The Sports
Business
Above: Fans
wait in line outside Raleigh's Entertainment
and Sports Arena to buy tickets to a playoff game
We Got Game
The Hurricanes' success proves we're a
pro-sports state;
But you still have to win, as the Hornets and Panthers know
Also: Wachovia
banks on appeal of sports
By Kevin Brafford
The
hockey team has given Canadians a reason to think of North Carolina as
more than a rest stop on their annual winter treks to and from
Florida. The football team, after an unprecedented rise in just its
second year of existence, has fallen just as quickly. And the
basketball franchise, once its game’s model, has given the state’s
most visible city a black eye.
For the moment at least, the pro teams that play in the Tar Heel
state, with their multi-million dollar payrolls and exorbitant ticket
prices, represent the good (the NHL’s Carolina Hurricanes), the bad
(the NFL’s Carolina Panthers) and the ugly (the NBA’s Charlotte
Hornets).
Which begs the question: Is North Carolina a viable market for
major-league sports? In a state that boasts more than 650 golf
courses, where you can snow ski in the mountains one day and get a tan
at the beach the next, where NASCAR and college basketball are kings,
and where there are no fewer than 10 minor-league baseball teams . . .
well, you get the picture.
“There are so many options out there for the sports fan in this
state,” says Max Muhleman, the president of Muhleman Marketing in
Charlotte and a figure regarded nationwide as a visionary in the
industry. “We live in such a diversified area of the country.
There’s a lot of competition for the entertainment dollar, which is
what pro sports really is.”
Perhaps, but these are games that are many things to many people —
where emotions tug at one’s sleeves. No one has ever completely
captured the essence of the relationship between a fan and his or her
pro team and its stars, athletes who are being paid millions of
dollars to live out our dreams.
“As great as a concert might be,” says Muhleman, “there’s
nothing like the raw emotion of a huge crowd that’s turned inside
out for a team that represents a city and community on a national
stage.”
Jim Cain, the president and chief operating officer for the Carolina
Hurricanes and also a Wake Forest University graduate, says that’s
one reason hockey is succeeding in the middle of ACC country.
“It’s a different culture than following your favorite college
team,” he says. “In this state, you have a lot of passionate
collegiate rivalries between fans and alumni. What we’ve been able
to do is cross those barriers and give the state a team that everyone
can rally behind.”
The Hornets Fly Away
Our state was void of these big-league sports until Charlotte was
granted a NBA franchise in 1988. There was reason to think that the
Hornets wouldn’t make it, that filling an arena for 41
regular-season games in a college hoops haven was a pipe dream.
But Muhleman knew better. He and his staff had done research and come
up with the key factors that would signal the probability of success
or failure for a pro sports franchise in a city. Six elements were
identified, and they’re barometers that are still in place today:
 Current population and its
income
Growth potential of the
population
A passion for sports
Modern facilities
A strong corporate presence
A cooperative local
government
“There was no question that Charlotte was perfect for a NBA
franchise,” Muhleman says. “It scored extremely well in all of
those factors. While a lot of people were surprised at the Hornets’
success, I wasn’t one of them.”
Indeed, the Hornets were an instant hit. The publicly funded, $52
million Charlotte Coliseum, with 23,901 seats, was the league’s
newest and largest arena and every seat was filled every night. The
spiffy purple and teal uniforms, designed by UNC alum Alexander
Julian, featured pleated shorts and vertical stripes and was the
NBA’s top seller within a year.
Owner George Shinn, a rags-to-riches success story himself, was the
toast of Charlotte. Fans, patient through the lean early years, were
rewarded as the Hornets finished near the bottom and thus drafted near
the top. New arrivals Larry Johnson and Alonzo Mourning developed into
stars and joined fan favorites Dell Curry and Muggsy Bogues on a
spectacular mural that adorned the First Union building uptown. The
team led the NBA in attendance eight times and had a string of 364
consecutive sellouts.
