July 23, 2006

Creating an Upward Spiral

Normally when you drive around in the Greater Toronto Area on the weekend there's usually less traffic on most of the highways than during the week. But yesterday was different. There was way more inbound traffic than there should have been. Plus the Eaton Centre (the biggest mall in downtown Toronto) was jammed with tourists.

Question: What was happening? Answer: The New York Yankees were in town to play the Toronto Blue Jays.

The Rogers Centre was sold out for each game (Thursday through Sunday.) That's four straight days of games. Given Toronto's proximity to New York State, Pennsylvania and Michigan the inbound traffic was due to Yankee fans from those states. Add in a favorable exchange rate and you get an economic bonanza for Toronto merchants, hotels, restaurants and oh yeah...the Blue Jays Baseball Team.

The New York Yankees are acknowledged to be getting the highest revenues (and costs) in baseball. Today's New York Times business section had an article about the Yankees called The House That Steinbrenner is Building. There was one quote from the piece that stands out:

"It's not just attendance any more, said Tracy Dolgin, the chief executive of YES. The better you do as a franchise, a cycle develops. When you're winning, there's interest in the team and your ratings are higher. Then attendance increases, you sell more food, more parking. It's an upward spiral."

YES is short for Yankess Entertainment and Sports Network. In my opinion this quote is absolutely applicable not just for YES and other baseball organizations but for all types of businesses.

It could take a generation to create the kind "upward spiral" that characterizes the Yankee's organization and those fortunate teams they visit. But what can you do to leverage a short or medium term one? The key is to understand your business model.

Just one dimensionally providing a product or service isn't enough. Successful businesses field the equivalent incremental services that are the Yankee's parking, and food that create revenue streams over just the ticket revenues. The rest comes down to working hard to ensure that your organization does what it does consistently and with minimal faults.

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2 comments:

  1. Great article. I don't know why, but I am fascinated with Canada, especially the social aspects. How close to the centre of the city is the stadium? In alot of UK towns/cities, new football stadiums are being built "out of town", as this offers more space, parking and reduces congestion. Obviously, you lose out on the Upward Spiral, as you described.

    Matt
    City Challenge

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  2. Matt, the Rogers Centre (baseball & football) and the Air Canada Centre (hockey & basketball) are in downtown toronto. Both are in close proximity to each other and are connected to a major transportation hub.

    David

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