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Volume 21 No. 17

Franchises

Photo by: GETTY IMAGES
Just as then-Chicago Blackhawks general manager Dale Tallon began to speak, the boos began.

It had been only days since Blackhawks owner Bill Wirtz had passed away in September 2007 at 77, and the team planned to honor him before an October home game at the United Center with a eulogy given by Tallon.

Tallon began with words that spoke to Bill Wirtz’s passion and love of Chicago, its people and the Blackhawks. But the Chicagoans grew restless, especially those who notoriously nicknamed the late owner “Dollar Bill” and detested many of his business decisions.

Related story:
The Blackhawks’ Rocky decade

“As Dale started talking and Dad’s picture came up, the boos got louder and louder and louder,” recalled Bill’s son, Rocky, who took over as owner of the Blackhawks following his father’s death.

“The boos were deafening,” he added. “For a long period of time, the words ‘Wirtz,’ it was like Pavlov’s dogs — the fans just booed.”

How times have changed. In his 11th year of ownership, Rocky Wirtz is viewed as one of the model owners in any sport, while the Blackhawks have done a complete 180, transforming from what ESPN called professional sports’ worst team in 2004 to one of the NHL’s leading franchises.

That turnaround can be no clearer than the reaction of fans who spot Wirtz walking in the concourse to grab a pregame sandwich. They swamp him, take pictures, ask for autographs or just shake his hand to say thank you.

“I can’t go 20 feet out there, it gets crazy,” Wirtz said with a laugh.

The Blackhawks were veering down a bad path prior to 2007, losing more than $30 million that year and more than a combined $191 million in the 10 years prior. Wirtz said the financial troubles were so damning upon his initial dive into the books that he was concerned the franchise might cause irreparable harm to the family’s other businesses, which includes a wine and liquor distribution empire. The team needed a cash infusion of $34 million to meet payroll at the start of the 2007-08 season.

Rocky Wirtz mended the team’s relationships with fans, who now seek him out for autographs and photos.
Photo by: CHICAGO BLACKHAWKS
“It was a little like falling out a first-floor window — we couldn’t go down any further,” Wirtz said.

But Wirtz immediately developed a vision and was driven to be decisive. He focused on making the right hires, mending relationships in the community and with the fans, and implementing a number of changes that went directly against the way his father operated the team.

“One of the biggest flaws an executive can have is to not make decisions — the most important decision was to simply make a decision,” he said. “It sounds funny, but if you don’t make a decision you don’t have to worry about being wrong.”

NHL Commissioner Gary Bettman recalls meeting Rocky for dinner at Coco Pazzo in Chicago just weeks after his father had died and he had taken over the team. Only having known Rocky casually, the two spent more than six hours getting to know each other.

“Rocky was immediately focused on what he could do to reconnect the Blackhawks to that amazing Chicago sports scene, and do everything to encourage people to come back to a historic franchise,” Bettman said. “Looking back, it’s been a remarkable but not a surprising turnaround for the Blackhawks, and while the team lost its way for a while, Rocky lit the fuse to bring it right back.”

‘Pride is Back’

John McDonough has a framed photo on the wall in his United Center office that faces downtown Chicago. It shows a fan at a game in 2008 holding what appears to be a bedsheet with three words written on it: Pride is Back.

McDonough, a Chicago native and longtime Blackhawks observer, witnessed the team’s decline first hand while serving as a Cubs executive for more than 24 years, including most recently as president.

The ’Hawks Inner Circle
Rocky Wirtz, chairman and owner
The third-generation owner has overseen all aspects of the team’s operations since October 2007.

John McDonough, CEO and president
The former Chicago Cubs executive joined the Blackhawks in 2007 and has been crucial to every major initiative the team has had since.

Jay Blunk, executive vice president
A close confidant of McDonough, Blunk oversees the team’s business operations and has championed efforts on fan engagement and accessibility.

Stan Bowman, senior vice president
and general manager

The son of legendary NHL coach Scotty Bowman — a senior adviser of hockey operations for the Blackhawks — Bowman was named GM in 2009, after spending eight years in the team’s hockey operations department.

