Meeting quotes, part 4

Here’s the big “meat” part of the “meeting,” in which the execs discuss how the ticket-price increases might help the on-ice product in the long term, and I discover that the franchise is losing MORE money than it was before we all endured the lockout. At the end, they discuss the plans for the new season-ticket holder website. Here’s the next part of the interview…

———-

Question: What assurance can you give to fans that increasing season tickets will increase the possibility of the Kings spending big money on players when the opportunity comes up?

(Robtaille:) “Whatever money we’re making by increasing our ticket prices, we’re using it to make our business better. When you talk about getting players, when the time is right, the time is right, but the goal for us is to make our business better, and that will trickle to what we do with hockey and everything. The cap is going up and we have to give (Lombardi) the opportunity to get the guys when they’re ready.”

(Lombardi:) “You have to look at it a certain way. People might think, `Well, season-ticket prices are going up, so which free agents are you going to sign?’But, as I’ve always said about free agency, you don’t build your core with free agency; you add to your core. When I talk about our vision, and getting people to see it, it’s getting closer. But it’s like the Oakland A’s and the Yankees. We’re building it like the A’s but we want to finish it like the Yankees, and then keep our guys.

“We’re go through all this, and it’s not fun but we have to go through it. But when we go through it, we want to get rewarded. We don’t want our fans to say, `Well that’s not fun. We go through all the heartache.’ That’s part of integrating your business with your hockey model. On the hockey side, you can’t make decisions that are reactionary. That’s what is going to get you in trouble. So it’s like they’re saying here. What, we’re going to win the Cup and then raise prices five percent? That doesn’t make sense.

“What we’re confronting, it’s like when I talk to you about the age-distribution chart and the defensemen and the goalies. (The business people) are confronting their reality, which is that we’re in the second-biggest market in the country and our prices are (relatively low). Luc is saying, we want to be a good business. Well, a good business in L.A. has the potential to generate revenue and make it a viable business and compete with the big boys. It goes back to that statement: `We’re L.A. and we have to start acting like it.’ We need the product, no doubt about it, and that’s where the rub comes right now. It’s like saying, `Well, you’re 29th in the league.’ I can see where the back end is not that far away. How can we do this when we’re 29th in the league? Well, we can see where this is headed if this all comes together. We’re being proactive.”

(Robitaille:) “Look at two years from now, or whenever (Lombardi) goes to resign Kopitar and Johnson and all the young guys. In this new business, those young guys are making all the money. So you look at two years from now, when suddenly Dean has to sign all these guys, and we expect him to go get whoever is available, plus he needs to sign some defensemen, we need to be right there as a business, so that he has the opportunity to do that. We’re basically getting ready for our organization to be real good. That’s what we all need to do together.”

(Altieri:) “As Luc indicated, we don’t want to get good and then all of a sudden say, `OK, 25-percent increase.”’

—–

Question: Because you know the perception, whether you agree with it or not, has been that in the past, the Kings haven’t been willing to spend what it takes?

(Lombardi:) “What you mention about the past.. This is a positive for me, what you see in this office. The business people and the hockey people were never across the ball from each other. Obviously I know that teams don’t make it based on nice offices, but what you’re seeing is that hockey is trying to stand alone (within AEG). That’s something I think, if planned properly in this marketplace, business and hockey can work together.

“Whereas in the past, with AEG, it was a monolith. You’ve got this now, and it’s the first time in the history of the Kings (under AEG), that the business and the hockey are standing alone. But you also have that AEG muscle. It turns AEG into an asset rather than a drag. That’s kind of what happens when you have these big monoliths owning sports teams. (The teams) can get consumed by it.”

(McGowan:) “We’re creating a hockey culture on the business side. We used to have a multi-event culture, because everyone who was working on hockey was also working on other AEG-related stuff.”

(Lombardi:) “It’s like your (McGowan’s) own situation before. You were working on tennis, golf, lacrosse and whatever. Now you’re just working on hockey.”

(Robitaille:) “We have people now who are going to bed thinking of the Kings and waking up thinking of the Kings. We have fan-development people and we’re getting out into the community more than ever. There are a lot of things that we’re doing and that’s what is important, we believe, for the future. It’s going to be very, very important to keep improving that.”

(McGowan:) “A lot of it started with the hiring of Luc, and we’re a year into that now. We’re really, we feel, set up with a good staff needed to run a great organization.”

(Robitaille:) “One thing that’s changed is, in the old days when people complained about the Kings, they wanted the Kings to sign those free agents when they were 32. In today’s game, your high salaries are (When players are) 23 and 24. When you look at our team, we need to make sure we’re ready for the future. This organization needs to be ready, and it’s very important that we set that up, to be ready. That’s just a fact. The game has changed and the model has changed totally.”

