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Home , Mike Babcock, National Hockey League

Island University

The Most Valuable Team in

Market 260 - Fall 2019

Prepared for

Professor Jennifer Ford

Project Due Date: 16, 2019

Maddison Pierce - 655466514 Geoffrey McKinnon -655779726 Greg Moynan - 578650491

Table of Contents

Executive Summary 2

Introduction 3

Problem 3

Immediate Issues 4

Basic Issues 4

Case Data Analysis 5 Perception 6 Maslow’s Hierarchy 7 Value 7

Criteria & Weighted Assessment 8

Preferred Outcome 9

Implementation 10

Where Are They Now? Jump to 2019 11

References Page 12

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Executive Summary

The Maple Leaf Hockey Club, or simply referred to as “the Leafs”, is one of the most valuable hockey teams. They are a professional hockey team based in Toronto, .

This case embodies the break-down and analysis of the teams current product, and solutions to improve the problem. The problem is that the Leafs currently have a separation between product performance and customer derived value. The basic and immediate issues facing the marketing department are laid out in order to give a holistic view of the problem. The case is deeply analysed from a theoretical standpoint to highlight the marketing principles included in this case, such as Maslow’s hierarchy of needs. Criteria has been laid out in order for the marketing to make a well informed and fitting solution. These criteria are; the budget will cost less than $13 million, must see average attendance grow to 19 500 in a year and must see a 4% increase in revenue over the following three years. These criteria are then used to decide the best alternative out of the proposed solutions. The best outcome is then decided, and the implementation of this solution is presented. This implementation plan is within the bounds of a year, and reveals all the managerial and financial changes necessary for implementation. The case analysis is followed by a brief overview of the teams current position in the league, competitively and financially.

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Introduction

The are a hockey team in the NHL based in Toronto Ontario. They entered the league in 1917, and in 2014, are now the largest team in terms of net worth; valued at 1.45 billion dollars (Babin et al., 2017). This team has enjoyed periods of success, winning the ​ ​ thirteen times, however the last year they won this cup was in 1967. Over the years the team has developed a strongly devoted fanbase who have made the team an integral part of their life, leading to consistently high attendance as well as a twenty year waiting list for tickets. Brand identity is strong and consumers continue to pack the arena for home games, achieving an average attendance of 19 447 across the 2013/2014 season (“Toronto Maple Leafs Yearly Attendance Graph”, 2019). This is relative to the 19 800 seat capacity at the arena, which is a 98.2% capacity. These numbers have translated to strong economic performance and stable growth. In 2013 the team reported revenues of 190 million dollars, which was a 134 percent revenue increase over 2012 (“Toronto Maple Leafs’ Revenue 2005-2018”, 2018). Despite this tremendous financial stability, high consumer perceived value and excellent game attendance, the team had not made the from 2006 to 2012, and even when finally making the playoffs in 2013, they lost in the first round.

Problem

The large discrepancy between product performance and financial health and consumer value has lead to uncertainty in the team’s future stability and ability to compete against current, as well as long-term challenges and economic forces. The problem is that this underperforming product is somehow retaining a massive fan base and experience contradictory financial growth. This issue pertains to Shannon Hosford, the chief marketing officer at MLSE. This corporation is responsible for the marketing of the Toronto Maple leafs team, and has experienced great success representing other teams such as the basketball team that competes in the NBA. This issue is coming to light in 2014, as the team faces uncertain times and is required to address this issue. The issue is concerning because it means that consumers are identifying and deriving value from brand association, instead of enjoying a superior product. Although it seems contradictory in nature to attempt to fix a product that is producing a high

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level of sales and enjoys a dedicated fan base, it is important as a marketer to take a proactive approach and ensure consumers are receiving a highly competitive product at a high value level.

Immediate Issues

The problem at hand has resulted in many issues, of which a few are in the forefront of the brand’s area they can effect change in. The most prominent issue is that consumer brand loyalty is fragile. Although consumers currently strongly identify with the brand, an unpopular player , change of staff or brand identity change could drive away devoted fans. Another possible outcome is simply that the fanbase could start supporting other teams, or simply no longer support any team. It could be a matter of one more bad season that would result in a massive drop off in fan support, as they switch their loyalty as an act of frustration for the poor product. This fragility should be immediately addressed as consumer ties to brand identity seems to be the driving factor of the team’s financial health.

