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The Golden goose | How the Knights hit the jackpot in Vegas

LAS VEGAS, NV - JUNE 07: Nate Schmidt #88 of the Vegas Golden Knights skates against the Washington Capitalsduring the first period in Game Five of the 2018 NHL Stanley Cup Final at T-Mobile Arena on June 7, 2018 in Las Vegas, Nevada. The Capitals defeated the Golden Knights 4-3. (Photo by Harry How/Getty Images)

  • Local businesses and community leaders helped to secure 16,000 ticket deposits
  • 10-point plan helped to prioritise tasks as team approached first season
  • Team became a rallying point after Las Vegas shootings

In just half a season, the Golden Knights NHL expansion team has captured the imagination of the US sports world with its success on the ice and, just as importantly, shattered the long-standing myth that Las Vegas is not a viable market for a major sports team.

After taking a calculated gamble on Sin City, owner Bill Foley has hit the jackpot.

The billionaire businessman shelled out a record $500m to purchase the rights for an NHL team in Las Vegas in June 2016.

Despite all the one-off sporting events in the city, it was the first time one of the four US major leagues had put a franchise in the ‘Entertainment Capital of the World’.

“Las Vegas is hockey-ready,” said Foley bullishly. “We’re convinced of it. We know it.” And boy has he been proven correct.

There is no shortage of attractions and distractions in Vegas, but the Golden Knights are playing to sell-out crowds every week at the T-Mobile Arena, right at the heart of the Strip. The Knights have, of course, been hugely aided by their success on the ice – they are riding high in the Pacific Division, becoming just the fifth team in NHL history to win 30 games in their inaugural season.

Foley, however, knew in advance that Vegas was a budding ice hockey market ready for a local team to support.

After hiring data research company Nielsen Scarborough while doing his due diligence, Foley established that there was huge interest in the sport among the 2.1 million population in the Las Vegas area. Responding to the research, several hundred thousand local residents – many transplants from cities with established ice hockey teams – said they watched, listened to or attended NHL games and were fans of the sport. The trick was not to sell the sport to these fans but rather sell the team. This latent interest was successfully harnessed when the Golden Knights received an incredible 16,000 season-ticket deposits before their first game.

With numerous sponsors on board and ticket revenue, merchandise sales and social media interaction among the best in the league, the Knights have redefined what it is to be an expansion team – not only in the NHL but across professional sports in the United States.

So how did they do it? Kerry Bubolz, the Golden Knights team president and former long-standing executive at the NBA Cleveland Cavaliers, tells SportBusiness International the inside story of how the franchise became an immediate hit.

The Founding 75

Before being fully admitted into the NHL, the Golden Knights had to prove to commissioner Gary Bettman their ability to sell tickets in the market, as expansion hopefuls Seattle must do in the coming months.

A huge helping hand came from ‘the Founding 75’ – a group of local business owners and community leaders in Vegas who helped Foley and his initial team of just five employees drum up interest in season tickets.

“The Founding 75 held events, they opened up their Rolodexes, they at times called their friends and family and said, ‘you need to jump on board with this’,” says Bubolz.

“The Founding 75 helped really stimulate the PR and marketing activity in the market place. There was some advertising that was done but it was mostly grassroots and we got to 16,000 ticket deposits, which was incredible.

“The market over-delivered in a significant way. It wasn’t just the casino gaming companies buying hundreds and hundreds of tickets, it was workers who worked for those gaming companies taking money from their own pocket and putting it down to buy tickets.

“Over 90 per cent of the deposits were between four and eight seats, which told me there were a lot of local people – who live and work and play in this community – who were willing to buy seats.

“Candidly, for any sports organisation that is your most important local revenue stream and to have such a strong foundation with the tickets has really allowed us to get to a really good start.

“We felt confident even before we dropped a puck in October that we would be playing to over-capacity crowds on a nightly basis.”

Climbing ’10 big rocks’

With 16,000 season-ticket deposits secured, confidence was high in the build-up to the Knights’ first game in October 2017. But keen to focus minds, Bubolz came up with a 10-point plan to secure commercial success from the outset.

Bubolz adds: “We have a very talented group of people who have varying experiences and varying ideas and every day as we were building to opening day people would have new thoughts.

“The biggest challenge was to prioritise what was most important to make sure our foundation was strong. I worked really hard in that last six months [going into the opening game] to focus on a top 10 of ‘big rocks’ to launch the brand.”

1) Converting the 16,000 deposits into real plans. “We were very successful in that,” says Bubolz. “We were able to convert them into over 14,000 what we call full-season equivalents. We also have a significant number of relationships that are three-, five- and 10-year commitments for season tickets, so it’s not just a ‘I’ll try it for a year scenario’ but 75 per cent of all the seats we sold were on a multi-year basis as we converted people into their plans.”

2) Finding a TV broadcast partner. “Through the NHL and the expansion process we had the largest authorised territory to distribute to in the league (Montana, Wyoming, Idaho, Utah, Nevada and parts of California and Arizona) but we needed a broadcast partner to distribute to all those market places and also provide the rights revenue necessary,” Bubolz says. “We had to go through a process and we believe we’ve found the right partner in AT&T SportsNet [Rocky Mountain].”

The network, formerly Root Sports, shows all Knights games live except those shown nationally on NBC or NBC Sports Network. Through the deal, many Las Vegas residents initially feared they would be unable to watch Knights games on TV but a last-minute agreement was reached with Cox Cable, the largest provider for TV services in the Las Vegas Valley. A similar deal was also required for CenturyLink.

3) Sponsorship. “We needed to build out our sponsorship staff and platform and needed a media mix to go into the market place,” says Bubolz. “Our sponsorships are anywhere between $50,000 and a couple of million [dollars] on a multi-year basis and we really had to knock on doors and talk about our vision and our story. We’re really proud in terms of the numbers we were able to get on a local basis and also we have some regional and national companies involved.”

Capitalising on their first-mover advantage, Knights’ sponsorship deals include Cirque do Soleil, the D Hotel, the Cosmopolitan of Las Vegas, City National Bank and Credit One Bank, while StubHub and AXS are ticket partners.

4) A flagship radio partnership. “We wanted to find the right partner that could distribute our games on both AM and FM frequency,” says Bubolz. A multi-year partnership was signed with Lotus Broadcasting, with games broadcast on FOX Sports 98.9 FM and 1340 AM. “Also 30 per cent of the market is of Hispanic origin and we wanted a partner who could distribute our games in Spanish which we did in ESPN Deportes (1460 AM). We do a game of the week in the Spanish language.”

5) Game presentation. “Las Vegas is the entertainment capital of the world,” says Bubolz, “and we wanted to put on a show that outside of what happens on the ice would be in line with the high expectations that people have when they come to Las Vegas for entertainment.” Before every home game there is an ‘opening ceremony’ in which a giant stone is placed on the ice with a sword sticking out of it. A hooded villain character, waiving a flag for the opposing team, emerges and unsuccessfully tries to pull a sword from the stone on the ice.

To the cheers of the crowd, a knight in golden armour then vanquishes his opponent after successfully retrieving the sword. It could easily be scene from a show at one of the casinos around the corner on the Las Vegas Strip.

6) Retail. “We knew that for us to be successful we needed to find a retail partner and have appropriate retail distribution. We ultimately chose Rank + Rally to be our partner and we built our team store and e-commerce site,” says Bubolz. The Golden Knights have striking military-themed retail stores at T-Mobile Arena (the Armory) and at their practice facility (the Arsenal) as well as an official shop at McCarran International Airport.

The franchise has deliberately tried to enhance the local shopping experience as revenue from items bought online must be shared with the other NHL teams – but revenue from items bought in Vegas stays with the team. Rank + Rally, the merchandising arm of Levy Restaurants, designs and operates the Armory. Bubolz adds: “Merchandise sales have been terrific, jersey sales are top in the NHL and our per-person arena spending during games is top in the league and our total revenue is top five in the NHL.”

7) A training centre. Bubolz says: “We had less than a year to build the facility, which is a $3m investment. Not only did we need to build it out, we needed to find a naming rights partner to help with the financing of the facility and we did that [with City National Bank].”

Paul Stowell, senior vice president of media relations for City National Bank, tells SportBusiness International: “With the Vegas Golden Knights being the first professional sports team entering into Las Vegas it really had a leg up over everyone else. The Raiders won’t be running up until 2020 so the Knights really had an opportunity to blaze a new trail in professional sports in Las Vegas. Everything lined up perfectly and we thought it was good chance to get behind a great sporting opportunity in Las Vegas.

“When we met with Mr Foley, his predictions were play-offs in three years and Stanley Cup in five. We thought to ourselves, ‘that’s really ambitious’, and if he was going to spend the money to really put a competitive team on the ice then that was something that we were going to seriously look at. And we did and we’re very excited over the success they are having – this is unprecedented for an expansion team in all of sports.

“We hadn’t done anything in Nevada in terms of sports sponsorship before and it looked like a perfect fit for them and for us. It’s been a great partnership from day one.

“The brand identity that has been provided to us through these deals has been tremendous for us. We have people coming to City National now because we are the official bank of the Golden Knights.”

8) Developing the social media brand. Bubolz says: “Although we don’t have the same number of [social media] followers as the more established brands, our engagement levels are near the top of the NHL.” The Chicago Blackhawks lead the NHL with 2.5 million Twitter followers while the Knights have, by contrast, just 284,000 followers.

The Knights Twitter account has made national headlines through some provocative postings but they have certainly added to increased awareness of the brand. “Being here allows for so much creativity just because there’s no template to follow,” Knights social media lead Dan Marrazza said recently. “Not only is there no template for an expansion team in the digital era — there’s no template for a team in Las Vegas at all on the major league level.”

