Senators Making Business Strides

June 17, 2002
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GRAND RAPIDS — Late last March, the Ottawa Citizen called the Ottawa Senators’ President and CEO Roy Mlakar the driving force behind the franchise’s business success. At the end of the past season, the Senators’ ninth, the franchise established club highs in attendance, points in the standings and revenues from ticket sales, corporate suites and advertising signage.

And Mlakar managed to accomplish all that with a save-the-franchise campaign that was run on virtually a shoestring budget in a heavily taxed small market with the eighth-tiniest payroll in the 30-team National Hockey League.

Still, Mlakar, who turns 51 today, wasn’t satisfied. For the upcoming season, he added a new twist to selling game-day tickets by opening the sales window on July 21, about two months earlier than most clubs and the earliest sales date in modern NHL history. Why? Because Mlakar felt that if he could reduce inventory, the demand for tickets would increase.

“The fact of the matter is, we are over-pricing our industry right now and to think you can sell the numbers of season seats in the economy that we have in North America — and to continue to charge more money for the product — is absolutely ludicrous,” said Mlakar.

“So you have to find a different way to sell your product. In Ottawa, we felt the best way to sell our product was on an individual game basis earlier.”

Within a few weeks, the Senators had five sellouts, four more near-ones and only limited seats available in some sections of the Corel Centre — and the home-season opener was still more than 60 days away.

“So it was a change in strategy that we’ve found to be extremely successful,” he said. “We’re moving significant amounts of tickets earlier by reducing the inventory, which is what you have to do.”

Now Mlakar gets to jump from the ticket-selling frying pan directly into the sponsorship fire. Nortel Networks, one of the franchise’s largest corporate supporters, is hurting. After losing $19.4 billion in the last quarter, the telecom company recently cut 30,000 jobs with 6,000 of those cuts made in Ottawa.

Then Nortel announced it would not renew a reported $1 million sponsorship agreement with the NHL for the league’s all-star event in February. Next to go might be Nortel’s separate sponsorships with individual franchises, and the company has a number of those with the Senators and the arena.

“As for their ticket program that they’ve had in the past, we certainly don’t expect, after all of the layoffs and the challenges that they face, that they’re going to renew that. But we banked on that in advance,” said Mlakar, a native of Parma, Ohio. “There comes a time when we have to support our own internally, and understand what they’re going through.

“As far as some of their sponsorships in the building and their branding of the upper bowl here, some of those contracts are ongoing.”

As for player contracts, Mlakar limited his remarks regarding the summer signings of high-priced free agents to echoing what Vancouver GM Brian Burke said in July. Burke indicated then that the financial gap between NHL franchises was widening, a chasm being expanded by a half-dozen clubs that Burke didn’t identify by name.

“As far as me commenting on whether (former Detroit Red Wings) Martin Lapointe is worth $5.2 million in Boston, I have no comment,” Mlakar said. “I will say it’s unfortunate that some owners don’t employ the same strategy with hockey as they do in their other businesses.”

But Mlakar had plenty to say about the tax burden his club carries, a load that American clubs don’t have to bear. The tax that riles Mlakar the most is a provincial entertainment tax, an added levy the club pays when it plays in Ontario because the Senators are considered foreign entertainment there.

“For the Toronto Maple Leafs and the Ottawa Senators in Ontario to pay a 10-percent entertainment tax on the taxes because we’re deemed non-Canadian is ridiculous. When the Montreal Canadiens and the Ottawa Senators pay more taxes together than the other 28 franchises put together, we find that equally ridiculous,” said Mlakar.

Mlakar said when Canadian pop stars like Celine Dion and Alanis Morrisette play the Air Canada Centre in Toronto, like the Senators do, the entertainment tax isn’t charged. He also noted that the movie industry is given a tax break when it films in Canada.

“When we generate for the government $240 million in annual taxes and you are at threat of losing that industry, it doesn’t take a Yale graduate to figure out you better do everything you can to keep it,” he said. “And certainly the way you get motion pictures made in Canada, by giving them a different tax structure because you need that industry, it doesn’t seem that to penalize sports is very wise to me.

“Are we going to quit in Ontario fighting the entertainment tax? No. Do we have any hope it’s going to change? Yeah, and there’s a hope that we can cure cancer, too. But things move a lot slower here, and the battles seem to never end. It’s ongoing.”

Mlakar, who is expected to be in Grand Rapids for the NHL Showcase game between his Senators and the Florida Panthers at the Van Andel Arena Sunday, has paid his professional dues. He spent 17 years in the American Hockey League before moving up to lead the Los Angeles, Pittsburgh and Ottawa franchises of the NHL in his 31-year career.

So Mlakar has had ample time to see the industry develop from both sides of the border. But what he hasn’t seen is that progress taking hold in both countries at the same pace or in the same manner.

“In the United States, we’re looked upon as a game. In Canada, it’s a passion,” he said. “In the United States, it’s a business. In Canada, they can’t make up their minds how to treat it as a business, and a lot of those problems go right to the political leaders.”

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