Dream Job by Richard Peddie – Book Review and Giveaway

Richard Peddie, the former president and CEO of Maple Leaf Sports and Entertainment (“MLSE”), recently released his memoirs in a book titled “Dream Job”. The book weaves together tales and lessons of business, leadership and sports – so if you are a sports fan and business enthusiast, you should thoroughly enjoy this book. I happen to have two autographed copies of the book that I’m prepared to giveaway to you, my readers. If you are interested in a copy, please email lynda@cunninghamca.com and I will draw two winners from a hat on November 18th.

Mea Culpa – Let’s Get this Over With

For Toronto Maple Leafs fans, Mr. Peddie has been a lightning rod for criticism because of the Maple Leafs lack of success and Stanley Cup drought. In addition, both the Toronto Raptors and Toronto FC soccer team were less than successful during Mr. Peddie’s reign.

To Richard’s credit, he does not hide from his teams records. He states that he may have stayed longer, “but I got tired of losing”. He has “regrets about some of the general managers I hired”, including (in reference to John Ferguson) “our big mistake, you don’t put a rookie GM in charge of the Maple Leafs” and “ in hindsight, what was I thinking hiring a reserved, taciturn coach [sic] for the Toronto market?”. He puts Rob Babcock, the former GM of the Raptors, “among the worst hires of my entire career” and in regard to the Raptors, he states “the record is disappointing, it’s unacceptable and it wore me down”.

Richard says that “as the CEO responsible for the performance of the Leafs between 1996 and 2011, I can assure you that losing caused me the most pain”. Throughout the book Mr. Peddie states that the most ridiculous notion held by fans was that MLSE only cared about money and not how well the team performed. He refutes that notion, saying he and MLSE cared deeply and that the insinuation makes no economic sense (more playoff games means MLSE makes more money).

With the sports teams’ records dealt with, let's look at some of the pearls of business wisdom and sports tidbits in the book.

Business Background and Philosophy

It is interesting to note that Richard loved basketball and always wanted to run a basketball team from the time he was 20. Hockey was not his first sports love.

In the book, Richard takes you through his varied careers with Colgate, Pillsbury, Labatt Communications, The SkyDome and MLSE, which is very interesting reading, if you are interested in the business of business.

Mr. Peddie states that the value of MLSE grew six-fold from a $300 million enterprise value to somewhere close to two-billion while he was CEO. While the reasons for the growth are multi-faceted, a significant reason was that instead of having the Leafs and Raptors at cross purposes, MLSE was able to eventually synergistically combine four teams.

If there is one business takeaway from the book, it is how important Richard feels vision and values are to any leader and their organization and how they must be adhered to and not just be statements on plaques in a company’s reception area.

There are very many insightful quotes; three I found very interesting were the following:

• You earn “respect first, affection second”
• "Management gets the workforce it deserves” – in reference to the Harold Ballard era and the sex scandal at Maple Leaf Gardens
• "The ability of a CEO to remember employee’s names and circumstances matter a great deal”

The Dark Side of the Dream Job

While being the president and CEO of MLSE has significant perks, when the fans’ beloved Maple Leafs are not winning, the job can be outright scary. In chapter two, Mr. Peddie discusses death threats he received, fans wanting to fight him and how someone hired a plane with “Fire Peddie” to fly over the Air Canada Centre ("ACC") and how there were three websites devoted to firing him. 

Interesting tidbits

Although the book provides some very insightful business and leadership tips and food for thought, what I really enjoyed as a sports fan were some of the sports related tidbits. Here are some of the more interesting ones:

Vince Carter was a “mama’s boy” and even after he was traded, his mother assumed she could continue to enter the private lounges at the ACC.

When Ken Thompson, the richest man in Canada, was being shown potential new seats at the ACC (season ticket holders were given a chance to select new seats when the team moved from Maple Leaf Gardens), he selected two great Platinum seats. However, 48 hours later he called back and asked for first row gold seats. These seats were only one row higher and saved him a seat licence and club fee. Rich guys are no fools.

I always hated the popcorn at Maple Leaf Gardens – I now know why. Richard reveals that the popcorn at Maple Leaf Gardens was always stale because it was made weeks ahead as there were not enough machines to pop it freshly.

A very interesting tidbit that touched me personally is when Richard speaks about how he would often give his own personal lower bowl Maple Leaf and Raptor tickets away prior to a Leafs game. He would go up to the purple (highest) section and find a kid with a Leafs or Raptor shirt on and give them his seats. Sort of his own “Campbell’s Van Line move of the game”. Why I found this interesting is that about twelve years ago I was given purple tickets to a Leafs game and took my son, who of course had his Leafs shirt on. A guy in a suit who said he worked for MLSE asked us if we wanted his tickets to move to the lower bowl and gave us his tickets. I do not remember the MLSE executive saying his name, so it may not have been Richard, but we were given the tickets and appreciated the gesture. What is funny about this incident is that my son who was 9 or 10 at the time wanted to stay in the purples since he could see the whole ice and I had to drag him to the great seats in the lower bowl.

A non-sports related tidbit is that Richard notes in his book that he was not a great student until later in university and if it hadn’t been for a teacher increasing one of his marks, he may never have even gone to university. Why I find this interesting is that I have always felt marks (except for the truly brilliant) were overrated and the intangibles are often of much greater importance (remember that if I ever interview you). Here is a perfect example of a great CEO who very easily could have not even gone to university if not for some luck.

I will stop here so you have something left to read, but I highly suggest you give the Dream Job a read and if you would like the chance to win a free signed copy, send your information to Lynda.

