COVER

GRETZKY INC.

Off the ice as well as on, The Great One is money in the bank

JAMES DEACON December 5 1994
COVER

GRETZKY INC.

Off the ice as well as on, The Great One is money in the bank

JAMES DEACON December 5 1994

GRETZKY INC.

Off the ice as well as on, The Great One is money in the bank

COVER

JAMES DEACON

Ducking into a Beverly Hills pasta bar, Wayne Gretzky hardly looks himself. Maybe it is the ball cap pulled low on his forehead, the uncharacteristically glum expression on his face or the fact that hockey’s proverbial white knight is, from T-shirt to cowboy boots, dressed completely in black. Wearily slumping in his chair, he orders a beer and sighs: “I guess that’s it.” On the last day of September, National Hockey League commissioner Gary Bettman had just rejected the players’ eleventh-hour offer and locked them out, jeopardizing a season that was supposed to start the next day. Concerned about undermining hockey’s budding fan interest in the U.S. Sunbelt, Gretzky views the labor impasse as about as welcome as a stick to the gut. “I just hope that people understand and the game doesn’t suffer too much,” he says gloomily. But his mood brightens considerably when the subject turns to hockey’s long-term prospects. “I’m probably more optimistic and more determined than ever,” he says. “Of all the major sports, hockey is the one most on the rise.”

Such positive thinking might finally be rewarded if the hockey talks, which showed signs of apparent progress last week, salvage a portion of the season (page 58). But optimism springs easily from a man who, despite the now nine-week-old lockout, is thoroughly enjoying himself. Gretzky is happily ensconced in the lush life of Los Angeles with his actress wife, Janet, and their three thriving children. His father, Walter, with whom he is extremely close, has recovered from a near-fatal brain aneurysm. The herniated thoracic disc in Gretzky’s back that nearly cut short his career in 1992 has been consigned to memory. And at 33, he has emphatically demonstrated that reports of his athletic demise were greatly exaggerated: last spring, he scored his 802nd career goal to overtake Gordie Howe’s all-time NHL record, and he won his 10th league-scoring title. Even the lockout has its upside: although frustrated by the impasse, he got to spend autumn with his family. And barring a settlement with the league, he will fulfil a longheld dream next week when he takes a handpicked team of NHL stars to Europe for a series of games against club teams.

But virtually since the day he first laced a skate as a professional, Gretzky has quietly pursued a second arena of achievement—business. “It’s pretty simple,” he explains. “I was bored by not doing anything with my time off, and before I got married and had kids, I had a lot of time.” After a comparatively slow start, his off-ice activities have given new meaning to the term “net profits.” He and his agent, Los Angeles-based Michael Barnett, now juggle a diverse portfolio of endorsements and partnerships with companies that sell everything from hockey sticks and soft drinks to insurance and consumer electronics. His corporate partners, eager to associate with The Great One, seek bigger profits and higher market profile. In return, they pay Gretzky fees and royalties that, added to the staggering $11.6-million-per-season stipend that the Los Angeles Kings pay him for playing, push his annual income to an estimated $23.5 million. “Gretzky’s legend has transcended his sport so that even mainstream American companies have been able to use him,” says Jeff Jensen, who covers sports marketing for Advertising Age, the Chicago-based trade journal. “People know what he stands for even if they know nothing about hockey.”

Gretzky has kept his business affairs mostly to himself—he hardly needs more publicity, and, be sides, it is his business. But what he once jokingly referred to as “my little empire” has become difficult to ignore. He stars in major television advertising campaigns for such consumer giants as Domino’s Pizza and Sharp Electronics. He is a cor-

porate spokesman for Coca-Cola and Zurich Insurance. He has boosted the bottom-line fortunes of such smaller companies as Easton Sports and inline skate-maker First Team Sports. His name and image are licensed on dozens of products, from trading cards and posters to T-shirts and coins. He has one restaurant in Toronto and will soon help launch a North American chain of sports-themed restaurants in an all-star partnership that includes gridiron hero Joe Montana, tennis ace Andre Agassi and basketball behemoth Shaquille O’Neal. Time Warner, the giant U.S. communications firm, has designed an interactive video game around him, and he is spearheading a plan to build privately financed, family-oriented ice rinks across North America. ‘We have tried to build something I can fall back on when I retire, something I can do when I finish playing hockey,” he says.

