Labatt’s 1, Carling no score
What a great day for a ball game. Hot and muggy and the traffic backed up to Manhattan. Everybody’s out selling. The Portuguese hot pretzel vendors squabbling over territorial rights, scalpers hustling tickets and “genuine” auto-
graphed baseballs. The yellow cabs are hopping, the limousines parking and the elevated trains rhythmically disgorging fans and smiles. It’s the Yankee opener and New York’s favorites are home again, back in the Bronx, back in Yankee Stadium, the House That Ruth Built, after
two years of exile in Queens sharing Shea Stadium with the Mets. The New York Times is complaining about the cost to a bankrupt city of regilding this shrine (gone from $24 million to $100 million in five years). But the Yankees were threatening to leave—actually leave—New York if the stadium wasn’t fixed. That’s like Washington without the monument, Niagara without the Falls. Inside, the stadium is a giant, gleaming white bowl filled to the brim with 54,000 people melting under the sun like multicolored peppermints. Mayors, governors, senators, actors, munching hot dogs and gulping down beer. And down below, the Yankees, grown-up boys in tight white pants and little blue caps, are preparing to trounce the Minnesota Twins, justifying their multimillion-dollar contracts, their two-tone hair dryers, the owner’s marginal returns, and the pride of New York City. And just think: in 1977 all this sweaty pomp will be transported to the Canadian National Exhibition Stadium in Toronto. Thanks to beer. Thanks to Labatt’s, which just won an American League expansion franchise. Thanks even to Carling, which fought them every inch of the way.
They’re lining up for beer inside the stadium, and no doubt someone on television is telling the folks at home it’s time for a beer break. In a box on the first base line sits 57-year-old businessman Jerold Hoffberger. He owns a baseball team and sells beer, so he knows better than anyone else why two of Canada’s three big breweries were locked for two years in a head-to-
head battle to bring a team to Toronto, why they fought in boardrooms and hotel rooms, mostly in private, until Labatt’s finally won. As the head of Carling National Breweries Inc. (the U.S. subsidiary of Carling O’Keefe Limited) and whose family has been part-owner of the Baltimore Orioles for more than 20 years, Hoffberger knows what the game is really about: selling. And he knows who the target is: the millions of Walter Mitty men sitting on the stands or in front of a television set. “See those 54,000 people over there?” he asks with a sweep, adding, ironically: “Maybe two of them are not nice.”
Baseball fans—Saturday afternoon
heroes who play with the neighborhood kids and still dream of standing lonely on the mound, who can tell you who won every pennant, every World Series. Marketing men, the gurus of business, will tell you that baseball fans are the kind of people who don’t like surprises. They never run their cars with the gas tank less than half full. They like security. But most important, to Labatt’s and Carling, they like beer. Hoffberger understands that. He knows that there isn’t much left to entertain the average guy with a couple of kids. And there aren’t many places left for beer companies (their numbers streamlined by razor sharp competition, their advertising outlets plugged by the government) to push their product. So there’s baseball, the cheapest sport (average seat in the American League $3.25), the last slice of apple pie for a country gagging on politics and poverty topped with the glitter of decadent
chic. “The game is a ballet,” says Hoffberger, capturing the graceful slide of a player in his camera lens. The game is also a business.
The brewers were part of baseball right from the start, along with men who had made their millions in real estate, broadcasting, lumber, shipbuilding and automobiles. From Chris Von Der Ahe of the St. Louis Browns (18811897), Jacob Ruppert of the Yankees (19151939), right to the present owner of the St. Louis Cardinals, Au-
gust A. Busch Jr., father of such favorites as Budweiser and Michelob. And even if a brewer didn’t own the team, he was likely the sponsor who made players heroes on radio and then on television. Brewers wanted to be associated with baseball for the privilege of sitting in a special box, the more practical privilege (in recent times) of deducting depreciation of players’ contracts, and the most desirable privilege of all: selling. And here was Toronto, feeling not quite complete despite the highest freestanding structure in the world, the CN tower, pricking its skyline, the largest metropolitan city in North America without majorleaguebaseball.With2.7 million consumers, like tiny sponges waiting to soak up the combination of baseball and beer.