It could also be said that the team is unable to draw new fans, as they seem to only rely on a fanbase that has been established for years. This inability to entice perspective fans and keep new fans excited about the product is an immediate issue that the team must address in order to see attendance increase as those long-term fans age out of the market. This fragility can also be projected across multiple revenue streams such as ticket sales and merchandise sales. These strong revenue streams are fueled by factors outside of the product performance. These factors include the strong consumer-brand relationship, and once again introduce doubt into the sustainability of these revenue streams as the product performance is poor.

Basic Issues

Although basic issues by nature are in many ways out of the immediate control of marketers and those who are to implement changes in the brand and product, considerations must be made to accommodate and account for the strain of these issues. Due to the poor performance of the product, a noticeable threat is that fans can convert to other teams. With the NHL becoming a larger sport in terms of viewership, participating teams and revenue, Toronto must recognize the fast changes and threats they face today. Specifically, Toronto faces threats from within the team with the possibility that performance can vary greatly across weeks, months and years. As this issue is taken from a marketing perspective,

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player performance as well as team performance are considered outside of the effective realm of the markets implementing change. Therefore, wins and losses are outside the control of the marketing team, whoever they greatly effective the value perception of the product and customer retention.

Although Toronto currently holds the top financial spot in the league, other teams are a serious threat to financial stability as well as being a substitute for current customers. With the of teams entering the market is increasing, as well as teams establishing themselves as a winning franchise, this could lead to other teams eating into Toronto’s loyal fanbase. There is also the threat of a new team starting up in Toronto, or a close market that could lead to Leaf fans supporting other teams. As the league grows, and Toronto faces increased competition, Toronto could find themselves dethroned from their leading financial position in the league, as well as see their foundational fanbase crumble.

Due to the nature of competitive sports, as well as consumer trends, the Toronto Maple Leafs could see viewership in hockey, as well as the way people watch hockey, change. With consumer trends changing across time as dynamic societies change, consumer interests in hockey could simply decline. Interest in the sport could drop off, or simply replaced by a new sporting experience. Considering that buying hockey tickets and merchandise is not an exchange that satisfies a basic physiological need for consumers, when economic times worsen, spending around sports as well as attendance at games can drop. Attending a sporting event live is a luxury consumers deeply consider before purchasing, and often involves giving up a great deal of time. Spending money on these such events are the first to go when money gets tight, so economic health is a factor in the Maple Leafs’ financial stability. Game performance numbers could also drop off as online streaming and television broadcasts of games allow consumers to watch the game from the convenience of their own home for far cheaper. As these viewing services further advance and allow the consumer to enjoy more of the game from home, this could hurt game attendance. Consumer may also simply weight the cost and benefits of seeing a game live, and determine the experience of the environment and excitement may not be enough to get them to leave the comfort of their own homes.

Case Data Analysis

This analysis audits the reasoning behind consumer attendance and strong loyalty for the Toronto Maple Leafs in a fragile market. Consumers’ view towards the team is strongly enhanced through perceptual involvement such as: beliefs in the organization, self-identification, and recognition with the

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“community” that comes with being a “fan” of the team, less so much the product (Sutton, 2016). These are traits consumers highlight in their hierarchy in holding value. Relying and focusing on a consumer's psyche is key to targeting new consumers, as well as continuing to retain current consumers in an effective way through developing positive perception, satisfying needs, and creating value.

Perception

In the current situation, changing the product; which is the teams’ performance, was not a viable outcome with the prevailing fragility of consumer behaviour in parallel. Although performance is an important factor in success, consumers find satisfaction through the social environment as one of the most important reasons to attend an event (Bauer, Sauer, & Exler, 2005; Holt, 1995; Pfaff, 2002; Wochnowski, 1996 in Uhrich & Benkenstein, 2010). Because product fluxuates in quality at an unknown rate, gaining more attraction to the team can be accomplished through enhancing consumers experience with intense stimuli. In Chitturi et al’s (2007) theory, consumers are less likely to repeat a purchase when utilitarian needs are not met versus hedonic expectations. Therefore, we can assume that this tells us customers are unsatisfied with basic needs of the game, and could potentially refuse to purchase tickets next time if the basic needs are not met.

