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November 2013 Report on Business magazine cover

November 2013 Report on Business magazine cover

Can Tim Leiweke save the Maple Leafs? Add to ...

Tim Leiweke may have one of the hardest jobs in corporate Canada: turning Maple Leaf Sports and Entertainment’s sad-sack franchises into legitimate contenders. Though rolling in profit, MLSE has failed to win where it matters: on the ice, on the pitch and on the court. The Leafs have gone 46 years without a Stanley Cup, Toronto FC has yet to produce a winning season, and the Raptors can’t keep talent long enough to build a team.

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Enter Leiweke, a 56-year-old, straight-talking St. Louis native who spent the last 17 years shaping Los Angeles-based Anschutz Entertainment Group (AEG) into a championship factory, with titles from basketball’s Lakers, hockey’s Kings and soccer’s Galaxy. Now, Leiweke’s being asked to do the same for Canada’s richest sports conglomerate. The man doesn’t lack self-confidence. Soon after touching down in Toronto, he began talking about parade routes for the Stanley Cup celebration, and suggested the Leafs take down old photos of former greats and start living in the present. Not surprisingly in sports-mad Toronto, controversy ensued.

Leiweke says he regrets being so bold (well, sort of). But as the new CEO of MLSE, he understands just how big this job is: a complete rebuild of a long-neglected corporate structure. The future of some of MLSE’s key assets may depend on it. Job one, he argues, is for the organization to start acting—and talking—like it wants to win again.

These teams haven’t been the most successful franchises in recent history. Why on Earth would you leave L.A. to take this job?

Because of that reason. Who would want the job if you were winning all the time, and all you were doing was continuing to maintain that tradition? The great jobs in life are the ones with the biggest challenges. That’s why we are here—to push ourselves, to find the biggest mountains we can possibly find to climb. And this one’s a big one. These are teams of significance. These are teams that matter, teams that are part of the life and the history and the tradition of an entire community. So if you could win here, it would be absolutely remarkable, and you would change the market forever (1). I like that. And I think that, in the past, maybe that scared some people here.

When you think back to when you arrived in L.A., what similarities do you see coming into Toronto?

None. I wish. In L.A., it was a build. In the case of hockey, the Kings were pretty insignificant, because Gretzky had left. Soccer didn’t exist. And we really weren’t ingrained in the Lakers, because AEG was the minority partner and they weren’t playing in our building yet. Here, it’s a very big company (2). You come in and you inherit people, you inherit culture, you inherit tradition, you inherit a way of doing business that had already been set in stone, in some cases. And so now what you are doing is, instead of building things, to some extent you have to tear a few things down to rebuild them. You’ve got to change the thinking, the culture and the way we operate as a company day to day. This is much more difficult.

As the new CEO, nobody expects you to win off the bat. What sort of window do you give yourself?

I think the Leafs should expect to win, and because of the year we had last year (3), we want to continue to build upon that success. There is an expectation there, and we accept it. I have not been shy of saying that the soccer team will be completely fixed. We cannot be afraid of winning. For too long here, we’ve been afraid of expectations, and they’ve crushed us. We’ve been afraid of winning, and it has destroyed us. Great organizations don’t back down from the challenge. I learned that with the Lakers. The Lakers are not afraid to admit that they are expected to win. We need to have that kind of culture here.

Now, the Raptors are going to take time, because of the system that we have with the NBA and the reality of not only the contracts, but our lack of resources—we didn’t have one pick in the draft this summer—so that may take a little bit more patience. But you will immediately see a different team, a different tone.

The Raptors have the knock of being the team nobody wants to play for. How do you turn that around?

I think we already did. We got the NBA executive of the year (4) to come here. They wanted him to stay. I’ve heard people say, well, that’s happened before. But not with a guy who was under contract, who won 57 games and who was offered a new, long-term contract. He made a choice to come here (5). People who say players won’t come here because they don’t like the cold weather or they don’t want to play in Canada or we don’t have ESPN—those are excuses. We’re not using those any more. And by the way, they’re not true. This is a great city. This is one of the top three or four cities in all of North America, with one of the best, if not the best, economy in North America. We will have no trouble convincing people to come here—if we win. No great player is coming here unless we can prove to them we can win, and win often.

It seems you’re doing a cultural rebranding of these teams. Have you thought about rebranding the Raptors specifically? It’s been a long time since Jurassic Park was cool (6).

We definitely are doing a cultural rebuilding across the board. What it means to the Raptors is more than just culture. We are going to submit to the league, in the near future, an application to change our logo, our look, our colour scheme—everything but the name. Our 20th anniversary is coming up. It gives us a great opportunity to change the way people view us, including our brand. (7) I hope we’re good enough to take advantage of it.

Why everything but the name?

We debated the name a lot. Honestly, I’d change the name. But there are others here who felt strongly that we shouldn’t change the name, and so I’m going with them on this one. Part of me has to understand that there is a long history here, whether it’s the Raptors, the Leafs or, for a shorter span, TFC. And maybe we need to occasionally admit that we can’t change the world in one day. So I’m learning how to take a deep breath.

Your signature move in L.A. was bringing in David Beckham to the Galaxy. How do you evaluate that now, and do you think you can duplicate that with Toronto FC?

There’s never going to be another David Beckham. He’s the most popular athlete on the face of the earth (8). You’re not going to catch that lightning in a bottle again. In L.A., that worked particularly well, because he was the star of stars. We don’t need that here. We are well beyond a star in name and brand saving this franchise. Our fans would read right through that. We will get a player that is equal to, if not better than, David Beckham. We have to. The future of this franchise is at stake. I’m really worried about TFC—more worried than anything else I’ve had to deal with so far. It scares me that we have let it slip this badly.

You use the word fear a lot. What do you mean when you say fear?

There is a fear of success here, which is amazing. But I actually think we were afraid because we didn’t know how to find it. We have to say, “Look, occasionally we’re going to try things and they’re not going to work. That’s okay.” We can’t accept it, we shouldn’t live with it. So when I talk about a fear, I talk about a fear that failure becomes something we accept here. That’s what scares me the most. We cannot accept where we are at with TFC (9). I know how we’re going to fix it. That’s not cockiness. It’s confidence. Because I’ve been through this before.

Your job is unlike that of most CEOs. The Leafs will make money no matter what. Win or lose, you could sell out the ACC two times over on most nights. It’s almost something you don’t need to worry about—making money (10)—which is odd for an executive.

Everyone knows we will sell this building out no matter what we do. If nothing else in the last 10 years, we’ve proven that point. And so, fine, some people will accept that and say, I don’t have to do any better than what I’m doing now. And some people won’t. And what we need to do here is find an organization—our coaches, our general manager and his team, our players—who won’t accept that. The message we’re trying to send to the players is that it should anger us that we’ve got to rely on the past so much. Not because we haven’t had a great past. It’s unbelievable to walk into an arena and see 11 Stanley Cups (11). I only have one (12). But we have to stop hiding. All we’re trying to do is shake everybody up.

A few of your public comments—like the one about having the Stanley Cup parade route planned—have drawn criticism. Do you regret them?

People made fun of the parade thing. It had nothing to do with the parade route. It had everything to do with, we’ve got to want to taste it so bad that we’re willing to do whatever it takes to get it. And I just don’t think we’ve had that yet. I think we’re getting there now. And when you get that kind of character and culture in an organization, those are the ones that win.

Toronto isn’t used to hearing a sports executive—or any CEO, for that matter—talk this way.

I probably underestimated that. I’m straight-ahead. I’m very energetic. I know all the commissioners have commented on my energy and passion. I’ve had one commissioner say I’m the bull in the china shop. I’ve had another say I’m the Energizer Bunny. They’re comparing me to animals a lot—I don’t know if that should make me nervous. But I’m a bull, I admit it. I want to succeed. And sometimes I get ahead of people. We’ve had people in this organization who didn’t love it, and some of them are no longer here, and I’m okay with that. My guess is, there’s probably people in this organization who don’t love it now. Do I put undue pressure on the players and the coaches by setting this standard? If you don’t want pressure, don’t come here. I’m trying to tone it down a little bit. But we have the ability to do it—our resources are better here than anywhere I’ve ever seen. It angers me that we haven’t rewarded the fans.

You have other problems to fix too. Increasingly at Raptors games, if it’s not the Heat or the Lakers playing, the middle-centre of the stadium—the higher-priced tickets—is a wasteland. What message does that send to you?

The fact is, there is a market here. Those seats used to be full. We just got bad. That’s what it tells me. The people and companies that can afford those seats have been here before, and will come back again, but because of the price we charge them—and we are expensive (13) —they’re going to be the first ones to go. God bless those who sit upstairs, because they’ve been much more patient with us. But we are expensive. I think that’s the delicate balancing act. If people think we’re going to reduce our prices, that’s not going to happen. Because we will spend whatever it takes to win here.

What is your relationship with the owners: Bell, Rogers and chairman Larry Tanenbaum?