In a series of recent interviews with Maclean’s, Gretzky talked about how he and Barnett have woven a seemingly disparate group of partners into a mutually profitable web. Although neither he nor his sponsors would divulge the exact dollar details of their contracts, one thing is eminentiy clear: off ice as well as on, Gretzky is money in the bank.

If pro sport ever had a can’t-miss kid, it was young Wayne Gretzky. The Brantford, Ont., native was a certified phenom at age 10, when he scored 378 goals in one 69-game season as a peewee. He signed his first pro contract at only 17, and tied superstar Marcel Dionne for the most points in his rookie NHL campaign. Since then, he has won the Stanley Cup four times and respectfully but inexorably obliterated just about every league offensive record—including the supposedly untouchable milestones set by his idol, Howe. His league-wide impact has been equally impressive: his trade to Los Angeles in 1988 turned around a failing franchise and paved the way for the league to add five more Sunbelt cities.

The endorsement world took longer to con-

quer, partly because in sport it is not so much what you do as where you do it. Mark Messier, Gretzky’s former teammate with the Oilers, won the Stanley Cup five times in Edmonton, but only

became the object of marketing desire after winning the Cup last spring with the New York Rangers. Gretzky found the spotlight in Los Angeles, arriving as a bona fide star in a place that worships and rewards the species. Today, his annual endorsement earnings, estimated at about $12 million, are topped only by the gods of athletic commerce—including basketball-star-turnedbaseball-striver Michael Jordan (estimated at $40 million), basketball’s ubiquitous O’Neal ($20 million) and venerable golfers Arnold Palmer and Jack Nicklaus ($20 million each). And Gretzky has done it all despite the fact that hockey, for all its recent inroads, remains a poor fourth in the U.S. sports consciousness after basketball, football and baseball. According to Brandon Steiner, president of Steiner Sports Marketing in New York City, hockey stars such as Mario Lemieux, Brett Hull and Eric Lindros simply do not yet have the profile to carry a national U.S. advertising campaign. “You put most of those guys in street clothes out on Madison Avenue,” said Steiner, “and no one notices them.”

Not so Gretzky. He excites advertisers not so much for the records he sets as for the manner in which he sets them. He has a style all his own—signature moves inside an opponent’s blue-line that give him space to shoot or to set up a teammate in the clear. He is creative, finding scoring opportunities from seeming chaos. He is a team player, whose assist totals are even more remarkable than his goal records. And he is generous, reflecting glory on teammates, past players and the greatness of the game.

Clean-living and clean-cut—except for his recent union-solidarity goatee—he is a model citizen off the ice as well. Advertisers cringe when their walking billboards attract negative publicity: examples range from the relatively benign, such as figure skater Nancy Kerrigan’s post-Olympics petulance, to the more serious—golfer John Daly’s alcoholism, sprinter Ben Johnson’s steroid scandals and, of course, the arrest of ex-footballer O.

J. Simpson on murder charges. Gretzky, meanwhile, is unfailingly polite to both fans and reporters. He comes across as the guy next door, albeit a very famous one—an enthusiastic family man who honors his parents, his team and his small-town values. Amazingly enough, associates say, the image is accurate—Gretzky really is all those things.

But for sponsors, the most intoxicating ingredient in the Gretzky mix is the amount of attention he generates. Even last season, playing on a team that would not make the playoffs, Gretzky was still featured on the news each night as he neared and finally surpassed Howe’s goal-scoring record. As a result, his renown extends well beyond the narrow confines of the hard-core hockey crowd. He is frequently invited on talk shows and hosted NBC’s Saturday Night Live. His presence at a Coca-Cola-sponsored kids’ hockey camp last summer in Anaheim, Calif., attracted a camera crew from Entertainment Tonight, the weeknight half-hour of Hollywood Lite. He is no longer a mere athlete, he is a fullblown celebrity. Sharp, the Japanese electronics firm, made Gretzky the spokesman for its most important consumer product, the Viewcam—without even identifying him as a hockey player in its TV ads.

