Scoring position - Atlantic Business Magazine

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Scoring position
If Bobby Smith has his way, loyal Moosehead fans will soon be rewarded with a
championship team. Because what’s good for the game is also good for business.
By Stephen Kimber
“So...” The new owner glanced around
the room at the expectant faces of the
small group of front office employees he’d
inherited as part of his recent purchase of
their company. “Who here handles group
sales?”
It was September 2003, and Robert
David Smith had just acquired 64 per cent
of the Halifax Mooseheads junior hockey
team from Moosehead Breweries for what
was reported to be more than $3 million.
It seemed an excellent fit. Smith, better
known to a generation of hockey fans as
Bobby, credited his own three years as a
junior player with transforming him from
“a 17-year-old kid who played hockey into a
hockey player, and there’s a big difference.”
After breaking Ontario junior hockey
league records for assists and points
that still stand nearly 35 years later,
Smith had been drafted first overall in
1978 by the NHL’s Minnesota North
Stars. Over the course of a 15-year
professional career, he played in more
than a thousand games, scoring almost
a point a game and won a Stanley Cup
ring as a member of the 1986 Montreal
Canadiens.
When he retired in 1993, Smith
returned to school (academically gifted,
his mother had been “disappointed”
when he originally chose hockey over
university) and squeezed four years of
undergraduate and graduate business
education into just three years. The day
he graduated, the NHL’s Phoenix Coyotes
hired him as general manager. Four years
later, in 2001, “the owners sold the team
out from under me” and Smith suddenly
Online extras: atlanticbusinessmagazine.com | 15
Smith, better known to a generation of hockey fans as
Bobby, credited his own three years as a junior player
with transforming him from “a 17-year-old kid who played
hockey into a hockey player, and there’s a big difference.”
found himself out of a job. And at loose
ends.
Which is when he began to
reconsider his own passion for junior
hockey. Could it also be a good business
investment? He kicked the tires of an
American team in the Western Hockey
League, explored the possibilities of an
Ontario franchise. Neither turned out
to be a good fit.
Then one day in the spring of 2003,
as he was finishing up a golf game in
Scottsdale, Arizona, he got a call from
Jeff Hunt, a friend who owned the
Ottawa 67s junior team. Hunt told him
Moosehead Breweries would announce
the next day it was selling its Halifax
junior franchise. Smith should check it
out.
Smith, who was born in North Sydney
and lived briefly on Sable Island as
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16 | Atlantic Business Magazine | November/December 2012
a child before his civil servant father
transferred the family to Ottawa,
“immediately called 4-1-1 and asked
for the number of the brewery in Saint
John. I asked to be put through directly
to the president.” Three months later,
Smith had a hockey team to call his own.
Passion rekindled. But a business?
Group sales?
Group sales — putting bums from
bowling teams, university engineering
classes, boy scout troops and minor
hockey teams into arena seats every
game, win or lose — is traditionally a
critical revenue-building piece in the
sales strategy of any sports franchise.
But there was, Smith remembers, an
uncomfortable silence in the room that
day. Finally, someone responded. “Well,
um, I answer the phone when anyone
calls.”
to
Get it there.
SEE
YOU !
SOON
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By the spring of 2004, negotiations
for a new contract had bogged down.
At one point, Smith says he suggested
extending the current contract for a year
while the two sides continued to hammer
out a better deal. But when Metro Centre
officials coupled their two-word response
— “Not interested” — with a threat to
start peddling the team’s scheduled
game dates to other customers, Smith
decided to play hockey’s version of hard
ball.
Just weeks before the opening game of
the 2004-05 season, he stunned Metro
Centre’s operators, not to mention the
team’s fans and the downtown restaurant
and bar operators who depended on
game-night customers to boost their
own revenues. Smith announced he
was moving the Mooseheads from the
modern 10,500-seat Halifax Metro
Centre with its comfortable seating and
new jumbo Silverscreen scoreboard to
the crosstown down-at-its-heels 75-yearold 5,500-seat Halifax Forum with its
hardwood bench seating and obstructed
views of the ice surface.
Three days later — after the ensuing
public outcry prompted frantic city
officials to step in and take over the faceto-face negotiations — Smith had a deal
he could live with.
The details of that 28-page agreement,
which has since been renewed, are
secret. But it’s believed Smith not only
got a significantly larger slice of the nonhockey revenue his team generated but
also a chunk from the annual rental fees
for the 44 luxury skyboxes that ring the
arena. Smith himself won’t talk specifics,
but he does make the point the boxes
wouldn’t be nearly as attractive without
the Mooseheads’ 40 home games a year.
How profitable is the team? While
Smith dismisses recent speculation in
the local online business publication,
allnovascotia.com, that the team earned
a profit of $700,000 “in its best years”
— “They’re just plucking numbers out of
the air,” Smith says, “and they’re way off”
— he declines to reveal much more. “In
some years, we’ve experienced losses,
significant losses,” he says. “In other
years, we’ve had some black ink.”
Though group sales and lease
agreements may be keys to financial
stability, Smith knows the real ticket to
real financial success for the Mooseheads
is to consistently put a winning team on
the ice.