—–

Question: Is the team making money? Losing money? Where are you on that?

(McGowan:) “We’re not making money. We’re losing money.”

Question: And that’s just on the Kings?

(Robitaille:) “Just on the Kings.”

Question: Significantly more than before? Better?

(Robitaille and McGowan, simultaneously:) “More.”

Question: More than before the lockout?

(Robitaille:) “Yeah.”

Question: Is that a concern?

(Robitaille:) “Yeah. It’s a concern because we’re here to make this business work.”

(McGowan:) “I think our response is to build the organization differently, to meet the reality that we’re losing more money than we did before the lockout, and what we can do about it. Some of the things we’ve been talking about are some of the things we can do about it. We’ve got to run a better business.”

(Altieri:) “It comes back to what Dean said when he first came on board. The first thing he said when he came on board was, `I’ve got to get an infrastructure in place.’ It’s the same thing here. We’re putting in place an infrastructure that we feel confident is going to rectify this issue.”

(McGowan:) “We can’t continue to operate the same way. We have radically changed the way the Kings operate, from a business perspective. We’re going to continue reshaping our business, on a regular basis, in order to get a core group of 60 to 70 people that spend 100 percent of their time on this franchise. That’s happening and it’s exciting.”

(Altieri:) “The best thing is, we have AEG’s full support. They want this and, again, we’re going to have that muscle to use when we need to use it.”

(McGowan:) “There are phenomenal business resources that we can use and tap into. It’s pretty great.”

(Robitaille:) “ To simplify it, Dean was hired to get us to the point where we can win the Stanley Cup. I was hired to get us to the point where we break even, or even make a little money. Trust me, we’re nowhere near that.”

Question: So the hope is that (these increases) will help contribute to solving that…

(Altieri:) “Contribute, yes. There aren’t a lot of revenue-growing opportunities in hockey right now, just by the nature of the sport. Unfortunately, we don’t have a multi-billion dollar TV deal. So we have to take the opportunities we do have and do the best we can to make the most of them.”

(McGowan:) “It’s all about navigating that fine line between our needs and what’s fair to our customers. That’s the biggest message, that we will never take for granted the passionate support we have. We’re amazed. These people live and breathe Kings, and we don’t want to disrespect that loyalty and passion in any way. So we’re trying to find that fine line.”

(Altieri:) “we know our fans aren’t going to be doing cartwheels when they see that their prices are going up, but what we want to do is communicate and let them know that they’re getting direct communication from us. We think we’ve done a good job of that already, but one thing we’re going to do is launch a season-ticket-holder website, which we will launch at about the same time they get this (renewal) information, around May 10.

“They will be able to manage their accounts. We have a ticket-exchange program, so that if you’re not going to the game, you can turn your ticket in and have it resold and recoup some of your investment that way. We have, `Ask the Kings,’ where you can communicate with us directly. Not only will you get a response from the organization, but in many cases, you’ll get a response direcly from Luc, and Luc will be managing that communication. He’s going to be able to access a lot of the feedback, comments and complaints that we’re getting, and respond directly to them in a blog form.”

(McGowan:) “It’s interactive and it’s real-time.”

Facebook Twitter Plusone Digg Reddit Stumbleupon Tumblr Email
  • Garrett

    I like the idea of the season ticket holder website, but I think the Kings need to be reaching out to people beyond the season ticket holders. Those people are die-hard fans anyway and for the most part I imagine they are gonna stick with the team whatever happens.

    I just read ESPN the Magazine’s article ranking all the pro sports teams in the nation and the Colts topped the list not just because they are successful, but because they work well with their fans. They have taken the myspace format and made an online fan community for Colts fans. The Kings should be doing something like this right now. I see enough comments on this blog that obviously there are people out there who love the Kings and I gotta think most people who read aren’t commenting.

    I already want a profile on MyKings.net. Who else does?

  • Gavin

    How much are season tickets now? I keep seeing references to the increase, but where do I find the actual list of what they cost? Thoughts?

  • anthony

    Lombardi’s great rebuilding plan

    “Just you wait and see us in 2017″

  • Goon Squad

    They’re tiptoeing around the fact that AEG was/is just as bad as Disney at owning a sports team. It appears that they’re being given the opportunity to run this as a stand alone business, as if it had been sold to Dean and Luc. The only part of this that I see as hooey is the idea that AEG’s muscle (money) will come into play in the future. Sure, they are going to be “given the green light” to spend money down the road just as soon as they raise that money themselves. They want to “act like L.A.” but they/we don’t want AEG telling them what to do, ergo ticket prices have to go up to pay for future spending, as AEG is not going to. AEG could spend to the cap right now, and they wouldn’t hurt from losing money. It kind of does make one wonder why the monolith doesn’t just sell. Really. If you don’t love it…

  • JW

    I’d rather see more ads on the ice and on the jersey’s than to pay more out of my pocket so the Kings can be ‘ready’ to sign crappy free agents that don’t add anything to the team. Why are they putting the burden on it’s ‘loyal’ fan base?