Joel Quenneville, head coach
Quenneville has led the team to three Stanley Cup championships. He is a regular participant in the team’s business meetings, serving as a crucial conduit of the team’s marketing and communication efforts.

— Ian Thomas

The two had never met before they sat down at the sports bar Champps in the Chicago suburb of Schaumburg. What was originally planned as a discussion of the Chicago sports market turned into a five-hour discussion about life, business and their families. It culminated with Wirtz pitching McDonough the idea of coming on as Blackhawks president, refusing to let him leave without an answer. McDonough had a dream job, but strongly believed that if anyone could oversee a turnaround of the Blackhawks, it would be Wirtz.

He agreed before he left the restaurant.

McDonough went to work on completely overhauling the culture and operations of the Blackhawks. “Bring me great, bring me hungry, and bring me humble,” was the directive he gave to Marie Sutera, who heads the team’s human resources department.

Jay Blunk, who had worked closely with McDonough for 22 years at the Cubs, was one of the first to join him as vice president of business operations.

“At the time, the Blackhawks didn’t even blip on the regional radar in an incredibly competitive marketplace, and very early on we realized we had to have an underdog mentality,” said Blunk, now an executive vice president with the team. “We were going to have to do things that other people don’t do — we’re going to have to over-deliver, we’re going to have to make our players the most accessible players in Chicago, and we’re going to have to show up at every charitable event.”

Leaning on their expertise in marketing and broadcasting, some of their first moves came in those areas, adding features like a fan convention akin to the one McDonough created for the Cubs, and working to mend relationships with past stars the franchise had isolated, such as Bobby Hull and Stan Mikita — players McDonough grew up watching.

Perhaps most importantly, McDonough and Blunk leveraged their connections to get the team’s games on television, a move that Bill Wirtz had opposed due to his belief that it would hurt ticket sales.

“I was coming from a franchise where our games would go into 80 million homes 162 times a year and people coast to coast knew who the 25th guy on our roster was. Our games were not on television,” said McDonough. “But the day that Rocky took over and started to go in a completely different direction than his father, I think it got everyone’s attention, and a vibration was felt that something different was happening.”

The Blackhawks even went as far as becoming a corporate sponsor of both the Cubs and the White Sox, with scoreboard features showing up at every game — “We had to fish where the fish are,” Blunk said.

Borrowing a page from the Wirtz business empire, the Blackhawks installed a corporate culture that broke down the walls between the business and personnel sides — a rarity in sports. Under this structure, Blackhawks Coach Joel Quenneville or GM Stan Bowman would accompany McDonough and Blunk to a meeting with a sponsor, while the opposite may occur during a scouting meeting. Staff meetings include every member of the organization, regardless of the topic.

John McDonough tours the team’s new training center.
Photo by: CHICAGO BLACKHAWKS
Thanks in large part to an on-ice renaissance led by young players like Patrick Kane and Jonathan Toews, the Blackhawks quickly started to gain traction. For the 2008-09 season, the team surpassed its previous record of 13,425 season-ticket holders, shattering its single-season attendance record that same season. It also played in the Winter Classic that year at Wrigley Field, dramatically raising the team’s profile both locally and nationally.

It was later in that season when McDonough spotted that fan unfurling the “Pride is Back” banner in the upper sections of the United Center. The team’s three Stanley Cup wins aside, it’s a moment that McDonough said is the highlight of the last 10 years; a message symbolic of the complete overhaul the franchise has undergone.

“I remember speaking with Rocky and saying that I hope this fan base is feeling what I’m feeling because I feel this thing is coming on strong,” he said. When McDonough spotted that banner, “that’s when I got a sense that they knew something was coming too.”

He approached the fan and asked if he could have the banner, to which the fan responded that if the message meant that much to him, sure. McDonough told him, “You have no idea.” He keeps the banner folded in a drawer in his office.

The next 10 years

These last 10 years have been some of the most fruitful in sports for the Blackhawks. Overall revenue is up an astounding 342 percent from 2007 to 2017. Ticket revenue is up 520 percent; concession and retail revenue is up 635 percent; and sponsorship revenue is up 503 percent. While the bar was set low, few sports organizations can report such significant returns. The team’s season-ticket renewal rate is nearly 99 percent, one of the best in the NHL, and regular-season television ratings are up 490 percent in that 10-year period.

