SBJ/Aug. 11-17, 2014/Franchises

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  • Devils check in with Ritz

    The New Jersey Devils have turned to one of the world’s top luxury brands — Ritz-Carlton — to help them improve customer service and leadership skills at Prudential Center.

    Ritz-Carlton Leadership Center, a 15-year-old enterprise run by the five-star hospitality firm, signed a deal with the Devils to educate more than 500 people tied to game-day operations at the Newark arena, including team executives Scott O’Neil and Hugh Weber.

    The Devils are the first NHL club to use the Ritz-Carlton program since it launched in 1999, said O’Neil, the team’s CEO.

    The program falls in line with a complete overhaul of arena operations under Josh Harris and David Blitzer, who bought the team in August 2013, to develop a higher level of guest service. The Devils identified several essential aspects for improvement, including concessions, fan engagement, merchandise and game presentation.

    The first step was hiring Legends in June to upgrade the arena’s food service, replacing Aramark. The Ritz-Carlton initiative is the second step, O’Neil said.

    Team officials brainstormed brands that “best exude the type of experience we want to provide and kept going back to Ritz-Carlton,” O’Neil said.

    It wasn’t until Gracie Mercado, the Devils’ vice president of human resources, made a cold call to Ritz-Carlton that they found out about the program and worked out an agreement with the leadership center.

    The deal covers monthly visits during the season to follow up with the Devils and measure results after setting initial benchmarks that were established last month.

    In late July, Joe Quitoni, the leadership center’s corporate director of culture transformation, spent three days at Prudential Center, breaking the total group of 500-plus into multiple sessions on the arena floor. Quitoni used the center-hung video board as part for his PowerPoint presentation.

    Quitoni was overseas last week and unavailable for comment, but Jeff Hargett, senior corporate director of culture transformation, speaking on his behalf, said Ritz-Carlton instructs its clients on a variety of techniques to improve guest service.

    Sometimes it’s as simple as establishing a mission statement for employees to wrap their arms around, and knowing the proper way for addressing fans in the arena.

    “Often, it’s back to the basics,” Hargett said. “How do we speak to people? For example, if it’s a bank teller saying ‘Next!,’ that doesn’t make people feel welcome. We have to be consistent in the things that we do.”

    For team executives, the takeaway can extend to breaking down the selection process to make sure they are hiring high-quality individuals.

    “Are they hiring people out of desperation?” Hargett said. “If [the execs] don’t care, then somebody else needs to bring that issue to the table.”

    For the Devils, starting on the ground floor is imperative because the “bar has been set pretty low around here,” O’Neil said.

    “We have an arena that is 7 years old in the second-wealthiest state in the country with 21 Fortune 500 companies and 7 million people,” he said. “We want it to stand for much more than what we have now.”

    Team owners Harris and Blitzer also own the Philadelphia 76ers and are using the Disney Institute to help train employees connected to that franchise.

    Five major league teams including the Devils have contracted with Ritz-Carlton, paying fees ranging from $5,000 for a few hours up to $15,000 for a full day for the leadership center to share its expertise, Hargett said.

    Ritz-Carlton is prohibited from identifying its clients because of confidentiality clauses, but sources said the hotelier previously worked with teams in the NFL and MLB.

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  • ‘We’ve made a lot of progress in one year’

    Anthony LeBlanc, George Gosbee and the seven other owners of Arizona’s NHL team now have one full season under their belts, but this summer has been their first full offseason to market the team. That process has notably included the rebranding of the club as the Arizona Coyotes.

    While the Coyotes were not profitable in 2013-14, the club experienced gains in gate revenue and in TV ratings. Successes like that mean LeBlanc, the team’s president and CEO in addition to being one of its owners, is hearing less about the elephant in the room: the out clause the ownership group has after five years if the team loses a collective $50 million. That clause was part of a 15-year deal the group, known as Ice Arizona, signed with the city of Glendale to keep the team at Arena when it bought the team — and it was a principal subject for the owners when they came aboard last year (SportsBusiness Journal, Aug. 12-18, 2013 issue).

