Exclusive interview: Richard Peddie Outgoing MLSE leader recalls tenure, achievements
Richard Peddie’s first day with Maple Leaf Sports & Entertainment (MLSE) was in November 1996.
Two years later, he became MLSE’s President and CEO. In his near 14 years at the top, organizational value has tripled under Peddie’s watch, growing from a single sports team and a 1931-built arena to the modern-day collection of four professional sports franchises, management of three facilities, as well as multiple entertainment networks, commercial property developments, and other venues.
The most recent news, of course, is the sale of MLSE’s largest stake, a 79.5 per cent holding by the Ontario Teachers’ Pension Plan (OTPP) to media conglomerates Rogers Communications and Bell Canada. The media franchises will each hold a 37.5 per cent share of MLSE, while current MLSE Chairman Larry Tanenbaum, of Kilmer Sports Inc., will increase his 20 per cent stake by five per cent.
At the end of the year, Peddie will leave his post with MLSE. After 41 years in the business world and a career that has redefined Toronto’s sports entertainment industry, Peddie is ready to enjoy his retirement.
Peddie spoke with The Canadian Business Journal about his time with MLSE, highlighting organizational growth and achievements, as well as his illustrious career in business.
CBJ: What are your thoughts on MLSE’s recent sale and what does it mean to the company?
Richard Peddie: Teachers’ has been a long-time shareholder, and obviously our majority shareholder, stepping up over the years from a position of 40 per cent to the current of 80 per cent. They’ve been a great shareholder and have given us all the resources to build what we have built. When [Teachers’] took it over in the 1990s, we were really only the Maple Leafs and Maple Leaf Gardens, and what we have created speaks for itself.
Teachers’ equity division doesn’t typically hold on to things as long as they have with this, but it was a great long-term hold. Then they decided that if they got a certain price, they would move it, and obviously they got that price. They’ve sold and we’re delighted that Larry Tanenbaum is stepping up and taking another five per cent, and staying on as Chairman.
Bell and Rogers are iconic, sophisticated Canadian companies. If you look at the best known and best valued brands in Canada, Rogers and Bell are always there. They know our business and they are customers of ours. Right now, Rogers is a sponsor and Bell has been in the past. They lease suites, they buy tickets, we sell them our broadcast rights, and they carry our three specialty channels, so we have this really good relationship. They understand our business and we’re confident that they very much want to invest in the business and build winners, so it is a nice transition.
CBJ: What does Mr. Tanenbaum’s increased stake mean to MLSE?
RP: It shows Larry’s commitment to the long-term growth. It shows that he has an important role with the other two partners. It meant a lot to the employees.
Larry is very well known here, they like him, they know he is committed and for him to step up and to see Larry is still there as our Chairman and as our Governor in all three of our leagues it gives our employees and our players a great deal of comfort.
CBJ: What is your advice to the new ownership group?
RP: The teams are the engines, so make sure that they’re given every resource so they can to win. But they’re also going to have to be patient. I spent time in consumer products, I ran Pillsbury, and we had a really good year, but so did the guys at Campbell’s Soup, or Nestle, but there was no trophy, no parade.
There is only one parade [in sports] every year, and you have about a 3.3 per cent chance statistically of winning the championship any one year. It doesn’t come easily, and you can win it, but you have to stick to the strategy and be patient. That’s on the team side.
The fan side can be very interesting. Both Bell and Rogers are in the news a lot, they are big companies, but we are the most visible and well-covered company in Canada. We have about 50 media types cover us on a daily basis for that visibility and fan avidity. I always joke that when I ran Pillsbury, no one really got all upset about my crescent rolls and they didn’t dress up as the Pillsbury Doughboy. Here, people wear our colours, they paint their faces, they wear blue wigs, and they are very vocal, win or lose, and that can be all within one game. I can remember early this season we were in first place overall, and the team came in and we had a real stinker of a game, and the fans were booing by the second period, and we were in first place, so they’re going to have to get used to that.
The other advice I’d give is that there is a very strong culture coming out of our vision and values and I think they’d be smart to maintain it.
CBJ: What has made MLSE so successful?
RP: I’ve been in the sports entertainment business since 1989 [as the former President and CEO of SkyDome], and when I came out of consumer products, I found this industry to be very street smart, but very unsophisticated.
We instilled taking a page out of best practices for consumer products, we do a very robust annual plan, and interestingly, a lot of sports teams don’t do that—it is the norm in any other business.
We’ve also gone one step further which I believe differentiates us even more from most sports teams. Every November we have a major strategic review with our Board. Our management team views it as reloading the gun. We’ve had three objectives in our strategic plans as long as we have been doing them: we want to win, we want to grow enterprise value, and we want to be an exceptional place to work. Obviously winning increases enterprise value, but we’re always motivated by that date in November to come up with new ideas, and that was the genesis of everything from bringing soccer to Toronto, to building Maple Leaf Square, to getting into specialty television, Real Sports Bar & Grill, and literally every time those ideas have been presented as strategic plans. Our batting average has really been outstanding. Typically, about 10 per cent of a strategic plan gets realized, but our batting average is very, very high. Almost everything we have put down, we have ended up doing.