Now, the Blackhawks are plotting out the next 10 years and looking to remain innovative in their business practices, a mantra that McDonough has aimed to instill in all employees.

“They say after 10 years that maybe some of the motivation wears off a bit. I don’t see it,” he said. “We’re still the underdog, and we have a chip on our shoulder every single day. I don’t want us to get caught napping saying, ‘well, the Blackhawks are the new gold standard,’ because I am a firm believer that once you stop to admire what you’ve done, you’ve stopped and it’s hard to get started again.”

Seating areas allow fans to watch Blackhawks practices, which are now open to the public.
Photo by: CHICAGO BLACKHAWKS
McDonough said that neither he nor Wirtz or anyone in the organization is satisfied — despite the three Stanley Cups, five Western Conference finals, leading the league in attendance for nine years, and new office and practice facilities.

“I feel the engine is just getting started,” he said. “The emphasis is on innovation and trying things that are distilled and well thought out, but just haven’t been done before, and it’s that opportunity that we’re going for.”

Some of that was on display at the team’s training camp and annual scrimmage this season, where more than 20,000 fans attended. The Blackhawks flew drones over the ice to create new camera angles and captured audio from players on the ice and the bench.

Blunk pointed to that crossover between the business side and hockey side of the team, which allows for deeper access to the players and ultimately more content for digital and social media, a continued focus for the team.

Charlie Besser, president and CEO of Intersport and a longtime Chicago resident, noted the Blackhawks’ commitment to elevating its product.

A place to skate
The Chicago Blackhawks’ drive to deepen their ties to the community was demonstrated in November when the team opened its new $65 million, 125,000-square-foot training center roughly two blocks south of the United Center.

Originally envisioned as a one-ice-sheet facility solely for the Blackhawks, team owner Rocky Wirtz instead decided to up the ante and add a second rink, 22 locker rooms to house local teams, a separate training and workout facility, space to host schools and classes, and a full-service bar and food stand run by Levy, who also operates the United Center concessions. There’s also standing room and seating areas for fans to watch Blackhawks practices, which are now open to the public.

“One sheet would have been much cheaper and we could have done it on United Center land, but to be able to build something to give back to the community and provide access to people so that they can relate to this team no matter if they can afford to buy a ticket or not is important,” said Wirtz, who financed the project.

Wirtz said he is now looking into ways to further develop the United Center campus and its neighborhood, known as Near West Side, into a “year-round destination.” Last year, a 190,000-square-foot addition to the United Center opened. The HOK-designed space provides new offices for both the Blackhawks and Bulls, a new box office, a team store and a five-story central atrium, that includes a sky lounge and bar.

— Ian Thomas
“At a time when experiences matter more than anything, the Blackhawks consistently deliver the highest-rated sports fan experience in Chicago and one of the best in the nation,” he said. “Plus, until the Cubs emerged, they raised the collective championship spirit of our great city.”

The team will look to build on its local and regional fan base as it plays in its NHL-leading sixth outdoor game next Jan. 1 at Notre Dame.

“When you connect to Notre Dame and Notre Dame football and that campus, it can take your brand to places it’s never been before — when we’re trying to mainstream the Blackhawks brand, there’s nothing better,” Blunk said. “There’s still enormous growth potential with this franchise, and from my vantage point, I think we have more opportunity in front of us now than ever because we are now a mainstream brand in Chicago.”

For Wirtz, the team’s continued success comes down to something that he’s heavily focused on these last 10 years.

“It’s reinforced for me how important, especially in Chicago, relationships are. Relationships with players, your employees, your fans, even the media,” he said. “For whatever reason, we didn’t have very good relationships then, and if we did, we let them go by the wayside.”

As Wirtz watches each game, he’s now used to fans coming over to his seat and asking to shake his hand. “When people come around and say thank you, I don’t think it’s just for the championships. I think it’s being relevant to them again, and being important in their lives.”

