The blend of normative uncertainty and commercial immaturity in Swedish ice hockey

Abstract

By describing and analysing normative uncertainties and the commercial immaturity in Swedish ice hockey (Swedish Hockey League/Swedish Ice Hockey Association), this article focuses on the tension and dialectics in Swedish sport; increasingly greater commercial attempts (i.e. entrepreneurship, ‘Americanization’, multi-arenas, innovations and public limited companies) have to be mixed with a generally non-profit making organization (e.g. the Swedish Sports Confederation) and its traditional values of health, democracy and youth sports and fosterage. In this respect, the elite ice hockey clubs are situated in a legal culture of two parallel norm systems: the tradition of self-regulation in sport and in civil law (e.g. commercial law). Indeed, the incoherent blend of idealism and commercialism in Swedish elite hockey appears to be fertile ground for hazardous (sports) management and indebtedness. This mix of ‘uncertainty’ and ‘immaturity’ has given rise to various financial trickeries and negligence, which have subsequently developed into legal matters. Consequently, the legal system appears to have become a playground for Swedish ice hockey. This article reflects on the reasons and the rationale in this frictional development by focusing on a legal case that comes under the Business Reorganisation Act. The analysis reveals support for a ‘soft’ juridification process in Swedish ice hockey in order to handle the charging tension of the two parallel norm systems.

Notes

^1. Cf. Backman, ‘I skuggan av NHL’, 3.

^2.Carlsson and Lindfelt, ‘Legal and Moral Pluralism’.

^3.Backman, ‘I skuggan av NHL’.

^4.Norberg, Idrottens väg till folkhemmet; Andersson and Carlsson, ‘A Diagnosis of the Commercial Immaturity’.

^5. Cf. Storm, ‘Winners and Losers in Danish Football’.

^6. Cf. Solberg and Haugen, ‘European Club Football’.

^7. Cf. Andersson and Carlsson, ‘A diagnosis of the Commercial Immaturity’; Andersson et al., ‘Sweden: The Development of Club Football’; and Backman, ‘I skuggan av NHL’.

^8.Andersson and Carlsson, ‘A Diagnosis of the Commercial Immaturity’.

^9. On the contrary, the elite football clubs' representatives support the ‘51–49%-barrier’ because they essentially are frightened by the commercial drive and the opportunities in the culture of ice hockey, and their constructions of entertaining and amusing ‘Hockey Temples’.

^10.Gardiner et al., Sports Law, 66–70; Greenfield and Osborn, ‘The Legal Colonization of Cricket’; and Carlsson, Idrottens rättskultur.

^11.Foster, ‘The Juridification of Sport’; Carlsson, ‘Insolvency and the Domestic Juridification’.

^12. Cf. Foster, ‘The Juridification of Sport’.

^13.McArdle, From Boot Money to Bosman; Greenfield and Osborn, Regulating Football; and Anderson, Modern Sport Law.

^14.Carlsson, Idrottens rättskultur.

^15.Carlsson, ‘Re(con)fusion of Law and Sport’.

^16. We do not, reasonably, relate our reflection of the external American/Canadian influences on Swedish hockey, and its commercialization process, to national leagues such as CHL/USHL. No doubt, the horizon and the practices of the commercialization process of SHL are in fact inspired by, and an imitation of, the brand of ‘The NHL’. SHL's tradition of supporting the general European relegation system in team sports should also be grasped in this light.

^17. Cf. Carlsson and Hedenborg, ‘The Position and Relevance of Sport Studies’.

^18. Interestingly, particularly from a developmental and normative perspective, the Swedish Football Association was initially governing ice hockey. The SIHA was established in 1922, at a meeting in the Swedish Football Associations facilities in Stockholm. The Swedish Football Association's pragmatic attitudes to the amateur regulations have been reflected the SIHA (cf. Stark, ‘Folkhemmet på is’, 203, 222).

^19. In the Swedish Sports Confederation there are approximately 20,000 clubs and roughly 3 million individuals.

^20. This system, the Sport Confederation and the sports associations (such as SIHA) govern all sport in Sweden. As a comparison, Hockey Canada or US Hockey rules only youth and amateur hockey.