  • PSP

    I don’t understand – are they saying that the Kings’ hockey related revenue is dramatically below the league average?

    What exactly was the point of the lockout to get “cost certainty”? Didn’t the owners calculate that they could have a reasonable expectation of profit with player compensation limited to 55% of hockey related revenue?

    If the Kings are close to the league average revenue AND they were $7 mil under the salary cap, how could they be losing money?

  • Naturallawyer

    The reason they raised ticket prices probably has nothing to do with trying to pay for free agents or the other rationalizations offered up by management. It’s because the market will bear it. They will charge as much as they can so long as they are still selling tickets. Kings fans proved to them that we’ll pay for just about anything, as evidenced by relatively good attendance for a last place team. They charge more because they can. Care for the fans, and perception management, probably didn’t play much of a role in this at all. They raised the ticket prices because they know we’re dumb enough to pay anyway. (I was considering buying season tickets for this year, but not anymore. I hope their seat sales suffer so that they aren’t tempted to do this again next year.)

  • Crash Davis

    Being in the play-offs, year in and year out, is the final icing on the financial cake. Play-off revenue helps repeatedly to turn a season in the red into the black. Often $1 mil profit is made per play-off game. Get deep into the 2nd round – profits. That’s part of the equation for Detroit, New Jersey, Dallas and just a few others.

    Kings, as we all know, haven’t been to play-offs in like 5-6 years. So, they consistently run at a deficit. And, rebuilding a front office (firing scouts, hiring new trainers, adding personnel) takes money. If not for the deep pockets of Uncle Phil, they’d be in sorrier shape – looking for a new buyer/owner. This was their own doing, though. Old boys club, mismanaged.

    Finally, there are 2 types of owners: those who want to make money. Those that wanna win. Ilitch (Red Wings) and Buss (Lakers) wanna win, and will pay what they need/want for a trophy. (But they aren’t idiots either.) Conversely, Disney & Fox (when owners of Angels/Ducks/Dodgers), Sterling (Clippers)and Anchutz (Kings) wanna make money. Difference with Anchutz is, as has been stated, that the Kings are a slice of a much bigger entertainment pie, very important as a sports tenet at Staples (a cash cow) and for resultant real estate plans & development.

  • dominic lavoie

    Folks,

    I think it is important to remember that the organizations spends money on more than just player salaries. Lets give them a little more time before we revolt!

  • JD

    To comment on PSP’s question, “losing money” can mean many different things, especially when you are talking about a subsidiary/cost center of a larger conglomerate (like the Kings-AEG). In such a context, there are a lot of revenues or costs that can be accounted for in different ways or are non-cash charges. Among those are how AEG charges the Kings for using Staples, the offices, and the practice facility; how the revenue from the luxury boxes and seats that are paid for on a multi-event basis are split between the Kings, Lakers, Clippers, etc.; and how the revenues and license fees from concession sales are split between the Kings and AEG. So “profit” can vary widely depending on what is done with revenues and costs like that. Having said that, I think that Kings-only seat sales and advertizing revenue can be increased and is not where it should be.

  • gsmith

    AEG owns Staples Center

    AEG owns the Kings

    AEG charges the Kings rent to play at Staples Center

    Enough Rent so that they are guaranteed to lose money.

    The Kings lose a little money.

    Staples Center gets a tenant they get to ridiculously overcharge

    AEG makes an obscene profit

  • Matt Barry

    Let me get this straight:

    Pre-lockout, the Kings had a 54 million dollar payroll and still owed players and McNall compensation:

    NOW, the Kings are 7 million UNDER the cap, and if they were so concerned about LOSING MONEY why wasn’t Rob Blake traded?

    They share in revenue from the Lakers from the very costly Premiere and Luxury Suites. They average 16,500 per game and they’re LOSING MONEY???

    Bull.

    Pure bull.

    I love that Luc, who doesn’t even have a business degree, let alone a high school diploma, is telling us about “the future”.

    Wasn’t “the future” when they BUILT Staples?

    Didn’t Lie-Weekly tell us “We’re building from within” and “We don’t sign players to retirement contracts” and “we will not trade out youth” –

    Lies. Lies and MORE lies.