The Hornets took out the vaunted Boston Celtics in the first round of
the 1993 playoffs and the future was rosy. But within 30 months, the
bottom fell out. Shinn, citing escalating player salaries against the
lack of revenue-producing luxury suites in an arena barely seven years
old, traded Mourning to the Miami Heat less than a week into the
1995-96 season. The following summer, Johnson was dealt to the New
York Knicks.
“That started the beginning of the end,” says David Droschak, the
North Carolina sports editor for the Associated Press. “I think fans
understand that players change teams more frequently now than they
used to, but when it’s the owner who’s making the decision for
players to leave, like Shinn did with Johnson and Mourning, that’s
different.”
The Hornets fielded competitive teams in the years that followed, but
the city’s love was no longer unconditional. Shinn further alienated
fans by publicly embarrassing the franchise when he was taken to court
by a former Hornets’ cheerleader on charges of sexual harassment.
Now public enemy No. 1 and vilified whenever he showed his face around
town, Shinn sold 35 percent of the team for $55 million to Atlanta
businessman Ray Wooldridge in 1999. With Wooldridge acting as a front
man, the co-owners continued to push the city to handle the brunt of
the financing for a new downtown arena. The city, fed up, pushed back.
Fans, fed up, stayed away from the coliseum in droves and the team,
while successful, played in a building less than a third full on most
nights this year.
The end result? Next season, the Hornets will be in New Orleans, with
Shinn and Wooldridge having successfully petitioned the league to move
to a city that already has lost an NBA team — the Jazz to Utah —
due to a lack of fan support, but one with a fairly new arena replete
with luxury suites.
“I could let this almost be an emotional thing,” says Muhleman.
“There will be lessons learned. The ownership of the Hornets
didn’t do their part in keeping good public relations. And the city
council has been stubborn. It’s sad, really.”
The Wachovia Corp., along with Bank of America and Duke Energy Corp.,
had agreed to underwrite $100 million of the cost of building a new
arena if the Hornets would stay. Whether that offer stays on the table
is up in the air. “We’ll just have to take a step back, look at
the situation and see where we go from here,” says Mac Everett, the
director of corporate and community affairs for Wachovia and a past
chair of NCCBI.
If a new arena is approved, a NBA team will likely follow. The league
reluctantly approved the franchise’s move to New Orleans, but held
ownership more accountable than the city for the Hornets’ demise.
“This was the best recourse at this point,” says Russ Granik, the
league’s deputy commissioner. “That doesn’t mean the NBA would
never return. We like the Charlotte market.”
Will the Panthers Roar Again?
So does the NFL, which awarded Charlotte a franchise in 1995. The
expansion Panthers stocked their roster with proven veteran players
and were competitive in their inaugural season, despite playing more
than 100 miles away at Clemson University while a 73,248-seat, $248
million state-of-the-art stadium was going up in the shadows of
uptown.
By the following fall, all the pieces were in place: Owner Jerry
Richardson, a former NFL player himself, struck a stadium
naming-rights deal with telecommunications giant Ericsson and
additional revenue was guaranteed through the sale of permanent seat
licenses (PSLs), a marketing strategy developed by Muhleman where
fans, in essence, bought the rights to buy season tickets. “At that
time, the Hornets were still popular and had a tremendous waiting list
of people wanting to buy season tickets,” he says. “For the
Panthers, we felt the demand existed and that this was a way to
increase revenue.”
On the field, Carolina was the darling of the NFL, winning its
division and beating the Dallas Cowboys in a frenzied Ericsson Stadium
— “the greatest sports experience I’ve ever had,” says
Muhleman — to advance within one victory of the Super Bowl.
But questionable player personnel decisions, injuries and a more
difficult schedule brought the Panthers back to the pack the following
year and a steady decline has followed, culminating with a
league-worst 1-15 record last year that prompted the firing of coach
George Seifert. Fans stayed away in droves and the last few games of
2001 were played with the stadium barely more than half full.
