And
yet… and yet… the Toronto Maple Leafs are recognized as the most valuable
franchise in the NHL, reputedly worth well over $1 billion dollars. Their
popularity amongst their long-suffering fans is at an all-time high. Tickets
for home games are almost impossible to secure; every game is sold out and
there is a lengthy waiting list for season tickets despite the exceptionally
high prices. Current and past jerseys and assorted logoed merchandise –
everything from Carlton the Bear mascots to watches to pet gear, fly off the
shelves. The team’s Twitter account has over half-a-million followers.
How
to explain the Toronto Maple Leafs’ success? Well, first of all, we should
remember that the franchise is owned by Maple Leaf Sports & Entertainment,
who also own other sports franchises such as the Toronto Raptors, and various
facilities, including the Air Canada Centre and BMO Field. MLSE’s bills itself
as “Canada’s preeminent leader in delivering top quality sport and
entertainment experiences” to its fans. A private organization, it delivers on
its mission. And for MLSE’s owners (a large portion of MLSE is controlled by
public companies Bell and Rogers Communications), the investment has been
spectacular: In 2013, American financial magazine Forbes
estimated that MLSE is worth at least $2.25 billion dollars, and a Canadian
labour news agency reported recently that MLSE’s profits are “in the range of $100 million CAD per year”.
So
the Toronto Maple Leafs can continue to lose, and still make money. The
franchise can continue to pay its players anywhere from a low of half-a-million
dollars per year to eight-million plus, and still make money. It doesn’t
matter: the players are happy (with no monetary incentivisation to win, why
shouldn’t they be?), the fans are happy, and the Toronto Maple Leafs’ detractors
still have a hockey team they love to hate.
I
often talk to my clients about the importance of determining the core function
of their company. What’s a core function? It’s what drives the revenue, the
function around which all other functions revolve. In some organizations, it’s
manufacturing. In others, it might be retail store operations.
Not having insight into MLSE's inner workings, I don't know what its core function is. But what I find fascinating is that MLSE, despite having a mediocre hockey team, still makes money, and lots of it. So its core function may be franchising sales or merchandising. It certainly isn't about winning the Stanley Cup.
