The NHL and Divorce: High Net Worth Divorces and Athletes – Analysis of J.L.H. v. R.S.W. and Martin v. Martin In Sports

J.L.H. v. R.S.W., [2017] A.J. No. 283; Martin v. Martin, [2004] O.J. No. 5170

Roughly 70% of NHL athletes get divorced within their first year of retirement. The average NHL career lasts about four to five years, and the average rookie is about 20 years old. From the moment your skates touch the ice, you might marry, retire, and divorce before the age of 30.

So, if you are a high-income earner and most of your money comes from a short career, what does divorce look like for you?

Stokes Law LLP brings expert advice to ultra-high-net-worth cases so that you can SKATE through divorce. To discuss any concerns you may have, contact us at info@stokeslaw.ca.

The Starting Point - Halliwell v Halliwell, [2017] OJ No 3571

It is important to know where the average support agreement starts and why high-income earners are different.

In Canada, the Spousal Support Advisory Guidelines provide a general framework for determining support. They are most applicable up to a ceiling of $350,000. Beyond that point, the guidelines only go so far. This matters for cases like an NHL player’s, where income typically exceeds that of the spouse, especially now that athletes are coming off the bench earning $500,000 a year.

That is what the court said in Halliwell v Halliwell, at least. Halliwell says that although the $350,000 ceiling is not a hard cap, “Above the ceiling, spousal support cases require an individualized, fact-specific analysis.”

Each case is decided on its own facts, and for someone like Connor McDavid, that makes the analysis tricky.

What J.L.H. v. R.S.W., [2017] A.J. No. 283 and Martin v. Martin, [2004] O.J. No. 5170 Tells Us About Athletes

J.L.H. involves a wife who sought retroactive support after separation, following an equal split of $5.45 million. The wife, who was unemployed, burned through the money trying to keep up with the father, whose income was far higher. The court awarded the wife spousal support.

Martin involved Jacques Normand Martin, a historically respected NHL coach who has coached professionally since 1986. Martin also paid spousal support after separation to maintain the lifestyle of his then-wife.

Suffice it to say that the two cases share key facts:

1. High-income earners
2. A traditional nuclear family
3. Separation followed by payments to the spouse, with support paid later in life
4. Spousal Support Advisory Guidelines that were not sufficient to produce a fair and just outcome

What Does That Have to Do With Current NHL Athletes?

When courts step away from the guidelines, subjective and individual factors weigh much more heavily in support calculations. These include:

• Deferred contract payments;
• Incentives;
• The amount of moving and home buying required;
• Longevity;
• Health;
• Future earning potential;
• The lifestyle of the parties;
• The expenses of maintaining a public profile like Connor McDavid’s;
• The financial disadvantages the wife incurred as a result of the breakdown of the marriage;
• And the list goes on.

Essentially, the greater the difference between your income and your partner’s, the more subjective considerations the court takes into account in awarding spousal support.

A Hypothetical: Connor McDavid

This is a purely hypothetical illustration based on public information. It does not suggest that any real marriage is in difficulty.

We can use Martin to run through a scenario for a public figure like Connor McDavid.

McDavid currently makes $12.5 million a year with the Edmonton Oilers. Let’s assume his spouse earns no income, so the income difference is $12.5 million. Let’s also assume the marriage lasted eight years. Not including endorsements, investments, or other income, the simplest calculation would be 1.5% to 2% of the income difference for each year of the marriage. Taking the upper end of the range, that is roughly 16% of McDavid’s income, or $2 million a year, which works out to about $166,667 a month.

That figure does not account for McDavid’s expenses in maintaining the lifestyle of an NHL player, and one of the greatest ever. But that is a lot of money.

That calculation is also too simplistic. It is the most basic formula, applied to the most recognizable name in Alberta. Kirill Kaprizov recently signed the biggest NHL contract, valued at $17.5 million per year, and he is nowhere near the star power of Connor McDavid. McDavid could potentially sign a contract worth $20 million or more per year, given how much money the National Hockey League has been generating recently.

If McDavid’s separation happened today, his future earning potential would be considered. If it weren’t, Martin tells us the wife could face financial hardship and claim more spousal support.

So what does this mean for the 70% of NHL stars who might be staring down divorce just a year after retirement?

The Upside

There is a heavy analysis of what both parties need. Because the situation calls for a deeper inspection than the guidelines provide, the court will look more closely at your needs. As a result, you can put forward evidence and arguments to make your case more effectively.