Hockey is at the heart of what the Calgary Flames offer the community, but without a solid business strategy the team will founder, says the team’s president.

The game is a sport “which you cannot drive people away from,” said Ken King. “I know, because we’ve tried.”

David Lazarowych, Business Edge
Ken King says success masked weakness in business model.

King outlined his formula for success – “it’s the hockey, stupid” – and the team’s challenges on and off the ice to the University of Calgary MBA Society’s ninth annual Winter Business Conference last Friday.

While he described the Flames as “an incredible story of economic impact” in benefits to the city, King also had sobering words about building a competent, serious business enterprise to sustain its existence.

If the team were a public company, he noted bluntly, “my fiduciary obligation as chairman of this company would be to immediately sell the team.”

And while the Flames’ on-ice performance in the past has included flashes of greatness, including a Stanley Cup win, “I don’t think the business model has ever been particularly strong,” King told the conference, which attracted about 160 students and business representatives.

“I think that early success masked an underlying weakness structurally for the business. And then when the team started to lose, I think that excused the underlying weakness in the business model.”

If you build a strong administrative structure, with a “best practices” marketing, human resources, inventory management and IT strategy, the team can exploit winning and mitigate losing, said King.

“If we are only subject to the vagaries of winning and losing, I think – pardon my choice of the vernacular – we’re screwed. We have to be brilliant on the ice, or very lucky, and I don’t like our chances of either of those things.”

King also outlined a new communications strategy for the Flames called “Moving From Survival to Success.”

“We have been surviving, trust me,” he said. “It may look otherwise on the surface, but the fact of the matter is that this has been a survival mode, not a success mode.

“I’m not interested in life support, I’m interested in being involved in building something that’s tangible and of value, and that we all can be proud of.”

Challenges include the foreign exchange rate, the relatively small size of the market, and league partners who are able to pay exorbitant prices for their assets.

King said National Hockey League commissioner Gary Bettman is determined, through the 2004 collective bargaining agreement, to create an economic model that ensures teams can be both economically viable and competitive in their current locations.

“I hope he’s right,” added King. “It seems a lot to pin an entire enterprise on, that we will come through that process and all live happily ever after.”

The most important hurdle facing the Flames is ticket sales. Current totals stand around 12,000, and the team has its sights set on 3,000 more.

King said he made a unilateral decision last September not to go back to the market “like this,” he said, pointing a finger gun-style to his temple. “I, frankly, thought people would say: ‘Go ahead, pull the trigger. We’ve heard this act before.’ ”

Even though an aggressive campaign two summers ago resulted in the team reaching sales of 14,000 tickets, “I believe they overpromised and underdelivered,” King said.

“I think if we stood up today and said: ‘Folks, thank you for 22 years of great support, we have decided to move the team, we don’t think any of you would disagree with that at all if you knew the facts, so thanks, and come out to the last game’ - I think we would be vilified, I think we would be crucified, and I think it would be with some justification.”

But, he continued, “if we go to the market, and if in fact we exhaust all proper efforts to do what it is we need to do and then it doesn’t work, then I think we have a case, and we can move.

“The owners don’t want to move,” he added. “And I’m not here as an undertaker.” The day-long conference attracted a wide variety of perspectives on its theme, “Canadian Perspectives in the Global Economy: Strategies for Success.”

Other speakers included Nancy Foster, senior vice-president at Nexen Inc., Jim Perry, president and CEO of Global Thermoelectric, and TransAlta CEO Steve Snyder.