When television invaded Canada in the 1950s it found Carling (then Canadian Breweries, owned by E. P. Taylor’s Argus Corporation) hogging 50% of the market, with Molson’s Brewery Ltd. a secure second and the small southwestern Ontario brewery, Labatt Breweries of Canada Ltd., lagging third and running to catch up like an overanxious puppy. Molson’s is still second with 34% (Labatt’s figure), but the other two have exchanged places: Labatt’s 38% and Carling 26%. Carling’s “long, long decline,” as the brewery’s president Wilmat Tennyson puts it, can be traced to one big mistake. Carling fell for one of the conventional wisdoms of that time: that television and sports would not mix and that the new medium would be mainly directed at pensioners, shut-ins and children. Labatt’s was more judicious. In 1960, it
snapped up advertising rights for the Canadian Football League, taking a big gulp as it did so because it was its largest marketing investment up to that time— about three million dollars. Molson’s followed suit in 1963, becoming the national sponsor for Hockey Night In Canada, still a top television program among adult Canadians. (Molson’s clout was such that when Labatt’s tried to buy an NHL franchise in Vancouver in 1968 it was turned down. At the time the Molson family owned the Montreal Canadiens and the Forum.) The breweries didn’t stop at the big leagues, either. Labatt’s bloomed into pro skiing, car racing, golf, tennis and squash, while Molson’s rained money on amateur and crosscountry skiing, motorcycle racing, curling, powerboat racing and fishing. Carling (bought by Rothmans of Pall Mall Canada Limited in 1970), “desperately struggling to catch up” in Tennyson’s words, started the O’Keefe Sports Foundation, pumping millions into providing coaches for amateur athletes. The company didn’t get a break until 1969, when Montreal, landing the first major league baseball franchise in Canada, came up with the Expos. Carling was the sole television sponsor the first year when there was still some doubt about how major league baseball would go over in Canada. It was a gamble that paid off. Its share of the market in Quebec (which had plunged in the 1960s when a doctor had linked heart disease to beer) shot up 6% even though it was losing ground everywhere else. Carling has made the most of the Expos. In the Daytona Beach, Florida, spring training camp, a Carling tent invites visitors in for a drink and a brochure. Players are paid to travel with Carling reps, displaying the charm of muscle in hospital rooms and at civic luncheons. A billboard next to the scoreboard at Jarry Park tells you what to drink when you pop out of the sun for a cool one.
It was only natural, then, that Carling expected to have the inside track on any future baseball expansion in Canada. To its chagrin,things didn’t foment that way.
A cast of thousands surrounded Labatt’s and Carling as they struggled to bring a franchise to Toronto—dancing corporate minuets to the sound of the shuffling of promises, taking the show to Phoenix, Tampa, Los Angeles, New Orleans or anyplace where the sacred chieftains of baseball, the owners, got a sudden case of the “meets.” There was Metro Toronto Chairman Paul Godfrey, who put together the $15 million to transform the CNE stadium into a baseball park. There was John Alevizos of the Red Sox, the fast-talking, fast-
shifting promoter from Boston who came to Toronto in 1973, stirred up interest in the sport and later teamed up with Sydney Cooper, a tanned gnome and president of Pitts Engineering Construction Ltd. They started the Toronto Baseball Company Ltd. to which Carling quickly, quietly and confidently offered support. But by early 1974 Labatt’s was on the scene. It had this peculiar marketing problem, you see. The company was a secure number one in the province of Ontario, but for some reason sales in Toronto always lagged about five percentage points behind. So it needed a “new promotion vehicle.” Labatt’s 38-year-old president, Don McDougall, who had never even seen a World Series, went off in search of an unhappy American team, offering money and squeaky-clean streets. The World Series in Los Angeles in 1974 was Labatt’s “coming out” party. The race for baseball officially was on.
