BUSINESS

SELLING THE KING

WAYNE GRETZKY IS ALREADY GENERATING REVENUE FOR HIS LOS ANGELES OWNERS

ANN WALMSLEY September 19 1988
BUSINESS

SELLING THE KING

WAYNE GRETZKY IS ALREADY GENERATING REVENUE FOR HIS LOS ANGELES OWNERS

ANN WALMSLEY September 19 1988

SELLING THE KING

WAYNE GRETZKY IS ALREADY GENERATING REVENUE FOR HIS LOS ANGELES OWNERS

BUSINESS

Last month, when 38-year-old Los Angeles Kings owner Bruce McNall concluded a blockbuster trade by obtaining Wayne Gretzky, the National Hockey League’s brightest star, and two of Gretzky’s teammates from the Edmonton Oilers, many hockey experts questioned the wisdom of McNall’s gamble. The money-losing Kings had to pay Oilers owner Peter Pocklington $18 million, give the Oilers two players—and three first-round draft

picks. Although McNall would not confirm the figure, it has been widely reported that Gretzky’s salary package will cost roughly $24 million over the eight-year term of the contract, making him the highest-paid hockey player in history. But McNall has already begun to use his wholesome Canadian superstar to generate new revenue in a city that loves celebrities. “Wayne is bigger than life,” McNall told Maclean ’s in Toronto last week. “What better place than L.A. for a biggerthan-life person?”

McNall’s strategy is to recoup money from the other firms working with the Kings by taking a share of the windfall profits that Gretzky’s presence is expected to generate for those businesses. Among the interests are Prime Ticket Network, the cable company that carries Kings games, Jerry Buss, the

owner of the Los Angeles Forum, who collects rent from the Kings based on a percentage of the gate, and Ogden Allied Services Corp., which sells everything from Louisiana sausages, frozen yogurt and T-shirts to parking spaces at the forum.

At the same time, McNall and his executive vice-president, Roy Mlakar, have increased the price of game tickets by $2.50 to $22 for the best seats in the forum. And advertising rates for billboards have gone up by an average 40 per cent for new clients. The staff has approached sponsors and proposed ways to capitalize on Gretzky’s worldwide reputation, his trademark number, 99, and even his beautiful movie-star wife, Janet Jones. Already one California chain, The 99

Cents Discount stores, have run newspaper ads welcoming another 99 to Los Angeles. And said Gretzky’s father, Walter: “Wayne will do everything possible to help Mr. McNall recoup his losses.” Added the Kings’ treasurer, Robert Moor: “Wayne is going to be a golden boy here.”

McNall admits that the Kings badly need the extra money that Gretzky will generate. Although the privately held franchise does not report its financial affairs, McNall told

Maclean’s that the Kings have lost between $3.7 million and $6.2 million a year for the past three years and have probably never made money since joining the National Hockey League in 1967. Average attendance for Kings games amounted to only 11,667 last year in the 16,005-seat forum, which was built by Canadian Jack Kent Cook in 1966 to house the Kings, and the team only sold out five home games during last year’s hockey season, while the Lakers regularly filled the forum to capacity.

The Gretzky deal promises to change all of that. Prime Ticket Network spokesman Tony Acone said that Prime Ticket has agreed to pay the Kings a bonus of $3 million over four years and to increase its broadcasts to 60

games from only 37, as originally planned. Acone says that Gretzky could help raise the network’s audience to 2.8 million from 2.4 million by the end of 1989. “Gretzky,” he adds, “has already done an hour-long call-in show for us and he is very sincere and gracious. We are enthusiastic as hell.”

The Kings’ advertising team is also betting that sponsors will pay the new post-Gretzky ad rates. New clients that want to advertise on the billboards around the rink will have to pay $93,000, up from $50,000 before the Gretzky acquisition. In their own advertising campaign, the Kings are planning to follow up their initial newspaper ad campaign, summed up in the slogan “Gretzky is a King,” with billboards of the Great One declaring that “L.A. is a Great Place.”

But McNall and his management team are discovering that the franchise cannot exploit the Gretzky image for just any products. Gretzky’s agent, Michael Barnett, claims that he will only approve a “limited number of quality items,” likely including a poster and a T-shirt, for a new merchandising push. Gretzky has also turned down the Kings’ idea of selling signed portraits of him at the team’s opening game on Oct. 6. Although Gretzky and the Kings stood to make handsome profits on the idea, the hockey star modestly proposed a team picture instead. Said Barnett: “On opening night, we do not want Gretzky bells and whistles and 99s on everything you can think of.”

Gretzky’s availability for marketing the Kings may also decline if he takes on new long-term personal endorsement contracts for U.S. corporations. The clean-cut, blond 27-year-old star already earns more than $2 million a year, in addition to his salary, promoting seven major corporations, including Nike sporting goods, Nissan Automobile Co. of Canada Ltd., Gillette Canada Inc., Travellers Life Insurance Co. of Canada and Titan Hockey Equipment. Most of those lucrative contracts have three to four years left to run and will likely be renewed. Still, there is a great deal of interest in signing Gretzky to endorsement contracts in the United States. On the day following his trade from the Oilers, five other big U.S.-based corporations called Barnett with a wide range of advertising proposals.

As Gretzky hit the ice last week for the Kings’ training camp at Victoria’s Juan de Fuca rink, McNall was already able to point to some encouraging financial returns. Season-ticket sales have doubled and include such celebrity buyers as comedian John Candy, actor Tom Hanks and basketball star Magic Johnson. McNall’s ticket managers are now predicting that the team will attract average crowds of 14,000. Said McNall: “If Gretzkymania does not abate and the Kings go to the playoffs, we could even become profitable this year.” Indeed, the best marketing job that Gretzky can do for McNall in the next few months is simply to play hockey.

ANN WALMSLEY