Wednesday, December 21, 2005

Pro Sports and Criminal Capitalism

Business as usual, the Skalbania Pocklington story

This is a tale of pro-sports and greed, not by the players but by the owners. This was business as usual for the NHL under the leadership of Campbell, and Norris . They were all powerful and the players were commodities, slaves under their Imperial rule. Even the early days of the NHLPA were not without their controversy, with the founder of the union being charged with racketering for ripping off the players union.
In response to the difficulties faced by the Chicago Black Hawks and Boston Bruins on the ice and at the gate in the early 1950s, Campbell started the Inter-League Draft. This allowed the weaker teams to access the young talent hoarded by the richer clubs, especially Toronto and Montreal. In 1955 he showed unflappable leadership by suspending Montreal icon Maurice Richard then refusing to shy away from attending a game at the Montreal Forum. The Richard Riot was well documented but Campbell's leadership on behalf of the league in the face of a hostile crowd was less appreciated.

Clarence Campbell oversaw the advent of the NHL's expansion era. Between 1967 and 1975 the league tripled in size and its popularity was more widespread in North America than in any previous period. He met the challenge of the World Hockey Association head on and refused to allow players not under contract to NHL teams to participate in the 1972 Summit Series between Canada and the USSR. The most notable exclusion under this corollary was former Chicago star Bobby Hull.

The simple fact is that before there was Enron, or Nortel, or any of the current boom economy criminal enterprizes there were businessmen who used their business ventures to gain wealth, fame and fortune by illegal as well as legal means. Who ripped off workers and businesses to finance their personal empires. The very essence of the criminal activity was the primitive accumulation of capital, business as usual. Nelson Skalbania and Peter Pocklington were two of these.

Sports especially pro sports (Hockey, Football , Baseball, Basketball) in Canada has been the funded by businessmen, not all of whom are clean as the driven snow. The very nature of professional sports is a combination of business and local or regional boosterism, and of course tax breaks and the ability to purchase public funded spaces (stadiums, sports arenas) at firesale prices. Its a way of businessmen to fund their private entertainments, in the fine old tradition of the British upper classes.

As I wrote in an earlier article on the political economy of sports, the business of pro-sports has been heavily reliant on tax breaks, bait and switch tactics, and finally the use of public funding for private gain and pleasure. All those high cost special executive suites in sports stadiums are a place where business wheels and deals, and then when the going gets tough, they bail out asking the taxpayers to carry the bag.

The business of pro sports is entertainment, which is why pro-wrestling is a spor much to the chagrin of sports page writers, it has nothing to do with real atheletics or promotion of healthy lifestyles, it is capitalism's version of that old Roman tradition; bread and circuses. Keep the working class reading the sports pages, so they don't worry about the business pages or the international and national news.

Here then are a couple of characters who represent the rapacious capitalism of the 1980's that time of Thatcher, Reagan and Mulroney, the push to privatize the state and it's services, to de-regulate the marketplace and reduce government oversight of the market.

In the Wild West of the boom economy of the late Seventies and early Eighties in Alberta, businessmen like Nelson Skalbania and his partner Peter Pocklington were implicated in wrong doing in both the Alberta and B.C. stock exchanges as well as shady business dealings with their flipping of businesses they bought to buy more. So if they owned something, say a car dealership, it was gutted of its capital to finance further purchases, like the Edmonton Oilers, or Gainers which was then gutted and flipped etc. This was business as usual in Canada's bastion of the free market, Alberta.

And while Pocklington lives a life of luxury in exile in California, Nelson Skalbania still hovers around the edges. He returned to the Canadian sports scene in the 1990's buying up the B.C. Lions of the CFL. The Lions who are now a real threat in the Western Division were not always so especially during Skalbanias ownership.

There are new owners and movers and shakers out there now, new businessmen who want to own a major league franchise, who wheel and deal with our city councils and other levels of government to use taxpayers money to pay for their investments. This is the business of pro sports, and it is still a dirty business.

Nelson Skalbania a less than savory biography

Edmonton Oilers Heritage

Former Edmonton Oilers owner Nelson Skalbania was a complete opposite to his predecessor, Dr. Charles Allard.

Dr. Allard enjoyed neither the public spotlight nor the losses that came with the World Hockey Association (WHA) team.

With pressures mounting, Dr. Allard sold the Oilers for $300,000 to Skalbania, a real estate magnate from British Columbia. Through the Allard family’s North West Trust Company, Dr. Allard knew Skalbania through their dealings in multimillion-dollar property deals.

After another disappointing season in 1975-76 that saw the Oilers finish fourth in the WHA’s five-team Canadian Division, Skalbania became concerned about his team’s debt, which was in the range of $1.6 million.

Buying what was then a second-rate sports franchise was not Skalbania’s style, and the Oilers were not as attractive an investment as he initially thought. So in the fall of 1976, he decided to recruit a partner with whom he had done millions of dollars worth of real estate deals.

