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Wednesday, November 8, 2000
Canada doesn't sell in U.S.
By Darren Rovell
ESPN.com
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High taxes have doused Calgary's flame and drained Edmonton's oil. The exorbitant rent check has caused the Senators' golden helmet to lose its luster, and the lack of government support has forced the Canucks to be re-cast as the "Orcas."
And yes, even Toronto's once-healthy blue and Montreal's powerful red are fading a bit, thanks to the declining value of the Canadian dollar.
The NHL could not have survived without Canada, and Canada could never survive without the NHL. But, unfortunately, for the Canadian teams, "history" and "nostalgia" don't write checks.
NHL commissioner Gary Bettman did pen his name to the Canadian assistance plan, giving up to $3 million to those teams that qualify for it. But after Canadian teams reportedly lost over $100 million between 1996-1998, the league's donation is still a 'gee thanks' at best. Although Bettman has repeatedly stated that the Canadian roots in the sport will remain through the 2003-2004 season when the current Collective Bargaining Agreement expires, the noise from the clock on the time bomb can still be heard in the distance.
The best way to stop the countdown is to look as healthy and strong as the Rangers when the league financial doctor searches the pant leg for a toll of money in the years to come. Team brochures have been more colorful than ever before, and innovative packaged deals to boost attendance are now commonplace.
But, there's one revenue stream that is slipping away from the Canadian teams: Merchandise sales in the U.S.
According to the NHL, overall team sales in the U.S. from July 1999 to June 2000 placed the Toronto Maple Leafs in 22nd place and the Montreal Canadiens in 26th. So much for respecting the NHL's founding fathers.
The revenue difference between the top selling team and the worst selling team on the list was not released, but it's pretty safe to say that the Canadian teams couldn't be doing much worse. Although NHL teams typically don't sell a great deal of licensed goods outside of their own market, Canadian teams have hit rock bottom in the country where almost half their games are played.
The Oilers, Canucks, Senators and Flames were the league's bottom four on the list.
"It always comes down to wins and losses," said Martin Brochstein, executive editor of The Licensing Letter, a publication that tracks licensing activity in the U.S. and Canada. "The Canadian teams have not been doing particularly well, and that will depress sales."
Particularly well? As a group, "horrid" would be more appropriate. The Flames haven't tasted .500 for six years, the Oilers for eight. And after sitting atop the NHL for nearly 40 years, in the process picking up many of their 24 Stanley Cups, the Canadiens aren't even being mentioned as playoff competitive. The Canucks were the last Canadian team to make a Stanley Cup final (1994), but they have only won one playoff series since.
"Winning is definitely important, otherwise the product becomes very regionalized in terms of appeal," said Robert Maxwell, director of merchandise and consumer products for the Ottawa Senators.
But while the Senators were one of two Canadian teams to make the playoffs last year, they lost tremendous momentum in the U.S. as their star player, Alexei Yashin, became a hated figure by fans for his contract holdout. Yashin could have been Ottawa's savior in the U.S. merchandise market. Instead, the Senators finished 29th in league sales in America, despite the fact that the team does more than half its sales south of the Canadian border.
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Sales Rankings
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Team
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In U.S.
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Canada
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Toronto
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22
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1
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Montreal
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26
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2
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Edmonton
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27
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5
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Vancouver
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28
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6
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Ottawa
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29
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4
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Calgary
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30
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8
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For the most part, all Canadian teams also have lost their "Yashin" -- a big star who can boost sales.
"If the best hockey player in the NHL played on a team located in Canada, sales would definitely go up," said Matt Freedman, editor of Team Marketing Report. "But there doesn't seem to be a player in that extreme upper echelon that enables that Canadian team to sell merchandise to a broader audience."
Curtis Joseph, who ranks around 20th in terms of player popularity in the U.S., has now replaced past frontrunners like Wayne Gretzky, Mark Messier and Patrick Roy. When was the last time you saw someone wearing the classic Canadiens jersey in New York City?