If they had all run in the same direction, the race might have been easy to follow, but everybody seemed to be running in circles. When Hoffberger was looking to sell his brewery and the Orioles, Labatt’s courted the team for three months with visions of the Orioles playing at CNE Stadium. Carling forestalled that little union by negotiating to buy the brewery (the deal was completed in October 1975). Now, while the team is still the property of the Hoffberger family, happily boosted with Carling National’s promotional dollars, it can’t be sold without company approval— an effective block to Labatt’s, or anybody else for that matter. “We have a large share of the market in that area,” explains Tennyson. “If he [Hoffberger] sold the Orioles—he’s known as Mr. Baseball there— it would be a terrible reflection on him.” And, to clarify the relationship further, he adds: “The team is in our family.”
In March 1975, Cooper and a fellow
baseball director, Harold McNamara, were charged with defrauding the government in connection with the Hamilton dredging scandal and dropped out of the running. Baseball is a puritanical sport and, though it isn’t written in any rule book, anybody with criminal problems is not welcome in the club. (One exception is Yankee owner George Steinbrenner, who two years ago was fined $ 10,000 for making an illegal contribution to former President Richard Nixon’s election campaign, but then he was already a member.) Alevizos, who had already split from Cooper, formed a new company, with Lome Duguid (head of various distilleries, including Hiram Walker & Sons Ltd. and a director of Maple Leaf Gardens) as the new chief. Carling swiftly and silently fell in behind the new group. [Molson’s flirted with both the Duguid and Cooper groups, going so far as to assign a “man” to Duguid, but it all came to naught.} Duguid spent $100,000 of the Gardens’ money trying to get a team, but unfortunately for his chances the figure of Harold Ballard, president of the Toronto Maple Leafs, imprisoned in 1972 for misappropriating $205,000 in Gardens’ funds, loomed too loquaciously in the shadows.
By the fall of 1975, negotiations to bring the beleaguered and broke San Francisco Giants to Toronto were in full swing, Duguid and Carling following hard on the heels of Labatt’s. Carling was in an awkward position. Because of the corporate link with Baltimore, Carling could not buy any equity in a new team and had to keep a low profile in the negotiations. The Carling reps were so nervous they traveled incognito to baseball meetings, hiding in their hotel suites, waiting for Duguid to come up with the latest. “They were afraid,” explains Duguid, chomping on a cigar. “They could see the headlines—breweries battle for franchise.” Labatt’s, on the other hand, could afford to capture all the public attention, McDougall announcing repeatedly to hungry fans: “You only get back from the community what you put into it.” Boosted considerably by a partnership with Montreal financier Howard Webster and the Canadian Imperial Bank of Commerce, Labatt’s proudly announced the purchase of the Giants in January, 1976. Duguid was beaten. Carling was beaten. A sigh of relief went up. Toronto rejoiced, but it was all premature. George Moscone, a feisty San Francisco mayor in office only a few days, kept the Giants from coming to Toronto. He found local money—despite the bad fan turnout and the too-good competition from the Athletics across the bay in Oakland—and Toronto was blocked once again.
The loss of the Giants threw Labatt’s into a slump. Had the company gone too far out on the limb in spending more than $250,000 trying to get a team? But there was little time for second thoughts and corporate musings. The American League let it be known it wanted to expand and both
breweries were soon hustling again. A central figure in the league, and one of its most outspoken owners, Hoffberger didn’t wait long to act. He informed Carling and put together a last-minute but topflight group of Toronto businessmen headed by an old buddy from Jewish philanthropies, Phil Granovsky, the chairman of the board of Atlantic Packaging Company. (The group also included David Dennis of Sutton Place and Bristol Place hotels, Fred McCutcheon and James Kay.) Buoyed financially by a promise of advertising money from Carling and technical information from Hoffberger, the group worked for two weeks preparing a case. But by that time Labatt’s had been around too long, visible too long, and the league voted 11-1 in its favor, Hoffberger being the only opposition. “I thought they’d get more votes,” he says of the rival bid. “It was just not in the best interests of my company for Labatt’s to get the franchise.”
