The Noncompetitive Advantage

The Pittsburgh Pirates became the subject of increased scrutiny last week after leaked financial documents revealed that the lowly baseball club had managed to turn a profit while enduring 18 consecutive losing seasons.  The Pirates, from the front office down, have been run so poorly over the bulk of that futility streak that it should come as a surprise to some that a “small market” baseball club could indeed make money while failing to resemble anything close to a competitive team.

The Pirates’ futile existence coupled with their ability to turn a profit might sound somewhat familiar to hockey fans.  Look no further than the Toronto Maple Leafs as comparable hockey club to the Pirates.  Before Leafs fans’ heads explode, consider that statement in terms of competition and profit.  The argument that pundits take aim at the Pirates with is that the club has little to no immediate need to compete in the National League if they’re turning a profit while losing on epic level and drawing very little in gate reciepts.  That’s where the Maple Leafs and Pirates differ greatly; the Leafs are the NHL’s biggest draw, and while they’ve hardly been a Stanley Cup favourite over the last decade, they haven’t skimped on payroll and at least duped their fan base into thinking they’re going to compete.

In Canada, hockey is gospel.  We know that, which is why we accept that a club primed for their sixth consecutive playoff absence will find its way into 41 nationally televised hockey games next season.  There’s no denying the support of their franchise among Leafs fans, although, it’s fair to question that blind faith.  Despite their current run of futility the Leafs still draw more than their competitors, both at the box office and on TV.  Even without a single playoff appearance since the NHL’s return from the 2004-05 work stoppage, the Maple Leafs still lay claim to the league’s highest average ticket price at $114.10.  Even Detroit Red Wings fans have to pay more when the Leafs are in town, Jesus, I’d like to see some logic void of the “original six” argument on that one.

That hefty ticket price offers very little in the way of value, at least if you’re looking at it from a return on investment standpoint.  ESPN’s 2010 Ultimate Team Standings ranked the blue and white 102 out of 122 North American professional sports teams in terms of what “franchises give back to the fans in exchange for all the time, money and emotion the fans invest in them”.  The method for determining the rankings was based on several factors including; affordability, fan relations, ownership, players, stadium experience, title track, etc.  Say what you will about the Pittsburgh Pirates, but any average fan can walk up to the gate at PNC Park and purchase a ticket for the purpose of enjoying a baseball game complete with affordable food and beer.  You can’t say the same for the Toronto Maple Leafs’ in-game experience.  After purchasing a ticket from a scalper for well above face value a Leafs’ game will run you well into the hundreds if you plan on enjoying a drink and some food. Unless, of course, you’re a swag steppin’ big shot with corporate tickets.

It’s not just at the concession stands and box office where Maple Leafs Sports and Entertainment gouge their fans; according to Forbes Magazine the club was among the least efficiently run in terms of management over the 2009-10 season.  In a study that measured efficiency by calculating ” ‘payroll cost per win’ AND whether or not the team qualified for postseason play”, the Leafs spent $1.53 million per win while the median for the league was at $1.2 million.  At least they’re among other under performing clubs like the Edmonton Oilers, Calgary Flames, and New York Rangers, although the average ticket price for all three of those clubs is below $60.

Are The Leafs Hockey’s Answer to Baseball’s Pirates?

According to the documents outlined in an Associated Press report, the Pirates were able to make money by collecting nearly half of their income from Major League Baseball sources such as television revenue and merchandise sales.  The club has drawn a shit-ton of scorn for taking MLB money, and not putting it back into on-field baseball operations.  Fair enough, they’ve been shedding payroll year after year while seemingly lining the pockets of ownership and executives with very little concern for winning.

The comparison I’m making here is that MLSE has very little incentive to produce a winning hockey club, just like the argument that many have made in regards to the Pirates.  Once you start winning, then it becomes an expectation — which is where a lot of the scrutiny the once storied Bucs probably originates from.  How can a team that’s won five World Series titles between 1909-1979 and another nine division titles after between 1969-1992 reach a level of futility never before witnessed?

In my selectively humble opinion, the Toronto Maple Leafs aren’t exactly on the same scale as the Pirates in terms of futility.  They’re an interesting case study in the emotional attachment that fans have to their team, though.  The Maple Leafs rule the roost in terms of merchandise sales, television revenues, and box office returns; if anything it’s reasonable to take aim at their bloodless ownership and mercurial management team for failing to deliver an on-ice product that’s worthy of increased costs and national exposure.  In Richard Peddie’s world, the playoffs would only allow the Leafs to make even more money by pumping up the ticket price to an obscene level.  You would think maybe they would have approached this rebuilding thing with a little more planning to make the postseason a reality.

Maybe it’s time Leafs’ faithful stop spending first and asking questions later… but that would be unfaithful.

Comments (9)

  1. Curious about your “blind faith” statement. I see this a lot, and it’s generally implied to be a derogatory comment on the Leafs fan base. What I don’t understand, is why you think it’s OK to abandon a team (or not support them/cheer for them) when things don’t look good? Is that not what’s known as “bandwagoning”?

