Kitchener memorial auditorium complex seating chart

The Kitchener Rangers Hockey Club: Skating into The Future

Prepared by:

Weijing Weng

BUSI 1703

Oct 26th, 2017

Contents

Problem Statement……………………………………………………………………………………………………………….3

Situation Analysis……………………… …………………………………………………………………………………….…..3

Presentation of Options………………………………………………………………………………………………………..6

Decision Criteria…………….……………………………………………………………………………………………………..7

Evaluation of Options & Application of Decision Criteria………………….…………………………….…8-12

Recommendation and Rationale……………………………………………………………………………….…………13

Implementation Plan…………………………………………………………………………………………………………..14

Exhibit……………..………………………………………………………………………………………………………………….15

Problem Statement

The Kitchener Rangers Hockey Club (Kitchener Rangers) is an extremely well known non-for-profit franchisee in the local community located in Ontario. Steve Bienkowski is the chief operating officer and governor of the Kitchener Rangers. The Kitchener Rangers was successful in the short term, but Bienkowski was concerned about the demographic of individuals attending Kitchener Rangers games was ageing. Therefore, he wanted new people to experience their games and regenerate the customer base. Bienkowski needs a plan that would consider either short-term and long-term options for the organization to be more successful going forward.

Situation Analysis

Ownership and Management:

The Kitchener Rangers is governed by 40 individuals elected from the season ticket holders. Steve Bienkowski acts in an advisory role and manager of the Kitchener Rangers. Bienkowski is responsible for the daily operations, such as led the business activities of the Kitchener Rangers.

Current Strategy:

The organization’s current strategy is to make the Kitchener Rangers a stronger club by giving fans more exciting experience during the Hockey match. The Kitchener Rangers also provides free service (Ranger Express) for individuals attending the game, the bus will transport the fans from restaurants to The Aud. The Kitchener Rangers also had strong leadership and passionate community support and fierce demand for tickets. The Kitchener Rangers uses their achievements to regenerate more customer base, such as winning the Memorial Cup tournament twice. The limited season tickets could also increase customers’ expectations to the Hockey match.

Mission:

The mission in this case is to revitalize the customer base for increasing the variety of the customers, because the customers were ageing. It is their job to provide even more exciting experience for the community and the fans.

Current Markets:

For a Hockey match, fans would be considered as the customer base. The fans base appeals to upper-income level customers, with 50% having a family income over $100,000 and 55% having post-secondary education. There are two main age groups of the Kitchener Ranger’s fans. More than 80% fans aged above 20 and 44% of fans were 35 to 59 years of age. There is also an increasing trend of women playing hockey, gender distribution of fans would grow equally in the future.

Competitions:

The Kitchener Rangers competes against with the overall entertainment business in Kitchener-Waterloo, this is to say competed for entertainment dollars. This business is somewhat seasonal which attendance was lower in fall due to the volume and local entertainment events. Ice Hockey is regarded as a winter sport, which means this is not a trend during spring, summer and fall. To ensure that The Kitchener Rangers still has the customer flow, Bienkowski must pay close attention to the activities or promotions to generate the customers. Another competition is The Kitchener Rangers has the second highest attendance right behind the London Knight, because the London Knight had a larger arena which could hold more people.

History:

The Kitchener Rangers was formed in 1963 and a ‘farm team’ for New York Rangers was facing bankruptcy. Entrepreneur Eugene George was about moving the team to Kitchener Rangers. On October 1st, 1963, 54 hopefuls to the Kitchener Rangers training camp begin the team’s first season operating in ‘A’ League. The ‘farm team’ are voted to dismiss after 5 years’ operations. The Kitchener Rangers have done many achievements to prove their strengths. For example, 136 team members in Kitchener Rangers are moving on to play in National Hockey League, and the team has set attendance records for 11 consecutive years with an excess huge population for 175 consecutive games covering over the five seasons. In November 2015, there were also 25 players on the Kitchener Rangers’ roster.