Under that strategic umbrella, we have ideas, we make money, which is not always the case in professional sports, we throw off positive cash, and then the final thing is that instead of paying out dividends, our shareholders allow us to invest it back in the business. When you combine ideas and cash, and a willingness to invest, you end up with MLSE.
CBJ: How does MLSE operate differently than others in the sports entertainment field?
RP: Since I came into sports in 1989, it has gotten a lot more sophisticated and a lot of that credit goes to the leagues. David Stern [Commissioner of the National Basketball Association] and his people really share best practices, demand best practices, and Gary Bettman [Commissioner of the National Hockey League] is doing the same thing, Major League Soccer is doing the same thing, so the bar has risen for everyone.
I think we are very much a vision and values company, and I don’t know how many really are of the Tier-1 sports teams. In fact, Gary Bettman once told me that about 50 per cent of the NHL teams don’t do a really good annual budget. Of the 130 or so Tier-1 sports teams, I wonder how many really do a strategic plan? We do and we’re very proud of it. Claude Lamoureux [former CEO of OTPP] once told me he thought [MLSE’s strategic plan] was one of the best of any company they have ever owned.
Our true four brands are our four teams, and five now with Real Sports, so we have a real brand focus as well. Our retention rate of our partners and sponsors is also about 90 per cent, which has led the NBA for many years now. Molson, Coca-Cola, and Ford have been with us for a long, long time.
CBJ: How have core values played a role in MLSE’s success?
RP: I am a great believer in vision and values. It is a hallmark of how I’ve led companies since the mid-1980s, and I’ve just seen a tremendous correlation between business success and strong vision and values, which translates into a strong culture.
If the company does not have a clear vision, and really clear core values, then where do their strategies and tactics come from? We always view it that our vision is to win, and win in three dimensions: obviously with the teams, but also to win on the business side, and thirdly we want our people to win.
All of our strategies come out of our values. One of our values is Excite Every Fan, so you think how about how you do food and beverage, how you do game entertainment, how you run your buildings, how you service, how do present your stuff on television, and all of those strategies come out of that one value. Our vision and values statement is only 18 words, it is our DNA. Everything flows out of our vision and values.
CBJ: What does meritocracy mean to MLSE? What does leadership mean to MLSE?
RP: We’re in sports; it is the ultimate meritocracy. There is one winner and 29 losers. There is one parade. It doesn’t get any more Darwinian than that, so we’re not shy about being very much a meritocracy.
When I first started, I worked for General Foods and they focused on the bottom 10 per cent all the time. But frankly, where are you going to get the bottom 10 per cent, to the bottom 20 per cent? We really focus on the top 20 per cent of our company. Then there is that solid middle with a lot aspiring to be in the top 20 per cent, so meritocracy is very much alive.
We train a lot about leadership and we have a very robust in-house training program called Training Camp, as that’s the business we’re in, with course after course with all kinds of special projects. We were just chosen as one of the most engaged companies in Canada. We are a learning environment and one of the things you’re going to learn here is leadership.
CBJ: What has been your biggest personal achievement with MLSE?
RP: Just to get a chance to run four sports teams. When I was going to school, I really wanted to run a basketball team one day and to be sitting here today and having four teams is just a dream come true. We work with our Board to invest back into the community [investing more than $1 billion in the City of Toronto] and to create what we have had both in bricks and mortar creation and the people. Our people are our big legacy. We have a tremendous group of 600 or so sports entertainment professionals and I am very proud of that as well.
CBJ: What is your advice to a young person entering a career in business?
RP: Get a good business degree. There are many schools to choose from. And then work on your career. A lot of people come out of school and think that’s it, but if you work for a really good company, you will learn a lot, but that will only take you so far, especially in the area of leadership. You really have to invest in yourself, taking courses, listening to your bosses, reading the books, and really invest in your career.
CBJ: Who has had the biggest influence on your career?
RP: I get that question a lot, but I really haven’t had one specific mentor. Knowing Larry Tanenbaum for the last 20 years, he has been terrific. My brother [Thomas Peddie] is very successful over at Corus Entertainment. His boss, John Cassaday [President and CEO of Corus Entertainment] used to work for me years ago and he is a really accomplished businessman. I really look at the best practices of other leaders, I read about them, so I try to pick up that, but a pure mentor, I have not had.
CBJ: What’s next for you personally?
RP: I’m not completely sure. I’ve worked steadily for 41 years. The longest vacation I’ve had is two weeks. I want to chill. I am going to write a book about vision and values, and then I’m just going to sit back and see if any jobs come my way, and by that I mean consulting. I’ve been approached by a number of schools about teaching but I do not want to teach. I will work with University of Windsor and the Odette School of Business [Peddie’s alma mater] for sure, that’s my choice.
And frankly if nothing comes my way I’ll be happy getting fit, gardening, and writing a book.