As it happens, Gretzky’s first attempt at being a corporate spokesman was a complete bust. Nelson Skalbania, the Vancouver entrepreneur who in 1979 signed Gretzky to his first professional hockey contract—with the Indianapolis Racers of the World Hockey Association—wanted his prized employee to dress up an otherwise drab ceremony marking Skalbania’s purchase of a brewery in Prince George, B.C. Gretzky, who was then an extremely nervous flyer, jetted from Indianapolis to Prince George via Vancouver, but when he arrived, he was refused entry. The event was being staged at a bar, and Gretzky, though already a star, was only 17. He took a cab to the airport and flew back to Indiana.

In great demand to attend corporate functions or charity golf tournaments, Gretzky remembers his first off-season as a blur. “I didn’t have a schedule, a datebook—anything,” he recalls. “I needed someone in Edmonton to help me, to organize my life. It’s hard for me to say no to people—I’m not good at it and never will be.” He had met Barnett, then an Edmonton restaurateur, the year before, and they became friends during the 1979-1980 season, Gretzky’s first in the NHL. After discussions with his father, they struck a deal, and soon Gretzky’s off-ice affairs began to take shape. His face appeared on Pro-Stars breakfast-cereal boxes, and he was featured in Canadian advertising for such products as Mr. Big chocolate bars, 7-Up and GWG Jeans. By the time Gretzky left Edmonton in 1988, his off-ice income reached an estimated high of more

than $1 million per year—chump change for Michael Jordan perhaps, but big bucks by hockey standards.

Gretzky’s market muscle was evident with his first endorsement, signed in 1979 with Titan hockey sticks. The then-Finnish company agreed to pay $5,000 a year for three years. “I was 18 years old, I got to travel, meet people, play in golf outings, shoot some local TV commercials—it was great,” he recalls. “Great” understates the impact on Titan. As Gretzky began establishing his hall-of-fame hockey credentials, stick sales took off. By 1989, when Gretzky switched to Easton sticks, his income from Titan had climbed to $125,000 per year plus royalties on sales of specific models. During that same period, the company ceased importing its North American stock from Finland and built the world’s largest stick manufacturing plant in Cowansville, Que. From a lowly No. 15 in the hockey-stick world in 1979, Titan had rocketed to No. 1 a decade later. “Wayne was responsible for us building that factory in Canada,” says Bob Leeder, sales director for Titan. “He made Titan hockey sticks—no one in our company would dispute that.” Despite piling up points for the Oilers and profits for his sponsors, Gretzky may as well have been shovelling snow as far as many American advertisers were concerned. They understood basketball, baseball and football; they knew Magic Johnson, Reggie Jackson and Joe Montana. But although he had some U.S. contracts, Gretzky had still not broken through with mainstream America. That attitude changed when he moved south. Overnight, hockey became cool in California, and Gretzky became a hot commercial property. Kings president Bruce McNall, who has seen his own fortunes plummet and now faces four charges of defrauding banks for more than $300

million, said that even the entertainment industry took notice. “I remember having to go to a party the first night that Wayne was in L.A., and all the stars were lined up to get his autograph,” McNall recalled last summer. “He was shocked and a little embarrassed, but I think it showed the level to which he was known even before he played here.”

The attention was flattering, but it was not an enjoyable time for Gretzky. He was leaving Edmonton, where he had been happy, and the Oilers, one of hockey’s greatest-ever teams. Even today, his voice takes on a hard edge when he talks about Oilers owner Peter Pocklington “selling me out of Edmonton.” But Gretzky knows how to make the best of a bad situation—consider how many goals he has set up while being cornered behind the opposing team’s net. So he decided to make the best of the trade to Los Angeles, and as a result he has become rich beyond his wildest dreams.

