A community behind every success

With record sums changing hands in the sales of franchises, junior hockey is no longer a mom-and-pop organization. But with increased profits comes increased responsibility to the players – and a constant drive to have people fill the seats.

By TIM WHARNSBY

Globe & Mail

Diane and Joe Pritchard have found a way to combat the recession.

The proprietors of Billy’s Downtown Deli decided earlier this hockey season to extend the Friday night hours for their Dundas Street diner in the hopes they would pack the place with people attending London Knights OHL games at the nearby John Labatt Centre.

The venture has been worth it. Billy’s, usually open between 7:30 a.m. and 3 p.m., has been full for what the Pritchards have tabbed Friday Knights.

“Some of our regular customers are mad that we’re not open when the Knights play on Thursdays, too,” said Diane, whose diner was a popular eating spot when London played host to the 2005 Memorial Cup.

A few blocks east, Dolly Byard shows up for her shift at the Honest Lawyer and thinks to herself: “The Knights must be playing tonight.”

The bar-restaurant has more life than usual and more people are grabbing an early bite before the Knights face off against the top-ranked junior team in the country, the Windsor Spitfires.

“This place is definitely busier when the Knights are playing,” said Byard, who grew up three blocks from the old Montreal Forum, but has lived in London since 1976.

Not all businesses are thriving in downtown London because of the success of the Knights and the John Labatt Centre. There still are boarded-up stores near the 6½-year-old entertainment complex. But for the most part, since the centre opened its doors on Oct. 11, 2002, and the Knights moved in as the chief tenant, the combination has been a success story.

In cities such as London, junior hockey has become big business across Canada and the United States. But no franchise has undergone such a transformation as the Knights.

The team struggled mightily in the mid-1990s. It played in a deteriorating building on the south end of town and its on-ice performance was as horrible, setting a Canadian Hockey League record for futility at 3-60-3 in 1995-96.

Former NHL player Mark Hunter, along with his older brother, Dale, was at the old London Ice House for the final game that OHL season. The current co-owner of the Knights – then the Sarnia Sting head coach – and Stanley Cup winner with the 1988-89 Calgary Flames didn’t need a degree in risk management to see the possibilities.

“Dale and I always had interest in owning a major-junior franchise one day,” said Mark Hunter, 46. “I saw 4,000 people in that rink that final game. I saw 4,000 loyal fans for a team that won three games. This is a hockey city.”

So when the Tarry family decided to unload ownership of the Knights, the Hunters pounced. They secured a big bank loan by putting up as collateral the mortgages from their farms and homes in nearby Petrolia, to purchase the OHL club for $3.8-million in May of 2000.

If the franchise were sold today, the Hunters could cash in for more than $11-million.

To put that in further perspective, the Spitfires sold for $75,000 in 1976.

The big plus for the Hunters was they knew a $42-million downtown rink – financed by the federal and provincial governments, the city and a public-private ownership group – was in the works.

What the Hunters needed to do was construct an entertaining and contending team to fill the 9,000-seat facility and its 38 luxury boxes.

After breaking even in the final two seasons at the Ice House, the Knights have been a top draw since. Mark Hunter said the Knights went from 1,271 season tickets when they bought the team to 7,000, with another 2,000 on the waiting list. Seldom are there less-than-capacity crowds at Knights games and the success of the 2005 Memorial Cup certainly added value to London club.

“We’ve been fortunate,” Mark Hunter said. “We owe a lot to the city for building this gorgeous rink.

“We make money, we’ll never deny that. Sometimes how much we make gets exaggerated, but we make money.”

The Knights don’t disclose profit totals, but with an average ticket price of $14 and 9,000 fans a game with 34 home dates, that’s revenue of roughly more than $4.28-million for the regular season alone.

When asked if he is interested in selling the Knights, Mark Hunter replied this is something he and his brother plan to keep in their family for a long time.

“If you know anything about farmers, they just pass their land on down the line,” he said. “I bought some farm land in 1981, and I still have it. That’s what we will do with [the Knights].”

The Knights are proof junior hockey is no longer a mom-and-pop organization. Dennis Beyak, the radio voice of the NHL’s Toronto Maple Leafs, spent his early years in hockey in management with the Saskatoon Blades, Seattle Thunderbirds and Tri-City Americans in the WHL.

Beyak said junior hockey used to be a business where a franchise had a small window for financial success.

“It was a situation that each team knew they would either make a profit of no more than $5,000 or lose no more than $5,000,” he said.

That changed when the Edmonton Oil Kings moved to Portland, Ore., and became the Winter Hawks in 1976. All of a sudden, bigger buildings were involved – marketing and advertising became a big part of selling the junior game to fill the larger venues.

Calgary billionaire Bill Gallacher, an energy entrepreneur, purchased the team for a major-junior record $7.5-million last October – more than twice the previous ownership group paid for the Winter Hawks three years before.

