2003 - 2004
October 12, 2003
Generals skate on thin ice
To save the hockey franchise, the city agreed to help manage the team, but not everybody at City Hall is comfortable with being in the sports business.
BY MATT WILLIAMS
GREENSBORO - The Greensboro Generals had the look of success last season. The team had landed a sought-after coach, put together a winning season and had a strong showing in the playoffs.
But what Matt Brown saw was a franchise in trouble.
Brown, the Greensboro Coliseum's managing director, knew the team wasn't making money and owed more than $1 million to the ECHL, the 31-team minor-league hockey league of which it is a member. Early last year, Brown said, local owners Art Donaldson and Rocco Scarfone were skeptical about the Generals even playing the 2002-03 ECHL season.
By December 2002, just two months into the season, team officials were calling coliseum staffers frequently to see when they'd be getting their share of ticket and concession money after each game.
Brown was concerned in the short term about getting the team through the season. But even more important was the long-term future of minor-league hockey in Greensboro and the coliseum's bottom line.
The Generals and their 36 home games are the coliseum's anchor tenant. Their games made the coliseum's advertising space, premium seating and accommodations more valuable. Without the team, the city facility could easily face a $300,000 loss on top of the $1.5 million deficit it is projected to run this year.
So, during the next six months, Brown sought new ownership for the team. The result was an unconventional plan to preserve hockey this year - as a community entertainment option and to head off further financial losses - with the help of several local businessmen, the consent of city leaders and the blessing of ECHL officials.
The city, with Brown at the helm, agreed to operate the Generals for at least a year, paying all the team's expenses and taking all its revenues. A local group of investors would lease the team from Donaldson for a year and try to develop an ownership group that would take over minor-league hockey. Those investors also will pay the city $200,000 to help cover some of the team's expenses.
Even with outside help and a staff of city workers to pitch in, Brown said it would be a major feat for the team to break even, let alone make money. To do so, Brown would have to rescue a franchise that has lost money in every year it operated.
In a series of recent interviews, city officials explained how they plan to operate the Generals, detailed their financial projections and discussed what they expect from the current and prospective team owners.
A meeting of the minds
Making hockey in Greensboro happen this year required additional work for Brown once he realized the team's precarious situation: lobbying new investors, negotiating with league officials to forgive some of the Generals' debt and even looking into buying a lapsed franchise in Louisiana to replace the Generals.
Brown says it represents a shift of cities' involvement with sports franchises that he thinks will catch on in other small markets with marginal teams.
"I think you will see this model somewhere down in the future be the model that has to that has to be used to maintain minor-league sports in community venues," Brown said.
"How are they going to generate activity in their venues in the Columbus, Georgias of the world and the Huntsville, Alabamas of the world?" Brown asked. "Unless they restructure differently, how are they going to operate and have those tenants unless there's a meeting of the minds between the buildings and the sports teams having the same objective?"
In Greensboro, the meeting of the minds resulted in an arrangement that made Brown the chief operating officer of the coliseum's anchor tenant while also serving as the arena's manager.
"We as a building have been far more involved than any other venue in the league," Brown said.
Midway through last year's season, knowing the city might lose the Generals, Brown approached Greensboro businessman Don Brady about taking over the team from Donaldson. Brady, owner of Brady Trane heating and air-conditioning company, had been a part-owner of the Greensboro Monarchs, which played hockey at the coliseum until 1997.
The Monarchs moved out when the then-Hartford Whalers moved to North Carolina. The NHL team, renamed the Carolina Hurricanes, agreed to play their 1997 and 1998 seasons in Greensboro until their permanent arena in Raleigh was finished.
The Monarchs never returned. Instead, Donaldson created his Generals franchise and, with Brown's assistance, returned minor-league hockey to town. Brown worked with Donaldson on developing the team; Brown recruited popular Monarchs coach Jeff Brubaker to return to coach the Generals. Brown also worked with the team on advertising and marketing.
Brown and Brady spoke several times at Generals games last season. Brady was interested. Brown also approached former Monarchs investor Bill Black, owner of Black Cadillac Olds. But Black was initially reluctant to assume responsibility for the team himself.
There were two major barriers to a new group of owners taking over the Generals franchise. First, Donaldson's ownership group owed the ECHL $1.2 million that had to be paid off before the team could change hands.
With the new owners unwilling to pick up the tab, Brown called the league commissioner, Brian McKenna, "more than a dozen times" to reduce the amount Donaldson owed the league.
When McKenna said it was unlikely that the league would restructure the debt, Brown made overtures on behalf of Brady and Black to buy either the Baton Rouge Kingfish or the (New Orleans) Louisiana IceGators, defunct teams that didn't owe money to the league. Brown offered to buy the IceGators for $100,000 but was turned down.
Unable to resolve the, debts, Brady and Black agreed to lease the team from Donaldson for a dollar. Donaldson's ownership group still retains ownership of the franchise and has yet to pay off its debt.