^21. For instance, SIHA's current proposition to abandon the 51–49%-barrier in order to initiate stronger market logic has been outvoted during recent meetings.

^22. The close link between the ideological origin of sport and public support is also revealed by the tax legislation, which gives non-profit sports clubs tax reductions that sport plc's do not have. Cf. Income Tax Act (1999:1229), chapter 7.

^23.Ejderhov, ‘Hård kamp om TV-rättigheterna’; Bengtsson, ‘Dif vill skriva eget TV-avtal’.

^24.Ejderhov, ‘Hård kamp om TV-rättigheterna’.

^25. In order to gain access to SHL the two last placed teams in that league play against the four best teams from Hockeyallsvenskan in a home and away qualification series. The first two teams in that qualification league are promoted to the SHL.

^26. However, it has in general been the image of ‘Canadian Hockey’ that has flourished in Sweden, in relation to the vision of the NHL. Yet, even Canadian Hockey is permeated by the Americanization process, and is actually an excellent representative of these cultural values and normative horizon. The American ‘gravities’ have, in this respect, entered the Canadian national sport. For instance, NHL, and the commissioner, is deeply embedded in the USA, despite a centre in Toronto, with the Hall of Fames (cf. Kidd and Macfarlane, The Death of Hockey; Gruneau and Whitson, Hockey Night in Canada).

^27.Alm, ‘Americanitis’, 37–8.

^28. Ibid.

^29. Perhaps KHL, the novel Russian league, might challenge the NHL's supremacy. But, regardless of financial potential, the league is being more or less developed to mirror the normative and cultural hegemony of NHL.

^30. In order to balance the league and to create an unpredictable league/product, the annual draft allows the team that finishes last in a major league to pick first and the best team to pick last, or ‘the worst to pick first’, even if there is a draft lottery.

^31. An important rationale in Swedish hockey is the players' desire to play in the NHL, and significant players like Börje Salming, Anders Hedberg, Nicklas Lidström, Mats Sundin, Peter Forsberg, Henrik Lundqvist and the Sundin Brothers have left Sweden for successful NHL careers. In some respects, this migration has affected the SHL's ability to attract an audience and to gain status and prestige in the League. Still, this migration has not hurt the SHL in a similar manner as the migration of talented young Swedish football players (aged 16–18) leaving for European football academies. This migration has damaged Swedish club football and has situated the Swedish league on the periphery of European football (cf. Andersson and Carlsson, ‘A Diagnosis of the Commercial Immaturity’.

^32. The reason for the transfer agreement is to maintain good relations between the NHL and SHL/SIHA. Nevertheless, the NHL dictates the conditions in the transfer agreement, so a move to North America is compensated marginally. In the most recent seven-year transfer agreement, signed in 2013, Swedish ice hockey was to be compensated with USD 225,000 for the 10 first players that leave and with USD 325,000 thereafter. Every Swedish club receives similar compensation, which is divided by the total number of players who have moved to the NHL during the year (Idrottens affärer, ‘2,1 miljoner kronor per spelare …’).

^33.Backman, ‘I skuggan av NHL’, 10–11.

^34.Östman, Från byalagen till Leksand Stars, 71.

^35. In some respect, the Swedish National Team (Tre Kronor) has been rather successful in the Olympics and in the World Championship. And, evidently, nationalism and success in international competitions, as in all sport, are important factors, which have also affected the image of Swedish' hockey and the league. For instance, the triumphs have evidently, in a historical perspective, supported the value of the Swedish' sport model.

^36.SHL, ‘Serieutredningens förslag till nytt seriesystem’.

^37. However, there are sports clubs in Sweden that have allowed their name to be used by a business company, e.g. LdB FC (women's football), Team-Boro (men's hockey), Kopparbergs FF (women's football) and Sallén Basket (women's basket).

^38.Östman, Från byalagen till Leksand Stars, 133–7; Stark, Svensk ishockey 75 år, Del I, 60, Del II, 17; Stark, ‘Folkhemmet på is’; and Backman, ‘I skuggan av NHL’.

^39.Fahlén, ‘Structures Beyond the Framework of the Rink’.

^40.Andersson and Carlsson, ‘A Diagnosis of the Commercial Immaturity’.

