THE ATHLETIC DATE: 05/17/2021

Hawks CEO Steve Koonin 1-on-1: Exceeding expectations, playoffs, streaming wars, fan experience & full arenas

By: Chris Kirschner https://theathletic.com/2595357/2021/05/18/hawks-ceo-steve-koonin-1-on-1-exceeding-expectations- playoffs-streaming-wars-fan-experience-full-arenas/

The Hawks are back in the playoffs for the first time since the 2016-2017 season. Atlanta quickly pivoted from a perennial playoff team to a rebuilding franchise that was going to build from the ground up. It led to Mike Budenholzer no longer wanting to be the head coach and transitioning to a developmental coach who was there for the darkest days in the Sixers’ rebuilding process, Lloyd Pierce.

Before the Hawks hired Travis Schlenk as the person who was going to construct this team to get back to the playoffs, he met with Hawks CEO Steve Koonin and COO Thad Sheely at Kevin Rathbun Steak to discuss his plan on how he was going to bring the organization back to relevance. According to Koonin, since that dinner, Schlenk has delivered on everything he said he was going to do.

The Athletic spoke with Koonin ahead of the Hawks’ playoff matchup against the Knicks to discuss the team meeting and exceeding expectations, the fan experience in the middle of a pandemic, the overall health of the franchise and much more.

Below is our conversation with Koonin, which has been lightly edited for clarity.

Be honest with me, before the start of the season, did you plan for the cost of a banner on the budget for the 2021 year?

If you’re talking about winning the Southeast Division, I did not see that as part of our future. What I was hoping for was we would make the playoffs; I was excited about the play-in tournament because I think it gave you the chance to have more meaningful games going down the stretch, but I did not see us being tied for the fourth-best record in the East — not in my wildest dreams.

Would you say anyone in the front office expected to be this high in the standings?

I can’t speak for everyone’s wildest dreams, but I would say that I think we’ve exceeded all of the expectations we had internally.

What has surprised you the most with how this team has performed this season? Is it the record or something else that you didn’t see coming with this group?

I think the way it turned around. We’re 27-11 (under Nate McMillan). That’s a (71 percent) winning percentage, which extrapolated over a normal season is (58) wins. I didn’t know there would be math in this conversation, but that’s extraordinary. That winning percentage is extraordinary. I didn’t see that coming. And then you compound that with the injuries we were plagued with, it’s just been an incredible blessing and a testament to all of the hard work these people put in and the coaches have put in. I think if it wasn’t for the Knicks, this would be the biggest story in the NBA.

I don’t think many people, myself included, expected the Hawks to be tied record-wise for the fourth seed in the Eastern Conference. I thought they might have had an outside chance to get the sixth seed, but I thought they’d be in the Play-In Tournament and potentially get the seventh seed. I didn’t expect this. What would you say was the mood amongst the ownership group in the first half of the season when this team was struggling?

It’s interesting because we were never really together as a group, so I can’t give you a great judge. Tony had a vision for playoffs. The “P-word” the last couple of years was not mentioned within the building. We were not going to put pressure and jinx and do that for our team. Our past two seasons, it was obviously not a playoff team. What I admire about Travis is when we had dinner before he was hired and announced, he laid out this plan with precision — what year, what needed to be done, flexibility with contracts, taking in bad contracts, getting as many draft choices. He had a formula — I wouldn’t call it an algorithm because it wasn’t that complex, but he had a formula that he followed almost to the day and almost to the tee. It’s worked. He, unequivocally, had a vision and a plan and executed on it. When it came to fruition under leadership from Nate, now everyone can see it. This is fast for a rebuild, especially a strip down to the studs rebuild. He knew what he wanted and articulated it, so we never were surprised in this process. We went back in the draft lottery two years in a row, and went higher in the draft than we were slotted. A few ping pong balls bounce differently, and we might be having a different conversation. The way things have turned out — (Schlenk) scripted and I couldn’t have scripted it any better.

How would you assess Tony’s current mood about the state of the franchise?

Tony Ressler is an incredibly disciplined business person who understands what it takes to be successful and the steps you have to take and the investments you have to make and the pieces that have to fall together in the big part of the equation, which is some luck. I think Tony feels very good with where the franchise is today, and I think he believes we’ve just begun. I certainly don’t want to put words in his mouth, but I think he thinks this is step one on a very, very, very wonderful journey. We’re not doing this to make the playoffs annually. We could have stayed with the team from 2017 and done that. We’re doing this to win a championship.