The second barrier for a potential owner was the responsibility of running a professional sports team on short notice with few resources. With little time until the ECHL's league meetings in early June, Brady and Black were concerned that they couldn't build an organization to operate the team. Black preferred to focus instead on using the year to develop an investor group to buy the team outright.
On April 29, Brown wrote a memo to City Manager Ed Kitchen saying that the current Generals owners were stopping the team's operations. But a group of local businessmen, Brown said, would be willing "to fund a significant portion" of the team's cost if the coliseum used its staff to run the franchise. Brady, Black and other partners agreed to pay $200,000 to the city.
"The loss of the Generals would result in another black eye for our community at a time when we are concerned about the lack of entertainment options to retain and attract young adults," Brown wrote.
Kitchen agreed, saying he'd rather have the city run the team than have it dissolve and leave the coliseum without a major tenant.
"There were two troublesome choices, and I thought this was the better one," Kitchen said in a recent interview. Brown and Kitchen then met individually with seven of the nine City Council members privately to discuss the coliseum's operation of the team.
With an understanding in place between the city and the new Generals management - a written agreement was signed Sept. 29 - the city began operating the Generals. Coliseum officials put coach Rick Adduono on the city payroll, first with a month long contract in June and later for 11 months starting July 1. The city will pay. Adduono $56,350, plus bonuses for meeting attendance goals and for making the playoffs.
By August, Brown had been appointed as the team's alternate governor, voting alongside owners of other teams in the league's meetings.
The magic number: 2,000
A decade ago with a steady economy, the Greensboro Monarchs franchise drew almost 6,000 fans to the coliseum every game. It had one of the largest fan bases in the league.
But since the return of minor-league hockey in 1999, attendance has been less than a third of its former level in Greensboro. During the 2001-02 season, the team played 10 games in Winston-Salem instead of at the coliseum. Last year, the team averaged just over 1,600 paying customers per game. It gave away more tickets than it sold.
Generals part-owner and former team president Rocco Scarfone said he had cut the team's expenses from nearly $2 million a year in 1999 to about $1.6 million last year. Even so, he said. the team's losses were "extremely substantial."
"The team hasn't made money since the day it started," said Scarfone, whose Greensboro-based company runs several restaurants. "Why would you take it over now?"
Brown said his plan is to spend $1.2 million on the team this year. Brown plans to save money by trading advertising for expenses like housing and transportation and using the coliseum's staff to promote the team.
Even the minor expenses are being trimmed. The team signed a deal with hockey stick maker Sherwood to reduce the amount the Generals will spend on equipment. And Brown had his staff rework travel schedules to trim meal expenses on the road.
On the other side, Brown said average paid attendance would need to increase by 30 percent to 2,000 per game for the team to break even.
To get there, the coliseum is offering free parking for some games to fans who buy their tickets in advance. The coliseum also is offering flexible block-ticket plans and drawing on networks of business leaders to buy sponsorships.
A week before Friday's season opener, the coliseum had sold 474 season tickets, short of the 650 sold last year.
Brown said he sought Brady and Black to take over from Donaldson because of their enthusiasm for hockey and because they can leverage their community ties into a successful operation.
Scarfone said he was willing to put together an ownership group that did not require the city to shoulder the responsibility of running the team. But Scarfone said Brown turned him down, saying that he could not run a successful team because he is not a Greensboro native.
"We would have not done this with Art and Rocky (Scarfone)," Brown said. "I told them to their face we would not do it. It wouldn't make sense for us to do that. Would I do it with Brady and Black? Yes."
So far, the Brady and Black group, called the Generals Brigade, have picked up a number of prominent businessmen, including Willard Tucker, Ken Conrad and Porter Thompson, on their way to raising the initial $200,000 contribution.
But Black said that none of his business partners is interested in taking a lead role in owning a team. They all have their own companies to run, he said, but are willing to contribute some money to keep the team viable. Black admits he only went to two Generals games last year and expects to invest only $5,000 this year.
Next year, the group plans a broad offering to the public to raise money to buy the team outright from Donaldson. Under this arrangement, several hundred investors would buy $1,000 shares in the company, a ready-made base of season ticket subscribers.
Black says he is concerned that the City Council isn't completely on board with the idea and wants them to affirm their support before his group hands over the $200,000.
"Ideally, I would like to see the endorsement of the council, formally or informally, before we move forward," Black said.
Kitchen, the Greensboro city manager, said he would prefer to turn over the Generals to its new owners as soon as possible. The city has an option of running the team in 2004-05, but he would like to get out of the hockey business sooner rather than later.
"It is not my preference for the city to be managing the hockey team," Kitchen said. "Is it unorthodox for the city to be involved in this? Yes. That's why I'd rather only do this temporarily."
In the meantime, the Generals begin their season later this week. A league-wide players strike, which threatened to delay the season, was averted last month. The Generals host an exhibition game against one of its key rivals - the Charlotte Checkers - Tuesday evening.
The season opens at the coliseum Friday night.
Staff writer Taft Wireback contributed to this report.
Contact Matt Williams at 373-7004 or email@example.com
HOCKEY EXPENSES A sample of some of the Generals' costs so far: