Power Play for Winnipeg

"This deal ... has captured the passion of all Canadian." —Jim Ludlow (at podium), president and CEO of TNSE.

How the business savvy of True North Sports & Entertainment Ltd. brought a beloved NHL franchise back home

In 1996, Canada lost one of its most beloved NHL teams, the Winnipeg Jets, to the hot desert of Arizona, where they became the Phoenix Coyotes. Fifteen years later, in May of 2011, Winnipeg-based True North Sports & Entertainment (TNSE), in financial partnership with Canadian billionaire David Thomson, purchased the NHL’s Atlanta Thrashers from its ownership group, Atlanta Spirit. The purchase brought the beloved NHL back to a city—and province—that had gone without it for more than a decade.

The deal is monumental, not only from a business standpoint, but from a hockey-fan standpoint. “This deal is unique,” says Jim Ludlow, president and CEO of TNSE. “It has captured the passion of all Canadians and has become a powerful sports news story in Canada.”

As most can imagine, the TNSE and NHL backstory is filled with many handshakes, several memorable milestones, and a few lessons learned. The story begins in the late 1990s, following the Jets’ departure, when Winnipeg—a city littered with outdoor ice rinks and where many boys grow up playing hockey—took quite a blow knowing it no longer had the chance to snag a Stanley Cup.

The Transition Years

The NHL’s Winnipeg Jets team is sold and becomes the Phoenix Coyotes.

The Manitoba Moose enters the American Hockey League.

MTS Centre (owned and operated by TNSE) opens, replacing Winnipeg Arena.

TNSE presents to the executive committee of the NHL Board of Directors on how an NHL team can succeed in Manitoba.

Gary Bettman, NHL commissioner, approaches Chipman about the possibility of taking over the Phoenix Coyotes, as the team is on the verge of declaring bankruptcy. Chipman then makes a second presentation to the league about relocating the Coyotes to Winnipeg.

TNSE purchases the Atlanta Thrashers; the franchise is renamed the Winnipeg Jets and relocated to Winnipeg for the 2011–2012 NHL season. The Manitoba Moose is sold and moves to Atlantic Canada.

While disheartened for a while by the Jets’ absence, Winnipeg would gradually be revitalized—thanks, in part, to the efforts of TNSE, which worked with the local government to create a new, NHL-worthy venue. “One of the issues [in 1996] was that Phoenix had a new, highly functional venue that was sufficient for operating the NHL,” Ludlow says. “They had revenue sources available to create a successful operation for a tier-one professional sports team in hockey, and we just didn’t have a facility in Winnipeg at the time.”

Although there had been talks to create an adequate NHL venue prior to the Jets leaving in the ’90s, the plans always fell through. Finally, in the early 2000s, TNSE drafted a sustainable-financing model for a new venue in Winnipeg.

TNSE did receive capital grants from three levels of government in Manitoba, and the government was pleased it took on none of the construction or operating risk for the new facility. “We entered into a leading, public-private partnership in Canada for a sports-and-entertainment venue, privately owned with privately obligated debt,” Ludlow explains.

The 44,000-square-foot MTS Centre, which opened in November 2004 and replaced the former Winnipeg Arena, was designed and built with the NHL in mind. “We created a facility that we believed would meet tier-one hockey standards,” Ludlow says. “We didn’t want to build a [venue] that would be too small, [in case we were] able to migrate back to the NHL.”

Initially, restoring an NHL team to Winnipeg wasn’t TNSE’s primary objective. However, the possibility was on everyone’s mind, and the new complex would make a perfect place for an NHL-calibre hockey team.

In the interim, the MTS Centre became home to the American Hockey League’s Manitoba Moose, and hosted a number of high-profile concerts. It didn’t take long for the new venue to draw in big money, rising as high as 3rd in Canada and 19th in the world on top-100 lists of arena-venue ticket sales. “We had a successful run in entertainment in 2004,” Ludlow says. “People in Canada became aware of the success of the building … We have consistently been ranked as one of the top three buildings in Canada for non-hockey-ticket sales, as well as leading in revenue in hockey.”

Still, even with its AHL hockey and concert success, TNSE never let go of the prospect of one day bringing back the NHL to Winnipeg. “We continued to monitor events in the NHL, and we knew that if the opportunity arose, we would seriously consider it,” Ludlow says. “Over the years, things started make sense. We had been working to great lengths on a model we knew might work and, as most folks know, opportunities became available.”