This must be achieved within the first stage of a consumer's perceptual process by enhancing what consumers are environmentally exposed to by modifying the organization at a basic level. As per Bill Sutton (2016), notes that it is very important to satisfy a consumers’ core needs. This can be accomplished through a set of the three stimuli a consumer recognizes - the organizer, spectator, and game - have high energy and presence, which constructs an aroused atmosphere proven to strongly affect consumer behaviour in positive ways. By adding JMD’s (Just Meaningful Differences) in all three sets of stimuli, will assist developing consumers emotions towards the event as their perception is further built off satisfaction (Uhrich & Benkenstein, 2010). Spectator presence is already established with the 98.2 percent (of capacity) fanbase, and product is not the core focus of this analysis, stimuli must be enhanced through the organization. Increasing the quality of food (without increasing the unit price), pre-game experience, and youth involvement are amongst key factors that would change the way consumers develop new emotional value with events. Enhancing these factors will change perception to agree with a likeable, high quality and excitable experience; evoking hedonic emotions by exceeding consumers basic expectations (Chitturi et al, 2007).

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This allows for retention of current consumers, as well as sustainably build new fanbase in new generations because consumers learn to “fall in love” with the surroundings and consistently migrate to it, as they know they are fully satisfied with their decision to be a part of the experience.

Maslow’s Hierarchy

Every tier of Maslow can be considered an important attribute when an NHL organization wants to build a better relationship with their consumers. When a person makes the decision to become a consumer of a team, they must be satisfied (at minimum) on the second tier of the hierarchy. At this level, consumers will have developed a trust in the team, and recognize that they made the “right choice” in following that organization (Sutton, 2016). To achieve this, visceral motivations of consumers must be triggered. The SOR Model, developed by Mehrabian and Russell (1974) displays that this is established through, “...(S) in a specific environment elicits emotional reactions (O), which in turn cause either approach or avoidance behavior (R) toward the environment” (Uhrich and Benkenstein, 2010). This can be deciphered as: consumers will become more acquainted with higher levels of their hierarchy as environmental factors become emotionally relatable with the consumer.

Consumers must first satisfy their basic tiers of the hierarchy in order to gain any value for a team (Babbin et al, 2017). This must be satisfied in the physiological level, such that consumers will be satisfied through, for example, seating and food, before recognizing value in something larger than themselves (Sutton, 2016).

Value

Value is an important factor in one’s judgment of what they consider important. Even though the market segment is similar in value to the marketer, value is very personal, and varies amongst each individual (Holbrook, 1999). For the totality of Maple Leafs’ consumers, having a winning team does not pose to be the strongest factor in the willingness to make a ticket purchase, but other factors may decide how they value their purchase. This ticket purchaser orient will either: seek value through products and/or services provided, or find value through the product of the game. In this specific case, value is mainly found through the experience of the event and to “be a part of the community” is a main pleasure factor for the organization (Levitt, 1960 in Holbrook, 1999). This level of value is seemingly amongst the self-actualization of a consumer as the game becomes a part of the person’s lifestyle as they define

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themselves as “one with the team”. The value of this could even include making a sacrifice of time or money in order to keep up with the community that they strongly associate themselves with (Sutton, 2016).

Developing a better environment would be a wise investment in ensuring consumers affirmation in their ticket purchase. They will focus on the experience of the event as a whole, instead of the product alone. This changes a consumers’ perceived value to become emotionally attached to the team.

Criteria & Weighted Assessment

Criteria included are the requirements to base the weighted assessment of potential options. The decision criteria listed cover cost, opportunity, scalability, return on investment, increase in customer satisfaction, and realistic measures that help resolve the organizations’ problem. If two of the following three things had a positive reaction and outcome, were to be considered for implementation. The criteria are as follows:

1. Must cost less than $13 million to implement and execute. This is based off the 2014 estimated marketing budget. 2. Must see game average attendance reach 19 500 within 1 year of implementation. 3. Must see a 4% increase in revenue over the following 3 years. This is to pay for initial budget within two years.

