Friday, April 20, 2007

The Great One, McLean and Wirtz as far from Lord Stanley as they’ll ever be

Sidney Crosby’s first taste of what it takes to win a Stanley Cup ended Thursday night when his Pittsburgh Penguins were shutout 3-0 by the Ottawa Senators in game five of their first round match-up. Ottawa won the best of seven series 4-1, but anyone who understands what it takes to win a Stanley Cup knows it’s only a matter of time before Sid the Kid and the Penguins win their share of Stanley Cup playoff games. The Penguins are the NHL’s team of the future. Three franchises, the Phoenix Coyotes, Chicago Blackhawks and the Columbus Blue Jackets are heading nowhere quickly and the three franchises can point the finger directly at three people who have failed in providing their teams with the necessary tools to succeed.

Wayne Gretzky is the greatest player to have ever played hockey, but as an NHL executive he has been a complete and embarrassing failure. Bill Wirtz the longtime owner of the Chicago Blackhawks has taken all the pride that existed for one of the ‘original six’ NHL franchises. And Doug McLean finally ran out of excuses in his how he put together the Columbus Blue Jackets. As exciting as hockey fans in Ottawa are that the Senators appear poised to finally seriously challenge for their first Stanley Cup, the fans of the Coyotes, Blackhawks and Blue Jackets have little if any hope they’ll be making the playoffs for many years to come.

What began with Coyotes Associate Coach Barry Smith deciding coaching in Russia made more sense than coaching in the National Hockey League and was followed with the firing of General Manager and Senior Executive Vice President Michael Barnett, Senior Executive Vice President of Hockey Operations Cliff Fletcher, and Senior Vice President and Assistant General Manager Laurence last week, exploded Tuesday when Coyotes owner Jeff Shumway challenged how the Coyotes have been managed in recent years. While not mentioning Gretzky by name, given that Barnett (Gretzky’s former agent), Fletcher and Smith where all hired by Gretzky, reading between the lines Shumway tough talk suggested he’s had enough of The Great One management skills.

"I'll be blunt about this," Coyotes CEO Jeff Shumway told The Arizona Republic. "When I started holding meetings in December, I was stunned that we didn't seem to have a plan. There wasn't a vision of what it means to be a Coyote."

"I just met with Wayne (Monday) in Los Angeles, and we had a broad discussion about where we're going," Shumway said. "For instance, players will say they want to be in Phoenix.

"Sometimes, I think that means the weather is good, the golf is good, and there are nice clubs in Scottsdale. What they mean is they want to retire in Phoenix. What we need are guys who want to play hockey in Phoenix.

"I don't think the nature of the city affects just us. It affects other sports teams in town, too. You get guys here that realize it's a great place to live and a great place to collect a paycheck. We need to get rid of that attitude."

Shumway has every reason to not only be upset but very concerned about the Coyotes viability in Phoenix. An Arizona Republic report in early March suggested the Coyotes will lose more than $30 million this year. In the second year of a collective bargaining agreement that delivered cost certainty to NHL franchises, an NHL team losing tens of millions of dollars isn’t just bad, isn’t just terrible, it’s a sign that the NHL isn’t working in that market. With the NHL’s salary cap expected to rise next year (as will the salary floor, the minimum a teams payroll must be) the report also suggested the Coyotes will keep their team payroll at the bottom half of NHL’s payroll scale and won’t be signing any major free agents during the off-season.

Even scarier in the last few weeks reports have emerged from Phoenix that suggest the Coyotes have lost more than $300 million since 1998 Phoenix-area developer Steve Ellman bought the Coyotes from Steven Gluckstern and Richard Burke, and in 1996. Current Coyotes owner Jerry Moyes took control of the Coyotes a year ago. When he took control on April 13, 2006 Moyes told the assembled media, he was ready to jump in and build the Coyotes with both feet.

“I am making a full time commitment to the Coyotes organization and the continued success of the Glendale Arena and am very excited to have the opportunity to bring a Stanley Cup Championship to the best fans in hockey. We have one of the finest executive staffs in professional sports put in place by Steve Ellman and Wayne Gretzky. General Manager Michael Barnett and club President Doug Moss have done an outstanding job in helping to build a solid foundation and a first class operation. I have full confidence in the direction that has been set by these premier professionals.”

The club also announced the appointment of Arizona native Jeff Shumway as the new CEO of the Phoenix Coyotes, effective immediately.

