SkyDome's sibling rivalry

For nine years it's been the apple of Toronto's
eye. But soon the folks will be oohing and
aahing over a new arrival, Air Canada Centre.

Toronto -- THE technological wunderkind of sports stadiums is having an identity crisis.

Once revered as the kingpin of mixed-use entertainment facilities in this country, if not the world, the SkyDome is no longer sport's favoured child.

It's now nine years old -- not exactly ancient, but considered "mature" in a business where team owners across North America have been frantically building posh pleasure palaces with a slew of corporate boxes and premium seats, the engines needed to pull the whole train.

Like other cities' mega-stadiums -- the Kingdome in Seattle, the Silverdome at Detroit, the Superdome in New Orleans and the Metrodome in Minneapolis -- the SkyDome is in a conundrum. It went big. It went bold. And now the honeymoon is over.

"All of them face different variations of the same problem," says Sam Katz, founder of EnterSport Capital Inc., a Philadelphia-based investment bank that specializes in sports and entertainment facilities.

"They all were pioneers," Mr. Katz adds. "And the pioneers got killed."

In Toronto, that's a timely analogy, particularly with Air Canada Centre -- soon to be home of the National Hockey League's Toronto Maple Leafs and the National Basketball Association's Toronto Raptors -- now rising from the ground a few blocks down the road.

The SkyDome's immediate problem is how to compete with the flashy new guy who plans to open his doors in 10 months.

But industry pundits say Air Canada's imminent arrival is only one in a long list of SkyDome ills. Equally pressing concerns include the sluggish performance of its marquee tenant, the Toronto Blue Jays, the loss of the 45 Raptors games a year to the new kid on the block, the need to placate corporate box holders fed up with historically high food and booze prices, reported disharmony among its four major owners, uncertainty over the possible sale of the Jays, and finally, the huge operating costs associated with the place (the SkyDome sucks enough power to light a city of 25,000 people).

"Ultimately it proves that the best-looking stadium with the most modern technology can only carry you so far," says Paul Godfrey, president of Sun Media Corp. and the main man cajoling the National Football League to come to Toronto. "The bloom wears thin after a period of time because ultimately the thing that drives success [of a stadium] is the success of the team on the field."
NEARLY everyone in the sports community has an opinion on what the SkyDome should do to become the marketing tour de force it once was.

In an ideal world, sports know-it-alls say, the Jays and the SkyDome would share one owner. It would help, too, if the SkyDome snared an NFL expansion team as another tenant. Finally, the SkyDome should get all 161 corporate box holders to renew multiyear leases.

The terms of the 10-year SkyBoxes, which expire in December, 1999, account for roughly half the stadium's annual revenue. Court documents show the SkyDome posted revenue of $46-million in 1996.

The problem is none of the above are sure things. And with Air Canada Centre's 152 suites coming on stream, Corporate Canada can pick and choose from a regular smorgasbord of more than 310 stadium boxes and arena suites.

With its splashy status, the pundits predict Air Canada Centre will lure more than a few SkyDome boxholders away. As Mr. Katz puts it, the upstart has the added advantage of coming in behind a trailblazer.

"SkyDome did a lot of unique things," Mr. Katz says, pointing to its hotel, its health centre and its corporate participation. "Anybody that does something first gets a lot of attention, but also generally makes a lot of mistakes.

"The next guy along can copy what you did right, and avoid the things you did wrong."

Air Canada Centre has another potential advantage. Its new president, Richard Peddie, knows better than almost anybody what makes the SkyDome tick. He ran the place during its glory days from 1989 to 1993.

"There's an expression that the best game warden is a reformed poacher," says the 51-year-old executive, who joined Maple Leaf Gardens Ltd. two weeks ago.

"I know the building's strength -- which is its versatility -- and I know its weakness -- its size.

"They're an open-air building, a domed stadium and a concert hall, so they're one of a kind because they offer all that," adds Mr. Peddie, who heads up the transition team at MLG, which bought the Raptors and Air Canada Centre in February for more than $450-million.

