professional teams in the CPL and MLS and leagues in Canada to boost their annual registration fees by 60 per cent to match prospective player fee increases. Currently, each MLS team pays Canada Soccer $30,000 and each CPL club pays $20,000.)

The executive director of one provincial soccer federation, who did not have their organization's approval to speak publicly about the issue, told TSN that they would vote against any request to increase player levies.

“It’s not the job of provinces to fix the mess that Canada Soccer has created,” the executive director said.

Signs of the financial crisis are apparent.

Canada’s men’s national team only played one game during two international windows during the fall of 2023. When John Herdman was head coach, he spent some of his time fundraising for his team, finding private donors to cover the cost of flights and games.

While federation staff have secured friendly games for the men's team on June 6 against the Netherlands and two other games in late 2024 with the U.S. and Mexico, that's happened because the Dutch and U.S. soccer federations have agreed to cover most of the costs of those games, the Canada Soccer source told TSN.

The women’s Under-17 national team in February failed to qualify for their World Cup. Before their games, the Canadians did not have a proper training camp because the federation couldn't afford to stage one, according to a source. 

Similarly, the men's Under-20 national team played in a Concacaf tournament last month (Canada finished 3-0 to advance to the tournament finals), without a training camp.

“We are running minimal national team programming with minimal staff, and we still are running a multi-million deficit,” the source said. “It's hard to see a solution here unless that CSB deal is done. The trouble is some of the people on our board are responsible for signing that deal, and the other ones don't have the guts to stand up and hold them accountable.”