The Business Press – The start of a successful Reign

MINOR-LEAGUE TEAM: With attendance trending up, Ontario franchise expects to make a profit in its third season.
06:00 AM PDT on Wednesday, April 7, 2010 (http://www.thebizpress.com)
By CHRIS H. SIEROTY
Contributing Writer
For the top executive of the Ontario Reign minor league hockey team, responsibilities go far beyond just working with his staff to set ticket prices, budgets, player acquisitions, issues with the arena, merchandise, and overseeing the team’s relationship with AEG and their National Hockey League affiliate, the Los Angeles Kings.
Being the vice president of business operations, means Justin Kemp – the face of the franchise – takes every opportunity to promote the game and not just to the team’s fan base but to the 4 million residents who call Inland Southern California home.
“The biggest challenge we have is awareness,” Kemp recently told The Business Press in an interview at the team’s executive offices adjacent to Citizens Bank Arena. “There are still people within five miles of here, who don’t know that the arena or team is here. That’s a challenge we both face.”
The Reign, one of three East Coast Hockey League teams in California, began operations before the 2008-2009 season as the anchor tenant in the new, $150 million Citizens Bank Arena. In their first year in existence, the team finished second in the league in attendance, averaging 5,856 per game. This season, the team is averaging 6,165 fans per-game.
That success led to the Reign hosting the ECHL’s All-Star game on Jan. 20.
“That was a good sign,” he said. “Hosting an all-star game means they are liking where we are sitting in attendance. We play in a community that is of interest to the league, it’s one of their top markets and it’s easy to get here. Those were all factors in determining that we would host the event.”
Kemp said despite the early success, the goal was to continue to make more Inland residents aware of the Reign both on and off the ice. Off the ice, he said it was crucial to have their players attend monthly charity events along with parties hosted during the off-season at various restaurants in the region.
The team has also created The Hope Reigns Foundation, dedicated to providing children in the Inland Empire with educational and recreational opportunities. He said the foundation was largely supported through private donors and fundraising efforts.
“In my opinion, we have a very strong ownership group with Barry and Justin Kemp,” ECHL Commissioner Brian McKenna said in a phone interview from Princeton, N.J. “The Ontario market is strong, and the arena is fantastic. We are very happy with how things are working out so far.”
But to really spread the word of the Reign’s existence throughout the region, a TV or radio contract could lead to wider recognition if a deal could be reached that is beneficial for both parties. In terms of getting Reign games on local radio, Kemp may need to be convinced there is an audience for their games.
“We may have been the only team this year and last year not to have one,” he said. “It’s a budget expense we thought wasn’t necessary. I’m not one of those people who is convinced people listen to hockey games on the radio. Unless, we could get a radio station to step up and donate their airtime … where it is attractive for both of us.”
But with the success of the ECHL All-Star game that was televised regionally, Kemp is considering working with Fox Sports West to reach a deal.
“The all-star game was our first televised game that reached 5.8 million homes, and Fox Sports West replayed it six times,” he said. “How many people responded to that, including fans and non-fans alike? Television works, but it’s very expensive. We want to get a few games televised, maybe a Reign game of the month or two or three games a season. ”
He said being in partnership with AEG did help in securing Fox Sports West to televise the game, but because of the game’s success the regional sports network was “open to other opportunities if the price was right.”
Kemp said it costs $3.5 million a season to operate the Reign. That figure includes player salaries, which cost between $11,000 and $12,000 per week, housing costs for the players, their lease at the arena, costs for arena workers at each game, office space in Ontario, travel expenses, employee salaries among other operational costs.
Compared to minor league baseball, where the major league affiliate picks us most of the players salaries, Kemp explained that the Reign was responsible for paying their players wages, most of whom are free agents. Unless the player is property of the Los Angeles Kings, then the team is only responsible for $525 a week even if the player is making $1 million a year from the Kings, he said.
“It’s tough for us based on the expenses we have,” he said. “I think the business of minor league baseball in many ways is more attractive, because your costs are so much less, but your revenues aren’t the same. It’s really hard to turn a profit in hockey, minor league hockey especially. It’s not impossible, but there are a lot of factors.”
Asked if the Reign were profitable in their first two seasons of operation, Kemp told The Business Press the team had “not made a profit the last two years,” but he was optimistic that would “change this next year.” He said the team had already seen a spike in season ticket sales for next season and corporate sponsorships had exceeded the team’s expectations.
“In year three, it’s going to be about increasing our revenues and cutting some expenses,” Kemp said. “We are in a good position to turn a profit next year.”
Kemp said the team is in partnership with AEG, the entertainment company that owns the Kings and Staples Center in downtown Los Angeles. He explained that AEG had been awarded the management rights to the arena for 10 years and that the Reign has an ownership split with AEG.
“They own part of the team and we own part of the management rights,” he said. “The difference is they completely run the facility and we run the hockey team. ”
Despite operating the team at a loss for the first two years, Kemp said he was committed to offering an affordable product to local hockey fans.
“We recognize that the number one thing people are looking for with us is value,” he said. “Based on what other teams in our league price at, our tickets are one of the most expensive in the league, but we play in one of the most expensive markets in the league. So it’s all relative.”
Kemp stressed that he was committed to offering fans $10 tickets, while the most expensive ticket is $40 to sit next to the glass for a Friday or Saturday night home game. With attendance figures placing the Reign near the top of the league, you could argue that they priced them right.
“You could also argue that we priced it too low,” he said. “I’m sure that no one walking up to buy a ticket wants to hear that. The important thing to us is that we always have a ticket that people can get for about $10. Ultimately, it’s going to come down to value for our fans. People are still going to look for a good deal when the recession is over.”
He said you can experiment with the pricing of your premium seats, maybe raising ticket prices by $2 or $3, but it was crucial that the organization offer affordable tickets, especially in a recession.

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