"When Guy Lafleur played in Canada, we were doing a good Canadian business," said Steve Senken, president of Darius & Partners, a N.Y.-based jersey personalization company that is licensed by both the NHL and the NBA. "We sold a good deal of Doug Gilmour when he was playing for the Maple Leafs before they traded him. But the truth is that Mats Sundin as a captain has very minimal marketing influence."
"If you walk into the Leafs sports store in Toronto, there is a fairly decent cross section of every player," Senken said. "One player doesn't stand out like Patrick Roy did with the Canadiens or even Joe Sakic when he was with Quebec. Free agency and the value of the dollar in Canada have taken their marquee players away and that has had an impact on their sales in the U.S."
The Leafs still sell so well in Canada that they are ranked No. 2 overall in North America, and the Canadiens sell enough product in Canada to finish in the top half of league sales. But in the U.S., the Canadian tradition seems to have taken a backseat to futuristic looks.
"It seems to me that a lot of Americans are jumping on the expansion bandwagon," said Chris Stergiou, manager of consumer products of the Maple Leafs. "The Atlanta Thrashers are selling well, but people buying their jerseys don't even know who the players are. They just throw on the jersey because it's cool."
Stergiou is right about the fresh look. While the classic Red Wings, Flyers, Rangers, Blackhawks and Bruins all rank in the top ten in U.S. team sales, expansion teams can't go wrong. Seven out of the nine expansion teams that entered the league since 1991 rank 13 to 19 -- this despite the fact that the Wild and the Blue Jackets haven't even played their first game.
"It's interesting in hockey. Some of the teams that have been very successful in merchandise are these expansion teams like San Jose, Anaheim and the Predators," said Brandon Steiner, president of Steiner Sports Marketing. "They put a mediocre product on the ice, but they sell well because they have become novelty items."
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Vancouver made a huge mistake (with their new logo). No one can identify what it is. It's meant to stand for Orca Bay-their owners. The color's good, but it really has no connection with the Canucks. ” |
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— Chris Stergiou, manager of consumer products of the Maple Leafs. |
Increasing U.S. sales will be tough for the Canadian teams and winning is essential if they want to eventually "de-regionalize" their sales. Some teams have gone with a new design or a third jersey to help sell outside of Canada and appeal to the masses.
There's no doubt that Vancouver's John McCaw had merchandising in mind when he became the majority owner of the team's holding company Orca Bay in late 1996. Vancouver's bold switch from the yellow and black to the blue orca certainly had people talking. But so far the effort has come up short where their greatest gain might be realized -- in the U.S.
"Vancouver made a huge mistake (with their new logo)," said Stergiou. "No one can identify what it is. It's meant to stand for Orca Bay-their owners. The color's good, but it really has no connection with the Canucks."
In the same vein, the Calgary Flames plastered a horse logo on their third jerseys.
"The horse was an eye-catching, good-looking logo that was cool and appealing to younger fans," said Wayne Karl, editor of the Hockey Business News. "It fit in well with Calgary -- being a western city, it made sense with the horse image. But they still have a fair bit of work to do." Despite the change, Calgary finished last in NHL team sales in the U.S.
Even the Canadian leader, the Leafs, have made some minor changes in their look this year -- the font on the numbers on the jersey back is different, and silver will now appear around the maple leaf. The importance of gaining in the U.S. market is not being overlooked.
"I was surprised that we were that low in the U.S," said Stergiou. "Stadium revenues are static, we have maxed out in sales unless we go up by jacking ticket prices and TV revenues will go up, but even that is limited. But the one thing that hasn't been expanded big time is merchandising.
"If the Leafs won the Cup, they would not only be selling well in Toronto and Ontario, but there will also be a spill-off into other league markets," said Brochstein. "Remember, there is nothing more successful than success."
Darren Rovell covers sports business for ESPN.com.
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