Uncategorized

I have reached a point where I am (gasp!) considering making the Montreal Canadians, and not the Leafs, my favourite hockey team. I was born and raised a Leafs fan….so this move is serious business for me, and comes after prolonged deliberation. It is not just the performance of the Leafs– any team can have a bad season or two (and somebody has to be at the bottom of the league), but rather, it is my perception of value associated with the team, which is driving me away. I should also say that I am a ‘casual’ fan, so I welcome any errors in my logic below from those more knowledgeable than I.

In the economics of sport, it is generally in the best interest for any league to have a ‘balanced’ level of competition; that is, the outcome of any game is in question, and any team can be considered a contender for the ultimate goal of championship. This allows each team to promote itself as providing a high level of quality of play, and therefore, a high level of entertainment for consumers. In the case of the Leafs, they have not won the Stanley Cup in my lifetime (not since 1967!) and generally fail to come close. This essentially means that critical elements of the brand promise are simply not being met, nor have been met for a long time. We fans would like to think that our team is a contender- that our community of fans may have the opportunity to watch our team in the playoffs (or, even better, participate in a great street party once the championship has been won!). Sadly, it is been a long time since ‘consumers’ of the Leafs have been able to enjoy this pleasant daydream.

This performance is strangely coupled with a serious imbalance of supply and demand (the Leafs sell out every game), means that it is very difficult for non-seasons ticket holders to get seats. Certainly, one can engage in the ‘valuable’ services of a scalper, but this means taking a family of four to a game should run somewhere in the $500 range for rather poor seats…..and as such, the value of the experience is very much in question. When I think about the vast array of entertainment choices for a night out and the value associated for each, the Leafs are no longer an attractive option, especially if you are part of a large family.

Thinking about all of the factors in my relationship with the Leafs, and the performance of the team in the league, this has an impact on the satisfaction I have with the team in general. For most businesses, we would expect that solid product or service performance leads to satisfaction, and highly satisfied customers tend to be more loyal. Over time, this loyalty translates to more money spent on the organization as customers return for more of the same product or service again and again over a length of time, meaning that an investment in improving the customer experience can ultimately be very profitable. Therefore, it is very much within the interests of the Leafs to perform well, and keep me a happy purchaser of tickets and merchandise.

However, it is a question of both customer satisfaction, and more importantly, loyalty, which forces me to reassess my relationship with my favourite hockey brand. Normally, we would use a number of measures in our research to understand how a customer feels about a product or service experience; overall, I would consider my ‘satisfaction’ with the team is fairly high: I have a lot of history with the organization, and from what I can tell as a casual fan, it looks like the right kind of effort is being made by the individual players. However, the perception of value is quite low….as is my ‘likelihood to continue use’ (the idea of loyalty is very complex, and cannot be captured with just one measure).

To further complicate the matter, multiple studies in a number of industries have shown that customers in the middle range of satisfaction are just as likely to defect as those at the ‘highly dissatisfied’ extreme of the scale. This essentially means that the Leafs (and other service organizations) cannot rely on customers who are merely ‘satisfied’, but rather, needs to push consumers into the realm of ‘delight’ in order to shut the back door of defection. In the case of my relationship with the Leafs, I am pretty far from delighted.

Not sure if you heard, but there was a recent move by RIM (blackberry) founder Jim Balsillie to buy the Phoenix Coyotes and move them to Ontario- possibly Hamilton.  Ultimately, this move was stopped by the NHL, with the league taking the position that ‘the right channels were not followed’.

The issue which was not talked about is that the Leafs are the proverbial golden goose for the NHL – the most valuable team in the entire league. Team value, revenue, operating revenue are all significantly higher than a decade ago…while player costs remain flat. Plus, an average (pre-scalper) ticket price of $97 dollars in Toronto…..versus $55 and $67 for the second and third most valuable teams (New York Rangers and the Montreal Canadians respectively). The Leafs have raised ticket prices by 3.5% this year, and have the highest ticket price in the entire league. To me, this is the equivalent of a Honda Civic having the same price a Rolls Royce.

Hence, I wonder if the move of the Coyotes was really stopped to prevent the legions of dissatisfied/merely satisfied consumers in the GTA a choice of where to spend their hockey dollars, and preserve the artificially high revenue for this team, (revenue that appears to have no relationship with the actual performance of the organization). There are reasons why the league would do this; certainly to appease the voice of such a powerful stakeholder as the owners of the Leafs (primarily the Ontario Teacher’s Pension), but also, the league revenue-sharing program in place means that some of the substantial revenue of the Leafs is shared with teams that are operating in the red. I however, feel that the pain caused by the organization is now greater than the barriers to defection…..so away I go. Vive les Habitants!