Tonight's Stanley Cup completes a remarkable sport business turnaround for Chicago Blackhawks

When they began to serve notice they were on the rise and we saw the Chicago Blackhawks as one of the top-10 sport business stories of 2008, we noted that “new owner Rocky Wirtz understands spending money to make money is the way it works in the sport business and the way most successful franchises stay sustainable for the long-term.”

Tonight as they celebrate their first Stanley Cup in 49 years, the Blackhawks stand as a classic case study of a turnaround made possible by aligning ownership with both hockey operations and business operations and firing on all cylinders on the marketing front.

Rocky Wirtz understood what was required and pressed the button on hiring new Blackhawks president John McDonough in the fall of 2007. Just over a year later, the Blackhawks used the NHL Winter Classic on New Year's Day 2009 -- playing at iconic Wrigley Field -- as a metaphor for McDonough's approach to promoting your product and making it as accessible as possible.

They were still 18 months away from tonight's Stanley Cup victory, but the revitalized Blackhawks were an Original Six franchise that mattered again to Chicago and to the NHL.

We rated them as the hottest sport property in North America in Champions of The Sport Market 2008 and watched last fall as they confirmed their status as the fastest-growing hockey business in North America when they made a big move on Forbes Magazine's list of 2009 NHL franchise valuations.

Forbes valued the Blackhawks at $258 million U.S. in October, seventh among the 30 franchises in the NHL. No franchise increased in value more than the 26% bump enjoyed by Chicago, which climbed seven places from #14 the previous year; leapfrogging ahead of the Vancouver Canucks, whom they eliminated in the second round of the Stanley Cup playoffs each of the past two years.

There is no denying the engine of their make-over is winning talent; thanks to the work done by previous Blackhawks' general manager Dale Tallon and his successor Stan Bowman and epitomized by players such as Jonathan Toews, Patrick Kane, Marian Hossa, Duncan Keith and Brent Seabrook.

Yet equally clear is that the team's increased equity comes on the strength of the one-two punch of a better product and better marketing.

Bulls and Bears blog May 5th: http://thesportmarket.blogspot.com/2010/05/nhls-chicago-blackhawks-represent.html

The remarkable rise of the Blackhawks has been fuelled largely by a tremendous turnaround in ticket and sponsorship sales, which in turn has been supported by a new television strategy to repatriate and promote the Blackhawks brand throughout Illinois.

The Blackhawks gained 20 new corporate sponsors under the leadership of McDonough and the ownership of Rocky Wirtz, the son of the former owner, the late Bill Wirtz. Sponsorship quadrupled and season ticket sales tripled. As a result, the Blackhawks rose to the top of the league in attendance, rocking the United Center – the largest arena in the NHL -- and making it live up to its name as the Madhouse on Madison.

That in itself is an amazing turnaround from their second-to-last status in league attendance four years ago. Chicago has jumped from 29th among 30 clubs in 2007 to 19th in 2008 and first overall in the two seasons since then.

Rarely in the business of sport has a professional sport franchise gone so rapidly from such a lowly status both on and off the field of play, to a perch this high as one of the league leaders in business operations and, as of tonight, its overall champion.

Their "One Goal" slogan, a solid marketing mantra since 2008, has been reached, very effectively and ever so efficiently. The bottom-to-top turnaround: less than five years.

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If Gary Bettman cannot see the opportunity for the NHL, someone else will

One of the principal jobs of the commissioner of the National Hockey League – or any professional sports league for that matter – is to create value for his member franchises and their owners. Commissioners do that by creating league-wide conditions that grow the business of their member clubs.

The more revenues franchises generate, the greater their business valuation. When more franchises make more money, the average value increases throughout the league and that is good news for NHL club owners in the same way rising home prices and growing ownership equity is a boon for home owners.

So when it comes to franchise values, we give NHL commissioner Gary Bettman credit where it’s due. Values have grown under Bettman’s 17-year tenure several fold.

The question for any seasoned business valuator -- or any fan who cares about the game for that mattter -- is, however, what could be?

When one considers where the league could be without the stresses -- both public and private -- surrounding a group of under-performing hockey businesses in the southern U.S., Bettman's record raises red flags and deserves further scrutiny.

That’s because every single one of the NHL’s major business indicators – attendance, ticket prices, box office, merchandise sales, sponsorship sales, television audiences and revenues – would be even higher if the league had less U.S. sunbelt franchises and more Canadian or northern U.S. franchises.

Why Bettman has not pro-actively addressed the issue is one of the big blind spots in his leadership of the NHL. Why the NHL’s governors – the owners of the league’s 30 clubs – have not pushed more aggressively for solutions that would strengthen the league and improve their own lots considerably is an even bigger mystery.

If it’s true that you’re only as strong as your weakest link, the Phoenix Coyotes are a problem for the NHL. So are the Atlanta Thrashers. Throw in the case of the Florida Panthers – where less people are watching on FSN Florida (an average of 13,400 viewers per game) than are attending games in person (15,000 on a good night) – and you have at least three teams mired in red ink in questionable hockey markets.

Why not play to your strength? Why not license your product in markets where it is being gobbled up in record numbers? Why not replace your weak links with solid performers?

“The Case for Canada” report outlines just how bullish the Canadian market is for the NHL brand of hockey, especially in the period since the lockout in 2004-'05.

http://www.vancouversun.com/sports/could+cash+return+roots/3060451/story.html

It suggests that if the NHL relocated three of its weakest southern U.S. franchises to Canada, their individual franchise values would increase by more than 50 per cent and the league’s average team valuation would jump by $11 million US. It also submits that the combined revenues of the three relocated franchises would rise by $100 million per year, average attendance would grow by 6,000 more fans per game per franchise (or 738,000 more per season) and regional television audiences would increase twenty-fold. Yes, twenty-fold.

Yet more than anything, the report by TheSportMarket.biz and The Vancouver Sun makes a compelling case for the landing of at least one more NHL team in Canada. Plain and simple, the numbers clearly show how the NHL, its member franchises, broadcast partners and other corporate stakeholders – not to mention fans of the game in Canada – would be well-served if the NHL shifted its centre of gravity northward.

The proof is in the pudding of the hockey markets themselves. Considering market size, demographics and other attributes including affinity for sports in general and hockey in particular (as Forbes Magazine does in its annual list of NHL franchise values), the average NHL market contributes $84 million to its franchise valuation (out of about $210 million in average overall value).

Sun belt markets are considerably weaker; the market attributes of Phoenix, Atlanta and Florida for hockey average out at only $48.3 million according to Forbes.com. That's about half the average U.S. hockey market value and about 40 per cent that of the average Canadian market.

Those numbers exemplify how the sunbelt teams are dragging down the average value of NHL franchises the way shabby houses devalue entire neighbourhoods.

The Case for Canada is clear. It’s your move commissioner Bettman.

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