It is a stinking hot July day in Southern California,

and the tar is bubbling up between cracks in the deserted parking lot surrounding The Pond of Anaheim. But inside, the arena is cool and alive. In the plush home of the NHL’s Mighty Ducks, a scene befitting the namesake Disney movies is in full swing. On one section of the rink, weak-ankled kids career around like bumper cars, collectively trying to steal the puck away from the lone adult in their midst. They slash him, hook him and call him ► 'S**. names. Finally, they hound him down, capture the

Épuck and send their victim gasping to the bench in search of water. Leaning against the boards, Gretzky “ drags a towel across his forehead and laughs at the 8 suggestion that he has met his match. “This stuff % isn’t easy,” he protests. “Those kids are good.”

jkkA I Although he enjoys working with kids, summer

shinny is strictly business for Gretzky, one of many

corporate obligations on his off-season slate. Companies pay him sixand seven-figure annual fees to be their spokesman, and two of the five days he works for Coca-Cola each year are spent playing host to the kids at the Future Stars camp. Gretzky’s duties vary with the company. With some, he meets with staff or speaks at sales meetings. Most use him in print and TV advertising. Others simply ask him to join key clients for a day on the golf course.

Profit and publicity are the goals and assists of the marketing game, and Gretzky delivers both. Tony Luppino, vice-president of corporate communications for Toronto-based Zurich Insurance, says that his firm started using Gretzky in its advertising in 1988 and, within three years, scored 20 per cent better in customer-awareness surveys. Every summer, thousands of kids around North America buy six-packs of Coke and fill in ballots in hopes of winning the chance to scrimmage with Gretzky at the camp. And Stuart deGeus, national director of field marketing for Ann Arbor, Mich.-based Domino’s Pizza Inc., reports that using Gretzky in advertising has given the company market prominence in Canada that outstrips its relatively small presence—180 Canadian outlets compared with 4,700 in the United States.

But Gretzky is more than a figurehead. He can, in the sales vernacular, move product, so he has several deals with smaller firms that cannot afford his usual up-front fees but offered him a percentage of profits. Industry analysts say that such royalties can push his annual stipend from a single successful firm to well over $1 million. And with Gretzky’s help, some of his sponsors have been extraordinarily successful. Easton, for instance, approached him in 1989 about endorsing its aluminum-shafted stick. When the company built one to his specifications, Gretzky signed a fee-plus-royalty deal for four years (it has since been renewed). Easton, a private company based in Van Nuys, Calif., does not release financial information, but industry sources estimate that its hockey sales have increased to more than $40 million from about $14 million in five years. First Team Sports, a Minneapolis-based manufacturer of Ultra-Wheels in-line skates, signed Gretzky in 1990 and saw its skate sales climb to an estimated $95 million in 1994 from only $4 million in 1990. “We are trying to grow in Europe,” says Dave Soderquist, the company’s vicechairman, “and even in places like Switzerland or Austria we can show buyers a catalogue with his picture in it and everyone knows Wayne. He opens doors in new markets.”

Gretzky is extremely cautious about which hockey products he endorses. For instance, Barnett has had to turn down rich offers from skate companies because Gretzky prefers a brand—Daoust—that pays him nothing but fits perfectly. (Perfect is a relative term: Gretzky has weak ankles, so, to improve his skating, he crams his

size 9s into a custom-made

pair of size 63A skates.)

“My profession is hockey,” he explains, “and if I can’t function at my best, I’m not going to be sought after in other areas.”

In recent weeks, Gretzky has agreed to endorse The Official All-Star Cafe, a new restaurant chain run by Robert Earl, who founded the successful Hard Rock Cafe and Planet Hollywood franchises. Earl is counting on Gretzky,

Montana, O’Neal and Agassi to push people out of sports bars and into fullservice restaurants. And in November, Time Warner InterActive announced that Gretzky will go digital as the star of the forthcoming “Gretzky! All-Star Hockey,” a home video game due out next March. Also coming in 1995 is a new athletic shoe—for street hockey—designed with Gretzky’s help by Santa Monica, Calif.-based L.A.

Gear.