With Bell and Rogers, they know where I’m headed. George (14), probably more than anyone, gets exactly where I’m going, because he’s gone through this with Bell. He got rid of a lot of people, changed the culture there and changed the way they operate as a company. And by the way, I don’t bother them a lot and they don’t bother me a lot. I get what they want me to do. We need to win here, and that’s what they expect me to do. I think they’ve got my back. Larry’s the same, except it’s a little personal for Larry, because he knows everybody here. He was friends with a lot of people I let go. But I think Larry, more than anybody, deserves the right to win here. And when we do win, it will be the greatest day in his life. So I keep that in mind every day when he occasionally gets mad and says, “You said what?”

You’ve had to fire a few people (15). How tough was it to come in and make those personnel changes?

As everyone knows, I like the subway here. I’ve done two games now where I’m in the subway going home, and it’s an unbelievably good opportunity to talk to people and hear what they’re thinking. So the other night, someone came up to me and said, “Oh yeah, you’re that mean guy firing everybody.” And I’m like, I’m really not that mean. I’m actually nice. I don’t go around trying to fire people. It’s not what I came here to do, nor what I like doing, by the way. I’ve been in this business 35 years, and I’ve never gotten used to that. But I do it. Because you have to. I feel bad for them. That said, I’m not going to be shy on making the decisions we need to make here. And I won’t compromise. Because the problem is, if I compromise once, that creeps right back into our culture. I’m anxious to get through this part of it. It’s not my favourite part.

What were you asked in the interview for the MLSE job?

I don’t think we ever went through a long interview. I think they understood who I was. For me, the most telling moment was when I went back to George and Nadir (16) and said, “We need a player to change the fortune of this soccer team. When I walk in your offices and tell you I could get David Beckham and it’s going to cost us $40 million, are you in?” And they told me, “We’re all in.” They didn’t think about it for a second. It was not what they asked me; it was what I asked them—and the answer they gave me.

This interview has been condensed and edited.

Footnotes:

1

The Leafs haven’t won the Cup since 1967, defeating the Montreal Canadiens in six games

2

MLSE’s estimated value: $2.25 billion

3

First playoff berth since 2004

4

Masai Ujiri left the Denver Nuggets to become Raps GM last May

5

Salary in Denver: $500,000 Reported salary in Toronto:$3 million

6

The team’s much-maligned logo

7

The Raptors have named Toronto hip-hop star Drake their “global ambassador”

8

He has 29.6 million likes on Facebook

9

Record since inception (as of Oct. 1):

50 wins

103 losses

66 ties

10

Leafs’ 2013 revenue: $200 million Operating income: $81.9 million

11

Toronto has 13 cups in total, if you also count the 1918 Arenas and the 1922 St. Patricks

12

In 2012, the Kings beat the New Jersey Devils in six

13

Lower bowl seats range from $150 to $1,500 for courtside, depending on the opponent. The Raptors ranked 13th of 30 NBA teams last year, with average crowds of 18,144

14

George Cope was named CEO of Bell in 2008, tasked with resurrecting a stumbling company that had been leaking market share to its rivals

15

Including TFC general manager Kevin Payne

16

Nadir Mohamed, outgoing CEO of Rogers Communications, which owns 37.5% of MLSE

Leiweke’s blueprint

Winning is nice, but Tim Leiweke is playing a higher-stakes game at Maple Leaf Sports and Entertainment. When Rogers Communications and Bell paid a combined $1.07 billion for 75% of MLSE, it wasn’t just to sell tickets and stream highlights to mobile devices. The real reason companies buy sports teams is to flip those assets down the road—at a much higher valuation—while enjoying the cash flow that comes along the way.

Prime sports assets have an uncanny ability to appreciate in value—particularly if you build assets around them. This is Leiweke’s forte. When he joined the Los Angeles Kings in 1996, they were a struggling hockey team at the end of the Gretzky era. Working for Denver billionaire Phil Anschutz, Leiweke built the Anschutz Entertainment Group (AEG) into a model for professional sports ownership—a constellation of properties that includes the Kings, the Lakers, the Galaxy and others. Built around them are assets and investments ranging from newly built stadiums to the L.A. Live entertainment campus, which churns out revenue from its hotel, restaurant and convention centre facilities. In 17 years, Leiweke oversaw the acquisition of more than 60 businesses, and AEG is now worth upwards of $8 billion (U.S.).

That’s why Leiweke has come to Toronto. It’s all about valuation and expansion. Already, there are rumours—true or not—that MLSE will buy the CFL’s Toronto Argonauts and renew the push to bring an NFL franchise to Canada.

Winning increases the company’s value, and Leiweke’s ambitious goal is to double MLSE’s by 2020—which means vRogers and Bell would be cashing a cheque for several billion. Not a bad return. That is why big companies buy sports teams.

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