“Anybody that goes 1-15,” says Muhleman, “is not going to be
viewed as good entertainment. Panther fans were spoiled early — when
you see it at its best, you don’t want to see it at its worst.
What’s most important is that people are staying with their season
tickets — the sold tickets are nearly 70,000. Let’s see what
happens when they start winning again.”
Stephen Lewis is willing to wait. The Charlotte banker recently mailed
in a check for more than $400 for his 2002 season tickets. He’ll be
in Section 256, wearing a Panthers jersey, on eight Sunday afternoons
this fall, win or lose. “Sure I want them to win,” he says, “and
it kills me when they don’t. But I love being part of the atmosphere
— tailgating, getting your game face on, screaming until you’re
hoarse. You can’t beat it.”
Despite appearances, the Panthers remain financially profitable —
the NFL’s television package, split evenly among the teams, is
easily the most lucrative in sports — and Muhleman says fans’
patience with Richardson ultimately will be rewarded. “He’s an
owner who doesn’t put profit over performance, and he’s shown that
he’s a person you should rally behind,” says Muhleman. “This is
a guy who’s been there and I believe is going to get there again. He
has support in the right places.”
The reference is to the deep corporate pockets that also make
Charlotte the state’s most viable option for big-league baseball.
The city is home to eight Fortune 500 companies, including Bank of
America, Wachovia and Duke Energy. All told, the eight companies
headquartered in Charlotte employ 43,000 people.
“We did a study for the Charlotte market for baseball four years
ago,” said Muhleman. “We felt a team could average about 24,000 to
25,000 fans a game for 81 games — baseball has tremendous roots in
North and South Carolina.”
Should Major League Baseball look our way in the near future, the
second-best option would be the Triangle, according to Muhleman.
That’s bad news for residents of the Greensboro, Winston-Salem and
High Point areas. “Although we haven’t done a study on the Triad,
I can look at it and say they are weak on several of these factors,”
Muhleman says.
Hockey Conquers Tobacco Road
The state’s most intriguing sports story these days is the
Hurricanes. Five years ago, Peter Karmanos Jr., the chairman and CEO
of Michigan-based Compuware, moved his floundering Hartford Whalers
from Connecticut to North Carolina. He announced his intentions in
May, signed a lease in June for an arena in Raleigh that had yet to be
built and began play in September in Greensboro.
The Hurricanes were a team in exile for two years. Players practiced
on a community ice rink in Raleigh and were
bused 80 miles to Greensboro for home games. Sports Illustrated
wrote an unflattering story about hockey in Mayberry under a headline
that read, “Natural Disaster.” In short, Carolina was the
laughingstock of the NHL.
The team also faced a host of challenges in Raleigh, its soon-to-be
home. Arena construction glitches, cost overruns and public
mudslinging with co-tenant N.C. State led to the Hurricanes being
perceived as arrogant and unyielding. When the Entertainment and
Sports Arena — a corporate naming-rights sponsor has yet to be found
— hastily opened in October 1999 for the first game, more than 4,000
fans never got into the building due to traffic congestion and an
inadequate parking plan.
On the ice, the team was competitive, but few seemed to care. Native
North Carolinians didn’t understand hockey and weren’t willing to
pay what they viewed as the high price to find out. Enter Cain, a
lawyer who had opened Kilpatrick Stockton’s Raleigh office in 1985
and secured the Hurricanes business when they arrived. By the time the
ESA opened, Karmanos knew that help was needed quickly to right a
sinking ship. On Feb. 1, 2000, Cain was introduced as the team’s
president and COO.
“Our relationship was bad with just about everybody,” Cain says.
“Our mission was to earn the support of the community.” Over the
months that followed the team conducted surveys, met one-on-one with
civic leaders and sought to reinvent itself. The result was a
125-point “Canes Contract with the Fans” announced prior to the
start of the 2000-2001 season.