With this season being much different than any other season since you joined the league, what have you learned about the fan experience in this kind of season that you can apply to future ones when things are back to normal?

What I learned from Steph Curry is he talked about how important the fans are to the game. When you go to a game in the arena, it’s just very different. The architecture of sports involves fans. It’s a really important piece. That’s why we’re working so hard to figure out what we can do safely. First of all, safety for players, employees and fans is paramount, but, my goodness gracious, sports without fans is not great. It’s not what it’s designed to be. What I do really appreciate is how fans have stuck in there with us. We created three season ticket packages with 11 games each for season ticket holders. We wanted to keep that engagement. A lot of people asked, ‘Well, why did you have fans at all?’ It’s so important to keep that connectivity between a team, the city and fans. I think we were cautious. We called the plan, ‘Crawl, walk, run.” I still don’t think we’ll be running until we can fill the building, but we’ve had no incidents or outbreaks from the building. The first two people we tested with our protocols both tested positive for COVID — the first two fans. We had one test positive before they entered the building last week. It’s been an incredibly difficult year. Plexiglas is just everywhere in the building; I’ll be glad when I don’t see Plexiglas everywhere in the building. One of the genius things about sports is the ability to high-five the stranger next to you. I hope that comes back, and with the vaccine, it should. It’s very exciting to get through the season intact from a COVID perspective, but we really miss fans. When going into a season like this one, what would you say has surprised you in terms of the fan response and engagement to everything that is going on?

There’s several metrics that I look at, rather than relying on anecdotal evidence. TV ratings are up 19 percent, in a world where TV ratings are really not going well. Our merchandise sales have been phenomenal this year. The MLK jerseys were a giant hit. Our social media channels have all seen significant increases. All of the brand health metrics have been great. What I think is so unique about this season is I think the Hawks brand and the social justice component and the service to the community component and us being relevant and present outside of the game of basketball combined with a team that is really fun to watch and is successful has put us in an incredible position for the future.

You mentioned TV ratings, so I will ask you this: A lot of fans have complained to me over the past year about the inability to watch games on different streaming services. I don’t know how involved you or teams can be in this process, but have you heard from fans who aren’t able to watch games because of this?

Unfortunately, and it’s far out of our control, but when you subscribe to a virtual multi-channel video provider, they sell on price. One of the ways they try to keep the price low is limiting professional sports, which are expensive. There are plenty of options, like Comcast Xfinity, that carries all of our games. It is one of the biggest frustrations because we want to be available on the market from a team perspective. It’s incredibly important. But it’s something that isn’t our fight. That is between Bally Sports and the distributors, but our fans are caught in the middle and it makes us very sad.

I know your TV background — is this something that you’ve been pushing for to get a resolution quickly behind the scenes to get something done?

I can push and huff and puff, but this is two corporations not headquartered in Atlanta who are in a good, old-fashioned pissing match. It’s happening in every major market that has a Bally Sports team. No one is picking on our city. I was disappointed that the Braves and Hawks, two very powerful brands in the city, aren’t carried by some providers, but if there’s a message to fans who are reading this is: You have choice. Exercise your choice.

How would you describe the overall health of the business given that there haven’t been many fans in the building, concessions aren’t overflowing and the parking revenue obviously isn’t the same. Where’s the business as a whole right now?

We had a very good business year, in context. Early on, ownership, led by Tony, decided we were going to pay everybody and not lay anyone off. We were not going to furlough and we were not going to cut. He believed that was short-term damage to a long-term business. I’m very, very proud of the way our employees responded to that and have worked incredibly hard during this period. There are elements of our business like ticketing, pieces of sponsorships that have been greatly impaired, but there are other pieces of our business that we were able to grow and, overall, we feel good about the year, but it’s all in context of the year, and it has to be in context of the year.

What parts of the business were you able to grow?

We were able to grow our merchandising business. We were able to be successful with our sponsorship and the advertising side of the business to deliver what we promised sponsors. I’m sure you watched our games and other games on TV, but our presentation looked better than most. We turned our building into a TV studio, which helped us capture a lot of advertising dollars. We had to innovate, and, again, I hope this chapter is closing. It is very difficult to run a business because live events are the last thing to come back, but the vaccine is the great key to turn it back on. I think the events business will all be back to full buildings soon.

Given the vaccine rollout, would you anticipate having a full arena next season?