Financial Position:

The Kitchener Rangers played at the Kitchener Memorial Auditorium Complex (The Aud), but the Kitchener Rangers did not own the place . The Kitchener Rangers borrowed $9.6 million from the city and the Kitchener Rangers would have to paid back $12.2 million over 16 years, which means the organization must paid back $762,500 per year. Regular season revenues were $6,400,000 with a surplus of $50,000. The only revenue received from concessions, a food service provider was 10% of beer sales. More than 50% of the revenues primarily come from ticket sales for games. Corporate sponsorships also provided a large percentage of the revenue to Kitchener Rangers, including digital and print signage opportunities. And the organization might receive the first $350,000 from the executive suites created in 2003. There are two major expenses, rentals and bus service which costs 19% of the revenues per year compared to the average of 10% and $75,000 respectively.

Industry:

The Kitchener Rangers is part of the sports and entertainment industry. 90% of Canadians hockey was their cultural fabric. The economic activities related to the hockey was worth over CA$11 billion annually and expecting to increase in the following years. Approximately $2.6 million will affect the economy directly to the hockey industry, because hockey-related tourism is highest in small towns and villages according to the Exhibit 2.

Key Success Factors:

The most successful firms in the industry are providing an exciting experience for the community and fans during the games. The Kitchener Rangers often worked in the flavour of the local community and the fans. The Kitchener Randers’s competitive advantage is to provide free service for the individuals attending the games. Ranger Express is the free service that the Kitchener Rangers provided, but it will cost the Rangers $75,000 per year. This helps more customer flow to the Kitchener Rangers. Therefore, it brings a stronger community support.

SWOT Analysis:

Strengths

· The Kitchener Rangers is extremely well-known in the local community, which helps reducing the marketing, advertising expenses.

· The Kitchener Rangers had passionate support from local community and fierce demand for tickets.

· The Kitchener Rangers were doing successful in short-term.

· -The Kitchener Rangers located in an older neighborhood in Kitchener, it was only 5 minutes driven from downtown and 20 minutes driven from Laurier and Waterloo University.

· The Kitchener Rangers has the second highest attendance of 6,992 attendees on average.

· The Kitchener Rangers provided free service (Rangers Express) for individuals attending a game from a certain restaurant to The Aud.

· The Kitchener Rangers would get additional revenue of $350,000 from the executive suites.

Weaknesses

· The demographic of individuals attending the games were ageing, 56% customers over the age of 35.

· Ice Hockey is regarded as winter sport, which is seasonal. The customer flow will be lower in other seasons.

· There is a limited reserved parking spots.

· Thousands of people are on the waiting list for season tickets.

· London Knight has a larger arena which could hold 9,050 people, it could be a competition for the Kitchener Rangers.

· Players have a bad performance without Tuesday games, because they are forced to play three games in 3 days.

· The Kitchener Rangers needs to pay $75,000 for the bus service.

· The Kitchener Rangers needs to pay 19% of revenue rent to The Aud.

Opportunities

· The Kitchener Rangers has potential to have young population customers base if they open a new arena in small towns and villages, because the hockey-related tourism is highest in those areas.

· The Kitchener Rangers could use the additional revenue to promote the marketing for getting more customer base.

· Operating revenues through sales, such as Coke, popcorns and chips.

Threats

· The residents in Ontario were driving to games in Toronto.

· The demographic of individuals attending the games will be aging continuously if the Kitchener Rangers keeps the current situation still, such as not putting mass marketing and any promotions.

· The Kitchener Rangers is somewhat seasonal, attendance will be lower. This is a huge threat to the Kitchener Rangers, they may lose a huge entertainment dollars, revenues, sales and customer base.

Presentation of Options

Short-term Options

1. Increase Marketing toward Individual Customer:

Strengthen and improve the marketing to gain awareness from the people in their twenties. The target individual customers could be university, college students and young professionals or people from outside the Kitchener-Waterloo area. To revitalize the young age customer base, the organization wants to use newspaper and radio advertisement to make the broader community aware that there were still tickets, they were not always sold out. The price of radio advertisement was $50,000.

2. Increase Marketing toward Social Media:

Strengthen and improve the marketing in social media aspects, such as website, online shop, Facebook page, Twitter feed and Instagram. This option is to make an impact to a newer group of fans (new followers), and constantly update the current hockey standings to attract more customers attending the games.

Long-term Options

1. Changing the arena:

The Kitchener Rangers is thinking about a new facility with 10,000 or more seats for generating more seating, customer base and customer variety, because The Aud was an older facility and it is expensive to repair its infrastructure and it has less seats compared by that. Bienkowski thinks the organization can still operate at the existing facility to decrease the financial burden.

2. Status Quo:

Run the business under the current situation of not having a diverse group of consumers, pay the high proportion of rent and provide free service.

3. Spread out the 2 tickets distribution:

Spreading out the 2 tickets distribution to give customers the access buying tickets without them having to be put on the waiting lists for season tickets.

Decision Criteria

Changing in Attendance:

Changing in attendance is significant to the Kitchener Rangers because the number of attendees could tell how many tickets they sold and how much revenue they generated. The Kitchener Rangers has the highest attendance at an average of 6,992 attendees/game in the 2014-2015 season. Each option will be evaluated on whether the options could bring more attendees. For an option to be recommended using this criterion, the attendees should be greater than 6,992.

Negative Impact on fan experience:

The impact on fan experience is a critical decision criterion because The Kitchener Rangers is a sports and entertainment industry which is to say that only the fans will come. Therefore, fans are the main source of the revenues. Each alternative will be evaluated on a scale of 0 to 10. To recommend and option based on this criterion, the option must be the lowest of the options.

Expenses:

Expenses are important in this case because as a non-profit organization, the revenue must at least break even with the expenses. There is a limited revenue per year, so every expense can heavily affect how the organization works and the future development even with the support of the stakeholders. Each option will be evaluated on the certain amount of money they paid in Canadian dollars. For an option to be recommended using this criterion, the expenses must be reasonable within capabilities.

Evaluation of Short-term Options

1. Increase Marketing toward Individual Customers

Pros

Cons

· The Kitchener Rangers would generate the young customer base to decrease the ageing individual problem.

· The Kitchener Rangers would be a topic for this crowd.

· The Kitchener Rangers gained a lot of well-earned media attention in newspaper and radio.

· The Kitchener Rangers would need to pay $50,000 for radio advertisement each year.

· The Kitchener Rangers is being considered not taking this option if it had not been free.

Application of Decision Criteria

The Kitchener Rangers uses newspaper and radio advertisements to generate the young customer base would be a good idea to get more people to the Kitchener Rangers. According to the 57% of Canadians still read printed newspaper, so this option would be a good choice to increase the variety of customer base, for both young and the aged. The impact on fan experience would be scored 2 on the scale of 10, because using newspaper and radio does not impact fan experience negatively. It also did impact the fan experience positively, it brings the young peers to the Kitchener Rangers at the same time. The expenses of radio advertisement were CA$50,000.

Evaluation of short-term Options

2. Increase Marketing toward social media

Pros

Cons

· Everyone is using the Internet.

· It is easy to get thousands of followers on the Internet.

· The marketing cost could be 0.

· The website included information about the game schedules, players, current standings and others which is convenient to check the current information.

· If someone or a group of people is being negative and doing the negative things on the post, it would be hard to clarify.

· Hacker might be able to access control over social media.

· People of old age might not pay attention on social media.

Application of Decision Criteria

Everyone is using Internet and it could be the best channel to get any information in the world. The social media has done successfully, welcomed 22,500 followers for Twitter and 3,600 followers for Instagram. The more followers, the bigger chance for people to come. It is projected that there would be an increasing trend in followers, attendance and sales. This option will be scored a 5 on the scale 0 to 10. Using social media could attract people’s attention right away and only the people who loved hockey will share the Kitchener Rangers news on their newsfeed, latest news will be known fast. There is advantage, and disadvantage. Once someone or a group of people has complaints and are being negative, it would be difficult for the organization to clarify. Everyone has different perspective to everything, which means this option has a certain threat for having bad complaints. The Kitchener Rangers does not need to spend dime for marketing this. It costs $0.

Evaluation of long-term Options

1. Changing the Arena

Pros

Cons

· There would be more seats available for the new arena, which allows more people attending the games.

· A new facility would extend the longevity of the long-term expectations.

· It could attract A-circuit performance to Kitchener-Waterloo.

· It diversifies the group of consumers.

· It is a huge change for the fans who loved The Aud and the tradition of that building.

