Monday, April 14, 2008

Business-like Thinking is Everywhere… and Especially in Boise

I’ve built my business model around the concept of speed and access, and the Groups, Events, and Media office I have in Boise is no different. StinsonGEM is just one way we can help our clients take advantage of the ever-accelerating pace of change in medicine, life sciences, lifestyle, wellness, and related research and technology.

With that in mind, enjoy this article from The Idaho Statesman…

Quest for longevity: Boise's minor league teams use a business approach to stay alive
Mar. 30--Idaho Stampede coach Bryan Gates has had two pressing issues on his mind in recent weeks.

How to hold off Los Angeles to win the West Division in the NBA Development League.
And when he's going to get an $800 credit from an airline for a pricing mistake on a team road trip.

Managing investor Bill Ilett is tracking both issues closely -- the former from his courtside seat at Qwest Arena, the latter through weekly reminder e-mails to his coach/travel agent.

"It's $800 that we can use," Ilett said.

The Idaho Steelheads have a choice when they buy hockey sticks.

They can buy a one-piece stick for $120. Or they can buy a $90 shaft and $40 blade separately.

They have opted for the two-piece sticks.

"With a one-piece stick, we don't see the stick being broken," coach Derek Laxdal said, "we see $120 being thrown onto the ice."

Those might seem like nickel-and-dime issues, but in the world of minor league sports it is that attention to financial details that can make the difference between longevity and insolvency for the three teams that will play games at Qwest Arena in Downtown Boise next month -- the Stampede, Steelheads and Boise Burn indoor football team.

Still, these teams aren't get-rich ventures.

"None of us have ever made a penny on this thing," Ilett said of his ownership group. " We get paid in dunks, great assists and 3-pointers."

"It's a challenge to break even," said Ray Kaufman, the chairman of the board of Block 22, the Steelheads' ownership group.

Reminders of that challenge -- and what happens if they fail to meet it -- are everywhere.
The Steelheads began play in 1997-98 in the now-defunct West Coast Hockey League. Their rivals, the Tacoma Sabercats and San Diego Gulls, also are defunct.

The Stampede began play in 1997-98 in the Continental Basketball Association, which folded during the 2000-01 season and, despite a rebirth, has lost its place as the development league for the NBA.

Yet 10 years after they burst onto the Treasure Valley sports scene, the Steelheads and Stampede have emerged as integral parts of their community and turned Qwest Arena into a sports haven.
The Steelheads, who have won two ECHL championships in the past four seasons, have stopped what was a steady decline in attendance until a few years ago.

And the Stampede, who joined the Steelheads at Qwest Arena in 2005-06 and won 18 straight games this season, report increases in attendance, sponsorships and walk-up ticket sales.

"We've been through six coaches, three (arena) moves, three general managers, a league change -- and I think it's stronger than ever right now," Gates said.

The key, both franchises say: Treat your sports team like a business.


Steelheads forward Lance Galbraith helped the team win the Kelly Cup in 2004 and 2007. In between, he spent one year with Fort Wayne of the United Hockey League.

"One of the things that brought me back here was when you do leave, you miss how professional they are here," Galbraith said. "How they treat their players."

Said captain Marty Flichel, who has spent five seasons with the Steelheads: "We get treated like gold."

Horror stories are easy to find among minor league athletes and coaches.

Flichel moved to Tacoma in 2001, signed a two-year contract and bought a house. Less than a year later, the Sabercats shut down.

The owner of a United States Basketball League team that Gates coached walked out six days into the season.

And Stampede guard Randy Livingston was playing for Gary in the CBA when players weren't getting paid and was playing for Idaho when the Isiah Thomas-owned CBA folded in 2001. Some of his teammates had to stay in Boise for a couple of weeks working odd jobs to earn enough money to get home, he said.

"Isiah came from the inner city," Livingston said. "I thought he would be the last person to take away from a lot of guys trying to live the same dream he had when he was younger. It was disappointing. It was shocking, too."

The Steelheads and Stampede try to prevent those kinds of crises with a businesslike approach.
Ilett, for example, meets once a month with Gates and team president Steve Brandes to go over the budget and expenses line by line.

The Stampede's local ownership group has lost money just once, Ilett said (the team was owned by Thomas from 1999 to 2001). The season in the red was 2002-03, when the team restarted and made reparations to the season-ticket holders who lost money when the team folded in 2001.
The franchise never has paid its owners, Ilett said, but the Stampede did purchase a $100,000 floor for this season by saving their modest profits.

"We are very, very disciplined in how we operate business-wise," Ilett said. "The majority of teams in our league do not make money."

The Steelheads have always been profitable, team president Eric Trapp said.

"It's a sport, but it's got to be run like a business," ECHL commissioner Brian McKenna said. "You need to make sure that you've got year-round focus on the business, you need to make sure you look after your customers and you need to keep the product fresh and new and entertaining. The folks there in Boise do all those things."

The Steelheads, for the most part, let the hockey do their talking. It's a relatively new sport to Boise and the arena's open concourse creates a social atmosphere.

"They've done a good job of putting a quality product on the ice, but also making it a fun place for people to go as an event," said Steelheads fan Marty Reid, who has had season tickets since 1997.

The Stampede, on the other hand, spend more than $35,000 a year on halftime performers to augment the entertainment value of their games.

