A fledgling sports group is developing what it thinks is a new business model for minor league team owners to successfully operate in niche markets where it’s difficult to break even, let alone make a profit.
Seven people have formed a limited partnership in Columbus called Revolution Enterprises, a company that will spend the next two years creating new leagues for indoor football, lacrosse, hockey and, possibly, team boxing.
Revolution’s president is Dave Whinham, who spent about 20 years in the Arena Football League and Arena Football 2 as a coach, team executive and board director. Among the other Revolution principals are Dr. Eric Margenau, who has owned 17 minor league teams; Frank Pergolizzi and Steve Evans, Whinham’s partners in a separate sports, entertainment and media firm; and ex-AFL and Arena Football 2 team owner Mark Hamister.
Here’s how the business will work: Revolution will sell franchises in each of the four sports to individuals for $150,000 apiece, a fraction of the cost to buy clubs in similar leagues. One franchisee can own multiple clubs in one market, and the fees are negotiable if an individual decides to buy two or more teams.
Revolution’s goal is to have eight teams competing in its football and lacrosse leagues in 2009, with hockey to follow in 2010. It is targeting top 100 markets, Whinham said.
The group will focus on promoting fights and other special events this year to start educating potential franchisees. “Those events put us in position to help our initial franchisees earn and learn and also give them a real feel for the way it all works,” Whinham said.
The guiding principle behind Revolution is to employ a single staff of six to seven people dedicated to selling tickets and sponsorships for any and all teams controlled by a franchisee, the principals say. The franchisees are responsible for paying their staffs.
Cross-selling teams in different sports is nothing new, having been done with varying levels of success. Margenau said the single-staff structure worked when he owned baseball and hockey teams at the same time in Mobile, Ala., in the 1980s.
Carl Scheer, now a consultant, tried it with his indoor soccer and hockey clubs at the Bi-Lo Center in Greenville, S.C. The “psychological aspect of getting one staff geared up for another season right after the other one ended” led to burnout and the model didn’t work in that instance, Scheer said.
“I don’t know where it’s been done effectively” in the minors, he added.
Revolution is not going at it alone. The group has struck a strategic alliance with Global Spectrum, which operates about 70 venues in the U.S. and Canada and is part of the Comcast-Spectacor empire that owns the Flyers and Sixers in Philadelphia.
Under their joint agreement, Global Spectrum will help Revolution find team owners at the local level, assist in arena lease negotiations and “help pitch business to get additional dates and opportunities in our buildings,” said John Page, Global’s chief operating officer. Global Spectrum also could own some Revolution teams, but that is not its top priority in the partnership, Page said.
“It can work, certainly with the backing of companies like Comcast,” said Jim Lites, president of Hicks Sports Marketing in Dallas. Lites has known Whinham since 1988, when both worked for the AFL’s Detroit Drive, and is a member of Revolution’s advisory board.
Revolution thinks leagues like its lacrosse circuit
could fill dates in places such as Glen Falls, N.Y.
Hicks Sports Marketing officials have talked to Revolution about possibly putting lacrosse teams in Deja Blue Arena in Frisco, where the Dallas Stars practice, and in the new 6,500-seat arena Stars and Rangers owner Tom Hicks is building in Cedar Park, an Austin suburb.
“They need a facility owner and operator to team together with so they can sell a product at an affordable price,” Lites said. “Otherwise, the models traditionally fall apart.”
The Glens Falls (N.Y.) Civic Center, a recent addition to Global Spectrum’s portfolio, is one secondary market building that does not have a sports tenant and could benefit from the Revolution model, Page said, although that remains speculation at this point.
Revolution also is distinguishing itself by providing what its principals are calling “team specialists,” industry veterans Whinham and Margenau have worked with the past 20 years. Revolution will pay those people to train the team owners and their employees to operate a sports franchise in their respective market, going so far as to write and publish instructional manuals for each franchisee.
“We give them an actual ‘starter kit,’ which the average owner in this industry doesn’t get,” Margenau said.
Franchisees may sell a team at any time, according to Whinham.
“We expect that successful franchisees will be able to have profitable exits,” he said. “A key difference is that we do not intend to drastically change the price of new teams and territories … our mission is to always provide them with low acquisition and operating costs.”