This set of criteria was reflected upon a set of five alternative generations. These generations were discussed as they have the potential to either: enhance the system, develop a new target market segment, and/or identify a future issue.

1. Renovation of home stadium - this alternative would lead to a large increase in future ticket ​ sales and revenue, but posed as an extremely high risk and an unattainable choice with the set criteria. As per and Quicken Loans, the average stadium renovation costs between $140 and $190 million. Not only is this over budget, but the time required to renovate would require a loss in revenues while the arena is closed. This may allow for a higher capacity, but it should also be considered whether or not this will wear off the novelty of being “one of the people” who get to attend the games.

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2. Loyalty program - Loyalty programs gain a competitive advantage in the market. A loyalty ​ program gives incentives to consumers to a) buy more product and/ or b) become loyal to the team. This posed the benefit to the consumer by increasing consumer retention through instrumental conditioning reward system; specifically of food value packs and family group packages (Babbin et al, 2017). Loyalty cards typically involve customers giving out personal information, which would benefit the organization in understanding the market in identifying their consumers. Even though this may take an initial “hit” on the bottom line from bundle purchases, this alternative was positive amongst all decision criteria in long term financial recuperation and consumer identification.

3. “Do nothing” - It was considered to “do nothing” when deciding the criterium for the weighted ​ assessment, but more proactive approaches proved to create enough JND’s (Just Noticeable Difference) to avoid negative impact and/or reaction from consumers. Since current status shows that nobody is actually unhappy with the experience, this was left as a viable choice in the assessment.

4. Youth engagement - This will help increase consumer fanbase with a new target segment. With ​ ticket prices being so high, seasons tickets being so hard to attain, and the convenience of on demand, makes it harder for younger generations to attend games. By developing a program that increases the involvement before games will motivate consumers to buy into the loyalty program (in which the two options would pair well), and develop hedonic meaning to this segment. Pre-game experiences will draw many different youth through engaging activities such as “Meet the Player”, games, team swag, and more.

Preferred Outcome

There are three outcomes that are being focused on with this approach. First, is the need to improve customer experience and association with the team. Second, will focus on the younger generations and families. And third, is to create these outcomes with increased amount of touch points and engagements with key demographics.

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The preferred outcome will emphasize on family values and family tradition around hockey. The plan will entail having employees at tents handing out team swag, high quality merchandise, a children focused pre-game experience (for example, “Meet the Player”), and quality food trucks outside the stadium.

Budget Estimate: $10 million ● $5 million facility upgrades ○ Kids zone of seating ○ Concrete pads for food trucks ● $2 million allowance for loyalty provisions ○ Accounts for initial loss from product bundling ● $2 million for specialization ○ Merchandise quality ○ Employees for directed events ● $1 million for marketing additions ○ Promotional tools

Implementation

The customer experience is the first thing that needs to be addressed. The Toronto Maple Leafs are in a very privileged position to have the fan base they do have, but they cannot take that for granted. When people come to the games, they need to make it a special event from the time they reach the stadium till the time they leave. From when they enter the stadium, they need to cultivate a fun atmosphere and experience. Affordable food and beverages, t-shirt cannons, and intermission entertainment. Post game they should create time for the players to meet the fans. From the time partons step onto until the time they get into their cars to head home, their experience should be a positive one.

Family friendly and younger generations of fans are the target with this plan. With the family ticket packages, the team will be accessible with an affordable price for this target market. With this new approach the focus will be aimed at the kids, starting with the kids’ zone as they arrive at the stadium, having mascots, t-shirt gives aways, games and players showing up to personally sign Leaf’s merchandise. The lower price point for families will be implemented at the concession stands, family

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packages and kids packs will be promoted at the concessions with Leaf’s merchandise as part of these packages. Throughout the game and intermissions giveaways, games, t-shirt cannons and mascots will be focused on the family dense areas of the stadium. In the post game time meet and greet with players will be a benefit of the family ticket package and our loyalty rewards fan club members. These measures are all targeted at kids and families, bringing new fans with the aim of creating life-long fans.