    LeBlanc: “We feel that if things fall into place for us this upcoming season, we should come very close to breaking even.”
    “The fans see where we’re going as an organization,” said LeBlanc, whose group purchased the Coyotes for $170 million last August. “They see the seats starting to be filled and us completing corporate deals.”

    Asked if it were possible that the owners could announce well before the five years are up in 2018 that they are committed to staying in Arizona, LeBlanc said, “I feel that absolutely has potential around the fourth year. I really do.”

    LeBlanc spoke recently with Christopher Botta about the Coyotes’ goal for profitability, their management structure, and how the team is received by both fans and local businesses.

    A year into owning the club, can you project a time when you believe it will be profitable?

    LeBLANC: By the end of the 2015-16 season. We feel that if things fall into place for us this upcoming season, we should come very close to breaking even.

    Was the rebranding as the Arizona Coyotes an expensive proposition?

    LeBLANC:  Not at all. The only real expense was liquidating some old merchandise. We were careful last year not to introduce too much new merchandise with “Phoenix” on it. The “Arizona” part of it was part of the agreement with Glendale, so we were prepared.

    Has gaining the trust of the Arizona corporate community been a challenge?

    The Arizona Nine

    Owners of the Arizona Coyotes

     George Gosbee (executive chairman and governor): Chairman and CEO of AltaCorp Capital in Calgary
    Anthony LeBlanc (president, CEO and alternate governor): Sales and marketing executive, most recently as VP, global sales at Research In Motion (now BlackBerry)
    Gary Drummond: Investor and board member of several private and public companies; former commercial lawyer in Saskatchewan
    W. David Duckett: Builder and developer of oil and gas midstream businesses in Canada
    W.R. Dutton: Founded Upton Resources in 1987 and spent most of his career in the oil and gas drilling, exploration and production business 
    Robert Gwin: CFO and SVP, finance of Texas-based Anadarko Petroleum Corp.
    Scott Saxberg: President and CEO of Crescent Point Energy in Calgary
     Craig Stewart: Executive chairman of RMP Energy in Calgary 
    Richard Walter: Founder and CEO of Sub-Sahara Capital Group, an investment firm in Scottsdale, Ariz.

    Source: Arizona Coyotes

    NHL Commissioner Gary Bettman (center) with co-owner George Gosbee (left) and LeBlanc in 2013

    LeBLANC:  We knew it would take some time. There was so much uncertainty of whether the Coyotes would be in Arizona, you can understand why the corporate community was reluctant to partner with the team. The ones who did got deals for cents on the dollar. Our first year was about rebuilding the value of the Coyotes and letting people know we were staying. Attendance was up — our gate revenue increased 16 percent from the previous full season — and TV ratings were up 85 percent. That’s the story we can now tell.

    Why do you believe that the NHL will be successful in Arizona?

    LeBLANC:  People seem to forget this about the franchise: Up until the bankruptcy [in 2009], the team was bad [and] went years without making the playoffs. That would hurt any team’s fortunes. Then, just as the team turns it around, they go bankrupt. The Coyotes are making the playoffs, even advancing to the Western Conference Final [in 2012], but there’s all this uncertainty around the franchise. … That’s going to take its toll.

    How would you describe your fan base?

    LeBLANC:  Arizona is a transient market. You just don’t find too many people born and raised there. There are a lot of people from Chicago, Minnesota, Western Canada. There is a hockey fan base in the Arizona market. The team needs to be stable and competitive. Arizona is a big market. We’re still in the bottom five in revenue, but we expect to be with the San Joses of the world — in the middle of the pack.

    Are you concerned about so many fans of other teams being in your arena?

    LeBLANC: Our fans say they don’t want to see jerseys of other teams in our arena, but I can live with it for now. Most of those fans, they may be wearing Blackhawks or Red Wings jerseys when we play Chicago and Detroit, but they’re Coyotes fans the rest of the season. The opportunity is there for us to convince them to buy more tickets for Coyotes games. It’s the same things for the other teams in our area. When the [NBA] Suns host the Lakers, there are a lot of Lakers fans. Same thing for the [NFL] Cardinals when they host Green Bay or San Francisco.

