Sweet Success

August 24, 2009

From SportsBusinessJournal.com By DAVID BROUGHTON Milton Hershey said he didnâ�™t want to build a company town. He wanted to build a home-town. So rather than build tenement buildings or row houses for the factory workers who were helping him create his confection empire, a common practice during the turn of the 20th century, he built homes, a school, a hospital â�" and a baseball field, everything he felt was necessary to create a community atmosphere for his employees and their families. The years to follow brought growth for the company and, in turn, for the community. One constant was a passion for the local hockey team, another Milton Hershey creation. Fifteen miles to the west, in the state capital of Harrisburg, the local sports lore involves a similar tale of community support, but going even one step further: community ownership of the team. These two neighboring communities, sandwiched by Super Bowl-winning, Stanley Cup-touting Pittsburgh to the west and World Series title-carrying Philadelphia to the east, have shown a sustained ability to look inward. Even during the past five years, when the marketplace has seen almost no growth in population or total wealth, and its unemployment rate has doubled and tourist spending has dropped, support for the Hershey Bears and the Harrisburg Senators has remained. Itâ�™s that support that gives the community the No. 1 spot in SportsBusiness Journalâ�™s 2009 ranking of the nationâ�™s top minor league markets. â��The Bears existed before the Flyers, before the Steelers, so in the old days, it was all Hershey,â�� said Bears President and general manager Doug Yingst, who grew up near Hershey in the 1950s and 1960s. â��Even today, in central Pennsylvania, children are Bears fans first, and most of them want to grow up to be a Bear.â�� When those children today go to watch a Bears game, they head toward the 10,000-seat Giant Center, a nine-year-old venue that features the suites, club seats and other amenities common to most modern-day arenas. To know the history of the Bears and of Hershey, though, is to appreciate the 73-year-old building that sits just beyond the Giant Center. Retaining the past It was 1932, on the heels of the Great Depression, when Milton Hershey founded the local hockey team. The name?A not-so-coincidental Hershey Bâ�™ars. Fans routinely packed the 1,900-seat Ice Palace area that Hershey built that housed his team, and it was that same fan enthusiasm that inspired Hershey in 1936 to build the 7,286-seat Hershey Sports Arena, which he declared as â��the largest monolithic structure in the United States in which not a single seat suffers from an obstructed view.â�� The Ice Palace remained, though, adjacent to the new venue, and it still stands today, as a museum. Media criticism of the commercial moniker eventually forced the Bâ�™ars to be renamed the Bears, and the arena later took on a new name as well: Hersheypark Arena. It was here, in 1962, where Philadelphia Warriors center Wilt Chamberlain scored a record-setting 100 points in an NBA game. By then, the Bears and their building had become integral parts of the community. So it was that bond between these central Pennsylvania fans, the Bears and their corporate owners that drew a severe test about a decade ago, when fans heard that venerable Hersheypark Arena was about to be replaced. â��It was such an amazing place,â�� said former Bears general manager Jay Feaster about Hersheypark Arena. â��You would have generations sitting together, and they could say, â��These were my parentsâ�™ seats and my grandparentsâ�™ seats.â�™ But I felt very strongly that no matter how great Hersheypark was, we were losing business, not so much on the hockey side, but to concerts and other entertainment options. Food and beverage concessions were stuck in nooks and crannies, and you couldnâ�™t move to get to them anyway.â�� Feaster, like Yingst, attended Bears games in his younger years, having grown up in nearby Palmyra, Pa. He served as general manager of the club from 1990 through 1996, working after that for two seasons with the Hershey Co. subsidiary Hershey Entertainment and Resorts Co. (HERCO), which oversees the Bears, the Giant Center, Hersheypark Arena, and the themed amusement park thatâ�™s part of the parent companyâ�™s assets, as well. Yingst succeeded Feaster as Bears general manager. But before Feaster left Hershey in 1998, becoming general manager of the Tampa Bay Lightning, the duo oversaw the plans for a new building for the Bears. â��It was really difficult for people to accept at first. Iâ�™m a fan. I knew what it was like,â�� Feaster said. â��I think the fans, for the most part, saw that times were moving on, and if we were going to maintain our standings on the ice, we had to get a new building.â�� The resulting $83 million Giant Center opened in 2002, funded by HERCO and the community of Derry Township, which includes the city of Hershey. But just as the Ice Palace was left standing when Hersheypark Arena opened, HERCO kept the old barn intact, which seemed to help fans with the transition. Today, Hersheypark Arena is as busy as ever, serving as home ice to two area colleges, frequent Bears practice sessions and public skating. HERCO officials would not comment on whether the buildingâ�™s myriad revenue streams make it profitable or not, but they did say that the ancient ice plant that provides ice for the rink also provides the ice for all the drinks in the entire 120-acre Hershey-themed amusement park. And fans have embraced the Giant Center. Its 40 suites and 688 club seats are booked, and season-ticket sales are up by 2,500 over what they were at Hersheypark. The Bears are near or at the top of AHL merchandise sales annually, and they led the league in attendance for the third consecutive season in 2008-09. Yingst would not say how much of the companyâ�™s overall revenue comes from hockey operations, but he said it does â��provide a positive cash flow for the corporation.