With the St. John’s Ice Caps now officially gone, departed for Laval, there will be no pro hockey played in Mile One for the foreseeable future. There will, however, be pro basketball. St. John’s will be the home of the National Basketball League’s newest team and will open their season November 18th in PEI. This has been rumoured for several months, as the departure of the Ice Caps left Mile One without a permanent resident.
Many are rightfully asking, why is there now a basketball team here? In a market that could not reliably support a hockey franchise, it is certainly puzzling that someone would think, hey let’s bring a basketball team here on two months’ notice. The man behind the move is one Irwin Simon, originally of Halifax. Simon owns the Hain Celestial Group, a company that distributes a range of foodstuffs and personal care products. Per a CBC article about Simon, his business practices have come under question in the past. Last year, an alleged accounting error was discovered, and resulted in a 35 percent drop of the company’s stock price.
The alleged error occurred when Hain Celestial was counting revenue when their products were sent to distributors – not when they were sold by said distributors. This was first noted in an August 2016 article in the New York Times, which painted a rather damning picture of Hain Celestial’s business practices. Simon, the founder, acts as president, chief executive, and chairperson of the board. Interestingly, Simon does not hold much of his company’s stock. He owns about 1.8 percent of the company – 1.9 million shares – but he does opt for a much larger personal salary than many company founders do. On average, he takes home about $18 million, a staggering amount for a company worth around $2.7 billion. In speaking with a CPA, The Muse learned that this type of accounting error borders on blatant fraud. It usually occurs when trying to artificially inflate the value of a public company, and as Charles Elson of the John L. Weinberg Centre for Corporate Governance said, it can be misdirection when other problems exist. He is quoted as saying, “When you see overcompensation, it’s usually indicative of failure in other areas.”
There was also a lawsuit in 2013, which alleged Hain Celestial had misrepresented its Avalon Organics and Jason brand personal care products as organic. The company settled the suit out of court for a reported $10 million, after nearly four years of litigation. Between the complaints of consumers and shareholders – who have been dissatisfied with their level of compensation from their investment in the company – there is ample reason to question Simon and his motivations for buying a basketball team in a province that has no established history of a basketball culture.
The Muse reached out to the NBL for a comment on Simon’s ownership bid, who downplayed any concerns about Hain Celestial’s business practices. Audley Stephenson from the league’s office said there is no concern about Simon’s financials. “If there was a concern it would have been addressed somewhere along the lines of the application process,” said Stephenson. He went on to say that, the NBL regularly turns down applications from a variety of groups, but in Simon’s case they felt he would make a strong addition to the league.
The Muse also contacted Simon about his acquisition of the team, via email. He told us that he and his partners, Robert Sabbagh and John Graham, were very excited at the prospect of brining pro basketball to St. John’s. “We are excited about coming to Newfoundland, we will play a major role in the community and, John can elaborate more, Rob and myself look to do a lot more in the community with multiple sports and entertainment venues. We are putting together a very strong leadership under John so this will have no effect on my role at Hain [Celestial] or Robs at Honda.” The sense is that Simon is going to stay out of the day-to-day minutia of running a basketball team, while focusing on his business in New York.
There has been a burgeoning basketball scene in St. John’s. As Memorial’s basketball teams have become more and more successful, local interest has been increasing. Along with that, the NBA’s overall popularity has been booming over the past several years leading to more and more casual fans. The NBL is hardly a marquee league, but it is nonetheless a pro league featuring some of the best players in Canada. It will be interesting to watch what the attendance figures look like come December first, when the team will play the first home game of the year. As well as watch what level of involvement the NBL’s newest owner has with the team and community.