    What about the arena being in Glendale and not in Phoenix? Do you feel that’s an obstacle, as some critics have said?

    LeBLANC:  People say, “Well, the arena is so far out [in Glendale].” That’s crap. That was an old excuse for years. To go from North Scottsdale to downtown Phoenix, versus North Scottsdale to our building in Glendale, it’s almost identical. The difference is that when you get to our arena, you have wide-open surface parking. You go downtown, you have to find a parking garage. We feel we put that myth to bed over the last year.

    Do you feel that hockey in Arizona had a serious image problem after the years of small crowds and bankruptcy?

    LeBLANC:  One of the best things that happened to our ownership group was that the Canadian media was so negative toward hockey in Phoenix. No offense to a lot of sportswriters, but they didn’t recognize the market we have. I’ve spoken with some of them. We’ve made a lot of progress in one year. Our biggest problem was that top goalie [Mike Smith] got hurt near the end of the season, we lost seven of eight games and missed the playoffs by two points. Now, that was heartbreaking. I’m a professional fan now.

    With nine men making up Ice Arizona, what is the structure? It sounds like it might be difficult for everyone to get on the same page.

    LeBLANC:  Ownership is made up of nine relatively equal investors. [Governor and Executive Chairman] George Gosbee has final say on our votes over NHL business at league board of governors meetings, but there’s no question, our group is a nine-member democracy.

    How often do you meet?

    LeBLANC: We have a weekly call of owners at 8 a.m. Arizona time every Friday. It’s an optional meeting, but we haven’t had a call that doesn’t have at least six or seven of the guys on it. Each Friday, I also send out a report summarizing the news and financial data from that week. These are really busy, very successful men (see box), but they are so invested in the Coyotes because they want to win.

    How did you and George Gosbee end up being the faces of the ownership group?

    LeBLANC:  George and I put the deal together. George put the equity together with the other partners. I did the deal with the NHL and the city of Glendale. Our partners are comfortable with George and I being the front guys.

    Why be CEO when you could just be an owner?

    LeBLANC: My background, at Research In Motion, is sales and marketing, and this hockey deal is a pursuit of passion. The partners liked that someone with real skin in the game was going to personally be involved in the running of the team.

    Do you have a shareholder agreement for big decision-making?

    LeBLANC: It’s very structured. As the CEO, I have authority in-budget and over budget up until about $1 million. I can make the call on my own. Anything above the million and I have to make a call to the board so all the partners agree. Either way, I don’t make any decisions without consulting my partners. We’re in this because we’re all hockey fans, we’ve all been blessed with success in business, we want to win, and we want to do it right.

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  • Liverpool plans a visit to Asia for next year

    Liverpool FC plans to play preseason exhibitions in Asia next year but hasn’t finalized any markets yet, according to Billy Hogan, the club’s chief commercial officer.

    Hogan said that business staff will evaluate markets later this year and meet with the soccer staff to get their feedback before finalizing a preseason plan, but more than likely, they will return to Asia.

    Liverpool is an international draw.
    Photo by: GETTY IMAGES
    “We’ve got a significant fan base throughout Asia, and it’s also an important market for [jersey sponsor] Standard Chartered,” Hogan said.

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    In addition to being an important market for Standard Chartered, Liverpool’s training jersey partner, Garuda, is based in Indonesia. It has a regional sponsorship with Honda Motorcycles in Thailand, a sponsorship with smartphone brand Xolo in India and a sponsorship with the online-trading service InstaForex in the Asia region.

    Hogan said he would like to expand the team’s roster of regional sponsorships in the coming years. It already has global deals in most of the major categories such as airline, beer, automotive and banking.

    “Now it’s a question of where we have opportunities on a regional level,” Hogan said.

    The team last did a tour to Asia in 2013. It played before 85,000 spectators in Jakarta and 55,000 spectators in Thailand.

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