â�� A different ballgame About the same time that fans in Hershey were wrestling with the idea of a new arena for their team, fans in Harrisburg were facing the prospect of not having a team. In the spring of 1995, the nine-year-old Class AA Senators had been purchased for $4.1 million, and the new owners were intent on moving the franchise to a new, taxpayer-financed facility in Springfield, Mass. The response was swift. Following the 1995 season, Harrisburg Mayor Stephen Reed took the unheard-of step of having the city buy the team for $6.7 million. Attendance, which had already been high, soared. On the field, the club won four straight Eastern League championships, from 1996-99, and conversations began about upgrading what was then a picturesque but no-frills ballpark. Metro Bank Park sits on an island in the Susquehanna River, making it a unique setting in pro sports. The city approved construction bonds for facility updates in 2003, but the desired renovation project never got off the ground. Fans continued to flock to the stadium, but fewer of them were paying for their tickets. Increasingly, the team was distributing tickets to its sponsors, who in turn would make them available to fans. By 2007, the city was giving out 120,000 free tickets. Not all of them were being used, but for a team that posted an attendance of 240,000 fans that season, it meant that the funds needed to pay for the still-necessary stadium improvements would not being coming from ticket sales. In early 2007, Michael Reinsdorf, son of Chicago White Sox owner Jerry Reinsdorf and head of International Facilities Group, a consulting company for major league and minor league stadium construction and finance, asked veteran minor league baseball executive Bill Davidson what he knew about the Senators. â��I said, â��All I know is the stadium is on an island and it floods a lot,â�™â�� Davidson said. Davidson further researched the market, though â�" an action that included taking in a few Bears games â�" and in October 2007, Reinsdorf and a few Harrisburg-area businessmen purchased the team for a Class AA-record $13.25 million. The transition for local fans of having a fan-owned to now an outsider-owned minor league club was challenging. â��It took us a while to get our feet underneath us,â�� said Davidson, president and general manager of the Senators and who has previously run minor league baseball teams in Midland, Texas; Chattanooga, Tenn., and Delmarva, Md. â��The community had been hearing about stadium renovations for years. Now, Michael Reinsdorf comes in, obviously an out-of-towner, with another set of promises. â��We felt, for 2009, that we had to show the community we meant it.â�� To jump-start a planned $45 million project this year, one of the largest video boards in minor league baseball was installed, along with two LED ribbon boards, and an outfield boardwalk with picnic areas. The new owners also have cut the flow of free tickets, dropping the number down to 40,000 in 2008 and then 10,000 this season. As expected, there was backlash. â��It certainly created negativity in local media,â�� Davidson said. â��We took our lumps. But we knew the renovation would bring people eventually.â�� Attendance in 2008 dropped to its lowest point in more than a decade, and some corporate sponsors declined to renew their contracts. But in further testimony to the strength of the Hershey-Harrisburg market, in this, the second year under the new ownership, the Senators earlier this month topped last yearâ�™s attendance and are on pace for the best box office in a decade â�" with most of those fans paying for their tickets. The team is averaging more than 1,400 walkups per game. Sponsorship revenue is up 10 percent, as well. In addition, fans in Harrisburg are beginning to call the club inquiring about the 22 suites and 250 club seats that will be added as part of the ongoing renovation. â��A sports identityâ�™ To be sure, current times are not easy times for any business. For minor league teams, and for their markets, the relative lack of disposable income that comes with a recession serves as a stern counter to the pitch of â��affordable, family entertainment.â�� League-level officials unanimously contend there has been no slowdown in the number of inquiries they are fielding from potential team owners, but they also notice more scrutiny before deals get done. â��I would say there are just as many people coming forward saying â��Boy, I still want to buy a AAA franchise,â�™â�� said Branch Rickey, longtime commissioner of the Class AAA Pacific Coast League. â��But buyers now are more disciplined and spending a lot more time reviewing financials than in the past.â�� Since SportsBusiness Journalâ�™s last ranking of the nationâ�™s minor league markets, in 2007, 104 clubs have closed their doors. But for almost every Bangor, Maine, and Minot, N.D., that disappeared off the minor league map the past two seasons, a York, Pa., or a Springdale, Ark., was eager to take its place. In Hershey-Harrisburg, the Bears and Senators continue on, being joined, in fact, by the American Indoor Football Association Stampede, which began play in the market this spring. Together, the minor league teams of Hershey-Harrisburg have played a combined 105 seasons in the market, trailing only Rochester, N.Y., whose five current clubs have a cumulative total of 187 years. That ballpark that Milton Hershey built more than 100 years ago â�" it remains in use today. It serves as a local concert venue, and youth and other community-based teams use it, too. And come fall, when the hockey season begins again, many of those same local residents will turn to another Milton Hershey creation, supporting it as theyâ�™ve done through the years. â��The Bears and the arena gave central Pennsylvania a sports identity,â�� said Feaster, the former general manager. â��And their fan base just continues to grow.â��