Winning and Losing

Reading Forbes Magazine's online sections about the business of sports the other day really got me to thinking about how exactly sports teams create value. It's easy to make the assumption that value in a sports team is created by championships, and there are certainly some examples of this being the case (think the New York Yankees). But really, what makes a team valuable and successful? In the NHL, the most valuable team and the most profitable team is the Toronto Maple Leafs, who haven't won a Stanley Cup in over 40 years.

So what makes them successful? Many different aspects go into making it a successful enterprise, but a great deal of the value is tied up in the brand. The owner of the Maple Leafs understands this perhaps better than any other NHL owner, and as well as some of the best owners in sports. He leverages his brand for everything. He has luxury condominiums and hotels in a square nearby to the arena named after the team. He has created offshoot products such as his own digital television station. He created a state of the art arena. He also sold stock in the team, such that the people of Ontario have a stake in the running of their favorite brand.

All of these savvy moves have created a very powerful brand for the owner of the Toronto Maple Leafs. In short, branding in sports is vitally important to the generation of value for a professional sports franchise.