"But the cost of running a big building puts us at an advantage. We're more intimate and we can move shows in and out faster."

The crux of the problem for the SkyDome is that it has lost its flavour-of-the-month status. Compared with the new stadium kids, it seems tired and a bit out of date. For a structure touted in the late 1980s as the eighth wonder of the world, that's a bitter pill to swallow.
FROM his office at the SkyDome, George Taylor has a bird's-eye view of the cranes and crews toiling away on the mass of concrete and steel that will be Air Canada Centre.

Mr. Taylor is the former John Labatt Ltd. chief executive officer who is pinch-hitting as SkyDome CEO until a permanent successor can be found to Paul Beeston, who quit last year to become president of Major League Baseball.

Speculation about an intense rivalry between Air Canada Centre and the SkyDome is overrated, Mr. Taylor says. He points out that the two are contra-seasonal -- SkyDome's baseball, which began this week, is played primarily while Air Canada Centre's hockey and basketball are in their off-seasons, and vice versa.

What will test the mettle of the SkyDome's sales force and marketing team, he says, is the expiry of the long-term leases on the SkyBoxes.

He believes they're up to the task. "The important thing is to bring leadership to the organization," says Mr. Taylor, who hopes to appoint a new CEO in the next few months.

"But we have very competent people in this organization and people who are really passionate about the building here. There is enormous strength at the operational level and people generally are young, dynamic and passionate.

"Most are younger than my children," adds the grandfather of seven.

As Mr. Taylor sees the situation, the SkyDome is still at the top of its game. It came off its busiest year ever, booking 302 events, in 1997. The Blue Jays' season ticket base remains high and attendance figures still place the Jays among the league's elite.

And he says rifts have been mended with many boxholders, who saw food and beverage prices fall 40 per cent in 1997 from the year before. The SkyDome now boasts that it has the cheapest wienie-in-a-bun, at 99 cents, of any sports facility in North America.
BUT the SkyDome's big problem is not Air Canada Centre, says one sports/entertainment industry consultant. "It's with the loss of revenue from baseball, and no significant revenue from football."

That drop in income in recent years, combined with added competition, means the facility needs to renew the bulk of its SkyBoxes, he says.

Since it became private, the SkyDome releases no financial data. But the Turnstile Tracker of Sports Business Daily shows Jays' attendance at the SkyDome in 1997 was up 1 per cent from 1996, but down 19 per cent from 1995.

(A court document filed a few years ago when boxholders were suing former SkyDome caterer Bitove Corp. included affidavits from SkyDome executives who warned that the building could go bankrupt if a lot of boxholders did not renew their leases.)

Again, Mr. Taylor is confident the premium seats and boxes in the SkyDome will be successfully leased come December, 1999. And he thinks there are more than enough big companies -- about 500 to be exact -- that don't have boxes in a sports facility and would like one.

"The other big issue people tend not to see when they look at Air Canada Centre is about 80 private boxes in Maple Leaf Gardens will simply pick up and move down the street," Mr. Taylor says. "That group are going to consume a large part of inventory of new building and of season ticket holders.

"They're going to have a honeymoon period, but in terms of competitive advantage, Air Canada Centre won't be as much of a threat as people suggest."

Others aren't so sure.

One boxholder at the SkyDome believes massive consolidation will sweep through the Skyboxes, with companies and individuals teaming up to split the cost. Of the 124 boxes that are currently tied up under the 10-year agreement, he estimates that 80 will re-sign under multiyear terms.

He also believes that both the SkyDome and Air Canada Centre are in for a wake-up call if they think corporations will fall over themselves to pay top dollar to get boxes and suites.

"People are beginning to think it's an expensive ongoing form of entertainment," says the holder of one of the SkyDome's more expensive boxes. "The average company loves to have corporate boxes, but there's only so many damn nights you can use.

"The reality is that we would like to use the boxes maybe one-third of the time we actually have them." His company, which also has a box at Maple Leaf Gardens, lets out its box space roughly one-third of the time.