Despite the WHL club’s pioneering history, the previous ownership group of Jim Goldsmith, Jack Donovan and John Bryant did not see success on the ice nor with their business relationships in the community.

Speculation has Gallacher also interested in becoming a NHL owner. But, for now, he is committed to reviving the Winter Hawks and keeping the team in Portland, a condition of the sale.

“We wanted to pick it up and dust it off and give it a new set of parents, that’s how I characterize what we’re trying to do,” Gallacher said.

The first piece of business was to bring in respected former Canadian national team coach Mike Johnston, who most recently was Marc Crawford’s associate with the Vancouver Canucks and Los Angeles Kings, as well as former NHL player Travis Green as an assistant coach to rebuild the on-ice product.

Former Edmonton Oilers and Carolina Hurricanes executive Doug Piper, a local product, was hired as the Winter Hawks’ president. His chief aim will be to reconnect the team with the community and its loyal fans.

“I’m a Canadian kid who grew up loving hockey, but I didn’t have the talent and I can’t coach, so this is a way for me to be close to the game,” said Gallacher, who also is part of the ownership group with the Nanaimo Clippers of the British Columbia tier II loop.

“You have to love hockey if you’re going to own a junior hockey team.”

Like any business, junior hockey has its warts.

With increased profits comes an increased responsibility to the young players they employ. The post-junior university packages that are agreed to have to be paid for and executed. It’s an important time in the athletes’ lives.

“I have a first-hand appreciation of how kids should be treated,” said Gallacher, whose 16-year-old is a defenceman with the Camrose Kodiaks of the Alberta Junior Hockey League. “Everyone has to realize that these kids are 16, 17, 18, 19 and 20, but they are only 16, 17, 18, 19 and 20.

“They have mothers and fathers who care deeply about their sons, who worry about their sons, who want to make sure that they are in a productive environment where they are looked after and developed and put on a straight path with not only hockey skills, but life skills.

“That is our main drive in Portland. We want an impeccable reputation in this area.”

Not all teams have that. For every good situation, there are franchises that in recent years required an ownership change to alter a poor image.

Former Calgary Flames general manager Craig Button, who has counselled top prospects in the past as whether to play major junior or U.S. college, encourages parents to do their homework.

“This is such an important time of life for these kids,” Button said. “Why would you want him to be put in a bad situation? Forget about the [NHL] draft, the good ones can dictate where they should play. Find out the good situations, the good environments. Even if the kid is going to play U.S. college hockey, there are bad programs there, too.”

Button acknowledges that not all prospects can dictate their new addresses. But as the number of quality environments increase, the pressure is on the bad franchises to clean up suspect reputations.

A few years ago, the once mighty Kamloops franchise was on thin ice. The Blazers had won Memorial Cups in 1992, 1994 and 1995. But a decade later, the on-ice product had deteriorated and the community-owned team’s financial picture was in disarray because of a scandal in which a long-term office manager had embezzled more than $1-million. (She was subsequently given a 3½-year jail sentence.)

Enter NHL players Darryl Sydor and Mark Recchi. They honed their skills in junior with the Blazers and wanted to see the franchise return to its winning ways.

They recruited Kamloops native Tom Gaglardi, who owns Vancouver-based Northland Properties, the parent company to Sandman Hotels, Denny’s Restaurants of Canada, Moxie’s Restaurants, Shark Clubs and other real estate and hospitality businesses, and former Blazers players Jarome Iginla and Shane Doan. The fivesome banded together to buy the Blazers.

After two years and two bids, the Blazers were sold for more than $6-million to the celebrity group and the rebuilding began.

“In my opinion, if this franchise carried on with a community ownership, it would have continued to deteriorate,” Gaglardi said.

Gaglardi believes that owning a major junior hockey team can be a big business. But it has to be done right.

“The reality is that in order to survive, entrepreneurial abilities are required,” he said. “Some teams that are community owned with cumbersome boards, like the Blazers were, are going to get passed.”

Gaglardi points to big-market junior teams such as Calgary, Edmonton and Vancouver that attract crowds as large as 10,000 or more, saying smaller markets such as Kamloops have to keep up with corporate sponsorship deals. But before corporate involvement can be lured, people have to fills the seats in order to make the investments made by local businesses worthwhile.

“It’s a complicated business now, simply because there is more competition for the entertainment dollar,” Gaglardi said. “There are other options out there.

“It’s a different game now [off the ice].”

Interested in the purchase, sale or investment in a professional sports team, e-sports organization or in sports tech? We’d welcome the opportunity to chat further with you about the various opportunities that exist in today’s market.  Contact: Tommy George, President, (240) 409-6297; tgeorge@thesportsadvisorygroup.com.