Prospective buyer says he was coached to skirt GTHL’s rules on organization sales
Published
A prospective buyer who says he had a deal in place to purchase a Greater Toronto Hockey League (GTHL) organization for $375,000 alleges he was coached on how to skirt the league’s rules prohibiting such sales.
In a series of interviews with TSN, the prospective buyer detailed his negotiations in late 2019 and early 2020 to purchase the Humberview Huskies, an organization in the largest minor hockey league in the world. He provided copies of draft contracts, emails and text messages to corroborate his story.
The prospective buyer said he contacted TSN because he believes his story is in the public interest. He requested anonymity because he feared family members involved in hockey might suffer retaliation.
“I’m embarrassed and a bit ashamed I was a part of this and came so close to buying an organization,” he said. “But I think it’s important that the public know what is really happening in the GTHL, where deals like this are an open secret.”
Humberview Hockey Club was formed as a six-team church league in 1960 to provide recreational programs to the then-growing area of North York. In 1988, Humberview joined the Metropolitan Toronto Hockey League (MTHL), which has since become the GTHL. Humberview operates competitive teams in A and AA programs for players from the ages of nine to 18 and also has a U21 team.
The prospective buyer said he moved quickly after a friend advised him in early December of 2019 that the Huskies were for sale. A father of two teenage boys who played in the GTHL, he contacted Rick Heinz, a former NHL goalie with the St. Louis Blues and Vancouver Canucks who was then the Huskies president, general manager, and owner.
“If you’re interested in the Huskies to own we need to talk soon,” Heinz wrote the prospective buyer in a text message on Dec. 18, 2019.
The prospective buyer said he and Heinz agreed to meet that same afternoon at a Montana’s restaurant in Milton, Ont., to discuss a possible sale and his desire to rebrand the Huskies.
“Great meeting!!! This hockey club is in your wheelhouse! You will be great at it,” Heinz wrote in a follow up text message to the prospective buyer later the same day.
Over the following days, the prospective buyer said he was given access to Humberview’s finances. Within days of speaking with Heinz for the first time, he and a partner were determined to buy the Huskies.
“I was sucked in quickly,” he told TSN. “I loved the idea of controlling a hockey organization and I convinced my wife this would be a good thing. We talked about using some of our savings. And I was pretty certain that down the road I would be able to turn around and sell the team for double what I paid.”
The prospective buyer said he was told he would need to get his story straight to secure approval for the ownership transfer from the GTHL, which mandates that organizations cannot be bought or sold because they are registered as non-profits. (GTHL organizations can be registered as not-for-profits with either the federal or Ontario governments.)
The prospective buyer said he was directed to tell the GTHL only that he was taking over as a director, and to deny that money was changing hands if he was asked. He said when he asked how the GTHL could not know that organizations like this were being bought and sold he was told the league was aware of organization sales but would not investigate so long as details of a sale were not discussed.
The prospective buyer said that after he had agreed to a $375,000 purchase price, he began having doubts about the reliability of the financial records he had been shown. Two weeks later, the prospective buyer said Heinz told him the deal was off because he found someone who had outbid him.
Heinz did not respond to multiple requests for comment.
“It’s for the best,” the prospective buyer said. “I’m actually shaking my head that I went so far down the road on this. This is not what hockey is supposed to be about. There is so much greed in the GTHL now, so many team owners looking for ways to get every cent that they can out of parents.”
The prospective buyer’s negotiations to buy the Huskies sheds light on how the former owner of one organization in the Greater Toronto Area, at a time when the hockey world is grappling with the lofty costs of playing the sport and declining player enrolment, allegedly turned an annual profit on their organization.
The prospective buyer’s sharing of documents, emails and his alleged contract with Heinz also comes with the GTHL under intense scrutiny. Former NHL player Akim Aliu and his partner Jim Nikopoulos have told TSN that the president of the North York Rangers organization told them during a meeting in July of 2021 at the GTHL’s head office that it would cost at least $1 million for them to buy the organization’s AAA teams.
Aliu said another AAA organization director offered his club for sale for $3.6 million, and another hockey parent whose son plays in the GTHL also described to TSN his negotiations in 2021 to buy a 25 per cent stake in a AAA organization for $1 million.
The league has told TSN that it is investigating multiple allegations that teams and the non-profit companies that run them have been inappropriately bought and sold.
While the GTHL refuses to say how many investigations are underway or who it has hired to scrutinize the allegations, a person familiar with the matter told TSN that retired Ontario Provincial Police officer Keith Lawson is at least one of the third-party investigators who has been commissioned by the league.
“In response to the enquiry about the Humberview Huskies, the league has no information on the negotiations you have enquired about and can’t comment on a specific situation of a transfer of control request that was never presented or considered by the GTHL,” GTHL executive director Scott Oakman wrote in a statement to TSN.
“The GTHL Board will not approve the transfer of control of an organization in which there is an inappropriate financial transaction involved. If an individual has information to indicate any inappropriate transaction, they should be encouraged to contact the GTHL so that a proper investigation can take place. In dealing with these types of matters, the GTHL does have legal and practical limitations in regard to the types of information it can access, including non-related private companies, cash transactions, etc. The GTHL, as with any sport governing body, relies on officials to be forthright in providing required information to the league. As a prior statement from the GTHL indicates, a number of investigations are already underway.”
Oakman wrote the GTHL has a transfer of control process that requires parties to submit all agreements, including a mandatory declaration of any financial transaction that may be involved in the transfer.
During negotiations in December of 2019, the prospective buyer of the Huskies said he was given an opportunity to review the organization’s financial statements.
“Some of what I saw was eye-opening,” he said. “One thing that stands out is the bookkeeping. This organization’s finances were not organized on a software program or anything. What I saw were handwritten scribbled notes that were kept in a three-ring binder. Imagine a high school student’s binder at the end of a school year with paper stuffed all over the place. This was one of the big concerns. I didn’t know if I could trust the numbers.”