^41.Backman, ‘I skuggan av NHL’, 50–3.

^42. The SMC reacted, in 2012, to a unique case concerning the organization of Swedish sports. The question in the case was if the solidarity rule in the Swedish Automobile Sports Federations competition rules, based on the Swedish Sports Confederations statutes, violates the Competition Act (2008:579). The Swedish Market Court ruled on 20 December 2012 that the Swedish Automobile Sports Federation is not allowed to have a total ban on functionaries or drivers in competitions that are not sanctioned by the federation (cf. Swedish Market Court, 2012:16, Dnr. A 5/11 (December 20, 2012). This ruling is most interesting in that the Swedish Market Court decision puts competition law over the constitutionally protected right of associations. In addition, sport clubs must pay attention to competition law, and non-profit movements' benefits as tax relief can be contested. Especially noticeable is that the Swedish Market Court did not take into account the traditional organization of Swedish sports. The Swedish Market Court decision also runs contrary to the established sports politics held by the Swedish Government and Parliament.

^43. The present legal dispute could be compared with how Swedish hockey dealt with the NHL-lockouts in 1994 and 2004. During the 1994 NHL-lockout, two NHL players were allowed at every SHL club; there where no restrictions during the 2004 NHL-lockout (cf. Ros, ‘NHL-invasion i elitserien 2004’).

^44. The Swedish Competition Authority, 2012-09-20, Dnr 501/2012; Swedish Market Court, 2012-12-03, Case A 2/12, appendix no. 48.

^45. In comparison, the Elite License in Swedish football was implemented in 1999, cf. Carlsson, ‘Insolvency and the Domestic Juridification’.

^46. In 1996/1997 Malmö IF changed the name to a more NHL-like label, Malmö Redhawks.

^47. P. Nilsson, ‘Det är för mycket idrott i sport’.

^48. Ibid. Yet, notwithstanding local magnitude, Swedish ice hockey is not like Indian cricket!

^49. Several board members have sued Stenbeck, the CEO and the sports manager for malpractice and deception.

^50. Cf. Aldskougius, Leksand, Leksand, Leksand! 21.

^51.Nilsson, ‘Så hamnade Leksand i den akuta miljonkrisen’.

^52.Idrottens affärer, ‘Leksand i desperat behov av 25 miljoner’.

^53.Bengtsson, ‘Ekonomisk dopning måste stoppas’.

^54. Ibid.

^55. One of Scandinavia's largest clubs, AIK from Solna/Stockholm, has approximately 16,000 members.

^56. Cf. Idrottens affärer, ‘Politikerna räddar Leksand, men …’.

^57.Ejderhov, ‘Dokument Leksand - en kamp för överlevnad’.

^58. cf. note 25.

^59. A ‘Sports Alliance’ is an umbrella organization where former sports sections in a club have established their own legal status. When a sports club transforms to a sport alliance, the new club in the alliance keeps the name and logotype of the original club. A sports alliance is usually established when the financial differences between sports/sections in a club are too big or when it is not effective to run a club with many different sports.

^60. Cf. Östman, Från byalagen till Leksand Stars. In this context (i.e. the problem of acquiring new players), it might be instructive to mention the post-Bosman situation in European sport. Since the Bosman ruling (C-415/93), players are free agents when their contracts expire, and the ruling has strongly contributed to the escalation of salaries, especially in ice hockey and in football (cf. Halgreen, ‘European Sports Law’, 51–4, 167–8, 189–201). In summary, players can be secured by a club's own talent development, by absorbing local players, by signing free agents as Bosman, or by trading with other teams (but a trade requires the players approval). Draft procedures like in the NHL are not allowed in the SHL.

^61.Idrottens affärer, ‘Bolagisering ska rädda Leksands IF’; ‘Nu jagar Leksand nya aktieägare’; ‘Leksand fick in 8,8 miljoner kr’.

^62. Cf. Ejderhov, ‘Har Leksand kringgått reglerna?’

^63.SIHA, Competition Rules 2012/2013, chapter 6.

^64. Ibid., cf. Employment Protection Act (1982:80).

