Leafin' Through Logic

Leafin’ Through Logic

maple-leafs-one-billion

So over the course of this week, I read a really interesting post that appeared on my LinkedIn newsfeed. It was from someone else’s blog, which I understand may not be the most credible news source, but the content stood out so much to me that I had to talk about it.

This article, written by Mr. Graham Robertson, talks about how the Toronto Maple Leafs hockey team as a brand has defied all known marketing logic. To explain, most of the sports teams that people know about—the Los Angeles Lakers, the New England Patriots, the Brazilian Soccer Team, etc.— all have one thing in common: they win. The Maple Leafs, though recently being valued at an estimated $1 Billion by Forbes, are definitely not winners. In fact, the last time they won a hockey championship was in 1967, when Lyndon B. Johnson was President and when Wal-Mart only had 24 total stores. And yet, as Mr. Robertson points out, the Maple Leafs have gone up in value from $280 Million to $1 Billion since 2004. Furthermore, in 2011 while the world was facing a global recession, the Maple Leafs had their overall revenue go up by 11%…and yet they finished in 29th place out of 30 teams!

Forbes Hockey

There’s an interesting business model that Mr. Robertson uses to describe how the Maple Leafs still make money.

  1. Despite their perennially mediocre record, the Maple Leafs always have sold-out games. There’s a really long wait for season tickets and for those who do have them, they can easily make double their profits by selling them on game night.
  2. Their television ratings are really strong. The Leafs, as being a “country brand” for Canada, have reach 30 million people across 2 TV sports stations, 3 radio stations, and 3 major Canadian newspapers. 
  3. Their sponsor list is long and loaded with money. There are more than 50 sponsors for the team, including 3 separate national banks.
  4. The team’s merchandise and retail sales are very strong. They recently added a sports bar to their arena, which itself seats 2000 people and has hundreds of TVs for fans to watch the team play on.
  5. They control their costs well. Because they have so much money, the team only uses about 6% of their brand value for drafting new players. This means that they can (and do) spend a lot of money to hire the best talent to play…and yet they cannot seem to win anything big.

So how is it possible that the Maple Leafs havegotten away with defying all marketing and consumer behavior logic for so long? Most of the time it’s: If teams win = They have more fans = They are more profitable. But yet here’s a team that never wins, but is still the most-valued hockey team. Mr. Robertson claims that the only real promise that the Leafs offer fans is that of “hope.” Their entire selling point is just on “hope.”

Which is absolutely astounding to me. How can a business that deals in profits and has shareholders, make money by just convincing fans to hope that their team will win. I mean how many losing seasons have to pass where people are saying, “Hey maybe this year the Leafs will win. Here’s my money for every game and I hope they’ll make it” for fans to finally get the message?? It’s incredible the impact that sports have on people. Hell, they’re more convincing with empty investments than all the bankers and politicians that most people complain about!

Thanks for reading and please comment below. Stay tuned for next week’s post!

The article from Mr. Robertson can be found here: http://beloved-brands.com/2013/03/10/leafs/

Photo-credit given to: http://www.torontolife.com/daily/informer/toronto-sports/