Throughout the entire corporate dance, the figure of Howard Webster, coyly de-
scribed by businessmen as the Howard Hughes of Canada, hovered mysteriously in the background. He hopped from group to group, brewery to brewery until he finally found the winner. Because winning is all that Webster (Imperial Trust, FP Publications) was interested in. As early as 1971, he had investigated the possibility of bringing the San Diego Padres to Toronto. He had been a silent partner with his nephew, Lome Webster, in a deal which was never consummated, to buy a share of the Expos. When the Cooper-Carling group surfaced, he promised support, briefly toyed with the Duguid group and finally teamed up with Labatt’s, taking their mutual bank, the Commerce, with him. (Final equity distribution: Labatt’s 45%, Webster’s Vulcan Assets Dominion Ltd.
45% and the Commerce 10%.) Maybe it was the attraction of the tax depreciation— $5,250,000 of the seven-million-dollar franchise price is to be considered player contracts and depreciable in total. As well, half of the remainder can be depreciated at 10% per year on a diminishing balance basis. Maybe, as McDougall suggests, “he was tired of being considered an outsider even though he owns so much in Toronto.” Though Webster never attended baseball meetings (he was represented instead by Gerry Snyder, the man who, acting for Mayor Jean Drapeau, had brought the Expos to Montreal) his presence was felt everywhere. Says Paul Godfrey: “We never saw him, but the baseball people always talked highly of him. Right from the
beginning, the owners wanted Webster involved.” Webster promised a Globe and Mail reporter his low profile would be maintained and gave his own reason for buying into baseball: “I think we can make some money from it.”
Wilmat Tennyson, an urbane South African turned Canadian, former head of Rothmans now with Carling, sips his white wine slowly and ponders his loss with watery blue eyes that seem perpetually sad. “It was like fighting with your hands tied behind your back,” he says. They could have gone all the way except for the Hoffberger connection. But Carling’s priorities were different from Labatt’s. Its American company was losing money, and own-
ing a brewery in Baltimore was more important than buying a team in Toronto. “If hadn’t been for that, there would have been some fight for baseball between the breweries in Toronto,” he promises. “It would have been man to man—me and McDougall. That doesn’t mean that my fingers didn’t itch, that I didn’t chew my nails at times.” And anyway the battle is not over. All three breweries are bidding on the TV rights for Alan Eagleson’s World Hockey Tournament this fall. True, Molson’s snapped up sponsorship of the Olympics in Montreal (they’re not telling at what price) and is supporting the Olympics for the handicapped in Toronto later in the summer. But Carling spent three million dollars providing coaches for amateur athletes for the games. And besides, there were other reasons for Carling’s slide (which Tennyson promises will be reversed next year); there were other reasons for Labatt’s successes over the years than just buying into sports at the right time. The Toronto franchise was a big loss, but “I won’t lose any sleep over it. It just means you have to be that much more professional in fighting a war with lesser guns. The two big guns belong to the others.” Across town, overlooking Toronto harbor, Don McDougall is sporting a cherubic grin, sitting back in dimpled velvet comfort and rewarding himself, appropriately enough, with a “Blue.” He’s a man with a big shopping list right now. A name for the new team, a general manager, new promotional gear. Already Labatt’s offices are deluged with calls from people looking for work—for everything from radio announcers to usherettes. The young Tory from PEÍ, one of the whiz kids of Canadian business (he shot up through Labatt’s ranks from summer university student trainee in 1960 to president in just 13 years) is savoring a complex victory. The fans outside are cheering for the man who knew so little about baseball that he booked into Los Angeles two years in a row thinking all the World Series were played there. But he led the traveling show from town to town meeting all the owners personally because “owners want to meet owners, not representatives,” never losing sight of the fact that “as the [brewing] industry becomes more concentrated, it also becomes more competitive. When it gets down to three, there will be one winner and two losers, so we’re playing for pretty high stakes.” The Toronto franchise wasn’t just another corporate decision. “It had to be something pretty important—worth waging a battle for—or else there was no point in getting involved.” The boys in the boardroom are cheering, too, even though some have said it isn’t wise for a corporation with a bottom line fixation to own a pro sport franchise, which rarely ever respects that yardstick of success. But 1,200,000 fans will be cheering that team in 1977. And as for Labatt’s little marketing problem in Toronto, forget it. It isn’t likely to hang around for long, now. ANGELA FERRANTE