 

Sports Agents Fees - A Large non-deductible Expense for NHL Players in Canada

From Mr.Sub Shoot-out at Air Canada Centre

Unlike many hockey fans, I am not excited that the NHL is back. Personally, I think this season is a farce. In protest I watched the first season of the Sons of Anarchy instead of the Leafs and Hab's home opener. It took me several years after the first baseball strike to come back. I love sports, but I can easily live without watching them. So in keeping with the NHL’s legal battle theme for the 2012/2013 season, I today discuss an interesting income tax case involving an NHL player.

Many professional athletes hire a sports agent to assist in negotiating employment terms with their teams and endorsement contracts with corporate entities. Typically, when an agent secures an employment contract for an athlete, he/she is required to pay a commission fee based on a percentage of the contract amount usually between 3-5% (for a list of the top paid baseball agents, follow this link). Although one would think such a fee would be a deductible expense to the athlete, that is not the case in Canada as Michael Caruso of the Florida Panthers recently found out when he went to tax court.

Mr. Caruso’s case brings to light the differences in how athletes are taxed in the United States and Canada. As any sports fan could tell you, U.S. based players often cry the tax blues when they are traded to a Canadian team. The additional income tax payable became a significant point of discussion following the recent Toronto Blue Jays/Miami Marlins trade. According to this article, it may cost Jose Reyes traded from the Marlins to the Blue Jays as much as $5million in extra income taxes because of the trade to a Canadian team.

Not only do U.S. based players typically pay less income tax as noted above, but the IRS allows them to deduct their agent’s fees on their income tax returns; although as discussed in this sports agent blog  the IRS are auditing agent fees to ensure they are actually paid in the year they are claimed. 

The Canada Revenue Agency (CRA) position on the deductibility of agent fees is set forth in IT-168R3. Paragraph 6 specifically disallows the following expenses: “Players employed by sports clubs are limited to the same deductions from employment income as are available to any other employee by virtue of section 8. For example, fines paid by players personally are not deductible. Legal fees incurred in the negotiation of player contracts are also not deductible”.

Back to Mr. Caruso. In 2008 he entered into a three year contract with the Florida Panthers. In 2008 he paid his agent MFIVE Sports Management (Anton Thun is the best known MFIVE agent) $2,927 and deducted the same amount on his personal tax return. The CRA promptly disallowed the deduction. Caruso then appealed to the Tax Court of Canada but the judge ruled in favour of the CRA. 

The Canadian tax rules allow a deduction for legal expenses incurred in order to collect or establish a right to salary or wages from an employer or former employer. Michael Caruso’s appeal was rejected for the following reasons:

i) There were no facts to suggest that Michael Caruso’s agent, MFIVE, was authorized to practice law. Note that the CRA’s requirement only allows for legal expenses to be deducted.

ii) Even if MFIVE’s services were considered legal services, the services were not for the purpose of collecting or establishing a right to salary or wages. A right to salary or wages can only exist after an employment contract has been signed – MFIVE only assisted in negotiating an employment contract that would subsequently give rise to a right to salary or wages.

Although most of us have little sympathy for well-paid NHL players, it seems blatantly unfair to disallow an agent’s fee. In my opinion, the CRA is not recognizing the economic reality of the “employee” expenses a player incurs.

Top Ten Reasons to vote for The Blunt Bean Counter

Jeremy from Modest Money is running a poll of the top Finance Blogs in Canada. Last year I was nominated in the Investing category and thanks to my loyal readers and my mom who voted 10 times, I managed to come in fifth. This year Jeremy has grouped investing and personal finance blogs together, so a top twenty finish would be solid. If you get a chance, visit Jeremy’s site to look around and vote for me. Don’t ask me why, but I had a sudden inspiration to have some fun and decided to create a David Letterman like top ten reasons list, why you should vote for The Blunt Bean Counter:

10. A vote for me is a vote for all unloved accountants everywhere (see the Big Cajun Man’s comment about many peoples “visceral hatred of accountants”).

9. What other blogger provides a tax twitter tip a day while constrained by a ridiculous 140 characters?

8. I am not a frugal blogger like half of Canada’s bloggers (that deserves 1,000 votes on its own).

7. What other fun loving blogger gives you girls an alternative to the “I got a headache” excuse by suggesting you tell your significant other that you just want to stress test his death before you get down to it?

6. I provide ideas that can potentially save you thousands of dollars, instead of trying to save you 49 cents on a box of 12 Popsicles.

5. I discuss the various neuroses you will develop in trying to get wealthy, so you feel better if you are not wealthy.

4. I may occasionally be blunt and sarcastic, but at least you don’t feel like you are reading a Happy Days Blog.

3. What other blogger will tell you to use a 1% prescribed interest loan to set-up a family trust to allow you to pay for your kids private education tax-free and then tell you, that you only need $500,000 to $1,0000,000 to do it. Come on, no one else teases you like this?

2. What other blog solves a tax problem you did not know you had in a way you don’t understand (full disclosure, I read this years ago in a newspaper).

1. If I win the $100 contest prize, I will go on eBay and buy copies of Great Hockey Classics (which is on VHS by the way) Toronto vs. Montreal, the 1967 Stanley Cup Playoffs (awesome link) and provide those copies to Leaf fans born in 1968 who have not seen the Leafs win a cup in 45 years.

This reason ties my blog together in a nice blue bow. Who needs to watch Leaf games when you know they will not win the Stanley Cup anyways?

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.