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GP14May03: Hockey from Canada; Winning with Wild Things Au Canada. People on both sides of the border never quite grasp the full importance of Canada and the U.S. to each other. Canada is our largest trading partner, and that’s just a start. While fractious types in both countries have recently stirred up divisive passions over trade, cultural, and diplomatic matters, at the end of the day we are very much part of one another, sharing more values than many care to admit. That North America (and Australia if you like) is really the only peaceful continent on earth is due to the creative bonds between us and Canada and, more recently, between us and Mexico. NAFTA is just the codification of the sinews binding norte americanos. Hockey, a Huge Export. There’s some debate about the provenance of ice hockey. Was it an English/Indian sport taken across Canada by the Brits in the mid-1800s? Or, per the revisionists, is it a game out of Nova Scotia (and Ireland) spread by Scottish and Irish immigrants? Well, never mind, it’s Canadian, and, despite the fact that it is Canada’s national passion, it has taken deep hold in the United States. It’s another one of those ties between us. History reminds us that most sweeping changes that occur in American life generally wash in from abroad, often transported on the backs of immigrants. As we study its growth and its dynamics, we see that cross border, professional hockey exemplifies much that is happening in business, politics, and even world affairs. Alternative Sports. Gradually our mainline sports—baseball, football, golf, and basketball—are getting in trouble, beset by monstrous payrolls and other exploding costs and exploited by a commercialism that takes away the gleam of heroism that gives sport its immortal quality. To revive our national sports, we are beginning to take some of them global to create new allure and capture new fans. It’s not just that we are importing players from all over the world: there are now rumblings, for instance, about major league baseball franchises further afield than Canada.. Attendance is declining in many locations, and all the main sports are losing their hold on America, except perhaps football. Other games are taking up the slack with kids, such as soccer, lacrosse, cross country, and hockey. Hockey is a mixed bag. It is gaining attention like all the alternative sports. But several professional franchises, to include the top seeded Ottawa Senators, teeter on the edge of bankruptcy. Several franchises in other professional sports also have deep money woes. Generally commentators have missed the fact that moral and economic bankruptcy are afflicting our mainstream sports, while the lesser seconds are gaining marketshare. The TV networks have not missed this decline and are negotiating their way out of money-losing sports contracts. Knowledge Management of the Talent Pool. In our Global Province letter of 2 April 2003, “Walmart Investing…,” we comment that Billy Beane, General Manager of the Oakland Athletics, has been able to put together a pennant contender at a fraction of the payroll cost of the New York Yankees, by astutely calculating the economic worth of every player in the majors and even the minors, and only picking up players at the right price. Pro sports have become so expensive that regionals and new teams have had to substitute smarts for money in order to become competitive. Three of the final round contenders (Ottawa, Minnesota, and Anaheim) for this year’s Stanley Cup, the holy grail in hockey, have payrolls under $50 million, did not exist before the 1990s, and did not get this far in the playoffs until 2003. In some pro sports, we are now proving what the gurus are wont to say—intellectual capital is becoming more important than bucks in the global economy. A Story Missed. Nobody has particularly noticed that hockey has grabbed the popular imagination. Certainly not The New York Times. It generally has done a lackluster job on the hockey story in a sports section that has never achieved its potential, although it sits in one of the richest hockey markets in North America, with enough fans to support the Rangers, Devils, and Islanders. That said, you should still take a look at Joe LaPointe’s “Mostly Unfamiliar Four Ready for Run at the Cup,” New York Times, May 10, 2003, p. B15. It toasts the upstarts that have pushed aside the established teams this year. Even USA Today, which is the dominant national newspaper for sports (the odd-man-out Wall Street Journal still does not have a sports section), does a half-hearted job on hockey. It has the scores in the morning, but its reporting lacks sizzle. We reported last week on a couple of stories the media is missing: hockey’s another. Best TV Sport. It’s also the best sport on TV, with big multimedia possibilities that are not being exploited. TV demands action, and hockey’s got it. There are simply more moves per second here than in anything else you can imagine. Football, baseball, tennis, etc.—they are all ponderous compared to hockey, and some of the captains of these sports are trying to speed them up in order to make music on TV. In fact, the whirl is so fast, the pace so frenetic, that many fans new to the sport complain they cannot follow it on TV, which should eventually lead ESPN to explain things better. Wild Thing. We’ve said that unknown teams in poor markets can rise to the top in sports now, whether it’s the California Angels in baseball or the Anaheim Mighty Ducks in hockey, if they’re smart and innovative enough. This is a great time for off-the-wall players who can defy the oddsmakers. In other words, we’re looking for “wild thing” or wild cards. Jimi Hendrix introduced his song “Wild Thing” at the Monterey Pop Festival (June 16-18, 1967), the seminal pop and rock event that installed music in the dreams of breakaway young Americans and made our youth-oriented music an unstoppable export around the world. “Wild Thing” was also the name of the pitcher in the movie Major League (1989) who helped resurrect a hapless team from Cleveland that had turned losing into an art form. Surely “Wild Thing” is a metaphor for any new, unfamiliar force that comes out of nowhere and seizes the day, sweeping all from its path. Minnesota Wild. This aside on the honorable history of “Wild Thing” is necessary to set the stage for the most amazing team anywhere in pro sports this year—The Minnesota Wild. A nowhere team, with the lowest payroll in the league at $20.7 million according to the Times, it has smashed through to the finals in its conference to a final joust with Anaheim. In two rounds (against Colorado and Vancouver), it was behind 3 to 1, and then won against both 4 to 3. This has never happened before. The team-members of the Minnesota Wild are making everyone else look pretty tame, and they’re so exciting it doesn’t even quite matter whether they take the Stanley Cup. At the margins, they have exceeded all our expectations. Upset. In sports, in business, in politics, in the competition between countries, this is the time when somebody with no money and no market presence can slay the big guys down the block. The Goliaths—in so many fields of endeavor—have to contend with swollen payrolls; fat habits; Olympian hubris; terrible morale and corruption; overgrown, broken systems; and a host of other cracks in the facade. Sports and everything else now are on a global playing field where knowledge and agility count for as much as money, where fast change is the only constant, and where a spirited contender with a sense of mission can topple the most powerful players on the turf by locating their Achilles’ heels. It’s a great time to be an entrepreneur as long as you know that you can’t raise money (the bankers and the venture capitalists and most of the rest have become ever more risk averse) and that you will have to get by on a hope and a prayer. But smart upstarts are making it all over the place, while the big fellows (and not just the airlines) are crashing right and left. It’s a time for Wild Things. When investing, you have to decide whether to be on a Sure Thing or a Wild Thing. P.S. Jim Rogers has just forwarded his Adventure Capitalist to us, and we are finding it to be an easy read. So far the picture we like best is of his souped-up Nash Bridges yellow car he drove around the world. Of course, his is a customized Mercedes, while Nash drove a Cuda. We’ll have a lot more to say about this book at a later date, but, for now, take to heart his caution to stay out of five-star restaurants. Food poisoning struck 3 times in his trip around the world, always after a visit to a top restaurant. This squares with our conversation with an engineer who had set up kitchens around the world. As he remarked, “there are only handful of clean kitchens on the face of the planet.” |
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