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Go team co-op!

Pride of ownership adds a whole new dimension to sports fan fever

Deafening cheers echoed through Mosaic Stadium in Regina when the Saskatchewan Roughriders slammed the Hamilton Tiger-Cats 45–23 to win the 101st Grey Cup championship in 2013.

Riders diehards, thousands of them wearing team-colour sweatshirts and body paint, were understandably ecstatic. A wave of watermelon green rippled through the stands as they celebrated the most coveted victory of the CFL season.

Beyond the exciting win, the fans had reason to be proud. It’s a well-known sports platitude that support from the local community has a huge impact on the outcome of a hard-fought hometown game. In Saskatchewan, however, the hoary old cliché takes on a whole new meaning. The reason: the Riders club is a cooperative – it belongs to the fans themselves – and to say they’re invested in their team is an understatement.

Results of a survey by Saskatoon-based Insightrix Research released in August showed the team has the third-strongest brand in all of Canadian professional sports. For specific categories, including the professional team with the most respect, greatest popularity and highest fan loyalty, the Roughriders clinched the number-two spot in Canada. The achievement is all the more remarkable given that only three per cent of the Canadian population lives in the province.

Motivated by values

Like all collectives, the Roughriders co-op exists to serve its membership. As well, because it is motivated by values first and profit second, it operates on principles that are significantly different from most professional sports clubs. It strives to keep ticket prices within the reach of every budget, for example, and to ensure that participation in the team and attendance at games is accessible to everyone in the province.

Yet for all that, there’s no question that its members love a great game. “I’m a fan first and member of the board second,” says Wayne Morsky, chair of the Roughriders club. “I show my Rider Pride as much as possible. The section of green in my closet is slowly creeping up to consume the majority of the space,” he adds, laughing.

The Riders have always been community owned, but Morsky explains that 10 years ago the team moved away from a management committee structure to a board of directors. The board’s decision-making power ultimately rests on the mandate of members, specifically its Class A voting shareholders who elect its directors. Riders fans may also purchase Class B shares, which entitles them to attend all member meetings, but provides no voting rights. Holders of Class A shares, on the other hand, can cast one vote per share at the club’s annual general meeting. Shareholders are not paid dividends, but receive various perks from the club, including preferred seating and merchandise discounts. The team has sold shares three times since 2004, with a limit of 20 shares per person.

“[Board members are now] elected by the shareholders to serve a three-year term and can be re-elected two additional times for a maximum of nine years,” Morsky says. “The selection is based on profession, geographical location and gender. This helps keep the board fresh, with broad representation from Rider Nation.” Morsky adds that like most credit unions in Canada, the day-to-day operational leadership of the organization is carried out by a president and CEO who report directly to its 11-member volunteer board.

Board members have a distinct role that includes providing overall strategic direction to the club. “That does not include sending in plays during the game,” Morsky quips. “We have committees that focus on individual areas, such as finance, marketing, HR and governance, and from this we provide recommendations and options that are debated at various levels. This debate is extremely beneficial when it comes to reaching consensus for the betterment of the organization.”

Two other CFL franchises claim community ownership, although neither is a true cooperative. The Winnipeg Blue Bombers team is a non-profit club, but the organization allows just one member of the public on its board of directors. The Edmonton Eskimos team offers shares for sale, but they are not available to the general public and can only be purchased through referral by the current limited number of owners. In Canada, the Roughriders remain the gold standard for genuine public control.

While the Saskatchewan football club provides an exemplar for community-owned teams in the CFL, in the U.S. that distinction goes to the Green Bay Packers. In fact, the Roughriders’ governance model borrows from that of the Packers, which has been the only non-profit, community-owned team in the NFL since 1923. As with the Roughriders, fans can purchase shares in the organization, with caps to prevent any one individual from controlling the team’s activities and operations. Other teams might have followed suit if the NFL hadn’t closed that door in 1960 when the league adopted a rule barring any further nonprofit franchises.

A cure for what ails sports

In his controversial book, Bad Sports: How Owners are Ruining the Games We Love, Dave Zirin, host of Sirius XM’s Edge of Sports Radio program and a sports writer for The Nation, lauds the Green Bay Packers’ model as the answer to all that ails the world of professional sports in North America, from high ticket prices, to player lockouts, to teams abandoning their home communities in search of greener financial pastures elsewhere.

The Packers are indeed a compelling case study. The team operates in the smallest market in the league (a feature they share with the Roughriders in the CFL). Yet according to Forbes magazine, over the last 12 years, the value of the Packers’ franchise has gone up by almost 300 per cent, while the typical NFL franchise has seen a climb in value of about 143 per cent. A recent Forbes study also selected the Green Bay Packers as the team with the best fans in the NFL, based on stadium attendance, TV ratings, merchandise sales and social media presence.

Elsewhere in the world, some form of fan-based proprietorship is common. In Europe, professional soccer is dominated by fan-owned teams. In fact, some leagues – such as the German Bundesliga – require majority ownership of all clubs by fans. In Sweden and Turkey, every professional soccer team is owned by fans. Again, however, not all are cooperatives in the strictest sense. According to sportswriter Charles Boehm, fan ownership “takes on many different forms according to the laws and culture of the countries in question, but at its core it is meant to empower and include supporters whose passion fuels the whole undertaking.”

