Interview with Michael Copeland
How does the Hamilton Tiger-Cats one-year stint at the University of Guelph (while the team’s new venue is being constructed) affect business operations for the team?
It’s a necessary transition – many sports teams go through this process – but it does have business implications. There is less capacity in Guelph, which affects ticket revenue – a relatively significant driver for clubs in the CFL. Roughly 2/3 of a clubs’ revenue comes from the gate, supplemented by corporate partnerships and distributions across the league. When you have lower attendance, you also generate less money from concessions and merchandise. This said, we consider the impact a necessary evil, and when you look at the opportunities that are provided by the new stadium – indicated by the recent announcement of a naming rights deal with Tim Hortons’ – then you see light at the end of the tunnel, given that the new stadium is managed by the Tiger Cats. In addition, we are using it as an opportunity to promote the league out East, in Moncton, where the team will play a “home game,” and earn supplementary revenues. All in all, we’re very confident that the new stadium, along with their current business model, will be great for the Tiger-Cats in the coming years.
What does the league’s runway look like in terms of prospects for expansion? What is the process for selecting teams and locations? Are there any cities, in particular, that you see as target expansion locations?
First, we cannot ignore our current expansion with the entrance of a team in Ottawa. We worked with the City of Ottawa for several years, and the team will be joining as a member of our Board this year, participating in the decision-making process before taking the field in 2014. As part of the return of the franchise, the Ottawa group has put together a $500MM project that involves a retail housing development, commercial development, and stadium refurbishment. Through that process we validated the belief that very strong local ownership is critical. We have suffered before having owners without strong ties to the community – so that’s something we see as a premium for any expansionary efforts. It can get very difficult, dealing with interest groups, and going through the municipal process. With Ottawa we’ll have 9 clubs, and having 10 teams makes sense for the CFL – for scheduling reasons amongst others. The east coast is an area of significant interest to us, and we see potential for a team out there to tie the country and our people together. It’s an attractive vision for us, but very preliminary. We’d require a population centre that could support a team, and Halifax would be the leading candidate through this lens. If there’s an opportunity, we’d like to do it, but we’ll need to be methodical and it would require the right ownership scenario.
Recently, in your role as President and COO, you inked a renewed, exclusive media deal with TSN/RDS and its TEAM network of radio stations. The agreements will significantly improve the league’s annual broadcasting revenues. Might this additional revenue be used to adjust the $4.4M salary cap?
Well, we bargain in good faith and have developed a compensation system that works for our league. The current collective bargaining agreement expires prior to next season, and we’ll enter those talks understanding that we need to strike a fair deal. That said, we understand the importance of our players; we are actively promoting stars, and building them with our marketing campaigns.
How did you weigh the exclusivity option during negotiation of the media deal? How do you ensure continued growth and promotion of the league given that CBC and Sportsnet have little incentive to promote CFL games when they cannot broadcast them?
Those are important questions that we debated at length throughout the process. We had the luxury of having a partner in TSN that is very engaged, progressive, and aggressive. They have done huge things in terms of our brand exposure (since the last agreement), and we foresee continued benefits from their support. Almost no other pro sports league has an exclusive broadcasting deal, but that’s largely because they cannot manage an exclusive deal because they have too many games. We play a 72-game regular season (81 in 2014 with Ottawa), and that is digestible for one network, like TSN. Furthermore, TSN is owned by Bell, who identifies properties to promote throughout the Bell Media distribution family – across television, wireless, and online channels through an arrangement called a “scorched-earth promotion plan.” The CFL is one of those properties – you’ll see us featured on stations like Much Music and Discovery Channel Canada, and so we benefit greatly from Bell’s association. Although there are benefits to having a split broadcasting package, in those cases there is also diminished attention and investment when compared to a partner that owns all of your games. An exclusive deal, for us, necessitates a commitment by our partner to continual improvement, high-quality production, and strong promotion; we ensured those capabilities will be covered-off within our new deal, and are very happy about the outcome.
Over the years, the CFL has clearly embraced a level of parity that other sports leagues may not have. Do you perceive there to be a trade-off between the consistency produced by this parity, and the potential benefits that can be realized from having dynastic, perpetually successful teams, which build a near-universal fan base (think: New York Yankees, Miami Heat)?