Attendance improved from just above 11,000 per game to 13,345. The
team reached the playoffs and extended the heavily favored New Jersey
Devils to six games before losing. Game 6, played before a raucous
crowd at the ESA, ended with the Hurricanes receiving a two-minute
standing ovation.
The franchise capitalized on the momentum with a season-ticket drive
for the 2001-2002 season that featured reduced prices and creative
structuring. “We brought unprecedented options with 11 different
price categories,” Cain says. “We put in seven-, 14-, and 21-game
mini-plans that responded to financial pressures and time pressures in
this market.”
The Hurricanes improved from a season-ticket base of 6,000 to nearly
11,000 this past season. The team sold out the ESA 14 times during the
regular season and drew an average of 15,521 per night. Carolina won
its division and even beat nemesis New Jersey in the first round of
the playoffs, an accomplishment that Cain agrees might have a
season-ticket impact next year of about 2,000. A few will be fans
gained, but most will be in the form of renewals. “We had a lot of
fans this year that were giving us a try,” he says. “They’re
excited by the entertainment, although they’re still learning the
game. Without question the best catalyst is winning — it helps to
remove an excuse for fans or the community not supporting you.”
Still, the Hurricanes remain a work in progress. Cain says this summer
they’ll place a sales team in Charlotte for the first time, in part
to capitalize on fans who no longer have the Hornets as an
entertainment option. A ticket-price increase for 2002-2003 has been
criticized by fans unaware that, despite its recent successes, the
team will lose millions this year.
“That’s why you have to have a critical mass of money and people
in the market that’s supporting a team,” says Muhleman. “I’m
impressed that the hockey team has done as well as it has, especially
given the recent economy. Their degree of difficulty, in selling
hockey in North Carolina, is already high.”
NASCAR Goes Corporate
The fight for the dollar in top-level pro sports is even being felt in
the state’s best-known industry. Charlotte is unquestionably
NASCAR’s de facto hub — nearly every major stock-car racing team
calls the area home, and many of the sport’s power brokers in track
operations and TV are headquartered in the Queen City. NASCAR, the
sanctioning body that’s based in Daytona Beach, Fla., runs its
licensing and marketing programs from an office in uptown Charlotte.
Winston Cup racing has gone corporate in the past decade. Its
end-of-season awards banquet is staged at the swanky Waldorf Astoria
in New York City. Race tickets, once moderately priced, average in
excess of $70 for the three events held annually at the Lowe’s Motor
Speedway. And while more than 180,000 fans fill the stands that
encircle the track in Concord, nearly a third come from out of state.
The two races in Rockingham, meanwhile, are stuck with early spring
and late fall dates when the weather’s unpredictable and haven’t
sold out in years. With the influx of new superspeedways sprouting up
across America — tracks have opened in Las Vegas, Dallas-Fort Worth,
Chicago and Kansas City — in the past four years, Rockingham is
expected to lose one of its dates in the coming years.
That still wouldn’t match the blow dealt to North Wilkesboro in
1996. The small Wilkes County town northwest of Winston-Salem
consistently played to full houses when NASCAR’s biggest stars came
calling. But when the sport sought to increase its national
visibility, North Wilkesboro was a casualty and lost its date on the
circuit to a larger track.
“Now there’s grass growing through the asphalt,” says Droschak,
the Associated Press’s sports editor. “It’s a shame, because
stock-car racing was our homegrown sport. But that’s progress, just
like hockey in Raleigh is progress.”
As is soccer in Cary. A new 7,000-seat stadium is home to the Carolina
Courage, a top women’s professional league team that drew a
near-capacity crowd — despite a driving rain — to its home opener
last month. The six elements that Muhleman speaks of are evident
again, so there’s no reason to believe that success won’t follow.
“Don’t get me wrong, winning is the ultimate elixir,” Muhleman
says. “But pro sports can be wonderful presentations. Nice
facilities and great experiences alone — with the right support in
the right places — most often will determine a team’s fate.
Charlotte and Raleigh are major-league markets.”
And that, he says, makes us a major-league sports state.
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