"That's just part of the business," said Gates, who has been with the team for eight years, including some time in the front office. "Is it cool that we've got someone from the Blazers down (playing for the Stampede)? Absolutely. Is it cool that we've got Quick Change (dancers) coming? Absolutely."


The Steelheads and Stampede have changed leagues this decade -- moves that have placed the franchises in more stable environments.

The Steelheads joined the ECHL in 2003-04. The ECHL is in its 20th season -- the WCHL only lasted eight -- and is well-established as a Double-A developmental league. The league has shrunk from 31 to 25 teams since the Steelheads joined, but is solid in the West.

The Stampede joined the D-League in 2006-07 -- a league that has the powerful backing of the NBA and helps develop some young players who have NBA contracts but wouldn't get sufficient playing time there. The league has grown from eight teams in 2005-06 to 14 teams this season and could have up to 16 teams next season.

Dan Reed, the D-League president, said franchise values have quadrupled in the last three years to more than $1 million. Attendance is up 15 percent from last season.

"Business is booming," Reed said. "People are realizing that this is, in fact, a different and better minor league than they've seen in basketball before."

People like Stampede fan Tim Garland, a project manager at Hewlett-Packard who has been going to games since the franchise started.

"I think if you look around the Valley, it's one of the best values," Garland said of Stampede games. "You're going to see guys who are playing in the NBA right now or are going to go up to the NBA in the future. I don't think you're going to see that anywhere else."

That direct tie to the NBA -- and the credibility it brings -- is the D-League's greatest value to franchises like the Stampede, whose fans still remember the mess the CBA became.

"The biggest challenge (for the D-League) is continuing to overcome the history of minor league basketball in many of our markets," Reed said. " It's a real credit to the Stampede that they've been able to operate as long as they have given some of the challenges in minor league basketball in the past."

Count Livingston among the believers. He doesn't expect any more payroll snafus or midseason collapses.

"Once they have that NBA logo and stamp on the team, I don't think that it will ever happen with this league just because they've invested so much," Livingston said.

The ECHL has strengthened in the West in recent years. While the overall league membership has dropped, the number of teams in the West has increased from seven to nine since the Steelheads joined, with Ontario, Calif., set to join next season.

"We've reached a certain level of stability," McKenna said.


So has Boise, which seems well-suited to its current collection of minor league teams -- the three Qwest Arena tenants and the Boise Hawks Class A short-season baseball team.

Boise, in fact, was named the seventh-best minor league market in the country last year by Sports Business Journal. The publication looked at the city's economy, market characteristics (good population with no major league teams nearby) and attendance numbers.

Another key ingredient: Qwest Arena, which was a bit ahead of its time with its downtown location when the building opened in 1997. Downtown arenas have become the norm.

"That generally tends to succeed and is almost a necessary piece of it anymore," said Bill King, a senior writer for Sports Business Journal.

A team's facility, King said, is more important than its record in determining franchise success.
Another biggie, King said: "Where that team fits into the fiber of the community."
And that's where the Steelheads and Stampede have really helped themselves.

The Steelheads raised or contributed $201,453 for charities last season, communications director Bonnie Way Snider said. The Pink in the Rink jersey auction raised a team-record $27,641 earlier this month.

The Stampede have a community foundation that generates about $100,000 per year for charity, Ilett said. The ownership group donated money to help the Boys and Girls Club build its gym in Garden City, and the National Guard presented Ilett with the Idaho Distinguished Service Medal for the work he and the Stampede have done to help local soldiers.

And none of those good deeds account for the youth clinics, reading programs and other public appearances by the players.

The charitable and outreach efforts create visibility and a connection with the community that can pay off at the box office.

"If you give back to the community," Trapp said, "they're going to want to be a part of your team."

Said Ilett: "What we have finally done is we have branded this thing. Everybody knows who we are. They may not know if we won or lost last night, but they know who we are. We've become a part of the Valley."


While the Steelheads and Stampede certainly look like community mainstays, there are some reasons for concern.

The Stampede owners average about 60 years of age, Ilett said. He has tried to lure some younger investors, but he also says selling part of the franchise to an NBA team is a possibility.
"We have to self-perpetuate this with people who are younger," said Ilett, 63.

And while the Stampede have increased attendance by 18.6 percent since joining the D-League, they rank sixth in the league with 2,844 tickets sold per game. That includes about 1,000 season tickets.

"The attendance could be a lot better," Livingston said. "This year, we've had a good product. People need to support the sport of basketball a little more."

For the Steelheads, their greatest strength is one of their greatest challenges -- consistency.
The product is fairly predictable. The franchise produces a solid, winning team every year with a mixture of familiar veterans and up-and-coming young players. The action on the ice has changed little in 11 seasons.

Attendance has slipped 12.4 percent since the novelty of the inaugural season. The economy is slumping, and the Steelheads are slashing season-ticket prices for next season for the first time in franchise history.

"It's harder and harder to figure out marketing," Trapp said, "to find new ways to get our message out that are effective."

But McKenna's experience as the ECHL commissioner tells him a franchise that lasts a decade usually has staying power.

The Steelheads are wrapping up their 11th season, the Stampede their 10th.

"It doesn't necessarily get any easier," McKenna said, "but the recognition and the brand is there and you're more accepted in the community.”

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