Moyes went on to state, “I am also pleased with the appointment of Jeff Shumway as the new team and arena CEO. Mr. Shumway has the right educational and business background to provide the leadership we need to make our team successful and our arena fan experience second to none.”

In the last twelve months Moyes hasn’t spoken very much about his investment leaving that to Shumway who fired everyone Wayne Gretzky hired, last week and on Tuesday challenged Gretzky. Its clear Shumway believes the center of the Coyotes problems is Wayne Gretzky and his mismanagement style.

If nothing else it’s clear the Coyotes aren’t the only ones who seem out to lunch when it comes to understanding if Arizona sports fans are interested in hockey. Arizona may offer a great opportunity to sports entrepreneurs, but Arizona is to hockey what Canada has become to professional baseball – sports version of a leper colony. Arizona is home to three professional hockey teams – the Coyotes, Central Hockey League Prescott Sundogs and ECHL Phoenix RoadRunners.

“There is a great love for hockey here and it is deep-rooted,” Coyotes President Douglas Moss told’s Timothy Gassen last month. “Because this is a melting pot community, there are many fans who bring their allegiances here for other teams. It’s our challenge to turn them into Coyote fans.”

However, Moss also told Gassen that love for hockey hasn’t included any real interest in buying hockey tickets. The Coyotes are enjoying the third-largest jump in paid tickets among all NHL teams in the 2006-07 season, though game attendance appears to be down about 1,000 fans per game. The reason for the apparent numbers discrepancy is actually a positive sign for the Coyotes. “We actually have given away far less complimentary tickets this year, while selling close to 12 percent more,” he said. “So while there might be less people in the building, more of them have paid, and that’s the growth that signals a strong future for us.”

“We had to be in our own arena to survive financially,” Moss says. “Between that and the new CBA (the 2005 Collective Bargaining Agreement between NHL teams and players, which brought a salary cap), the future for the franchise is bright. And this is the best place to watch a hockey game in any arena in the NHL, by far.”

However, when you’ve been giving away more than 2,500 tickets per game over an extended period you’re in a very dangerous place. Case study after case study clearly shows when sports franchises giveaway a significant percentage of their tickets over a long period of time they’re devaluing the value of their tickets. The challenge the Coyotes face, the horse has long left the barn. The Coyotes moved from Winnipeg a traditional market to Phoenix a non-traditional when the Winnipeg Jets management claimed they could operate their team in the Canadian city. If the Coyotes have lost more than $300 million in the 11 years they’ve called Phoenix home it makes sense for the team to move back to the Canadian city. The team may have lost money operating in Winnipeg but there is no way they would have lost anywhere close to $300 million in 11 years.

The National Hockey League made it to the front page of the Wall Street Journal this week, for all the wrong reasons. In an article titled “The Wirtz Curse: Why Chicago Fans
Trash Blackhawks” Wall Street Journal reporter Douglas Belkin painted as terrible a picture of a professional sports team owner as has ever been offered in one of America’s most respected publications. In the many years the Blackhawks and the Chicago Bulls shared the Chicago Stadium it was the Blackhawks and not the Bulls who filled the historic and now demolished arena. The United Center may be the house that Jordan Built but it’s the arena where the Blackhawks can’t sell tickets. The Blackhawks averaged 12,727 or just 62 percent of their available inventory. The NHL remains a gate driven league and when you are not selling tickets you’re losing money.

According to The Wall Street Journal: in a recent ESPN survey of 80,000 sports fans, the Blackhawks ranked 118th out of 121 professional sports franchises. Under the category of ownership, defined as honesty and loyalty to players and city, the fans ranked Mr. Wirtz second-lowest, above only Jeffrey Loria of major-league baseball's Florida Marlins.

What should be of even greater concern a report earlier this month in The Chicago Tribune suggested the half empty United Center includes thousands of tickets being given away for free by the Blackhawks through numerous promotions, including an e-mail campaign that put top-notch freebies the length of a hockey stick from the ice.

"It's called papering the house," said Barry Melrose, a former NHL player and now a hockey analyst for ESPN. "I'm not surprised they are doing it. It's been a terrible period for the Blackhawks. People are frustrated and angry, and the fans are showing it the only way they can, by staying away."

One fan told the Tribune: "I bought 40 tickets for $3.06 each," said 25-year-old Jason, a part-time ticket broker and full-time culinary student. That small sum accounted for the fees Ticketmaster charged to process the seats.

These weren't in the nosebleeds, either.