The first showed up in 2007. NHL commissioner Gary Bettman approached Mark Chipman, chairman of TNSE and then-governor of the Manitoba Moose, and asked him to meet with the executive committee of the NHL Board of Directors to give a presentation on how an NHL team could succeed in Manitoba. Chipman did just that, which helped build a foundation for what eventually became a friendly business relationship between the NHL and TNSE.

The MTS Centre is the new home of the Winnipeg Jets.

After the departure of the Jets, a group of local businessmen, including TNSE chairman Mark Chipman, purchases the Minnesota Moose of the International Hockey League. The team is relocated to Winnipeg in order to provide a new tenant for the Winnipeg Arena and to keep professional hockey in the city. The team is rechristened as the Manitoba Moose.

In 2009, Bettman contacted Chipman about the possibility of taking over the Phoenix Coyotes, which were on the verge of declaring bankruptcy. In October of that year, Chipman made a second presentation to the league about relocating the Coyotes to Winnipeg, and by May 2010, the company was slated to purchase the Coyotes. In fact, Chipman later said the company “came within 10 minutes of acquiring the Coyotes” on May 10, when the league and the city of Glendale, Arizona, struck a deal to cover the team’s $25 million in operating costs for another year.

MEET THE TEAM: Key Players Who Brought the NHL Back to Winnipeg

Mark Chipman
Co-owner of the Manitoba Moose & Chairman of TNSE

Jim Ludlow
President & CEO of TNSE

Gary Bettman
NHL Commissioner

David Thomson
TNSE Shareholder & Owner of Osmington Incorporated

Despite the setback, TNSE continued its bid for an NHL team, turning its attention to the Atlanta Thrashers—a team that had entered the NHL as an expansion franchise in 1999 and had become quickly doomed due to ownership problems, a losing record, and dwindling attendance. Although the NHL was hoping to keep the Thrashers in Atlanta, the Atlanta ownership clearly wanted out, and no local purchasers emerged.

For TNSE, it was a natural progression of events. “After the Coyotes deal settled down, the Atlanta opportunity became very [viable], and it was something we had long thought about,” Ludlow says. “The NHL was willing to negotiate, so it facilitated with Atlanta Spirit. Things made sense.”

The sale, amounting to $170 million—including a $60 million relocation fee split by the rest of the league—was finalized and announced at a press conference held at the MTS Centre on May 31, 2011. In late June, the sale and relocation of the team to Winnipeg was approved by the NHL Board of Governors, and the new Winnipeg Jets proudly appeared on the 2011 NHL Entry Draft on June 24.

The success of bringing the Jets back to Winnipeg was the result of several individuals from several organizations, including TNSE president and CEO Jim Ludlow (centre).

Reflecting on the deal, Ludlow remains humble. “[It was the result of] 10 years of thinking, from venue development, ownership, and management through to NHL dealings,” he says. “Some of our decisions regarding the building and physical plant were correct, the venue is right-sized for our market and for the NHL, and it clearly played out in where we landed in our ticket drives. We were patient for economics to align and the right opportunity to arise.”

After TNSE finalized the Thrashers purchase, the Manitoba Moose relocated to Atlantic Canada. But even though Winnipeg once again has an NHL team, TNSE remains committed to reinvigorating Winnipeg even further.

“We hope to accomplish success for our organization, but we think of this as something for our community first,” Ludlow says. “We were very enthusiastic and appreciative of the response of the community, which underscored our confidence and continued to move us forward.”

If the company’s recent season-ticket campaign—coined the Drive to 13,000—is any indication, good things are coming. After the private sales, there were just under 6,000 tickets left for the public, which sold out in just four minutes. “We were able to sell long-term tickets,” Ludlow says, “which is a reflection of the strength of our community and their passion for the product.”

As for the skeptics who wonder how the Jets—a franchise that famously flopped once—can thrive today, there is the reminder that the essence of success lies not in never falling, but in getting back up.

“The team had to go away first, in order for it to come back, for our community to grow, change, believe in itself, and mine its existing passion,” Ludlow says. “So many things have changed—we have a different community, a new building, and a different environment and climate for the product here in Winnipeg. There is a lot of demand for [NHL hockey] here in Winnipeg, and it will sustain itself in the long term.”