What the NBA has said is plan for full arenas, and that is what we’re doing. We’re 100 percent ready, and what we’ve tried to do is enhance the experience. I’m not going to tell you where it is, but we’ve installed cookie hotlines around the arena where you pick up the phone and we deliver hot, fresh, baked cookies to your seat. That will be for the playoffs. I’m not going to tell you where it is exactly on the concourse, but there are a lot of innovation experiments that we’re working on every day, every game so when we open, we continue to be the best game experience in the league. We were No. 1 for the last two years and we have no interest in relinquishing the honor.

The team recently announced that capacity is approximately going to be around 45 percent for the playoffs. Is there any flexibility in increasing that number?

I believe so. What I tell you today probably won’t be true tomorrow. Not that we’re making stuff up, but the CDC announcement regarding masks this past Thursday caught mostly everyone off guard. What I’ve learned is just roll with it rather than panic. We were the third team to get approved for the playoffs. We worked with the state, we got the state to approve. Arenas were not designed for social distancing. If you’re vaccinated and are sitting within 15 feet of the court, you still will be tested and masked. It’s complex. All of the rules involving player safety are negotiated with the Player’s Association. I think of it this way: Within 15 feet of the court, it’s owned by the NBA. Our job is to execute outside of that, and that’s our rules. Our guiding principles are fan safety and employee safety because we move past the perimeter.

Going back to last March to where you guys are now, what has encouraged you the most with how you guys have operated the business?

From a business side, we’ve stayed connected to our fans. We’ve stayed relevant and I think voting was one of the key things that will be remembered for a long time because it started a movement — 71 arenas around the country housed voting. Doing our deal with the Black-owned banks gives teams and businesses a roadmap of how when you’re borrowing money, you should be looking at Black-owned banks, not because they deserve charity but because it’s a good business deal with a great business partner. Our $35 million loan with them created a 10x factor for the bank that will be beneficial for them for a long time. Imagine 30 sports teams doing it at a similar level. That creates $10 billion of lending power and now we’re talking about real economic growth that can affect a community. Those are the kinds of things I enjoy and am inspired by. I’m thankful that we’re able to innovate and be more than a basketball team. I think COVID has given us that platform. With food insecurity, we had 28 courts we built around the city of Atlanta — we were able to turn them into pop-up grocery stores and feed families with grocery bags full of meat, produce, dairy, grains for two weeks at no charge through the generosity of Tony leading the Hawks. Tony will probably not be thrilled with me saying this, but they wrote a seven-figure check for all of the part-time employees to make sure they had a means to get by. We never publicized it, but I feel comfortable saying it a year later he did it because those are the extraordinary people that we’re fortunate to have in our community who give and care. Our employee retention has been terrific. We were at $15 per hour pay, which is the highest in Atlanta. We will continue to help people have a living wage and be a part of the solution to make this be a better city. You’ve said before how the ownership group considers the team to be a community asset instead of just a transactional business where you guys are taking money from fans, providing entertainment and the relationship ends there. What is the primary motivating factor in why the franchise does make it a point to take the relationship further than an entertainment production?

Tony and Jami (Gertz). Those foundation dollars do not grow on some special tree. Tony said in his opening press conference that this is a community asset. You can’t be one-dimensional. I’m not saying this is a business strategy; it’s a community strategy. We’re all in this together. I think sports has an incredible ability to unite. Look at how this (MLB) All-Star Game became this volleyball in politics. We never want to deal with that. We want sports for the good side of it, for what we can do and the doors it can open and the leverage it gives us to really and truly help people. That comes from your values. Your values are represented by your ownership and your leadership. Those aligned values allow us to be more than a basketball team.

So you’re saying this could be a totally different situation if anyone else was in charge of the team?

It was for 46 years. It was. You can’t cite anything with the last group and with (Ted) Turner. This isn’t anecdotal or me pumping up my boss. This is a fact as a life-long Atlantan. It’s one of the reasons why I came here. I do think the sports platform could do more than any policy or platform in uniting people. We have multiple reporters who follow us daily, we have TV stations, we have two radio stations dedicated to sports — we have a lot of energy and a lot of interest and we can channel that and partner with that to create positive change. Winning on the court is job one, winning off the court is job 1A.

On the flip side of what has encouraged you, what has either been surprising with how difficult it has been to run the business or something that has frustrated you the most with how you have had to deal with the situation, outside of fans not being able to be inside the building?