"I had two in Section 119 four rows up from the glass," said Jason, who resold those tickets on for $30 each. Face value on those tickets: $80. Yes the Chicago Blackhawks according to the published report are giving tickets to brokers for nothing. That isn’t “insult to injury”, its sheer stupidity. The Blackhawks are devaluing their entire ticket inventory. It will take the franchise years to recover from how they’re running their business operation.

"We're just trying to put some butts in the seats," said Peter Hassen, the Blackhawks manager of advertising and promotions. "We've had our ups and downs this year, and the fans haven't been supporting us as much as we'd like."

Another recent promotion was with radio station WCKG-FM 105.9. Members of that station's VIP club were offered free tickets for their birthdays instead of the usual box of doughnuts.

"Probably close to 100 or 150 people took advantage of that," Hassen said.

But the giveaway that has drawn the most attention started with an e-mail sent to recent ticket buyers, not season ticket-holders.

"We offered two free tickets to those fans who supported us in the past," Hassan said. "We gave them a password they could use on Ticketmaster to get the free tickets."

Thursday the Columbus Blue Jackets sent a message to their ticketholders when they fired their team president and the only general manager the team has ever had Doug McLean. One of the most popular people working in hockey, McLean who became the Blue Jackets president and general manager on February 11, 1998 was fired Thursday. The Blue Jackets stumbled to a 33-42-7 record this season, good for 11th in the Western Conference. MacLean, the only president and general manager in franchise history, enjoyed little success during his tenure. The Blue Jackets were 172-258-62 all-time under MacLean, and are the only NHL franchise to have never reached the post-season.

"This decision was extremely difficult as no one has worked harder, been more dedicated or cared so deeply for the Columbus Blue Jackets than Doug MacLean," said Columbus Blue Jackets Majority Owner, Chairman and Governor John H. McConnell. "Our fans are the best in the NHL and they have been extremely loyal and supportive of our team. At this time, our ownership group believed that making this change would be best for our fans and our franchise moving forward.

"Our organization, fans and the city of Columbus owe a debt of gratitude to Doug for everything he has done over the past nine years. He helped put together an organization that is widely respected throughout the NHL and was instrumental in the tremendous growth of hockey at all levels within our community."

Mike Priest, who serves as the president of JMAC, Inc., the parent company of the Blue Jackets, will assume the role of president and oversee all business operations of the club. Club Executive Vice President and Assistant General Manager Jim Clark has been named interim general manager and will oversee the hockey operations staff in preparation for the 2007 Entry Draft to be held at Nationwide Arena on June 22-23.

"While we will begin the review process immediately, no time table has been set with regards to making this decision," said Priest. "We are going to take a look within our organization first to fully understand where we are from a personnel standpoint and then we'll go outside our organization. We are going to be extremely diligent throughout the process to ensure we find the right person to work with head coach Ken Hitchcock to lead our hockey operations efforts."

McConnell’s decision was all about consume confidence. As nice a guy as McLean may be after six years of terrible it was time for McConnell to send a message to hockey fans in Columbus that it was time for a new beginning. And let’s remember Columbus is home to the Ohio State Buckeyes. While the Buckeyes may have managed to lose both the BCS football championship and the NCAA men’s basketball title to Florida, the Blue Jackets need to move forward. Firing Doug McLean was that first step.

And finally after winning the Stanley Cup last year, the Carolina Hurricanes failed to make the playoffs this year. The defending Stanley Cup champions according to a report in the Raleigh News & Observer Thursday expect to lose $4 million this year after turning a $10 million profit last year when they won the Stanley Cup.

"You can live with it," team owner Peter Karmanos said. "But not forever."

"We won't know until we know what we get in revenue sharing. That makes a big difference in our bottom line," Hurricanes president and general manager Jim Rutherford said. "But our corporate sales were not what we projected this year. And because of that, we will have a loss.

"I don't want to discount my losses, because my boss would not be happy with me. But it's a minimal loss compared to what we were doing prior to the work stoppage."

"We know who we want to sign," Karmanos said. "For me, it's almost a given. Either you dismantle the team or you say you're going to take a run at it. ... We want to do it right. That means it's going to go up."

Still there’s nothing quite like winning a championship, making $10 million and then losing $4 million the following year. Sports teams are supposed to enjoy the benefits from winning a championship and that includes making money – not losing money.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Wall Street Journal, Chicago Tribune, Arizona Republic and Raleigh News & Observer.

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