Well, it’s worth noting that whereas other leagues’ broadcast revenue composes two-thirds or more of all inflows; it’s the opposite for the CFL. If you’re a league that’s reliant on broadcast revenue, then the argument might be made for dynasties being able to increase viewership and hype. That being said, most of your games don’t involve those teams, and you still need to drive ratings, so even that’s debatable. The quality of the match-up is key. The CFL is a gate-driven league, and we have to make sure that all of the games are relevant and interesting for our fans in our stadiums. If your team has a chance to win on any given night, you’ll be a more engaged fan. For our owners, if you have a superstar team, and another that’s out of the running is coming to your stadium on a Thursday night in August, there’s a risk that you’ll have a small crowd. So, it directly impacts earnings. Another feature of the CFL is that every game is nationally-broadcast, and so we want four games each weekend to be compelling. I think any league would love to have the parity we have.
You mentioned that your revenues are structured fundamentally different from other leagues. However, do you use other leagues as case studies for business problems that you face with the CFL?
I have realized that all of the leagues deal with very similar issues. It’s a matter of scale, but oftentimes it’s just about adding a couple of 0’s in terms of the problems-at-hand: managing labour issues with your union; trying to optimize the in-stadium experience for your fans; how to create value in broadcast; how to monetize your digital media rights; how to create value for your sponsor partners; managing health and safety issues, etc. So, we are in very close contact with the other leagues. I speak to Senior Executives within the other leagues regularly, and sometimes they’re reaching out to us. In comparison to our peers, we pride ourselves on being flexible and nimble because of our size. On the other side, there are things we learn from other leagues and adapt in turn. There’s a lot of cross-pollination.
How do you manage the relationship with the National Football League, and the speculation surrounding their presence in Canada?
Our relationship with the NFL is very, very good. When the Bills in Toronto Series first came in, there was concern, but our strategy and response was to only worry about what we can control. They have helped us by staging their games in a way that doesn’t directly conflict with ours, which shows the spirit of partnership. In its current state, we don’t feel any direct pressure. Indirectly, we understand that our games are on television at the same time as NFL games in the fall, and we’re compared against their broadcast quality and half-time shows. But that helps us raise our standards. We try to promote our differences and, in terms of broadcast specifically, TSN’s best-in-class production has allowed our quality to remain similar to NFL regional productions. The Grey Cup is produced at the same production quality of the Super Bowl – literally, in terms of number of cameras and cost of production, so we’re very confident that we’re competing on those metrics. Further, our in-stadium experience is improving with the investments we’ve made: Winnipeg has a new stadium this year, Hamilton and Ottawa next year, and Saskatchewan in 2017. Our competition is not only other sports, but anywhere that disposable income can be spent for entertainment, and so we don’t rest on our laurels.
At last year’s MIT Sports Conference, Mark Cuban – outspoken owner of the Dallas Mavericks – suggested that the way to “break in” to the business side of professional sports was to carve a niche area with a unique, technical skill set; business degrees are a dime a dozen in pro sports, he alluded. How did you, with a background in law and business, and previous industry experience with Molson, come to be the President and COO of the CFL?
I had always been interested in sports, and had often thought about trying to work in sports throughout the early part of my career. There’s a couple ways that you can do it. You can start with an internship and work your way up. Another way, however, is to become the most competent you can be within the discipline you’re interested in – I think Mark Cuban’s comments are right on the mark. When I have a need for a finance or a marketing person, I hire them for their technical skills. The fact that they’re interested in sports might give me comfort that they’ll stick around for longer because they’ll enjoy the environment, but what I really need is the skill set. For me, law helped with analytical rigour, issue identification, and how to build strong working practices; my MBA at Ivey taught me about business issues, how they interrelate, and how to manage them; consulting helped develop my toolkit even further. If you want it and you’re patient, and you develop a strong toolkit, I’m absolutely confident that anybody can have a successful, productive career in sports. The professional sports industry is very much about being in the right place and right time, and who you know, but that doesn’t have to be a negative thing. You can expand who you know, and that’s what I did. My job resulted directly from a comment I made to the President at Molson during an informal breakfast we had to talk about my career objectives. I noted I was looking for a change, whether internally or externally, and twelve months later he referred me to the Commissioner of the CFL, which led to this.
Michael Copeland is responsible for the CFL’s strategic and business operations. He works closely with Commissioner Mark Cohon to oversee planning, finance, sponsorships, licensing, legal, football operations, and the league’s administration functions. He led establishment of the CFL’s new salary cap system as well as the completion of a recent broadcast and digital rights agreements, amongst other initiatives. An Ivey MBA (’99) and Western Law (’93) graduate, Michael has impressive and diverse professional experience ranging from strategic business development and marketing at Molson to corporate strategy consulting at the Boston Consulting Group to corporate and commercial law. He is a community leader, as well; Michael is a recipient of “Canada’s Top 40 Under 40” award, and is on the Board of Directors for WATERFRONToronto.