The partner was Peter Pocklington, whose business background also included auto sales. Skalbania and Pocklington would balance each other with their different approaches.

"Pocklington would pride himself on gut-instinct deal-making decisions, on not getting lost in details, on not losing the long-term view through short-term greed," wrote Douglas Hunter in The Glory Barons. "While Nelson Skalbania, his newfound business associate out West, often looked for quick profits with rapid rollovers of properties, Pocklington began to build a diversified empire."

Clearly, Skalbania and Pocklington were two of the most colourful and controversial figures in the Oilers’ history. Their deals were daring and sometimes dangerous. One of their lighter schemes involved a form of bribery.

"The Oilers were battling for a playoff berth and rewards were promised for making it," wrote Terry Jones in Edmonton’s Hockey Knights. "When they did, Skalbania called the team to attention in the dressing room and actually passed around one-way tickets to Hawaii, telling the team they’d get the return tickets if they won a playoff series."

June 1978
Indianapolis Racers owner Nelson Skalbania signs 17 year-old Wayne Gretzky to a contract for $1.75 million.

Bulls owner John Bassett said, "I can't comment on the matter because I don't know the details. But I know the type contract Skalbania signed Gretzky to is the same kind I signed Larry Csonka, Jim Kiick and Paul Warfield to in the World Football League. If Mr. Skalbania wants Gretzky to cut grass, drive his automobile, play football or play hockey, then Gretzky is supposed to do it. It will be interesting. If Gretzky is approved, then I have about 6 quality under-age juniors lined up. I wasn't interested in Gretzky. He has great talent, no doubt. But he's only 5' 8" and 150 pounds, something like that. I don't know if he can take the physical abuse he'll be subjected to."

Red, White & Blues

A personal history of Indianapolis Racers hockey (Part Six of Seven)

In hindsight, it's easy to see that Skalbania's habit of these past 30 years - buying and quickly folding or selling multiple sports teams - began with Edmonton and Indianapolis in the WHA. "Skalbania remains Canada's most prolific sports franchise owner," wrote Bob Mackin in the March 10, 2003 edition of the Vancouver Courier. "He flipped teams and players like kids used to flip hockey cards at recess."

In 1978, though, this new team owner's modus-operandi was just taking shape. The SuperFans guessed that Skalbania would end up selling Gretzky back to the team he formerly owned, Edmonton, and then fold the Racers while the cries of team debt still rang inside Market Square Arena. It's vital to understand that Gretzky wasn't signed to the Indianapolis Racers - he was owned by Skalbania through a personal services contract. We believed that the personal services contract helped guarantee that the profit from the Gretzky transaction would remain separate from the team debts.

"In truth, Gretzky, not the Racers, was the franchise Skalbania owned," Douglas Hunter wrote in "The Glory Barons" (as reported by the Edmonton Oilers Website.) "All Skalbania had to do now was to keep the Racers afloat long enough to become part of the renewed merger negotiations with the NHL."

There was also speculation that Skalbania still owned part of the Edmonton Oilers at the same time he owned the Racers - a conspiracy theory given credence by Jack Lautier and Frank Polnaszek in their history of the WHA titled "Same Game, Different Name." They write, "...(Oilers owner) Pocklington secured Skalbania's percentage of shares in the Alberta-based team for $400,000 when the deal (Gretzky sale to Edmonton) was officially made on November 1, 1978." The authors also quote former Racers player-coach Bill Goldsworthy saying, "Even with Gretzky, there was already talk that the Racers weren't going to last the season."

Racers fans who figured out this shell game were not amused in their roles as an audition audience - the games in Indianapolis were now a stage for other owners and the NHL to gauge the market value of Gretzky (and the rest of the players) for the impending franchise fire sale. At a public fan club meeting in downtown Indianapolis, shortly before the Gretzky paper-chase was concluded, anger at Skalbania was fervent.

Calgary Flames Franchise Biography

The Calgary Flames are a result of what can happen when a city does not support their hockey team. In an era where hockey has become a business rather than sport and loyalty is based on how long you can remain profitable, one city's problems became another city's success.

The Atlanta Flames entered the NHL in the 1972-73 season with all the hope that a new franchise could have. The team was owned by a local group of businessmen, The Omni Sports Group, led by Tom Cousins. At the outset all was well, but during that same season the upstart league, World Hockey Association began to operate and quickly threw salaries out of whack and put a financial strain on many teams as they scrambled to meet skyrocketing salaries being offered by the new league.

For eight years the Atlanta Flames were unable to get beyond the first round of the playoffs. According to Cliff Fletcher, Calgary's early general manager, "The Atlanta Flames always found a way to lose."

