“All the right moves when he turned eighteen, Scholarship and school on a big U.S. team… My boy’s gonna play in the big league”
While Tom Cochrane certainly had a gift for describing Canada’s passion for chasing pucks around a sheet of ice, he may have inadvertently fueled much of the zaniness one can see on a daily basis just by wandering down to their local hockey rink. While hockey used to be looked at as a great recreational game that allowed kids to have hours of fun, get their heart rate up, develop some positive character traits, and stay out of trouble, those themes seemed to have been pushed to the backburner in the all-encompassing effort to make it to “The Show”.
The Newest Country Club Sport?
This isn’t another column about the morals and values on display at today’s hockey rinks though. Instead, I thought we’d take a hard look at the financial numbers behind Canada’s favourite game and see just how they add up. The fact that hockey is extremely expensive to play isn’t breaking news, but I’ve come across several articles recently that take the stance that not only is hockey relatively pricey, it’s actually becoming exclusively the domain of the upper-class – especially at the elite levels. In a recent Globe and Mail column, Murray Costello, retired president of Hockey Canada, stated,
It [cost] may well be the game’s biggest problem, overall. Hockey is becoming an opportunity only for the people that can play it.
While I’m sure your credit card company (who is very happy with the balance that your hockey puts on your card by the way) will tell you the experience your child is gaining on the ice is “priceless,” I was interested in figuring how much it actually costs to play a game that used to be nearly free to the Canadian masses. After looking through several online sources, and stats from books written by people smarter than myself, I came to only three strong conclusions:
- The statistics that report the “cost” of hockey in Canada are often only taking into account the basic upfront fees that children have to pay to play. These fees cover ice time, referee fees, and other expenses team and league administrators have to pay. In reality these fees are only the beginning of what actually comes out of wallets in the pursuit of hockey glory.
- The full cost of playing hockey varies hugely across our country. Age group is one obvious factor, but rural-urban price ranges, the competitive level of play, the “extra travel seasons” that are now in vogue, as well as personal trainers and hockey camps, all need to be considered to get a true cost number. I couldn’t find this sort of statistic anywhere I looked.
- Hockey is damn expensive at almost any level anywhere in Canada.
What The NHLers of Tomorrow Had to Say
I wasn’t going to let the lack of a solid pool of data stop me from throwing out ridiculous assertions based entirely on anecdotal evidence however. So, I turned to a fully reliable source of information – grade 11 hockey players. Being a high school teacher, access to firsthand accounts of hockey expenses is plentiful, and so here is what we decided as a group after the students in my business class managed to get me off-topic for ten minutes or so:
- The team fees in order to get on the ice as a kid were only a few hundred bucks, and were much cheaper in rural areas when compared to urban ones.
- Travel costs such as meals, hotel rooms, gasoline, and other incidental expenses were a huge consideration for their parents. Many estimated these costs alone were well over a thousand dollars a year.
- Depending on what status level you wanted within your dressing room, you could get by with spending $1,000 a year on equipment (averaging out the more expensive items like hockey pants and skates that could conceivably be used for more than one year). You could also spend thousands of dollars quite easily. The general consensus was that when a player was ages 5-11 it was much much cheaper to outfit them versus when they hit their growth spurts and started believing that a $400 hockey stick was all-important to their goal-scoring quest. Oh, and if you’re a hockey parent, just pray your kid isn’t a goalie (for financial and emotional reasons).
- For many “elite” players (the ones that theoretically would be candidates to play pro hockey or get their post-secondary schooling paid for), the annual cost of joining a top-notch travel team for the spring and summer hockey seasons (yes, there is a summer hockey season now) could easily run into five digit territory.
- Hockey camps, power skating tutorials, personal trainers, and other “extras” were a reality for the majority of the best players on today’s top teams.
- These numbers were especially sobering when one considered that many families had two or three hockey players on the ice every season.
- I pointed out that there was a hidden cost involved in the form of their parents’ time as well. I have to no way to quantify this, but it stands to reason that some form of work hours or other productive time must be sacrificed on the altar of hockey right?
- We found a recent quote from the Toronto Star that calculated the annual cost for a AAA hockey player at the midget level was between $10,000 and $15,000 (to which they cleverly compared the cost for a year of medical school at the University of Toronto – $19,546).
Hockey as an Investment
But Mr. Prevost,” several of the students exclaimed, “Johnny [not a real name] says he is going to get to go to school for free down in the US, so his parents told him that money for hockey is a good investment.
Because our small rural area has managed to produce a few NHLers over the past few decades, it seems to be a commonly held truth that being good at hockey means you are guaranteed a scholarship that will magically fall into your lap. I mean, no one would really need the scholarship because it would just be a stepping stone to getting paid millions to play a kid’s game in the NHL, but hey, it sounded cool and business-like to say the money put into hockey over the years wasn’t merely spent for enjoyment, but was instead “invested”. I find this sort of irrational thinking very intriguing. It seems to run rampant in the hockey world, and there is no factual data to back up these claims.