    Nothing has changed… except my season ticket prices.

  • 24diving

    So let me get this straight, the team is losing money so the fans have to pay more to pay for all of the salaries of the new positions that are being created to build this busines structure? There are more coaches for this team than any other that I have seen, yet the team gets worse and worse. Maybe a few less “cooks” in the kitchen would be better and the monies better spent, or not spent. It seems like the same would be true at the upper levels where there are more GM assistants or whatever than there ever were with the previous leadership. I’d really like to know the comparison of the number of jobs between now and two years ago. I can think of several high-salary jobs that were not in existance previously. So, again, I contend the fans are being asked to subsidize the salaries of a number of new employees. That, of course, in addition to the over-priced, under-achievers that have been added to the team salary.

  • David

    Everyone probably remembers the popular TV Sitcom “Frasier.” There was a character on that show named Bob “The Bulldog” Briscoe. His favorite phrase was…..”THIS IS TOTAL BS!!”

    That sums up what Kings Management is trying to feed us.

    Rich, you reported earlier this week that the Kings Payroll was 54 million in 2004 & approximately 40 million for the past season.

    THAT’S A 35% REDUCTION! How can they possibly be losing more money now than they were in 2004? Do they think we’re freaking idiots?

    It must be from the loss of playoff revenue? I don’t think so, since the Kings failed to qualify for the Playoffs in 2004 (or 2003 for that matter)!

    This franchise is destined for continued failure until Philip Anschutz sells out to someone who is actually committed to winning rather than developing land.

    Go ahead and raise your ticket prices, but don’t insult us by saying that you’re losing more money Post-Lockout.

    COST CERTAINTY…..MY A$$!

    THIS IS TOTAL BS!

  • ReggieMoto

    Question: Is the team making money? Losing money? Where are you on that?

    (McGowan:) “We’re not making money. We’re losing money.”

    Question: Significantly more than before? Better?

    (Robitaille and McGowan, simultaneously:) “More.”

    Question: More than before the lockout?

    (Robitaille:) “Yeah.”

    Question: Is that a concern?

    Shouldn’t the next question(s) have been “How? What happened? Wasn’t the lockout resolution supposed to prevent this?” It’s kind of a given it’s a concern, right?

  • Bobby

    Anyone else think that this move is totally ballsy w/ the economy the way it is? People are paying more for gas and food and trying to make their dollar stretch further and how do the Kings respond? Spend more on your tickets! Wow, just wow.

  • Dan H.

    Evidently if they’re losing more than pre lockout then their business model sucks balls.

    And Luc is pretty funny when he talks about business models and future and blah.

    I liked him much better when he didn’t have a PHD in economics and could talk puck to the fans like he was one of us.

  • metalmaster

    There is no doubt they are
    building it like the A’s
    since they have never won jackshit since the 70′s.In
    fact the “moneyball” teams
    have never won squat as far
    as championships in any of
    the major sports. Is the goal to build a competetive
    team that can’t win when it matters or a team that is a serious contender for
    a Cup?

  • http://www.tickets.wealers.com/ Herbert Hillenbrand

    I found This Blog while I was searching google on key term tickets online. I like information posted. Keep up the good work.Thanks for sharing!

  • http://Http://www.ExplorePro.com Celina Figuera

    Awesome blog post, thanks for keeping me busy!

  • http://www.medialog.no/Members/BrochurePrinting Susanna

    Hi everyone. You cannot run away from a weakness; you must sometimes fight it out or perish. And if that be so, why not now, and where you stand? Help me! It has to find sites on the: Brochure print quote. I found only this – investments tool. Should the business angel of the vendors which are found to leave the governments be involved into year? The group had been broke not on the objections of the endowments of the dow trend right at the portfolio, invest. Thank :eek: Susanna from Vietnam.

  • http://findbusiness.ohlog.com/ business opportunity idea

    Wonderful to read!

  • http://businessopportunities.anyhow5.com/ business opportunity website

    Wonderful to read!

  • http://www.investingcube.biz/ Real Estate Investment Course

    Good post, thanks

  • http://buildingandcontentsinsurance.blog.com/ Building And Contents Insurance

    Wonderful to read!

  • http://www.timewarnerwaco.com/ Daren Pruitt

    Your writing could use some improvement to better drive house your factors, but the tone of the argument is correct on. I speak from experience because the nonprofit I work for runs an annual little company competition, and what most of our applicants have in typical is the fact that they’ve figured out people practices that help them contiually outperform their competitors, who generally are bigger.

  • http://dietpill.thripp.com/ Clarence Errico

    I really enjoy the information on this blog. I came across it while searching on Yahoo