The process of transferring ownership to a new group came about through a weird set of circumstances. There were two groups interested in acquiring the Atlanta Flames. The first was a group of Calgary businessmen, Doc and B.J. Seaman, and Harley Hotchkiss. This group was interested in the team for two reasons. The first was that they loved the game, and the second was they cared about the community. With Calgary in the hunt to host the 1988 Olympics, it would make things more financially attractive if there was a long term tenant in the arena that would have to be build for the Olympics.

The second entity looking to purchase the club was Vancouver businessman, Nelson Skalbania. According to the first group, Nelson's involvement drove the price of the Flames to a level that otherwise would not have been paid, had the original group been left on their own. The Seaman Group was well along the way to completing the deal with the Atlanta Flames when Skalbania jumped into the bidding process. Behind the scenes he had negotiated a T.V. rights deal with Molsons for $6 Million for 10 years. Skalbania in turn used the $6 Million as a down payment on the club, which, according to the Seaman's group took them out of the running, or so they thought.

Skalbania was based in Vancouver which proved to make it somewhat difficult for him to negotiate with the parties concerned, so he hired Norm Green of Calgary to help him out. In May of 1980, Green was able to bring both parties together and work out a deal. The final deal was that the Calgary group would own 50% and Skalbania would own the other 50%. By August of 1981 the Calgary group had bought out Skalbania in two separate transactions.

Skalbania edges way back from sidelines

Globe and Mail Monday, November 17, 2003, Page B3

VANCOUVER -- Nelson Skalbania, the jet-setting former sports magnate who suffered a humiliating fall from grace, is inching back into the spotlight after years of keeping a low profile.

Still a risk taker and fitness fanatic at 65, the bearded financier was sidelined in 1997 when he was convicted of stealing $100,000 from a prospective real estate partner and narrowly avoided time in jail.


Criminal law - Statutes - Interpretation - Theft - Mens rea for theft pursuant to s. 332 of the Criminal Code -Whether the Court of Appeal erred in taking jurisdiction of the Crown Appeal from acquittal when the trial judge found that he had a reasonable doubt about the Appellant's intention - Whether the Court of Appeal erred in its interpretation of "fraudulently" - Whether Section 686 (4)(b)(ii) of the Criminal Code of Canada is inconsistent with Section 7 of the Canadian Charter of Rights and Freedoms in that Section 686(4)(b)(ii) permits the Court of Appeal to substitute a verdict of guilty for an acquittal at trial - Whether the Court of Appeal erred in permitting a judge other than the trial judge to pass sentence on the Appellant.

The complainant gave the Appellant, Nelson Skalbania, a cheque in the amount of $100,000 made out to the Appellant's company in trust for the down payment of shares. The cheque was deposited to the Appellant's trust account. After the Appellant's bookkeeper informed him that his company's account was overdrawn, he responded that the deposit of the complainant's cheque to the trust account was an error and it should have been deposited to the company's general account. The funds were transferred and used for other purposes. The Appellant gave the complainant the "runaround" while he put together the money he owed the complainant which he paid together with interest and a sum by way of compensation for delay and inconvenience.

The Appellant was charged with theft of $100,000. The trial judge found that the Appellant had applied the money for a purpose other than that directed, did so intentionally and deprived the complainant of his funds intentionally, but the trial judge acquitted him of the offence because the misappropriation of funds had not occurred "fraudulently". On the Crown's appeal, the Court of Appeal allowed the appeal and entered a conviction. Rowles J.A. concurred in the result, but disagreed concerning the mental element to be proved when theft is charged under s. 332(1) of the Code.

Origin of the case: British Columbia

File No.: 25539

Judgment of the Court of Appeal: September 5, 1996

Counsel: Peter Leask Q.C. for the Appellant
Teresa Mitchell-Banks for the Respondent

Local ownership woes a Vancouver tradition

By Bob Mackin

The Lions became Cup winners themselves under Bill Comrie's ownership in 1994. The Brick furniture chain owner from Edmonton thought he was doing the city a favour when he sold the Lions to Vancouver's Nelson Skalbania in 1996.

Skalbania remains Canada's most prolific sports franchise owner. He flipped teams and players like kids used to flip hockey cards at recess.

When he owned the Indianapolis Racers of the World Hockey Association, he sold Wayne Gretzky to the Edmonton Oilers. Skalbania bought the Atlanta Flames and moved them to Calgary; he did the same with the North American Soccer League's Memphis Rogues, who became the Boomers. He sent the Western Hockey League's Calgary Wranglers to New Westminster. He owned the Vancouver Canadians and flirted with the idea of buying the Seattle Mariners. Skalbania also started a campaign to bring a National Basketball Association franchise to Vancouver.

The CFL braintrust had an amnesia moment when Skalbania bought the Lions. They forgot how he effectively bankrupted the Montreal Alouettes in the early 1980s.