^65. Company Reorganisation Act (1996:764), chapter 1, 1 §, and chapter 2, 1 §; cf. Ministry of Justice, Lag om företagsrekonstruktion, 171; Welamson and Mellqvist, Konkurs och annan insolvensrätt, 290.

^66. Company Reorganisation Act (1996:764), chapter 1, 1 §, and chapter 2, 1 §; cf. Ministry of Justice, Lag om företagsrekonstruktion, 171; Welamson and Mellqvist, Konkurs och annan insolvensrätt, 290.

^67.Helmersson, ‘Det sportsliga påverkas inte’.

^68.Eriksson, ‘Kostnadskostymen har varit för elitserien’.

^69. Ibid.

^70.Mora District Court, Case no. Ä:1612-12; cf. Company Reorganisation Act (1996:764), chapter 2, 7 §, and chapter 2, 17–19 §§; Joffer, ‘Emthén en av landets erfarnaste rekonstruktörer’.

^71.Joffer, ‘Så mycket får spelarna i LIF i lön’.

^72. This was crucial to LIF's economy. The club did not receive similar revenues to the clubs in the SHL. Still, the budget for LIF's players harmonized with some of the impressive clubs in SHL. According to SICO (Swedish ice hockey players' central organisation), the trade union, the average salary in the SHL is 75,000–90,000 SEK per month, but star players can earn three to four times this amount (cf. SICO, ‘Ekonomi bland lag och spelare i svensk hockey’).

^73.Ros, ‘Lockades med jakt’'; Nilsson, ‘Så hamnade Leksand i den akuta miljonkrisen’.

^74. Cf. Book and Carlsson, Idrott och city-marketing.

^75. Ejendals, a family-owned business and a work-wear manufacturer, has supported LIF annually since 1949, through targeted sponsorship. During 2002–2010 Ejendals put in more than 50 million SEK in LIF. Per Olof Ejendal has rarely missed a match in Leksand. It was Ejendals father, Valfrid, who initiated the sponsoring of LIF by purchasing a lifetime ticket, in 1956, for 600 SEK, at that time, a way to pay for a rink with artificially frozen ice. Cf. Joffer, ‘Lunch med storsponsorn’.

^76. An interesting detail, in the margin of this essay, is that Ejendals will be able to use the tax law in order to reduce its costs for purchasing the name right and the sponsoring of LIF, due to the fact that businesses are allowed to deduct revenue and sponsoring. Cf. Income Tax Act (1999:1229), chapter 16.

^77. For example, Swedish Television (Uppdrag Granskning) presented on 3 June 2013, the following findings: in the case of LIF, the municipality board of Leksand has supported LIF by means of a ‘loan’ of 8 million SEK to improve the multi-arena and a yearly rental (2.5 million SEK) to 2035 for public ice time. This was done during the club's hardest financial troubles, at the same time as they chose to close a school, due to the lack of finances. Cf. SVT, ‘Uppdrag Granskning synar Leksands kommun’.

^78.Idrottens affärer, ‘Leksand i desperat behov av 25 miljoner’.

^79.Bengtsson, ‘Ekonomisk dopning måste stoppas’.

^80.Welamson and Mellqvist, Konkurs och annan insolvensrätt, 272; cf. Bankruptcy Act, chapter 12, and Company Reorganisation Act, chapter 3.

^81.Joffer, ‘Så mycket får spelarna i LIF i lön’; Granlund, ‘Leksand: “Vi har ingenting att skämmas för”’.

^82. Other clubs that have received similar governmental wage guarantees during their recovery in 2012/2013 are MIF Redhawks and Timrå IK.

^83.Carlér, ‘Ansökan om företagsrekonstruktion’.

^84.Swedish Courts (Sveriges Domstolar), ‘Rekonstruktionen av Leksands IF’; Joffer, ‘LIF segrade i rätten’; Ödén, ‘Facit av Leksands uppgörelse’. The rules of creditor majority are described in Company Reorganisation Act (1996:764), chapter 3. Cf. Carler, ‘Ansökan om företagsrekonstruktion’.

^85.Mora District court, Case no. Ä:1612-12; , ‘Ackordsförslag och rekonstruktörsberättelse’.

^86. Swedish capitalists, influenced by the Wallenberg Family and their virtue, shall work, but not be visible. Cf. Andersson and Carlsson, ‘A Diagnosis of the Commercial Immaturity’.