Instead of merely letting the argument go in my business class, we spent the next ten minutes (much to the delight of a class that was no longer bound by the shackles of a carefully constructed lesson plan) looking up what the probabilities were of a Canadian hockey player getting to play professionally, and/or getting the scholarship that Cochrane promotes as every young hockey player’s birth right. The best pool of data I could find on the topic came courtesy of Jim Parcels’ book “Selling the Dream: How Hockey Parents and Their Kids Are Paying the Price for Our National Obsession”. Parcels followed the careers of roughly 30,000 Ontario hockey players born in the year 1975. The eventual conclusion of the study found that 48 players were drafted by NHL teams (although only 39 signed contracts, and a mere 32 ever skated in an NHL game). Of these players, only 15 of the original 30K played more than one full NHL season. Finally, only six players out of that huge pool of talent in one of the most hockey-mad regions on the planet managed to play enough games in the big league (400+ to be exact) to collect an NHL pension.
It'll Pay For My School Though Right?
These longshot stats did nothing to dissuade my dream-loving 16-year old students however, so they responded with,
Yeah, but how many got scholarships did those kids get, that’s pretty good too, even if they didn’t make the NHL.
Luckily Mr. Parcels had that information readily available as well. Forty-two players from that birth year played NCAA Division I hockey on a full or a partial scholarship. Now if we’re being charitable we could assume a couple hundred more of the players from that draft class could have got partial scholarships to Canadian schools, lower level American post-secondary options, or played at the Major Junior level in Canada where educational incentives are part of the deal. All the same, these partial scholarships are only applicable to tuition and don’t come close to covering the true cost of attending a post-secondary institution.
Our next step in looking at “hockey as an investment” was looking at the percentage of players this worked out for. Being charitable and saying another 300 players from the draft class got some sort of help with their tuition as a result of their hockey skills, gives us slightly better than a 1% chance of this “investment” paying off at all – and even then it was probably a terrible return on investment in terms of dollars and cents – but just how bad is it? If we ignore the fact that these statistics came in an age where Canadian players represented a larger part of the worldwide pool of hockey players, and merely focus on how much hockey cost an average player over the years in relation to what a scholarship is worth, we get a pretty enlightening look at just how hockey performs as an investment. As noted before, how much a hockey season will set little Johnny and his parents back is extremely hard to calculate as an “average”.
The return on the investment is a little easier to figure out. Hockey players on scholarship in Canada (as well as players that get 3-4 years of school paid for as a result of Major Junior careers) can look forward to about $3,000-$5,000 worth of “free” tuition for four years. We’ll say about a $20,000 return on an original investment that is almost assuredly several thousand more than that. A ROI that is far into the negative territory isn’t exactly how I want to handle my personal portfolio.
The Anti-Hockey Scholarship – Using an RESP Instead
Just so I could loosely tie this little tangent back to some semblance of a business lesson, I decided we’d compare the strategies of going all-out in pursuit of a hockey scholarship against building your own guaranteed scholarship through Canada’s RESP program. I decided to label this the, “Anti-Hockey Scholarship”. It’s interesting to note that while many parents truly believe their child will go places with hockey, a mere 35% of Canadian post-secondary students have an RESP in place for them. (With robo advisors such as Wealthsimple making it super easy to open an RESP account online, there are no more excuses! Check out our Wealthsimple review and try the service for free.) My prediction when we started the exercise was that every parent could literally guarantee their kid a full ride with the money they were “investing” into their hockey career. Before we get to my calculations here are a few of the assumptions I made:
- The parents were not going to put any money into an RESP other than this hockey money, so the Canada Education Savings Grant (CESG) will be maxed out, including filling in back contributions for ages 1-4 when no money would have been set aside.
- Investment returns within the RESP were calculated using a rate of return of 6% for the first few years (when a little more risk would be ok), and then progresses down to 3% as graduation day draws nearer. This is based on conservative risk tolerance.
- I used extremely conservative numbers to calculate the average cost of a hockey season. Obviously these numbers have a huge range, but when calculating in team fees, equipment, gas, and meals, I think most hockey parents would agree I’m undercutting the true cost by a solid amount. The point here was to use numbers that couldn’t really be argued with, as opposed to an absolutely precise number that I couldn’t really be sure of. Consequently, I came up with the figures of $800 a year for players aged 5-7, $2,000 a year for ages 8-10, $3,500 for ages 11-14, and $8,000 a year for AAA midget hockey, or top-flight high school programs.
- I didn’t subtract any amounts that could be used to enroll kids into lower-cost sports like soccer or basketball (as an alternative to hockey), but I didn’t include costs such as hockey camp, or elite-travel teams either.
Here is how the Anti-Hockey Scholarship would shape up over the years when we factor in the contributions, CESG, and investment returns:
|Scholarship Balance||Age||Scholarship Balance|
Even I was surprised at these numbers initially. If someone wanted to look at the comparison using costs from the other end of the spectrum, and maybe take a little more risk in the portfolio, the numbers could look a lot more ridiculous. Unless you are one of the .1% or so that are able to parlay their hockey skill into a professional career, or a scholarship at one of the top NCAA schools, the anti-hockey scholarship wins out handily. Of course the whole point of this exercise is to show that hockey is not a terrible investment – it’s a great luxury that kids should be allowed to enjoy without the pressure of looking at recouping their minor hockey fees.
For the parents out there that justify their kid’s hockey career by saying it will pay off in the end, the statistics don’t lie – you’re wrong. Let your kid play for the love of the game, and if they get to wear the team jacket of some elite travel team – then great, just don’t put a ton of pressure on them so you can wear one too.
(Editor's Note: Kyle's Canadian card was officially revoked after he had initially attributed the song in the article to Stompin' Tom instead of Tom Cochrane)