He paused before adding, “As they know there’s nothing you won’t do to try to win, they’ll support us.”

At the start of a game on Jan. 7, another sold-out crowd finished singing “The Star-Spangled Banner” in unison. Wirtz took it all in and said with a smile: “I still am surprised by not being booed.”

Photo by: GETTY IMAGES
2007
Oct. 5: W. Rockwell “Rocky” Wirtz assumes the role of chairman.

Nov. 20: John McDonough is named team president.

2008
March 30: The Blackhawks begin a sellout streak that now sits at over 430 games.

April 1: The Blackhawks announce that for the first time in team history, the team will televise the entire 82-game regular-season schedule and playoffs.


July 18-20: The first Chicago Blackhawks Convention takes place at the Hilton Chicago and becomes an annual event.

Sept. 20: The team hosts its first Training Camp Festival at the United Center.

Sept. 23: The Blackhawks surpass the team’s previous franchise record of 13,425 season-ticket holders.

2009
Jan. 1: The Blackhawks host the Detroit Red Wings in the 2009 NHL Winter Classic in front of 40,818 fans at Wrigley Field.

April 8: The Blackhawks set a team single-season attendance record of 835,972, surpassing the previous mark set in 1995-96.

July 14: Stan Bowman is promoted to general manager, who at 36 becomes the youngest general manager in the NHL.

2010
June 9: The Blackhawks win their first Stanley Cup under Wirtz’s ownership. The team would go on to win championships in the 2012-13 and 2014-15 seasons.

2013
June 28: An estimated crowd of 2 million fans celebrates the team’s second Stanley Cup victory in four seasons with a parade and rally.

2014
March 1: As part of the Coors Light Stadium Series, the Blackhawks host the Pittsburgh Penguins at Soldier Field before a crowd of 62,921 fans.

May 15: The Blackhawks and WGN sign a three-year extension of their TV rights deal through the end of the 2018-19 season.

Oct. 10: A new 5,000-square-foot flagship retail store opens on North Michigan Avenue.

2016
Jan. 28: The Blackhawks and WGN Radio agree to a five-year broadcast rights extension through the 2023-24 season.

June 15: Chicago Mayor Rahm Emanuel and Wirtz break ground on the team’s new 125,000-square-foot training center.

2017
March 1: The United Center opens a new office building and fan atrium that houses employees of the Bulls, Blackhawks, Levy Restaurants and United Center.

Photo by: GETTY IMAGES
June 20: In conjunction with the United Center and the Bulls, the team opens the Madhouse retail store on Madison Street inside the atrium.

Oct. 2: NBC Sports Chicago announces it will air live pregame and postgame shows for every Blackhawks game during the 2017-18 season, even those not carried on the RSN.

Oct. 5: MB Financial Bank agrees to a 12-year naming-rights deal for the Blackhawks’ new $65 million training center, which is now known as MB Ice Arena.

Nov. 18: The NHL announces that the 2019 Bridgestone NHL Winter Classic will feature the Blackhawks and Boston Bruins on Jan. 1, 2019, at Notre Dame Stadium.

Over their 21-year history, the Arizona Coyotes have been more associated with dysfunction than on-the-ice success. It’s a tumultuous history not lost on Chief Operating Officer Ahron Cohen, who likens it to a scene from “Entourage.”

“When Vinny Chase was thinking about leaving his agency and was meeting with others and getting pitched on why he should choose them, their message was that he was an iconic brand and should be mentioned alongside brands like that — ‘BMW, Coca-Cola, Vinny Chase,’” Cohen said. “A lot of the name recognition for us in the past has been ‘Coyotes, bankruptcy, ownership uncertainty, relocation.’

“We need to create a new narrative that gets away from that noise.”

In the last six months, the Coyotes have made several moves to do just that. Owner Andrew Barroway bought out all nine of the team’s minority investors this past summer, a move he says allows him to “streamline the decision-making process and operate more efficiently and effectively as an organization.” Barroway acquired 51 percent of the team in 2015 for an estimated $152.5 million.

Barroway then hired Steve Patterson, who has spent more than two decades as a sports executive and who brings a familiarity of the market after serving as athletic director at Arizona State.

