The Leafs are clearly the most Beloved Brand in Hockey. While there are lots of great fans of great teams, the Leafs stand alone with insane fans about a bad hockey team. The Leafs have not made the playoffs since 2004 and have not won a Stanley Cup since 1967, yet it has a following like no other hockey team. Most of the other Beloved sports Teams, whether it’s the Yankees or Man U or the Montreal Canadiens all reward their fans constantly with victories. It’s not very hard to be a fan of a team that has won 25 championships. But with a few teams like the Leafs or the Chicago Cubs, it’s not easy being a fan. Constant let down and heart break. The connection to the Leafs is not a rational one, but rather an irrational choice–or as Hotspex would say “e” rational that talks to the EMOTIONAL connection.
Let’s look at how the Leafs business model works. 1. Getting tickets to a game is nearly impossible for the average fan. They have strong luxury box sales and a strong base of seasons tickets. Season Tickets are passed down to family members in wills. At Pfizer, we put our name on the waiting list and they said it could be up to 40 years to get tickets. If you do have tickets, you can easily scalp them for twice the value on game night. 2. Every game is on TV, with strong ratings–a usual top 20 in the ratings for CBC’s Hockey Night in Canada on Saturday nights. In fact, if CBC every lost HNIC, it’s possibly the end of the network. The Leafs receive added earned media with 2 sports TV stations, 3 radio stations and 3 major Newspapers constantly covering every move the team makes. 3. The team’s sponsorship drive is incredible–carrying an astounding 52 sponsors on it’s roster–including separating out the banking category into Core Banking, Wealth Banking, Credit Card banking, which allows them to get money from three separate banks. 4. Merchandise sales are very strong. The Leafs have just announced it was changing its third jersey to be a replica of the 1967 jersey. Which means all those fans have to go out and drop another $129 on a new jersey. This past year, the Leafs have added a sports bar to the ACC, just outside the arena that has hundreds of TVs and seating for two thousand people. 5. Control of Costs works for the Leafs. In the 90s, as the Canadian dollar slid, players started to demand being paid in US dollars. Since that decision, the dollar has gone from 63 cents to parity and the Leafs bottom line has benefitted. In terms of Brand as a Business System, the Leafs get it. They derive all their value from their brand.
If we look at the hockey results, the Leafs haven’t made the playoffs since 2004. So let’s use 2004 and 2010 as the basis for comparison on numbers. In those six years of hockey despair, overall revenue has gone up from $117million to $187million. In the last year, with the world facing a global recession, following up on a 29th place finish in the standings, the Leafs revenue went up ELEVEN PERCENT!!! And because of the player strike a few years ago, player costs have gone down from $69 million to $57million. That’s a P&L the people of Price Waterhouse dream about. The resulting brand value has seen the Leafs value go from $280million in 2004 up to $505 million in 2010–making it the #1 valued team in hockey. Seven years of missing the playoffs and the value of the team has nearly doubled.
Compare the Leafs to the Red Wings, who use the slogan “HOCKEY TOWN”. The Red Wings are clearly the best hockey team in the past decade, best win percentage, most playoff appearances, most Stanley Cups. Let’s use 2004 and 2010 again. In those six years, Detroit’s revenue has gone up from $97million to $117million, a gain of 20% while the Leafs revenue were up 60% over the same period. Ticket sales are actually down at Joe Louis arena by about 10%. While the Red Wings made back to back Stanley Cup finals, you could have actually gotten a ticket at face value the day before one of the games. The value of Red Wings team has gone from $248million up to $315million, a solid gain of 27% in value but dwarfed in comparision to the Leafs 80% gain in value over the same period.
Now, we must come to the question of why? Are Leaf fans crazy? I do remember a few years ago, on Trade Deadline day in late February, there was a quote from a fan who said “I can’t believe I took the day off from work to watch the Trade Deadline and my Leafs didn’t do anything”. That’s borderline crazy. The Leafs are the eternal underdog, where the pursuit of victory is greater than the victory itself. But we might not ever find out. I’ve resigned myself to the fact that the Leafs WILL NOT win a Stanley Cup in my lifetime. And yet, I remain a fan. If they ever do win the cup, I’m not sure if the team’s value will go up or even down from there. Debate all you want, we may never find out.
Toronto likes to think of itself as the centre of the hockey universe. Not even close. Name me great hockey heroes from Toronto and the list is much shorter than that of Montreal. In fact, on a per capita basis, Saskatchewan is the true centre of the hockey universe. Most hockey superstars are from the remote locations like Perry Sound, Brantford or Flin Flon Manitoba. Maybe Stamkos will be the one that breaks through the top 50 all time. In the past 30 years, it sure hasn’t been the great players on the team. The Leafs have only had two players, Gilmour and Sundin, that you could call superstars, and a handful of good players like Curtis Joseph, Borje Salming, Wendell Clarke or Rick Vaive. But Toronto fans have made the most of average and have created mythical figures in Felix Potvin, Bryan McCabe or Mike Palmateer. Not sure where Reimer will be on this list, but if you talk with a Leaf fan, they think of him in the same breath as Patrick Roy.
As we are on the cusp of a new season, Leaf fans are optimistic. And ready for another Cup run. There’s only one thing I know for certain and would actually bet on it. The value of the Leafs will go up this year. YEAH!!!