After decades of gradual development, the sport of American football has become a staple of spectacle and American life in general, in addition to conquering new markets such as the United Kingdom, Germany, Mexico, and Australia. The same sport north of the border, in Canada, is facing dire existential issues. Protectionism, monopoly, and the Canadian Football Act (Bill C-22) have a lot to do with that.

The American Football Landscape

To fully understand the issue, let’s take a look at Canada’s football industry, which has a lot of catching up to do with its American counterpart.

In 1969, the US-based National Football League (NFL) merged with its primary competitor, the American Football League (AFL). Since then, it has been the undisputed leader in the sport of American football in North America and worldwide. Furthermore, its talent pool comes from the college ranks, with the main governing body being the National Collegiate Athletic Association (NCAA).

Within the established structure, players who have graduated from high school join a college team after accepting a scholarship. Then, after having played for at least 3 years in the NCAA structure, the top ones get allocated to an NFL team by virtue of the so-called “Draft” (each team chooses a player in order, starting from the weakest side from the previous season).

As such, the NFL’s position has been described as a monopoly even by some legislators. That label hasn’t stopped competitors from emerging. Such examples include the United States Football League (USFL; 1983-1986) and the XFL (2002), complemented by tons of spring leagues over the decades not directly challenging the NFL (which is traditionally played in the winter).

Professional football in Canada sits low on that ladder. Despite being much older than the NFL, the Canadian Football League (CFL) never reached the NFL’s highs and currently relies on failed former pros and low-ranked NCAA grads, alongside some of the best prospects from the Canadian college system.

The State of the CFL

If the CFL’s standing in global competition is poor, its financial state is even more dismal. Just five years ago, Canadian public broadcaster CBC suggested that the future of one of its biggest teams, the Toronto Argonauts, might be grim. According to the corporation, the club was losing “around $12 million operating within the Canadian league’s status quo”, which fueled talks for them to join the rejuvenated US-based XFL, now operating as a spring league.

These days, the situation on a central level is not any different. As CFL commissioner Stewart Johnston said in the fall, “Seven of nine teams did not make money last year. That’s not a sustainable business model.”

It’s clear that the state of Canadian football is not satisfactory. What are the drivers of these dire issues? It’s more than just reluctance amongst fans, who are stuck with a stale product and quickly turning to the NFL.

Monopoly as a Catalyst for Failure

American leagues recognized the potential of the Canadian market from a very early stage. One of the first attempts to establish a franchise north of the border came courtesy of the World Football League (WFL) in 1974.

When speculations ramped up that WFL shareholders wanted to expand into Canada, the government reacted firmly. On April 18th, the Canadian House of Commons debated Bill C-22, proposed by the Minister of National Health and Welfare, Marc Lalonde. Also referred to as The Canadian Football Act, the bill “was designed to ban foreign football leagues from playing on Canadian soil, almost explicitly during the CFL season; to keep direct competition from another league from having a detrimental effect on the CFL”, per XFL News Hub.

While it was never actually signed into law, the act and the parliamentary debate surrounding it were successful in keeping the WFL away from Canada. Thus, Parliament used the project bill with the same purpose on two more occasions:  against the USFL in 1983 and against the NFL in 2007. Therefore, even if no law has gone into effect formally establishing it, the Canadian Football League virtually enjoys a government-sponsored monopoly within Canada.

The result? As already mentioned, CFL teams, the Toronto franchise included, are facing dire financial losses, an increasing gap between the CFL and the NFL, and internal discontent with the reigning business practices coming from some of the franchises.

What Now?

The economic consequences of such a law, or even the potential for it, are difficult to overlook, even on the political side. After all, the City of Toronto, home of the Argonauts for 152 years, was one of three cities to originally oppose the bill, alongside Vancouver and Montreal, indicating that the struggles of the CFL were seriously recognized as early as 50 years ago. Moreover, the Argonauts attempted to join the returning XFL in 2023.

There is no doubt that the reality of a bill that has not been voted into law but is effectively “enforced” by virtue of parliamentary threats places political obstacles and uncertainty before potential investors (and even for the CFL, as possible new owners and sponsors don’t know what new piece of legislation lawmakers might come up with in the future).

So what should be done with the bill? Should it be permanently scrapped or voted into law?

The CFL is in a dire state. Would potential competition change that?

If the history of football in the US serves as any indication, the answer is affirmative. Many of the new inventions that have changed the outlook of the NFL, both technologically and on the field, were not brought to life by the NFL itself. For instance, in the 1960s, the AFL put on an offensive product not seen before, during an era dominated by defensive play. Also, the original XFL was the first football league to introduce field-level and helmet cameras, while also popularizing the famous “sky cam”, used to this day heavily by the NFL. Without having faced market competition, even the big empire of the present day that has become the NFL would lack many of its important features.

Not just American football or North American sports can take advantage of this case study. In Europe, established “sport pyramids” do not face any competition, mostly due to legislative barriers and the so-called Ministries of Sport, which discredit and discourage the founding of new clubs or competitions outside of those “pyramids” (e.g., PESA (BG), Article 10).

It is clear that the state of Canadian football will not move in a positive direction unless it is under more pressure on the domestic front. Should the bill be scrapped, leagues such as the UFL or even the NFL could establish franchises there and provide a more attractive product for the local fans while forcing the CFL to finally change its obsolete business model. In addition, the rest of the world should use this case study as an indication of the consequences of monopoly, in general, and as applied in sport.

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This piece reflects the author’s views, not necessarily the entire magazine. We welcome a range of pro-liberty perspectives. Send us your pitch or draft.