He said he was told that the Huskies received $20,000 per year from Scotiabank as part of the bank’s sponsorship of the GTHL and that the Humberview organization generated an annual profit of about $200,000.
He also said that despite some misgivings about how reliable the Huskies’ financial statements were, he and a partner initially agreed to pay $330,000 for the organization and then boosted their offer even higher.
A copy of their contract, which is described as a “sponsorship agreement,” says that Heinz, a director of the Huskies, planned to resign from his position and that the prospective buyer and his partner “wish to become directors of the Humberview club and assume full operational and financial control.”
According to the contract, the $330,000 the prospective buyer and his partner agreed to pay was non-refundable, subject to a number of conditions. Funds were to be transferred to Richard Furlong, a lawyer with Furlong Collins, a Milton law firm. The funds were to be paid before Jan. 27, 2020, with an amount to be agreed on to be placed in trust to secure the deal.
GTHL Letter westhead
(Cover page of draft sales agreement for Humberview Huskies, provided by prospective buyer.)
Furlong did not respond to a request for comment.
According to the contract, Heinz agreed to approach the GTHL and arrange for the prospective buyer and his partner to become directors of the Huskies organizations. If the buyers did not receive written confirmation from the GTHL that they had been approved as directors within 120 days of the agreement, the money in trust would be returned to them.
The contract also says that the balance of the funds due to Heinz [the outstanding money owed after an initial down payment was made] would only be released “after the [new owners] are in full and complete possession of all signed coach and player cards for [the Huskies’] eight registered hockey teams in the 2019-20 season as agreed upon.”
(There are nine age cohorts in the GTHL for players, beginning at the age of nine; players in their final GTHL season are 17. That means an organization with A and AA clubs could have as many as 18 teams. The prospective Huskies buyer said if the purchase had gone through, he planned to add 10 more teams to get to the full complement of 18.)
At the time the prospective buyer entered into the negotiations, the Huskies did not have a team in the AA Under-10 age cohort. The contract said that if Heinz arranged for the Huskies to have a new team in that age group for the 2020-21 season, the prospective buyer and his partner would pay Heinz an additional $25,000.
The contract said that within 90 days of the end of the 2019-20 season, ending March 31, 2020, or when asked by the prospective buyer and his partner, Heinz would voluntarily resign as a director of the Huskies.
Heinz agreed to be responsible for all Humberview revenue and expenses incurred or owing prior to March 31, 2020, including all 2019-20 ice contracts, a 2019-20 year-end banquet, and office space rented at Westwood Arena, the contract said.
Heinz also agreed to be responsible for preparing and filing the organization’s year-end financials with the Canada Revenue Agency for the year ending March 31, 2020, the contract said, adding that the prospective buyer and his partner would reimburse Heinz $1,660 for tournament fees already paid for the 2020-21 season and $881.40 for costs related to the organization’s website hosting.
“The parties hereby agree that this agreement is confidential and all terms and conditions herein are to be held in the strictest confidence and shall not be disclosed to any other person, other than as required by law or with the consent of all other parties listed,” the contract said.
Within days of agreeing on a price, the prospective buyer said Heinz came back to him and said he needed more money because another bidder had surfaced. The prospective buyer said he and his partner tentatively agreed to boost their offer to $375,000.
“We were already pretty committed to going forward at that point,” he said.
The prospective buyer, however, said he began having doubts and contacted Heinz to discuss his concerns.
“Are you available next Tuesday to discuss next steps?” he wrote Heinz in a Jan. 3, 2020, email. “At that time we will propose our offer to you and review a few outstanding matters.”
“I was understanding that the offer was today?” Heinz responded the same day. “Can I ask why has that changed? It’s been a week. What are the concerns that we didn’t cover in three hours Sunday and the previous meeting? Additionally, there is the time line for the other group that will probably happen next week. And I don’t want to jeopardize that deal if you can’t make a decision as we agreed upon…”
The prospective buyer emailed that since it was still the Christmas holidays, he would be back in touch the following week. On Jan. 7, he asked to review the Huskies’ finances.
“Can’t give you any info due to privacy concerns,” Heinz wrote in a Jan. 7 text message. “But can show you. I showed you that info in last meeting as well. However easy to do again.”
On Jan. 12, the prospective buyer confirmed that he and his partner would provide a deposit of $20,000 to secure the sale.
“Can the 20 k be made payable to me? And when can we complete closing?” Heinz wrote in a text message the same day.
Three days later, Heinz emailed the prospective buyer to say he was concerned about where the down payment was going. Heinz wrote in an Jan. 15 email that he wanted to ensure that the $20,000 payment for the organization be paid “directly to me,” rather than put in a trust account pending an agreement closing.
GTHL Email westhead
(Email from Humberview Huskies director and owner Rick Heinz regarding sale of team, provided by prospective buyer.)
On Jan. 25, Heinz texted the prospective buyer again. He wrote, “Looks like we [are] going in a different direction. I will stay in touch.”
The deal was off because Heinz had found someone willing to pay more, the prospective buyer said.
“And that was that,” he said. “This has left such a sour taste in my mouth.”
According to the Huskies’ website, David Arsenault took over as president in 2020. The Arsenault Hockey Group “is a not-for-profit hockey development organization with a full lifecycle development model, from youth to adult,” the website says, adding that its assets also include the Caledon Junior A Admirals of the Ontario Junior Hockey League, the Caledon Junior B Bombers of the Greater Ontario Junior Hockey League, the Caledon Junior C Golden Hawks Jr. of the Provincial Junior Hockey League and the AHG Hockey Academy.
Arsenault did not respond to a request for comment.