SBJ/Nov. 18-24, 2013/Franchises

Sharks sport a new philosophy

The San Jose Sharks, in their first full season with SAP co-founder Hasso Plattner as their principal owner, are enjoying a strong start on the ice but also are transforming their business identity.

The franchise is increasing its focus on hockey-related businesses that complement the NHL operation. Efforts to use the team and its arena for testing fan-experience measures also are in play.
The Sharks have won on the ice and refocused their business off of it since Hasso Plattner became their principal owner.
Photo by: GETTY IMAGES

There are conversations about bringing an outdoor NHL game to Northern California, as well.

“We’ve had discussions with the league at what I’d consider top level,” said John Tortora, Sharks chief operating officer. “The league is aware of our interest in a stadium game. Out of respect to the process, that’s about all I can say.” (See related story.)

There is little question that on the playing surface and in the front office the Sharks have earned the consideration to host a marquee league event. The Sharks had earned
Photo by: GETTY IMAGES
standings points in all but two of the their first 18 games this season. They’re playing to 100 percent capacity at SAP Center again this season, as has been the case in recent years. There are 14,000 season-ticket holders, a number that’s capped to allow for some group and general sales at the 17,500-seat arena. And rivalries with good teams to the south (Los Angeles Kings and Anaheim Ducks) and to the north (Vancouver Canucks) make for potential buzz-worthy opponents.

Soon after the NHL lockout ended last January, Plattner — already a Sharks owner — took control of the club by buying the shares of Kevin Compton and Stratton Sclavos. He appointed a three-man team to run the operations of the franchise. Tortora, who had been the Sharks’ general counsel, was promoted to COO. Jim Goddard, formerly the club’s executive vice president of building operations, added business operations to his title. General manager Doug Wilson remained in charge of hockey operations.

In addition to those staffing moves, under Plattner, 69, there has been a change in philosophy regarding the Sharks’ business. Previously, the Sharks’ parent company had outside investments that included the San Jose Stealth of the National Lacrosse League and Strikeforce, the former mixed martial arts league. Both investments were sold off before Plattner increased his stake in the franchise, but the effect of those businesses have helped shape the franchise’s plans for the future.

“The other pieces did not help our bottom line and became a distraction to what we do best: hockey,” said Tortora, noting an emphasis now on hockey-related businesses.

In that regard, Sharks Ice — the franchise’s hockey and skating facility business — is garnering increased attention. The Sharks own a four-sheet facility in San Jose, where the team practices, along with a two-sheet arena in Oakland and single-rink building in Fremont, Calif. All three venues provide open ice time and public instruction.

According to USA Hockey, the 4,800 adult hockey players who are registered in the group’s leagues through Sharks Ice represent the most players from any entity nationwide.

“Sharks Ice is a business we’re definitely looking to expand,” Tortora said.

The financial impact of Sharks Ice on the NHL Sharks is clear: Revenue generated by the ancillary business stays in San Jose, as opposed to being shared leaguewide. Tortora said those dollars, along with gains won by teams and the league in the new collective-bargaining agreement, ultimately will help with the Sharks’ bottom line.

“We’re still losing money year-over-year, but that’s because our owner is committed to winning a Stanley Cup and putting all the necessary resources towards that goal,” Tortora said. “Over time, we’re convinced that the new collective-bargaining agreement will be very helpful for us.”

The Sharks also are benefiting from their arena naming-rights deal with SAP, the company that Plattner co-founded. SAP took over the title sponsorship in July, replacing HP, with a five-year deal that pays more than $3 million annually. The revenue is split between the Sharks and the city of San Jose, which owns the arena. But beyond the money, the deal positions the arena to be an incubator of sorts for fan-engagement ideas.

“Everyone talks about the second screen, but we can experiment very rapidly with lots of ideas and find the ones that fans really enjoy,” SAP Chief Marketing Officer Jonathan Becher said. “Do they really want news alerts, or do they want the stories behind the players? We’re discovering that the casual hockey fan really wants to relate to the players, not just see a bunch of numbers.”

Plattner’s dual role only increases the connection.

“If it wasn’t good business for us [at SAP],” Becher said, “Hasso wouldn’t want us to do it.”

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