If I am 100 percent blunt, I cannot comprehend how someone won’t get a vaccine to save their life. I’ve been getting vaccinations since I was an infant, and so have you. I just don’t like how politics can really lead to someone’s health. More importantly, could lead to all of our health being impaired. There are now hundreds of millions of data points on the safety of vaccines — hundreds of millions. This isn’t someone’s opinion. No one is putting microchips into us. We can all heal faster and better if we just do the right thing for us. I’m not asking you to do something for me — do it for you! And then I benefit because you did it for yourself. I can’t believe we’re dealing with vaccinated sections and unvaccinated sections inside the arena. It’s mind-blowing when you see the numbers. If you’ve noticed, we had players run ads, and we run them nonstop because it’s that important. It’s been disappointing to me. Go away from the politics, you should do what’s right for you and your family.

I wanted to ask about the vaccine ads I’ve seen at games. The realization is there is hesitancy from some people to get the vaccine. Was there any hesitancy on behalf of the organization to come out and make clear your stance?

It was the reason to come out and do this. We wanted to show role models. I’m not sure if you can find better athletes in the world than NBA players, from an aerobic standpoint, a physical standpoint and a coordination standpoint. We wanted people to see those guys say, ‘I took the shot.’ It stays in the right metaphor for basketball and hopefully makes people remember. These guys are making tens of millions of dollars and are putting this in their body — it should make someone who’s 50 and not in world-class shape say, ‘Wow, I should do that.’ That was the whole reason. We worked with the Georgia Department of Health and the fabulous Dr. Kathleen Toomey, with our partners at Emory and Sharecare because it’s really the only way we dig out of this. I wanted to go back to the team. Are you guys currently on track or ahead of schedule with the plan Travis set out?

If you go back to 2017 and you look at the list of free agents for the 2022 season, it was very sexy. You had Giannis (Antekounmpo), Kawhi (Leonard). Travis had the vision to know that it was going to be very difficult. Most of these guys (who were projected free agents this offseason) did not leave their team, so the accelerator got punched in 2021. That was the only change from the plan. I’ve never seen anything like it. He had a roadmap and a plan, he was disciplined, we had more swings in the draft and then filled in. He did exactly that. You’ve seen growth in Kevin (Huerter), you’ve seen growth in Trae (Young), you’ve seen growth in De’Andre (Hunter), you’ve continued to see growth in John (Collins) and then you add in one of the great trades in Atlanta sports history in Clint Capela. What did we give away?

The first-round pick that Brooklyn owned, which ended up going to Oklahoma City, who drafted Aleksej Pokusevski, and Evan Turner, who’s now an assistant coach for the Celtics.

Not too shabby. (Bogdan) Bogdanovic was a free agent. (Danilo) Gallinari has won several games for us. Lou (Williams), two second-round picks and seven figures in cash for (Rajon) Rondo. Tony Snell for Dewayne Dedmon. Tony didn’t make 10 3s (on Sunday), which I wanted him to do.

I don’t think he has the personality to actually care about any of that.

I was texting (PR director) Garin (Narain), ‘MAKE HIM SHOOT! MAKE HIM SHOOT! I WANT A RECORD! MAKE HIM SHOOT!’ Like you said, I don’t think he cares, but those are the people you want. I’m just sitting here very grateful, humbled by what we’ve been through and hopeful coming out of the other side. When I came on board, I said we wanted to unite and excite the city of Atlanta through Hawks basketball. The next two weeks have a chance to do that.

My final question: I don’t want to say what are the expectations now that the playoffs are here, but what are the hopes over these next few weeks and possibly months? I’m sure you guys want to win the championship, but what do you hope for?

I think the hopes are to play Hawks basketball and be very competitive. We would obviously like to win, but I look at it differently from hope. I look at it as milestones. We wanted to make the playoffs. Playoffs had a wider definition this year. When we said that, the Play-In didn’t exist. I think both of us agree that we didn’t think we would win the Southeast with Miami in there. I didn’t think we would be tied for a top-four seed. Next season, we want to take the next step. I don’t know what that means, but I know this is a journey. We want to be more than a perennial playoff team. We want to compete for championships. I think we’re ahead of what everybody thought. Vegas projected us to be 36-36, we significantly beat that in a statistical manner. I’ll be curious to see what we do with finding opportunities. We couldn’t have had more injuries than we had this year. I’m excited to see what a full year looks like. I just want to have a really good time and continue to build this franchise into something really special for this city. More than two years ago, we came up with the idea of the MLK jerseys. Out of the blue, the Pope wanted to bless them. This year’s been a gift. We’ve been blessed by the Pope. We’ve honored one of the great Americans of all time in Martin Luther King Jr. Anything is possible. I’m not going to set limits.

You know the Hawks went 9-1 in the MLK jerseys, right?

I know every second of what they did in those jerseys. You might just see them in the playoffs. It would make sense.