“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 Coyote hired him as general manager. Four years later, in 2001, “the owners sold the team out from under me” and Smith suddenly 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 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.”
By 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 56-team 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.
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 face-to-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 non-hockey 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.
The 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 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 first-round 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.