Tim Leiweke speaks at the Arena Management Conference in Toronto on Monday.
REPORTING FROM TORONTO — Newly-appointed Maple Leafs boss Tim Leiweke delivered a rousing keynote address to open the Arena Management Conference here Monday, warning the capacity crowd that failure to confront the challenges facing the entertainment industry could have devastating consequences.
“The only difference between a rut and a grave is the size of the hole,” said the Maple Leaf Sports and Entertainment President and CEO, who’s been on the job since April. Leiweke’s all-inclusive speech addressed everything from his spate of firings at MLSE, to the ticketing industry, the newly managed Forum in Inglewood, Calif., Irving Azoff’s deal with Madison Square Garden Chairman James Dolan and the possibility for the relocation of an NFL franchise — to Toronto.
“The top three developing markets in North America are Toronto, New York and Mexico City, and the combined construction in Mexico City and New York doesn’t equal the growth in Toronto,” he explained to the audience. “If I’m the NFL and I have a troubled franchise, I would take note that there’s a lot of money here.”
It was an eye-opening and polarizing speech, not typical of most industry conferences but in line with Leiweke’s assertive posturing since taking over MLSE. During his 45-minute talk, Leiweke bravely addressed about a dozen topics — except his fallout with AEG Chairman Phil Anschutz that had him leave his position in Los Angeles in March.
The core of his speech focused on the changing revenue models confronting live entertainment, pointing to recent television deals for the Los Angeles Lakers and Los Angeles Dodgers worth a combined $10 billion.
Both teams “now make far more money broadcasting than they will ever make at the gate,” he said, arguing that venue professionals need to focus more on harnessing the power of their customer databases and less on the day-to-day operational side of running their buildings.
“Distribution rights are far more important than anything we generate in our arenas,” he said, later adding, “suddenly the digital highway and our customer databases are much more important than how we clean our buildings. We now have to diversify, we have to learn and we have to grow.”
It was a call for change that has certainly been felt at MLSE, where Leiweke has fired Toronto FC President and skipper Kevin Payne, as well as Earl Cochrane, director of team and player operations. He also cut loose Raptors President and GM Bryan Colangelo, replacing him with Denver Nuggets NBA executive of the year Masai Ujiri.
“We’ve made a few changes here, and in Canada they understand the culture of change but they don’t like change as fast as I like to do it,” he said, noting that some of his firings have been excoriated by the Canadian press.
Regardless, change is still on Leiweke's agenda and it begins with ticketing. During his tenure with AEG he helped the company switch from Ticketmaster to its own system AXS. He said many in the industry have failed to create fan-friendly experiences during the ticket buying process, paving the way for companies like secondary provider StubHub to grow into a company with $1 billion in earnings. Many sports executives hate StubHub because the company doesn’t invest in the product on the court, although Leiweke said that animosity is misguided and the passion should be directed toward understanding how their digital platform has turned them into a financial juggernaut. When Leiweke worked for AEG, he inked a 2012 deal with StubHub to become the official secondary market of AXS tickets and shortly after he left, StubHub became the naming rights partner to the home of the LA Galaxy in Carson, Calif.
“StubHub has no capital or risk tied into the business, they own no content, they own no facilities and they own no brick and morter locations,” he said. “They are exploiting our view of the world because they understand the customer experience. We should admire them, they are geniuses and they found a niche.”
It’s also important to understand where a company fits in the digital pipeline and content channel, and he points to Azoff’s recent deal with Madison Square Garden Entertainment, which he said will have him “serving as the anchor tenant for the Forum” in Inglewood, Calif., which was bought by MSGE in 2011 and reopens early next year.
“(MSGE Chairman Dolan) is not expanding his network through more sports teams, but by expanding his footprint,” he said. “I don’t think he’s going to stop – Irving is a pipeline for entertainment and he will be extremely important for the Forum.
So what does it mean for venues? Besides their large customer databases, Leiweke said facilities' strength is tied to their control of the ticket manifest, although even the future of that control remains uncertain. Entrepreneurs like Azoff are starting to squeeze out the necessity for agents, especially for mega-acts, and the result will be that agencies like WME and CAA will begin to look for new ways to generate revenues.
“I’ll bet they are going to look at your manifest and it won’t be long before they talk about premium seats, suites and club seats,” he said. “How long do you think until that becomes a topic of conversation?”
Contact: Tim Leiweke, (416) 815-5400