“Being a community-owned team is a driving force to give back in many ways”

—Wayne Morsky, chair, Saskatchewan Roughriders

In many instances, however, it’s the cooperative model that delivers good value – as well as good values. One of Spain’s soccer teams, Athletic Bilbao, which has more than 33,000 voting members, is a case in point: “Our institution, along with its supporters, is characterized by its desire to defend ideals which are becoming increasingly uncommon in football and in sports overall in the 21st century,” the team states on its website. Then there’s FC Barcelona, another soccer club and a true behemoth. The franchise is owned by nearly 200,000 voting members, known locally as socios.

And if the remarkable success of fan-owned teams in Europe is anything to go by, its North American adherents can have some confidence that their model is financially tenable. Forbes’ ranking of the most valuable sports teams in the world in 2014 has fan-owned teams in the number one and two spots: Spain’s Real Madrid, valued at $3.4 billion and FC Barcelona, at $3.2 billion.

Chris Chard, who teaches sport management at Brock University, says the concept of a fan-owned team has intrinsic appeal. “In this type of model, those with the greatest interest in a team, as fans, also have the greatest vested interest in the team, as owners,” says Chard. However, he observes, community-owned teams may struggle to find much-needed financial capital because they don’t have the luxury of turning to wellheeled private investors. “Professional sport is big business,” Chard says. “While we’re all aware of ever-increasing franchise values, the costs to run these enterprises at an operational level are significant.”

Profit a secondary goal

Morsky, a successful entrepreneur in his own right as the head of the Morsky Group of Companies, obviously appreciates the importance of financial viability. “The sports organization is a business and needs to be run as such,” he says. Whether he’s making decisions related to his own construction company or the future of the Roughriders, Morsky says the bottom line is about providing a quality product. But he’s also proud of the fact that the team’s operations are not necessarily driven by profit.

“An inherent strength in our model, compared to private ownership, is that there is no expectation of a return for both the shareholders and the board members,” Morsky says. “Private owners are always seeking a financial return. While running a financially sustainable organization is important for us, no one involved in governance is seeking the same financial return as an individual owner and therefore they are motivated differently to see the organization succeed overall.”

Even though profit may not be the driving goal, the Saskatchewan Roughriders organization doesn’t need to worry about finances, at least for now. Buoyed by its successful hosting of the 2013 Grey Cup, the team recorded revenues over expenses of $10.4 million in the 2013–2014 fiscal year, compared to $1.1 million in the previous year. Total operating revenues were $43.8 million in 2013–2014, against $34.7 million in 2012–2013, an increase of 26 per cent. With Grey Cup revenues included, the team’s total gross revenues were $68.8 million in 2013– 2014. The Grey Cup boost aside, the Riders have consistently brought in revenues over expenses in the last 10 years and continued to strengthen the club’s balance sheet.

Yet sports management professor Chard does not anticipate a movement towards fanowned professional teams in North America anytime in the near future. “Definitely, the appetite for community-owned teams has not been great in North America and I don’t foresee a great overhaul to the current system,” Chard says. “The current model of wealthy individuals owning teams is likely to continue. The current structure of the leagues and the policies around ownership would likely be the greatest impediment to change.”

According to Chard, a more likely change would be the conversion of teams into publicly traded companies on the stock market, as opposed to pure community-based models of ownership. “Teams that have shares which cannot be transferred or sold do not fit into this model,” says Chard. “Manchester United, which trades on the New York Stock Exchange, does.”

Riders rule!

Whatever direction the management of professional sports teams in North America takes, Saskatchewan Roughriders fan and shareholding member, Barry Smith, says he appreciates the community-owned aspect of his team. Not altogether surprising, given his affiliations: Smith has also been a member of a financial services cooperative for the past 12 years.

What is surprising is that his membership is with Manitoba’s Cambrian Credit Union ($2.9 million in assets, 60,000-plus members) – and that the Winnipeg Blue Bombers have been long-time rivals of the men in green. Because he was born in Regina, Smith maintains a connection to his hometown team despite moves to Calgary, Edmonton, Ottawa, Toronto, Montreal and now Winnipeg. In fact, Smith is so passionate about the Riders that he even named two of his children in honour of the team – his son, Ryder, and his daughter, Taylor, after the team’s home arena, Mosaic Stadium at Taylor Field.

“I feel that I am a part of my team and a part of what makes up Rider Nation,” says Smith, who purchased one Class A share when the Roughriders released the original share series. “I am proud to say that it is numbered in three digits, so I was well within the first thousand people. Purchasing the share was a way of helping out my team financially as well as putting my money where my mouth is.” Smith’s share certificate is beautifully framed and has special pride of place among other Riders memorabilia in his home.

Back at Mosaic Stadium, Morsky likes to sit in a section that has grown over the years to include old friends, new friends and most importantly, he says, the next generations. Will the team hoist another Grey Cup? He sure hopes so. But regardless of the scoreboard, he remains proud of the club’s commitment to open governance and to the community, with $1.6 million contributed to various causes and programs last year. “Being a community-owned team is a driving force to give back in many ways,” Morsky says. “The model works well to ensure transparency, accountability and accessibility to stakeholders.” ◊