Perhaps the most ambitious project Gretzky is currently associated with is developing private ice rinks throughout North America. Designed by Toronto-based Brisbin Brook Beynon Architects, each Wayne Gretzky’s

Iceland will cost an estimated $8 million and will house an ice rink, a fitness centre, day care, and retail and food-service outlets. The first three Icelands are planned for an unnamed site near Toronto, Boca Raton, Fla., and the Los Angeles suburb of Irvine. As well as making hockey more accessible, the Iceland project brings most of Gretzky’s sponsors under one roof. Visitors can expect to find pop machines by Coke, pizza by Domino’s, hockey equipment by Easton, athletic shoes and apparel by LA Gear, in-line skates by Ultra-Wheels and so on. “They are going to be more like community centres than anything else,” Gretzky says.

For all he does elsewhere, the rink remains Gretzky’s main place of business. It is what pays him most and what he loves best, and it is where his authority is greatest. When players’ association boss Bob Goodenow wanted to add weight to an important news conference recently, he asked Gretzky to be there. When commissioner

THE GRETZKY PORT FOLIO These are the companies that pay to have No. 99 on their team: AIR CANADA CHICAGOLAND PROCESSING (coins and medallions) COCA-COLA COSTACOS BROS. (personality posters) DOMINO'S PIZZA EASTON SPORTS (hockey sticks and equipment) FIRST TEAM SPORTS (Ultra-Wheels in-line skates) HARLEYBRANDS (clothing) L.A. GEAR (shoes and clothes) SHARP ELECTRONICS THE OFFICIAL ALL-STAR CAFE (U.S. restaurant chain) TIME WARNER INTERACTIVE (video games) UPPER DECK (trading cards) UPPER DECK AUThENTICATED (memorabilia) WAYNE GRETZKY'S ICELAND (ice rinks) WAYNE GRETZKY'S RESTAURANT ZURICH INSURANCE

Bettman wanted to enhance the image of the league, he requested that Gretzky attend Sports Illustrateds 40th anniversary TV special— Gretzky had placed 12th on the magazine’s list of the most influential sports figures of the past four decades. And International Ice Hockey Federation president Rene Fasel complained that member federations had trouble fitting Gretzky’s European tour into their schedules, but he complied anyway. “What can you do?” Fasel said. “He is so famous.” At times, says teammate Marty McSorley, Gretzky gets too caught up in his broader responsibilities. “He can get so involved with the issues of the sport,” says McSorley, “that sometimes I want to shake him and remind him that he’s just a player.”

The European excursion grew out of a concept that Gretzky and

Barnett proposed to then-NHL president John Ziegler in 1989. The idea—designed to enable top NHL players from all countries to take part in the 1992 Winter Olympics in Abertville, France—was lost on hockey’s administrators. But the National Basketball Association sent a Dream Team to the 1992 Summer Games in Barcelona and, partly as a result, European interest in basketball has boomed. Gretzky’s private dream team plans six stops—in Helsinki and Tampere in Finland; Oslo, Norway; and Göteborg, Stockholm and Malmö, Sweden—and, along with The Great One himself, will feature such NHL stars as Messier, Sergei Fedorov, Brett Hull, Paul Coffey and Doug Gilmour.

When Gretzky plays for the Kings, he is paid handsomely: he is in the middle of a three-year, $34.8-million deal. At $11.6 million per year, it is the highest annual salary in team sports history. “The contract,” says Barnett, “had to reflect what he had done for the Los Angeles franchise, not only on the ice but off it as well.” The lockout is costing Gretzky, but not as much as it appears. For one thing, $17.7 million of the total is deferred, to be paid in the five years immediately following the term of the contract. Also, teams can withhold salaries during lockouts, but not signing bonuses. Barnett structured Gretzky’s agreement so that $27.3 million is considered a signing bonus, while only $7.5 million is considered salary.

The game, however, does more than just pay Gretzky. Despite the pressure to perform, hockey nevertheless gives him refuge from the

near-constant demands of his off-ice life. “Sometimes it seems like I have been a pro all my life,” he says,

“but the rink was always the place where no one would bother me. That was where I was able to focus in on my own enjoyment, my hockey.”