He thinks he’s finally figured that one
out too.
Ta da! Your new lodge is magical indeed.
B
y the time he bought the team,
the Halifax Mooseheads were
already a Canadian junior hockey
phenomenon — in the stands at least.
The season before when the Mooseheads
had come within a game of going to
the Memorial Cup, the national junior
championships, the team averaged 7,600
fans a game, second best in the entire 56team Canadian Hockey League.
During its first 10 years of operation,
those box office triumphs had helped
spawn a new Maritime division within
the Quebec Major Junior Hockey League,
and the Mooseheads had even hosted the
2000 Memorial Cup tournament. The
team’s marketing success not only helped
its landlord, the publicly-owned Halifax
Metro Centre, finally become profitable
but it also made it possible for Halifax
to land the rights to host the 2003 world
junior hockey championships, the 2004
women’s world hockey tournament and
the 2007 men’s world championships.
As majority owners, Moosehead
Breweries had done many things right,
including keeping ticket prices down
so games became popular family
entertainment.
But the brewery hadn’t really ever had to
run the team as a business. “Moosehead,”
Smith says simply, “owned the team to sell
beer.”
Although Smith is the first to admit
owning a hockey team “is a lot more fun
than investing in XYZ stock,” buying the
Mooseheads instantly made it his primary
investment vehicle, and he needed it run
on a business-like basis.
“One of my first decisions was that we
needed to hire someone new to handle
group sales.” He was so impressed by two
of the applicants — Brian Urquhart, a
young accountant who would abandon his
C.A. studies to join the team, and Travis
Kennedy, fresh out of university — he
hired them both. Today, he says proudly,
they’re both vice presidents “running the
team’s business side on a day-to-day basis.”
But group sales wasn’t the only, or
most pressing, issue on Smith’s plate.
He quickly became convinced the team’s
lease with Halifax Metro Centre — the
arrangement that set out not only how
much the team had to shell out in rent
for each of its home games but also
itemized its share of the arena’s take from
everything from game-day sales of hot
dogs and beer to arena advertising — was
“the worst in the entire Canadian Hockey
League” and “could bankrupt the team” if
it wasn’t fixed.
T
he last season the Mooseheads were
serious contenders for the Quebec
league title was in 2007-08 when
team management traded away their best
young talent along with future draft picks
in order to stack the team with veteran
stars for a run for the championship. That
didn’t turn out so well — the team was
swept in four games in the semi-final and
its star player, Brad Marchand, the future
NHL star acquired in one of those trades,
was benched for the final game.
“That’s when I decided enough was
enough,” Smith says today.
Like many junior hockey teams, the
Mooseheads had operated on a boom-bust
cycle, taking two or three seasons to craft
veteran teams that could — but never quite
did — win it all, then starting all over again
the next season with a cast of no-names
and castoffs.
When Smith bought the Mooseheads
in 2003, in fact, the team was coming off
its most successful season on the ice. The
next year, Smith’s first, the Mooseheads
finished dead last.
Up and down, up and down.
After the failed run in 2007-08, Smith
18 | Atlantic Business Magazine | November/December 2012
recalls, “we lost 16 players. That’s when I
made the decision that we were going to
take our lumps. We were going to keep our
draft picks.”
For the next three years, “we were one
of the worst teams in Canada.” Attendance
plummeted from close to its all-time high
of 7,600 to just over 5,000 fans a game.
But then last season, the first bright
light escaped from the far end of the
tunnel. Thanks to finishing so close to the
bottom of the standings the year before, the
Mooseheads not only got to select second
overall in the annual draft of midget
players but they’d also stockpiled enough
high draft picks and players of their own
that they were able to trade for the number
one pick who turned out to be Nathan
MacKinnon, a hometown 16-year-old
already being compared to Sidney Crosby.
“Before he even stepped on the ice,”
Brian Urquhart says, “the excitement level
picked up, business picked up.”
Led by MacKinnon and fellow firstround draft picks forward Jonathan Drouin
and goalie Zachary Fucale, the 2011-12
Mooseheads over-achieved on the ice and
— as word of mouth spread — at the box
office. This year, with the team again a
legitimate contender for the Memorial Cup,
Urquhart wants to convert last year’s walkup, check-this-out, one-game customers
into 15-game package ticket buyers or
even season ticket holders. His goal is to
goose the number of season ticket holders
by more than 1,000 to 4,000. And keep
them in their seats for next season when
MacKinnon will very likely have moved on
to the NHL.
The trick, Smith acknowledges, will
be to ice a consistent product on the ice.
“There will always be a certain amount of
up and down,” he says, “but you don’t have
to manage boom and bust all the time.”
That said, he also knows that the team’s
loyal, long-suffering fans (the Mooseheads
have yet to win a league championship in
their 23 year history) want a championship
team.
So does Smith. “I can remember the
heartsick feeling I had being eliminated
from the [junior] playoffs in 1978, thinking
I would never have another chance at the
Memorial Cup.”
And now he does. Business meets
passion. | ABM