Since the economy is going gangbusters, the boxholder predicts the well-heeled financial sector types -- the banks, mutual fund companies, etc. -- will rush to buy boxes.

"But I know a lot of other firms who really are trying to scrutinize how effective these things are," he says. "A lot of companies are paying attention to their customers, as opposed to making themselves feel good.

"And some people actually like sitting in the stands -- God forbid -- where they feel they're part of the game. Not schmoozing with a bunch of people and watching the game on a TV monitor in a box. I can do that at home."

Air Canada Centre will have 152 suites, and it has allotted an extra $30-million to expand the site for Toronto's perennial favourite team, the Leafs.

Because of fans' seemingly undying allegiance to hockey in Toronto, Mr. Peddie is confident his sales force will drum up interest in all its suites. He would not comment on price, but some expect the best box in the house will cost up to $350,000 a year, including tickets, food and booze.

In 1999, Mr. Peddie says Air Canada Centre has budgeted for 170 dates, including roughly 100 for hockey and basketball, plus family entertainment shows and concerts. "But we're anticipating well over 200 dates."

Down the road, the SkyDome -- which always aims to book 300 dates a year -- expects bookings to fall, but still stay in the high 200s.

Make no mistake, in the near term it's going to be a dogfight for consumers' finite entertainment dollars. The SkyDome will get the big shows (Three Tenors, U2 and the Rolling Stones) but Air Canada Centre thinks it has a good shot at enticing more mid-sized family fare, like Disney on Ice.

"SkyDome is a pretty sexy building but it's not as sexy as it was," Mr. Peddie says. "That's not a criticism. It's a fact of life.

"It was a place to be seen," he adds. "We're hoping to make Air Canada Centre the place to be seen in 1999."

Once the two facilities have found and settled into their respective niches, however, Mr. Peddie believes Air Canada Centre and the SkyDome can work together.

"We're interested in the NHL All-Star game in the year 2000," he says. "Sometimes they need a big area. I hope we'll work together."
NEXT year marks the SkyDome's 10th birthday. To stay the people's choice, some industry watchers believe it will have to retrofit, become less sterile, definitely less cavernous, and -- gasp -- maybe even a little cozy.

True ball fans are salivating over the so-called "retroparks" like Camden Yards in Baltimore and Jacobs Field in Cleveland with their homespun feel and real-grass smell. There's a growing craving among some Torontonians for a place with quirks, character and natural turf.

Mr. Taylor practically snorts at that last suggestion.

"We live in a climate where it doesn't make sense to even consider turf," he says with some exasperation. "There is no known way to make grass grow without natural sunlight. It's been tried all over the world. The ballplayers like to play in this stadium. There will be continuous improvements."

Richard Levin, spokesman for Major League Baseball in New York, says the trend toward retro ballparks is largely a backlash against the cookie-cutter stadiums that proliferated in the '60s and '70s.

And Mr. Levin emphasizes fthat the SkyDome certainly is not part of that group.

"It's a wonderful stadium, a first of its kind with the retractable roof, and unique in its own way," he says. "It's inevitable something newer and shinier will come along. "[But] that's going to happen some day in Baltimore, some day in Cleveland.

"SkyDome is still regarded in baseball as one of the finer stadiums."

Contrary to what some people suggest, Mr. Taylor also says the National Football League likes to play in the SkyDome. And he believes his building is the natural place for an NFL expansion team to roost.

"It's the only place it will go," asserts Mr. Taylor. "They've been here twice [for exhibition games] and told us they love the facility."

Mr. Godfrey agrees that one instant solution to the success of the SkyDome would be the NFL, which, if it comes, would be the city's new glamour sport.

But the two sides would have some major wrinkles to iron out before an expansion NFL team would make the SkyDome home. Not the least of which is the thorny question of the SkyDome giving up personal seat licences to the football league, something it is loath to do.

Mr. Godfrey, who believes the SkyDome could be modified for the NFL, notes that seat licences have been a sticking point. And he's clear what the outcome must be.