· The financial burden increases a lot, it might include a higher rent than The Aud.

Application of Decision Criteria

The organization is considering a new arena with a capacity of 10,000 seats which could hold more people than The Aud. The purpose of doing that is to hold more attendees. This option will get a score of 2, the only negative impact is that some fans are not getting familiar with the new place. Fans miss the older building more and they are unhappy with it, finally give up attending the Kitchener Rangers games. Expenses is the main point for building a new arena which requires a lot of money. There is the limited revenue generated from different sources each year. Finding a bigger arena would cost over 19% of the revenues, $6,400,000, which is to say the organization must pay at least $1,216,000 per year.

Evaluation of long-term Options

2. Status Quo

Pros

Cons

· The Kitchener Rangers had passionate support from the local community, people love them.

· The Aud is at good location.

· The Kitchener Rangers has the second highest attendance of 6,992 attendees in the Ontario Hockey League (OHL).

· The Kitchener Rangers can also receive a large amount of revenue,

· The Kitchener Rangers needs to pay 19% of revenue for the rent.

· The demographic of individuals was ageing, 44% are middle-aged crowd and 12% are elderly.

· Around thousands of people are on the waiting list for season ticket.

· There is a lack of fan experience.

Application of Decision Criteria

The attendance of the Kitchener Rangers is still the second highest in the OHL which had an average of 6,996 attenders. Referring the Exhibit2, it was projected to have a higher attendance over the years. This option will get a score of 4 on the scale of 10. Run the business under current situation would impact the fan experience a little bit negatively. The fan experience needs more young customers to balance the proportion for different age of people. The Kitchener Rangers needs to pay the rent, 19% of revenues per year and the free bus service costs $75,000 per year.

Evaluation of long-term Options

3. Spread-out the tickets distribution

Pros

Cons

· The more tickets distributions, the more sales are generated.

· The price would be relatively lower than normal price.

· More people can buy the tickets at the same time.

· The ticket would not be that “valuable” as before.

· More operations and more expenses are required to open the new distributions.

Application of Decision Criteria

The spread-out ticket distributions would allow more fans buy tickets at the same time. There are no more worries like waiting on the lists. If more tickets generate from the spread-out ticket, there would be more and more attendees to the Kitchener Rangers. This option will be graded on the score of 4. Once the tickets are sold out, it could get crowed in the arena and therefore safety and security problem will appear more frequently. Operating two more ticket distributions would double the cost of renting a place, which costs $75,000.

Recommendation and Rationale

After applying the decision criteria to all 5 options for both short-term and long-term, I recommend the Increase Marketing toward Social Media as the ideal option for the Kitchener Rangers to move forward with in short-term. Referring to Exhibit 1, The option 1 and option 2 have the same increase changing in attendance, and the option 1 even has a lower negative impact on fan experience, but option 2 does not need to pay a dime. The reason I recommend the option 2 was the organization is already considering about dismiss the option 2 and newspaper and radio are not that popular as our cell-phone, everyone is using the Internet (social media). Expenses here are important, there is limited revenues as a non-profit organization.

I recommend Changing the Arena as the best option for the long-term option. Referring the Exhibit 1, Changing the Arena has the least negative impact on fan experience and expenses. The Aud was an older infrastructure and it is necessary to change a place to develop for future development. Expenses are important here still because there is a limited revenue. Any actions might avoid the future development to the Kitchener Rangers. Therefore, I suggest regarding the expenses as the most important factor that influences other options.

Implementation Plan

Short-term Option: Increase Marketing toward Social Media

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All these implementations happened at the same time.

Long-term Option: Changing the Arena

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All these implementations should be done before January, because January is the busiest hours for Hockey entertainment.

Exhibit 1

Evaluation Matrix

Changing in Attendance

(decrease or increase)

Negative Impact on fan experience

(scale of 0-10)

Expenses

(dollars)

Option1: Increase Marketing toward Individual Market

Increase

2

$50,000

Option2: Increase Marketing toward Social Media

Increase

5

$0

Option3: Changing the arena

Increase

2

$1,216,000

Option4: Status Quo

Increase

3

$1,216,000+ $75,000

Option5: Spread out the tickets distribution

Increase

4

$75,000