With these solutions that have been put forward the biggest benefit to the proffered outcome is that we increase the amount of touch points and customer engagement per game. The kids’ zone is where a heavy presence of employees, players and mascots will be placed to engage the fans as they arrive at the game. Inside at the concessions the workers will be trained to a higher standard to improve their ability to interact with the fans. The intra-game activities will be focused on family areas and will be created to focus more interactions with the fans. Most importantly, with the post game meet and greet is the ability for the players to meet the fans who idolize them and create lasting memories. From the time kids arrive to the time they leave they will have encounters with Leaf employees, mascots and players who are excited to meet them and make the event unforgettable.

Where Are They Now? Jump to 2019

The Toronto Maple Leafs continue to stand atop the as one of the most valuable hockey teams. They have not made any major changes in operations from a marketing perspective since the case date. However, they have focused on developing a much better performance product. Recently, the acquisition of arguably the best coach in recent memory, Coach , joined the team and begun the improved product development. Notably with the first overall of in 2016, and other large pickups from trades or free agents, most notably (National Hockey League, 2019). Beginning in 2015 the changes in the team coach and players demonstrated how the team needed to change, and they addressed this with the on-ice performance. They have modernized a very new-era team with a focus on scoring, , energy, youth and most importantly, excitement. The Maple Leafs have begun to make it into the playoffs once again, and in recent years have been considered a contender for the Stanley Cup. If they continue on this course, they will maintain their status as one of the most valuable teams in the National Hockey League.

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References Page

Babbin, B.J., Harris, E.G., Murray, K.B. (2017). Consumer Behaviour (2nd ed.). Toronto, ON: Nelson.

Chitturi, R., Raghunathan, R., & Mahajan, V. (2007). Delight by design: The role of hedonic versus utilitarian. Journal of Marketing Available at: https://pdfs.semanticscholar.org/d946/94d47e7eeb8bc850f9d48f7f5a3fbd3efc0f.pdf [Accessed 12 ​ Oct. 2019].

Holbrook, B. Morris. (1999). Consumer Value: A Framework for Analysis and Research. Routledge ​ ​ Interpretive Marketing Research. : Routledge.

Matthews, W. J., Stewart, N., & Wearden, J. H. (2011). Stimulus intensity and the perception of duration. Journal of Experimental Psychology. Human Perception and Performance, 37(1), 303-313. doi:10.1037/a0019961

Most Expensive NHL Teams in 2013. (2013) Forbes. Retrieved from: ​ ​ https://www.forbes.com/pictures/fjlg45mhf/1-toronto-maple-leafs-avg-price-368-60/#4501e0141 1bd

National Hockey League (2019). Leafs forever. Retrieved from https://www.nhl.com/mapleleafs ​ ​ ​ [Accessed 15 Oct. 2019]

Sutton, B. (2016). How teams can use Maslow’s hierarchy to build fan relationship. [online] ​ ​ Sports Business Daily. Available at: https://www.sportsbusinessdaily.com/Journal/Issues/2016/01/11/Opinion/Sutton-Impact.aspx [Accessed 15 Oct. 2019]. Toronto Maple Leafs’ Revenue 2005-2018. (2019). Statista. Retrieved From: ​ ​ https://www.statista.com/statistics/196905/revenue-of-the-toronto-maple-leafs-since-2006/

Toronto Maple Leafs Yearly Attendance Graph. (2019). The Internet Hockey Database. Retrieved from: ​ ​ http://www.hockeydb.com/nhl-attendance/att_graph.php?tmi=8490

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Tsuji, Y., Bennett, G. and Zhang, J. (2007). Consumer satisfaction with an action sports event. West ​ ​ Virginia University. Available at: https://www.researchgate.net/profile/Yosuke_Tsuji2/publication/266602146_Consumer_satisfacti on_with_an_action_sports_event/links/56bb0dd808ae0a6bc955deff/Consumer-satisfaction-with-a n-action-sports-event.pdf [Accessed 12 Oct. 2019]. ​

Uhrich, S. and Benkenstein, M. (2010). Sport Stadium Atmosphere: Formative and Reflective Indicators for Operationalizing the Construct. [online] humankinetics.com. Available at: http://www.humankinetics.com/acucustom/sitename/dam/067/242_uhrich_sport_stadium_a.pdf [Accessed 14 Oct. 2019].

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