9) Developing youth hockey. “Nevada has some of the lowest numbers in the country for registered USA Hockey participants but we’re excited about that. We knew the numbers were low and we have plans and activities that we’re working on,” says Bubolz.
According to USA Hockey, there were just 455 registered youth hockey players in Nevada for 2016. The Nevada Storm youth organization was quickly rebranded the Vegas Junior Golden Knights, and they use the NHL team’s practice facility among others. Already participation in youth ice hockey in Las Vegas has risen rapidly.

10) Hiring an entire organisation. “When I got here, there were maybe 12 people here” says Bubolz. “We had to hire an entire business organisation, an entire hockey organisation and, ultimately, through the expansion draft and amateur draft all of our players. And there is due diligence with everyone you bring in because you want talent but you also want the right fit.”

Reacting to ticket demand

Such has been the interest in Knights match tickets that the organisation has been selling standing-room only spots at T-Mobile Arena – and they have been a huge hit.

“Our fixed seating capacity is 17,367 and we have identified about 1,000 standing-room locations around T-Mobile Arena that are based on the demand that we sell. It makes for an even greater experience inside the arena so we’re at about 103 per cent of capacity,” says Bubolz.

Tickets prices will rise about 25 per cent next year as the franchise looks to price them more in line with demand.

“Seventy-five per cent of all our ticket holders – the 14,000 number – are on multi-year commitments and have a price freeze for year two. The remaining 25 per cent have a price increase from anywhere between $5 and $15 on a per-game basis,” says Bubolz.

“We were pricing a building without any real data of what the value was and through the secondary market and our relationship with StubHub we are able to see what our tickets are transacting for in the actual market place.

“What we went back to our members with is what we think is very fair and reasonable and, in some cases, significantly lower than the actual value of tickets in the secondary market.”

Most Knights games are in the evening but Bubolz says the franchise is increasingly looking to stage afternoon games at weekends “to expose the product to more families and kids”. The team’s 3pm ‘matinee’ on Nevada Day was a hit.

Embracing the gaming community

Las Vegas and gambling go hand in hand – and not only did the Knights want strong relationships with the local casinos but the gaming community itself was keen to become partners with the hockey team from the outset.

The D Hotel and the Cosmopolitan are active sponsors of the franchise while other casinos – the Wynn, MGM Grand and Caesars Palace – give match tickets to their “most significant customers”.

As part of The D’s partnership, the casino has advertising space at T-Mobile Arena and players make appearances at the casino. Watch parties at the venue – for fans who cannot get tickets – are also hugely popular.

Early this month The D and the Knights held a Fan Fest in the Strip, to which 10,000 people turned up despite a limited PR push.

Derek Stevens, owner of the D Hotel and former owner of minor league baseball team the Las Vegas 51s, tells us:  “I grew up in Detroit, which is a very big hockey town, and I was able to see the impact the Red Wings had on the community.

“Once I moved to Las Vegas I always thought that hockey would have a very big impact on the community there and visitation as a whole. I always wanted to be one of the first hotels in Vegas to support the [Golden Knights] so I was excited from the outset.

“Having the first major league team here had a lot to do with that as well, when it came to my thought process. Las Vegas always continues to evolve, and sports is the next step of the evolution.”

Dealing with tragedy

Two weeks before the Knights’ first game, Las Vegas was hit by the devastating shooting that resulted in 58 deaths. Knights players reacted quickly to the incident to help the local community and as a result gained a huge amount of public support in return.

“Our players right out of the gate asked what they could do and literally over two days following the shooting they were volunteering for everything they could possibly volunteer for and that really said to the community that they really care,” Bubolz adds.

“Unfortunately because of the tragedy we had to change our opening night that was meant to be a celebration of this first professional team in Las Vegas to an overview and recognition of those who lost their lives.

“I’m really proud of our team not only on the ice but off it because of that presentation as that was the beginning of the healing for a lot of people in the community.”

Maintaining momentum

So what’s next? The key now for the Knights is to maintain momentum and build on their stunning start.

Bubolz says the franchise is now focusing on national and international sponsors, rather than just local and regional ones.

“We believe there are a lot of companies that we’re going to be able to tap into that we didn’t have the opportunity in our first year leading into the first season,” he says. “Even on a local basis some companies who weren’t prepared to take the risk, we had a number of phone calls from in the first few months which has allowed us to grow and build our sponsorship base.”

A key issue that needs to be fixed soon is a trademark complaint by the US Army, whose parachute team are also called the Golden Knights and have gold and back as their primary colours.

“We let the NHL deal with the trademark battle [with the US Army],” says Bubolz. “At the end of the day they are the NHL’s [trade] marks and they have their legal team focused on it.

“We’re not that concerned at this point that there’s going to be any changes. We’re going to let the process unfold and we’re confident that we will get to the right outcome that everyone will feel comfortable with on both sides.”

There is little doubt why the Knights want to keep their logo and colours – their uniforms were recently voted the 13th greatest in NHL history.

With a minor league soccer team, the Las Vegas Lights, about to start their inaugural season and the Oakland Raiders moving to the city in 2020 (or possibly 2021), Las Vegas is moving from an entertainment town into a sports and entertainment town.

It is to the Knights’ credit that they have set such a high standard for others to follow.

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