“Any time you go through the uncertainties with ownership and the challenges this franchise has had over the years, it makes it tough to do the little things you have to do to grow the game, particularly in a Southern market,” said Patterson, the team’s president and CEO. “There’s not one thing that’s going to fix this, but bit by bit we have to take incremental steps and become a successful franchise.”

The Coyotes see Steve Patterson’s experience with facility development and ties to the Arizona community as positives for the franchise.
Photo by: AP IMAGES

“We recognize this situation that we’re in, where we’re toward the bottom of the league in a lot of key categories,” Cohen added. “It didn’t happen overnight and we’re not going to get out of it overnight.”

That has led to Patterson and Cohen to spend much of their time out in the community looking to build, or reaffirm those relationships, as well as stress that this regime is approaching things differently. Rather than attempt sweeping changes, Cohen said the franchise’s efforts have been on a “lot of singles and doubles,” focusing on a wide range of small, but hopefully effective, improvements.

The Coyotes have looked to deepen their connection through youth hockey, highlighted by a $2 million investment in programs aided by the NHL and NHLPA, and other efforts to spread not only ice hockey but inline and ball hockey to schools. The team is using its American Hockey League affiliate, the Tucson Roadrunners, who launched last season, to also spread the game to the southern part of the state.

Cohen and Patterson both referenced the success of other NHL Sun Belt markets in recent years, such as Nashville and Tampa, and how they’ve found success through deep community commitment led from the top of the organization down.

“Our message internally is, ‘Why not us?’” Cohen said. “By any metric there’s no reason why Phoenix can’t be better or just as good as any of those cities.”

The Coyotes also saw massive change on the ice this summer as well, replacing their head coach and making several aggressive free-agency and trade moves while maintaining their course as one of the youngest teams in the NHL. The summer saw the departure of the franchise’s most popular and longest-tenured player, Shane Doan. However, those moves haven’t led to success thus far, as the team is currently last in the NHL standings.

However, it has seen improvement off the ice. Attendance was up nearly 2 percent despite its win-loss record. Merchandise sales are up 8 percent, and food and beverage revenue is up 9 percent. Patterson noted that suite sales are well ahead of where the team was at this point last year, that they are tracking to hit their sponsorship budget and are already in discussions with several new partners that he said “are in categories where people didn’t want to talk to this team a year ago.”

Barroway said the team is financially stable and that “the remaking of our organization over the past year has the Coyotes in the right direction.” The team did not comment further on its balance sheet.

But Patterson’s a realist given the franchise’s history.

“You can’t blame people for a certain level of wait-and-see or skepticism,” Patterson said. “All you can do is sincerely go about your efforts to deliver on your promises and be a good member of the community and let the chips fall where they may.”

Patterson said those numbers could be even better with a different arena location other than the Gila River Arena in Glendale — long suggested by the team and NHL Commissioner Gary Bettman as a key reason for its struggles. Patterson said that for weeknight games, when traffic can cause it to take more than an hour to get to the arena from central Phoenix or the East Valley, attendance and food and beverage revenue are significantly lower compared to weekend games.

Uncertainty and dissatisfaction around its stadium situation has long cast a dark shadow on the team. The Coyotes say the current arena is too far away from the team’s fan base, premium ticket holders and corporate sponsors for it to be a success. Those struggles, along with the turnover in ownership, have helped flame rumors of relocation.

In March, Bettman wrote a letter to Arizona legislators asking them to back a bill that would have provided $225 million in public financing for a new arena in downtown Phoenix or the East Valley, in which he wrote that its Glendale location was “not economically capable of supporting a successful NHL franchise” and the team “cannot and will not remain in Glendale.”

The controversial remarks rankled many legislators and in a letter to Arizona legislators, former Glendale Mayor Elaine Scruggs wrote that “the Coyotes position at the bottom of the standings is a leadership problem, not a location problem.”

While there are clearly fissures in the relationship, the team hopes Patterson’s background in facility development and deep ties to the community help remedy the issue. Patterson was with the Houston Texans as the team planned its stadium, and also oversaw the development of ASU’s 425-acre sports facility district. He has extensive facility experience, and the Coyotes also have brought on arena consultant Mitchell Ziets to assist with the search for a new site.