    Sports is cyclical, and although in your short history, you seem to claim the Leafs haven’t been very good (and I completely agree), the years pre-lockout (specifically since the 98/99 season) saw the Leafs reach the semi finals three times, the conference finals twice, and a single quarter finals exit in the playoffs. Couple that with three seasons of 100 or more points as a team, and I’m not so sure your argument holds much water.

    Or, perhaps I’m reading it all wrong, and the negative context isn’t implied. It just seems to be an over-used statement that creeps up so often regarding the Leafs, but seems to have fairly little basis in fact when you actually look at their record over the past ten years.

  2. blurr1974, When a losing club is charging the most for its product, I think that’s taking advantage of fans that are loyal based on the club’s history. Let’s forget about the pre-lockout Leafs for right now and focus on the comparison of two teams locked in streaks of futility from two entirely different sports. Both turn a profit, but one does so by manipulating revenue sharing and putting a poor product on the field, while the other just pumps up costs for the fan while the team continues to struggle.
    The Pittsburgh Pirates have a storied history just as the Leafs do. They’ve been absolute shite for 18 years, therefore, the in-game experience is affordable and accessible to the average loyal fan. Are you implying that it’s fair for MLSE to gouge fans based on moderate late 90′s success?

  3. I’m not sure the comparison holds that much water. If I’m reading you correctly (I haven’t been following the Pirates story at all), the Pirates are profitable largely because of TV and revenue sharing money they’re getting from MLB, not from gate receipts. One could argue that the have incentive to keep their internal revenue stream, i.e. ticket sales, down to qualify for more revenue sharing, or at the very least don’t have to care if fans come or not.

    The Leafs do have to care if fans come or not, but are in the enviable position of being able to take their attendance for granted. There’s no money in hockey unless you’re getting the ticket sales. I know you went to lengths to say that the Leafs are different than the Pirates in that they still draw fans despite futility in the post, but with that being the case I’m not sure I see how the “Are the Leafs Hockey’s answer to Baseball’s Pirates?” question even gets asked without the answer being self-evident. The second last paragraph indicates the Leafs have no incentive to make the playoffs because winning raises expectations, but the last paragraph says they do because they’d be able to charge astronomical prices for playoff tickets. Which is it? The Pirates have no incentive to win because fielding a winning team raises player costs and would upset the balance sheet. That’s an entirely different thing.

  4. Funny that a team with next to no attendance turning a little profit makes headlines around the sports news world, yet the Leafs making money while charging astronomical amounts for tickets to cash in is ok because they’re hockey’s storied Leafs. Agree somewhat with Brian that the answer is self-evident. BUT it’s an interesting argument.

  5. @Vince It’s certainly arguable which of these two teams’ management groups are more reprehensible/inept. I’m not sure they’re directly comparable, but both their approaches do have a bad taste about them.

  6. JFJ equals Littlefield it seems in terms of how they destroyed their franchises future prospects AND current prospects at the same time. Burke=Neil Huntington in that both are GMs that seem to know at least a little about what they are doing but have to deal with cleaning out the mess that they were left. The Pirates were left without a good farm system despite 14/15, (not sure which) straight losing seasons when Neil Huntington came in and Burke was left with tons of no trade clauses to deal with. In that respect they are similar.

  7. I think the reasoning in this piece is a little confused.

    The Pirates could do something – arguably – to end the losing, assuming that ownership spending more money could be translated into more wins; by contrast, the Leafs management cannot. They’ve spent at or near the salary cap in every post-lockout year. MLSE is not skimping on the expenditures and then laughing all the way to the bank, so – unlike the Pirates’ management, they can’t reasonably be pilloried for being greedy jerks who pinch pennies to the detriment of the team’s competitive fortunes.

    Deciding not to buy tickets, then, would not be a reasonable course of action for the fans. If you accept that management is not deliberately sabotaging the team, there is no message to send by deliberately refraining from the purchase of tickets.

    What remains of your argument, then, is the simple assertion that Leaf tickets aren’t worth what MLSE charges for them. The fans (and yes, many corporate entities) who buy them disagree.

    Finally, at the end of this piece you fire off an puzzling and seemingly unrelated complaint, namely that since making the playoffs would undoubtedly help the team make some more money, “you would think maybe they [meaning MLSE management] would have approached this rebuilding thing with a little more planning to make the postseason a reality.” I don’t know how MLSE is supposed to simultaneously rebuild and make the postseason. Fans of the team accept that in order for the team to improve in the long term, there will have to be some pain on the short term horizon. We accept it because it’s true and inevitable.

  8. Leafs tickets get sold, but they purchasers don’t necessarily come to the game. I don’t know how many “sold out” games I’ve gone to where there are so many empty seats. It’s almost embarrassing when the announcer says something like “tonight’s sell out crowd of [whatever].” The fans are making their “statement,” they’re just failing at it….

    But I think bottom line, the tickets aren’t worth the price for the entertainment you get. Everybody seems to know it, whether they want to admit it or not, but no one seems to do anything about it.

  9. Two points here:

    1. Unlike the Pirates, the Leafs are a net contributor to revenue sharing in the NHL.

    2. A playoff run would make the Leafs far more than what they’re saving in incompetence. They likely grossed in the area of $12-14 million per playoff year during the early 00s when they were always in the second round (admittedly, thanks to the Sens always rolling over, but you take success where you get it)

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