How The Chicago Dogs Are Transforming The Minor League Baseball Model – Forbes
The Chicago Dogs, the nation’s newest minor league baseball team, are betting big that their customer-first-and-last business model will be a home run with fans and a grand slam when it comes to generating revenue.
For decades, minor league baseball teams were seen as a money pit. Major League Baseball teams would pour millions of dollars into running minor league franchises to use as a farm system for their players, without any regard to whether these development clubs were actually making them any money. Massive stadium, upkeep and payroll costs were seen as just another business expense. It was only recently that many began to realize that while writing off players who didn’t pan out was par for the course, the same didn’t necessarily have to happen for their clubs.
In the late 1980s, you could buy a minor league baseball club for a cool $500,000. These days, minor league baseball’s most valuable teams are worth an average of $37.5 million, up 35% from 2013. Much of that is because of better business management, fueled by grassroots marketing that emphasizes a family first atmosphere and strong community ties to the team. Of course, it took decades of operating in the red before most franchises were able to turn a profit, and many still struggle with revenue generation, which is often tied to team performance ― completely within the control of the parent club’s roster management.
The idea of starting a new minor league franchise from scratch is daunting. Doing it in a major metropolitan city that’s home to two successful MLB franchises is downright crazy. But talk to Chicago Dogs co-founder Shawn Hunter, and his strategic vision (and a whole lot of optimism) might just convince you that the Dogs aren’t just a good idea ― they’re a brilliant one.
Set to begin play in May 2018 in the Chicago suburb of Rosemont in a newly constructed, $60 million, 6,300-seat stadium, the Dogs are in it for the long haul. With more than 3.9 million residents within a 15-mile radius, as well as the stadium’s positioning alongside Interstate 294 and within Chicagoland’s premier entertainment hub, Hunter believes that drawing fans to games won’t be much of an issue.
“If I search for the next 20 years, I would never find the same set of ingredients that we have here in terms of location, in terms of public access and the complementary assets that exist here,” Hunter explains. “We’re just a mile from O’Hare [airport] and in the heart of Chicago’s fastest growing entertainment and shopping hub. I-294 will bring more than 75 million vehicles past the stadium annually, not only bringing massive promotional value to the team, but also unprecedented exposure and impressions to our corporate partners.”
Of course, Hunter, former president of the Phoenix Coyotes and later Anschutz Entertainment Group Sports (AEG), has been around professional sports long enough to realize that tickets don’t just sell themselves. That’s why the Chicago Dogs are taking a carefully planned and systematic approach to ensuring the franchise is successful from Day 1.
At the heart of that strategy is making sure that the city’s newest baseball club becomes as synonymous with Chicago as the Cubs and the White Sox. The team’s brand name is as authentic as one can be to its market, with the Chicago Dogs’ red-white-and-blue logo featuring the colors and four-pointed stars of the city’s flag and drawing inspiration from the city’s deep baseball and cultural roots. As Hunter puts it, “There’s nothing more American than eating a Chicago style dog at a ballgame in Chicago.”
The fun name hints at the deeper business plan. It starts with what will likely be the best game day and stadium experience in minor league sports, a facility that includes six skyboxes, a 200-person club level available for private events, a party deck area and a two-sided video board that will face inside and outside along I-294. The stadium can also accommodate concerts, food festivals, corporate events and outdoor hockey.
“Running a successful business isn’t just about having a good product. You can have the best product in the world, but if no one knows about it or your customer service is terrible, no one is going to engage with you,” Hunter says. “That’s why we’re relentlessly focused on building a first-class experience that will offer the highest return on investment from an entertainment standpoint that our customers have available to them.”
While the Dogs haven’t sold a single ticket yet, they’re already winning from a financial standpoint. Thanks to the positioning of their stadium along one of Chicago’s most traveled highways (2o0,000+ cars a day!) and the usage of a double-sided video board, the franchise has secured fast-growing Impact Networking to a 12-year naming rights partnership. Even if the Dog’s attendance numbers take some time to grow, Impact is certain to recoup much of its investment thanks to the media value of signage on what will now be called Impact Field. The company will get five major signage boards across the ballpark, including one atop the video board facing I-294.
While the Chicago Dogs still have a long way to go to prove that minor league baseball is viable in a major city like Chicago, they have used shrewd strategic forethought to ensure the club will have enough financial stability for the foreseeable future to grow its fan base and brand. If they prove successful, they will likely change the paradigm when it comes to the minor league business model.