Patterson said his focus has been establishing relationships in the community that would allow the team “to have more focused conversations on arena solutions.”

Karina Bohn, chief operating officer of Arizona State’s Global Sport Institute and former vice president of marketing for the Arizona Diamondbacks, said the turnover among the ownership group, the executive ranks and overall operational changeover have made it difficult for the Coyotes to establish consistency.

“In Phoenix, you need to show results for a long period of time, but once you do fans will strongly rally behind you,” she said.

From the league office, Bettman remains confident, and said all that has been done under Barroway’s watch shows the Coyotes “are working hard to strengthen, stabilize and provide a future for the club in Arizona — which is something I believe they are all committed to.”

“I would certainly hope that when they get to the point when they break ground and there’s a new building, all of the rumor and innuendo of the future of the club will stop because it will showcase a commitment that is backed up by bricks and mortar,” Bettman said.


Jerry Richardson has owned the Panthers since the team’s formation in 1993.
Photo by: GETTY IMAGES
Carolina Panthers owner Jerry Richardson walked out of the Mercedes-Benz Superdome on Sunday, Jan. 7, in what would likely be the final game of his nearly quarter century-long ownership of the team. His sale of the franchise comes amid a turbulent time facing the league, as many wonder if the league’s current challenges will affect the sale price of the franchise.

One example of those challenges comes with national viewership. The national rating on Fox for that wild card weekend playoff game, which came down to the final minute, was down 15 percent, underscoring a two-year skid in viewers of America’s top sport.

Richardson’s sale of the Panthers is clearly one of the most closely watched stories of the start of the year, as it is the first team to change hands in the NFL since ratings peaked in 2015. But despite the nearly 20 percent downward trend of the national ratings, and suggestions the NFL could fall from its catbird seat atop American sports, finance experts expect a league-record sale price over $2 billion, notwithstanding the controversies buffeting the league.

One investment banker even tossed out a figure of $3 billion as a possibility for the Panthers, which would be a record in all sports. The last NFL team to sell was the Buffalo Bills in 2014 for $1.4 billion.

Who's handling Panthers sale
Financial matters: Allen & Co.’s Steve Greenberg
Legal matters: Proskauer’s Joe Leccese and Moore & Van Allen’s Billy Moore
The “only headwinds in my view are concerns around concussions and the fact that the NFL is decidedly less global than other leagues, the NBA in particular,” said an investment banker, who like others in his position requested anonymity because he is seeking to represent potential buyers. “That may eventually impact value but [I] don’t think the Panthers will get dinged yet.”

The litany of issues that bedeviled the league in 2017 are well known: player protests, declining TV ratings, struggles in the new L.A. market. Richardson himself decided to sell after a report that he had acted inappropriately with female employees.

And indeed, one team position for sale, a one-third stake in the Tennessee Titans being shopped by Goldman Sachs, is finding little interest, sources said. Of course, that stake does not bring control (new controlling owners need to own at least 30 percent of an NFL team), and is complicated by other non-sports interests tied to the position.

No such issue clouds the Panthers, whose sale has several pluses in its favor.

“Scarcity [of teams for sale], huge demand to be an NFL owner, anticipated continued rise in value of media rights, ability [theoretically at least] to move the team, tailwinds of experiential/live entertainment generally, East Coast team that is easy for billionaires to get to,” said another investment banker.

While NFL TV ratings are down, football games are far and away the top content on television. And according to Gallup, 37 percent of Americans choose football as their top sport, more than three times the 11 percent who choose basketball, the No. 2 sport.

There are some factors unique to the NFL that will hold the price down. Roughly 80 percent of all league revenue is shared equally among the 32 teams, and league debt rules are strict and overly conservative.

That’s why marquee teams in the NBA and MLB can sell for over $2 billion, and it’s possible the Panthers might not set an all-time record sale price in sports.

Allen & Co. is handling the sale for Richardson, with a transaction finalized likely by the start of the 2018 season.