^87. Cf. Coakley, Sport in Society.

^88. The Annual Meeting of the Sport Confederation in 2013 returned a majority for the barrier, despite SIHA's ambition to abandon the principle.

^89. The Swedish rules for sport plcs differ from other Nordic countries, where there are no majority rules.

^90. This was a novel approach to ‘entrepreneurship’ in Swedish ice hockey. Curiously, we can find players in early Canadian hockey, such as Fred ‘Cyclone’ Taylor, who were effectively mercenaries, playing played for a number of teams, sometimes on a game-by-game basis (cf., Gruneau and Whitson, Hockey Night in Canada, 88).

^91. No doubt the morality can be discussed, and there are certainly those who believe that the hockey clubs' business is unethical. But it is still a legal issue. Besides, an Elite License regulation stating that composition and business reorganization, and not only insolvency, should result in relegation would have most likely avoided the collision between ice hockey's logic, morality and the law, as, for instance, in the Leksand case. Furthermore, the question of the government wage guarantee, as in the case of LIF, as an indirect support to achieve sporting results is not a question the legislature took into account when the Act was developed. This blunder or disregard could, however, be corrected through the elite license by stating that clubs that need salary guarantees would be relegated. But no action has been taken by the SHL/SIHA.

^92. Cf. Vamplew, Pay Up and Play the Game, 77–9; Halgreen, ‘European Sports Law’.

^93. Cf. Backman, ‘I skuggan av NHL’, 61–6.

^94. Ibid. After the experiences of bankruptcies in the 1990s the Finnish Liiga has acted quite radically, compared to the SHL/SIHA. In order to increase a commercial predictability, and to eliminate the hazards of relegation, the league has been closed for a decade. And since 2013 the league has established a licensing procedure, i.e. clubs that want access to the Finnish Liiga have to apply for this right, like franchisers in the NHL. Besides, the Finnish Liiga is not framed by the ‘Swedish 51–49-rule’, which supposes raising the revenues from the market. Consequently, the mixture of non-profit and commercial activity has been eliminated, through allowing full market logic. The obtained benefits are an enhanced basis for commercialization, a reduction of budget deficits and an increased legal predictability, i.e. clear tax rules. Cf. ibid.

^95. Cf. Foster, ‘The Juridification of Sport’; Gardiner et al., Sports Law, 66–70.

^96. Cf. Rottleuthner, ‘The Limits of Law’; Teubner, ‘After Legal Instrumentalism’.

^97.Habermas, ‘Law as a Medium and Law as an Institution’.

^98.Luhmann, ‘The Self-reproduction of Law and Its Limits’.

^99.Carlsson, ‘Re(con)fusion of Law and Sport’; Carlsson and Lindfelt, ‘Legal and Moral Pluralism’.

^100.Eder, ‘Collective Learning and Social Evolution’.

^101. That is, the Accounting Act (1999:1078), the Annual Reports Act (1995:1554), the Bankruptcy Act (1987:672), the Company Reorganisation Act (1996:764), the Employment Protection Act (1982:80), the Income Tax Act (1999:1229) and the Wage Guarantee Act (1992:497).

^102. The current action (and the discourse) is alterations in the system of relegation and qualification in order to make SHL implicitly closed. It will, as a result, become materially harder for a team in Allsvenskan to reach the SHL.

^103.Loland, Fair Play, 149.

^104. Cf. Wong, Lords of the Rinks, 91, 98–9, 121–2, 125, 143–8, 151; Lavoie, ‘Ice Hockey’, 544–546.

^105. Some NHL clubs do not make a profit. Several NHL clubs have an extremely low number of attendances in new markets and several teams (e.g. Pittsburgh, Ottawa and Buffalo) have gone through bankruptcy procedures. Other clubs have been under surveillance by their banks and must provide supplementary security. Another issue is that ‘tax breaks’ provide club owners possibilities to reduce profits. Despite these financial shortcomings, a belief exists that the NHL has been a successful business throughout its history (cf. Lavoie, ‘Ice Hockey’, 544–6; Kidd and Macfarlane, The Death of Hockey, 121).