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SBJ/Aug. 11-17, 2014/Franchises
‘We’ve made a lot of progress in one year’
Published August 11, 2014, Page 8
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 Jobing.com 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.”
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?
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.