"Some revenue sharing from seats will have to go to the NFL or they won't come."
ONE of the biggest gripes about the SkyDome is its size. But some fans think the state-of-the-art structure, made of enough concrete to pour a sidewalk from Toronto to Montreal, is built just right.

"I don't think it's so bad," says Benjy Hoffman, operator of a flower shop in north Toronto. "I like it because it's roomy, it's comfortable.

"I like cavernous. I just like big."

Mr. Hoffman, who pays up to $100 a pop to take in 20 Blue Jay, Raptor and Leaf games a year, thinks the uproar over the new Air Canada Centre will fade.

"People think the grass is always greener on the other side until you get there," he adds.

Mr. Hoffman had a word of warning for executives running the two facilities and who are now trying to figure out regular season and premium seat prices: "Even though we need a new hockey arena, I will not go if I have to pay more for my tickets."

Mr. Taylor agrees the SkyDome needs energizing, and to that end, he has instructed executive search firm Illsley Bourbonnais-Ward Howell International to look for a younger chief executive with a strong marketing and sales bent.

"The important thing is to bring leadership," Mr. Taylor says. "In my career, I've always preferred to side with enthusiasm and youth, not age and experience."

To stay on top, SkyDome management is well aware it has to spruce up its image. In the next few years, it's undoubtedly going to get a boost from the redevelopment of its next-door neighbour, the CN Tower. Not to mention the boon that will come to the area from the surge in building going on all sides of the SkyDome.

TrizecHahn Corp. of Toronto is dumping $26-million into overhauling the CN Tower. It also plans an indoor marketplace and shops that could link up with the SkyDome -- still the third most popular tourist attraction in Toronto.

"They're working with us and they seem to have an attitude to reach out to the community, as opposed to being the big dome sitting at the base of the city," says Bud Purves, a senior vice-president of TrizecHahn. "They're reaching out and it bodes well for them."

Starting lineup

SkyDome

Anchor tenants: Blue Jays (83 dates including preseason games) and CFL's Toronto Argonauts (10)
Cost to build: $532-million (includes hotel and health club)
Management: Interim CEO George Taylor
Ownership: Labatt 48%, Penfund 35%, CIBC 10% and Canadian Controlled Media, 7%
Corporate boxes: 161, of which 124 are 10-year annual leases
Club seats: 5,700
Cost of boxes: Skybox was $100,000 to $225,000 for 10 years, plus 16 tickets, food, beverages and hostess
Events: 302 last year and 280 are expected in 1998
Revenue: $46-million in 1996 (most recent posted)

Air Canada Centre

Anchor tenants: Toronto Maple Leafs (45 dates) and Raptors (45)
Cost to build: $217-million plus $30-million in extra amenities to house Maple Leafs
Management: Richard Peddie, president and CEO of transition team of Maple Leaf Gardens Ltd.
Ownership: Maple Leaf Gardens Ltd., including Steve Stavro and Larry Tanenbaum; Ontario Teachers Pension Plan and TD Capital
Corporate boxes: 152, of which 70 were already sold to Raptors suite holders
Club seats: 1,000 but adding more
Cost of boxes: Suites for Raptors range from $59,000 to $160,000. Some estimate Leafs/Raptors boxes could cost up to $350,000, but this includes tickets, food, etc.
Events: Budgeting 170 dates for 1999, but expecting well over 200
Revenue: N/A

Attendance

Toronto Maple Leafs had average attendance in 1997-98 of 15,706, or 100 per cent capacity. The figure for the previous year was similar.*
Toronto Raptors had 16,532 fans a game in 1997-98, or 82 per cent capacity. This was down 9 per cent from the previous year.**
Toronto Blue Jays averaged 31,967 people in 1997, or 63 per cent of capacity. This was up 1 per cent from the previous year and down 19 per cent from 1995 attendance totals.
-*Through March 16
-**Through February 23
Source: Sports Business Daily Turnstile Tracker, Major League Baseball