Although the economic circumstances are worlds apart, Gretzky is doing his best to bring a little Brantford to Beverly Hills. He and Janet, who met during the taping of a TV show called Dance Fever in 1981 and were married in 1988, moved

from a somewhat isolated estate in Encino to their current house so that Paulina, 5, Ty, 4, and Trevor, 2, could grow up in a more family-oriented neighborhood. Los Angeles may at times be a dangerous place, but kids still need other kids to play with. “It’s a gated community and, within that, we try to let them lead as normal a life as possible,” Gretzky says. “It’s not like it was for me. When I was six years old, I would get up in the morning and go to the park all day. We don’t do that. The kids are never out of the sight of an

adult. But it’s about as normal a life as we can provide.” Amid massive homes owned by the likes of celebrities Paula Abdul and Yanna White, the Gretzky abode is comparatively discreet. The two-storey house is furnished tastefully and comfortably with antiques and overstuffed furniture, but even the contractors who repaired the damage from last year’s earthquake could not mitigate the effects of children. The house is usually overrun by kids and kiddie paraphernalia. There is a steady stream of adults,

too. Janet’s mother has lived with them since they moved to Los Angeles, and both Janet and Wayne have had siblings stay for extended periods. Gretzky’s parents visit frequently, and during training camp two Kings rookies, Jamie Storr and Matt Johnson, bunked in.

Gretzky is conservative

with his personal investments, with occasional exceptions. In 1991, he split the $503,000 cost of the famous Honus Wag-

ner baseball card with McNall—a card that, because of McNall’s bank-

ruptcy, is now up for sale. But he claims that his only major moneyloser was his $ 1-million investment in McNall’s ill-fated purchase of the Toronto Argonauts in 1991. He avoids real estate and stocks, preferring steadier if less spectacular performance. “We are planning for his future,” says Laurie Hunter, his full-time accountant “He is very level-headed that way, unlike a lot of other athletes.” He also watches over his business interests. Tom Bitove, whose family co-owns Gretzky’s Toronto restaurant, says that Gretzky reacted coolly to news that sales in the early weeks of the operation were higher than expected. “He knew the numbers looked good, but he wasn’t going to be impressed until he had seen what we had spent,” Bitove says. “A lot of people think that it’s just Barnett doing all the deals, but Wayne knows his way around business. He is very astute that way.”

Gretzky’s fiscal conservatism breaks down when it comes to family. He loves to surprise his near and dear with lavish presents: among other things, he bought a new fishing boat for his father, a Ferrari for Janet one Mother’s Day and a Porsche for Paulina—the five-year-old—for when “she turns 18 or 21— I haven’t decided yet.” Usually, though, he is careful. “I don’t like being flashy,” he says. “But you still have to enjoy your success. I work really hard. I like to buy clothes, and I like to travel with my family. I just don’t want to be stupid about it and send the wrong message to my kids.”

Janet, who starred in such movies as The Flamingo Kid (1984) and Police Academy 5 (1988) and is again pursuing a performing career, steers the spotlight away from their children as best she can. “We have had a lot of offers to use our kids in things, and we have kept them out of it,” she says. They made an exception with the Sharp commercial, which chronicled Ty’s first-ever ice-skating adventure, but that is as far as she is willing to go. “I want him to concentrate on sports and kids and school,” she says. “I don’t want him to be a celebrity.”

Success could go to Gretzky’s head, but it would have to fight through his family to get there.

His wife and father, though enor-

mously supportive, are his reality checks. “I just try to impress upon

him how fortunate he is,” Walter

says. “Not everyone is in his position.” Nor is Gretzky likely to take his business life for granted. “I don’t want to take the money and run,” he says. “I get a kick when people say that their company has gone from here to there since I joined.”

Still, the business that Gretzky finally retires to is probably the one he has been in all along—hockey. “I would love to be part of an ownership group, putting an entire organization together,” he says. “And I would love for it to be here with the Kings.” But he is not retiring just yet—he expects to play at least two more years—and that is why, beyond his worries about the effect of the lockout, Gretzky also admits to a sense of personal loss. In autumn, even in Southern California, a man who has lived by the rhythm of the rink is ready to skate. “I am at an age when I do not want to miss any time out there,” he says. “I want to play.” And that, for Gretzky, is the bottom line. □