When The Tv Lights Start To DimWilliam C. Symonds
Inside the Montreal Forum, the anticipation was as brittle as mirror ice on a frozen pond. Montreal Canadien fans were worried because their first-place Habs had dropped three straight. Then, just over four minutes into the Feb. 10 match against the red-hot Vancouver Canucks, Canadien Gilbert Dionne slapped the puck into the net and the standing-room crowd of 16,838 erupted. That set the tone for an 8-3 blowout of the Canucks and rekindled hopes that the Canadiens may win the Stanley Cup once again--adding to the record 23 they have captured since 1916.
With such a powerful team and such rabid fans, running the Canadiens may seem as smooth a job as one of Dionne's slapshots. The team is solidly profitable. Last year, it was the key reason its owner, the Sports & Entertainment Group of Molson Cos., Canada's largest brewer, reported $7.4 million in operating profits on sales of $52 million. But Ronald L. Corey, the pin-striped president of the Canadiens for the past decade, complains that "it is getting tougher and tougher" to prosper in hockey. Salaries have soared even as the National Hockey League has become the first professional sport forced to take a cut in its U.S. national TV contract.
Corey isn't wringing his hands, though: He's taking steps to insulate the team from the vagaries of TV money by increasing revenues generated at home. And it won't be surprising if Corey's experiment is closely watched by executives in other sports. The years of steady growth in the national TV contracts of Major League Baseball and the National Football League may soon end.
Hockey has already taken its lumps. The league is receiving a mere $5.5 million from cable network SportsChannel America this year, compared with $17 million yearly under its previous three-season deal. True, the NHL does better in Canada, where its contract generates about $25 million a year. And the Canadiens, like other teams, pull in substantial revenues from local broadcasts.
But TV is no longer Old Reliable. So the Habs are creating other mainstays. The centerpiece of their strategy is a plan to replace the Forum, which they have occupied for more than 60 years, with the largest arena in the NHL. If they get the needed government approvals, the Canadiens plan to break ground on the $128 million new Forum in 1993 and move in for the 1995-96 season.
BIG PAYOFF. The logic for the move is compelling. Ticket sales already make up almost 65% of the revenues of NHL teams, with 10% more coming from other arena sources such as concessions. Only about 25% comes from TV. A new arena may be the only way a team can meet player costs, which soared 34% this season, to an average of about $300,000 a player, and still make money.
The new, privately financed Forum promises a big payoff. Its 33% increase in capacity, to 21,500 seats, should easily add more than $5 million to annual gate receipts of about $15 million. And while the Forum's 61 cramped luxury boxes bring in about $1.3 million a year, the 126 boxes in the new Forum will net 10 times that. Despite Canada's fierce recession, the Canadiens managed to prelease all the boxes, at upto $106,000 a season, in only two months. "It will be a tremendously successful building, and maybe one of the most successful in allof sports," predicts Ron Turner, senior vice-president at Ellerbe Becket Inc., the leading U.S. architect of new arenas. (Ellerbe is not working on the Forum.)
Of course, all those rosy projections depend on fan support. That's why the Canadiens throw free practices, field a traveling softball team during the summer, and keep eight Hall of Famers on the payroll.
Still, Corey worries that there's no way "to guarantee winning year after year." So Molson has formed a joint venture with Canadian Pacific Ltd. that will one day build two huge office towers next to the new Forum. Corey calls it "a long-term guarantee." In the uncertain business of sports, even the depressed office market can look like a sure thing.
THE CANADIENS' FORMULA FOR PROSPERITY -- Own your own arena--and stuff it with luxury boxes -- Build concession sales by making food outlets eater-friendly -- Stay close to the fans by opening practices to the public--and don't charge them for it -- Don't disappear in the off-season--keep your players in the public eye over the summer -- Don't let the stars go--staff your front office with retired greats and Hall-of-Famers DATA: BW