The Lions were 2-8 in the Skalbania era. Coach Joe Paopao did his part to keep the team alive, putting the team's travel expenses on his credit card. Advertisers and ticket buyers stayed away in droves, so Skalbania handed the franchise back to the league at the end of August 1996.

Sawmiller threatened to blow up B.C. bar
Wednesday, July 24, 1996
By Richard Mostyn
Yukon News reporter

The man who wants to build a $165-million sawmill in Watson Lake has a criminal record for threatening to blow up a bar full of people in British Columbia, The News has learned.

Leonard Bourgh, who at the time went by the name of Carl Lennart Bourgh, got into an argument with a fellow prospector in the Princeton Hotel Pub.

Around 11:30 p.m., on December 19, 1981, Bourgh threatened to blow the fellow up with a stick of dynamite.

"The guy (Bourgh) brought in a stick of dynamite, fused, capped and ready to go," pub owner Stephen Brodie said from Princeton.

"He casually stuck it on the counter right in front of me, all ready to go," added Brodie, who was tending bar that night and still vividly remembers the incident.

"He wasn't all that violent a character. He came in, had some sort of dispute with a guy, and then showed up with a stick of dynamite."

There were about 30 people in the bar at the time, added Brodie. Police were called and Bourgh was arrested.

Court documents obtained by The News show Bourgh was convicted under Section 80 of the Criminal Code --possession of dynamite for an unlawful purpose.

He was fined $1,000 or ordered to serve 60 days in jail. There is no receipt in his file to indicate he paid the fine, said Princeton court worker Marilyn Kinsey.

"He was in the can a few days over that one," said a Surrey-area mill manager who knew Bourgh at the time.

Bourgh had just sold a Penticton-area gold mining property to him, said the man, who asked that his name not be used.

These days, Bourgh has been presenting himself as a logger. He also accompanied Yukon Government leader John Ostashek on a recent trade mission to Asia.

His sawmill proposal has the backing of Ostashek, Economic Development minister Mickey Fisher and Watson Lake mayor Barrie Ravenhill, a Yukon Party candidate in the next territorial election.

The only details about Bourgh's logging experiences are contained in a single-paragraph biography found in his three-page sawmill proposal.

His younger brothers, Sven and Gus, run a small sawmill in Greenwood, B.C. But they have not talked to Bourgh in more than a decade.

However, the Bourgh family has a long history in the B.C. logging industry, said the mill manager.

"His whole family was in the logging business, going back to the old days. He and his brother had a mill up by Lillooet, B.C.

"His older brother (Erik) was the backbone and the brains behind it. A hell of a nice guy. He kept Leonard in line."

Erik and Leonard were in competition with Cattermole Timber, which owned the Watson Lake sawmill in 1969.

But Erik drowned, said the mill manager. And without his expertise, the Lillooet mill shut down.

Since then, people who know Bourgh say he's primarily been involved in the mining industry.

"I dabbled in the mining industry myself," the source said. "I bought a mining property (from Bourgh)

"He cost me, and anyone else involved with him, a bunch of money. I was smart enough to get out when I was only slightly burnt --about $25,000 or $30,000."

He wasn't the only one to lose money by associating with Bourgh, The News has learned from several sources.

Calgary-based geologist Ted Brownless, Bourgh and his sometimes partner Dave Anderson owned a small gold mining property near Greenwood, B.C.

"We were involved in KW Resources together," said Brownless, a major shareholder in the company.

Bourgh was paid to do some work, clearing and staking and other things, said Brownless.

The work was never done, and Brownless said he was forced to pick up the pieces. "Well, it cost me about --I never collected it Ѐabout $15,000."

Anderson calls Bourgh a friend, though the two haven't been in touch for about four years.

"The last I saw him he was up in Houston, (B.C.)," he said from Vancouver.

"When I knew him he was mostly in the mining business --prospecting and selling properties.

In the late `70s, Bourgh was involved in a deal with high-profile entrepreneur Nelson Skalbania to acquire timber near Whitecourt, Alberta, said the mill manager.

But the deal fell through, he said.

"Skalbania was the magic money source on the Whitecourt project," he said.

Brownless and Anderson both confirmed that Skalbania and Bourgh had worked together. "He knew Nelson Skalbania at one time," said Anderson.

Though he confirmed he had bid on the Whitecourt timber during a government auction, Skalbania denies knowing Bourgh.

After he was faxed a request for an interview about his dealings with Bourgh, Skalbania phoned The News on Tuesday.

"I had a bunch of consultants with me (on that deal)," he said. "I don't remember many of them.

"It was a long time ago. I had nothing to do with him and don't think I ever knew him."

Brownless remembers Bourgh as a man with a knack for raising money. He also remembers that Bourgh and Skalbania had been partners.

"Nelson's the one with most of the bucks," he said. "All of them (Skalbania, Anderson and Bourgh) are promoters and get involved with things."

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