Despite Efforts to Level the Professional Sports Playing Field, Franchise Success Far from Guaranteed

OTTAWA, Sept. 26, 2011 /CNW/ - Professional sports leagues in North America routinely make some effort to equalize market conditions so all member franchises can be successful. But on-field and off-field success for individual franchises is far from guaranteed. The latest Conference Board of Canada analysis (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-8.aspx) of the pro sports market concludes that three factors - ownership and management, playing facilities, and fan support - determine whether a franchise becomes a winner.

"Leagues are built around the same business model—individual owners acquire a franchise giving them the right to operate a team within the league. But as we have seen time and again, there are many cases of pro sports franchises operating in strong business markets but fielding perennially weak teams. These cases may reflect local market conditions, poor ownership and management, or a combination of both," said Glen Hodgson, Senior Vice-President and Chief Economist, and co-author of Why Pro Sports Franchises Succeed ... and Fail.

The three factors affecting the success of a professional sports franchise are:

  • Ownership and management strength - Two franchises in the same league can have similar market conditions, yet achieve widely different competitive and financial results over time. Chronically weak management and poor decision-making can over time create a self-perpetuating cycle of mediocrity and steady decline: poor competitive performance can lead to a dissatisfied fan base, reduced attendance and broadcast audiences, lower revenues, less money for player talent, and further deterioration in the organization's ability to succeed. Some franchises, like the NHL's Chicago Blackhawks, can break the cycle to become financially successful and build a championship team; others, like the CFL's Ottawa Rough Riders, never escape the downward spiral and eventually fail.

  • Adequate playing facilities -To succeed financially, a professional sports team must have a playing facility that is competitive in terms of scale and quality with the rest of the league. While some aging baseball facilities are revered for their tradition, most successful franchises prefer a modern facility that maximizes the fan experience—and the cash flow. The Conference Board assessed the controversial issue of public funding in its previous publication Who Should Pay for New Pro Sports Facilities?
    (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-7.aspx)

  • Fan support - The analysis identifies four elements that can influence the degree of support for franchises—local tradition and history, globalization of professional sports teams and leagues, marketing power of the sport, league or franchise, and changing demographics within markets.

This report is the latest in the series Playing in the Big Leagues: What Makes a Professional Sports Team Successful in Canada? (http://www.conferenceboard.ca/reports/briefings/bigLeagues/briefing-1.aspx).

The next briefing, the ninth in the series, will look more closely at a number of specific franchises in North America and Europe.


SOURCE CONFERENCE BOARD OF CANADA

For further information:

Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext.  448
E-mail: corpcomm@conferenceboard.ca

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