Today's podcast looks back at Disney's foray into professional sports ownership. I break down The Walt Disney Company's time as owners of both the Mighty Ducks of Anaheim and Anaheim Angels, analyzing what went wrong, how much money they lost, why it was doomed from the start and the 20-minute, $450,000 Mighty Ducks pregame intro that's so outrageous it sounds made up. Enjoy!
The Joe Pomp Show
How Disney Tried (and Failed) at Owning a Pro Sports Team
What's up everyone, I'm Joe Pompliano and this is the Joe Pomp Show. I hope everyone had a fantastic new year spending some time with your family and friends. Today's podcast is going to be breaking down the Walt Disney Company's time as owners of both the Mighty Ducks of Anaheim and the Anaheim Angels. We're going to analyze what went wrong, how much money they lost, why it was doomed from the start, and even the 20-minute, $450,000 Mighty Ducks pre-game intro that's so outrageous it sounds like it's made up. I think you guys are really going to enjoy this look back in history, so let's get right into it. Since its inception as an animation studio in 1923, the Walt Disney Company has been a staple of American media. From the earliest days of Steamboat Willie to the current crop of family-friendly franchises, Disney has stood the test of time and proven that you can be successful in this country for over a century. With more on the two breaking box office records and a new slate of Marvel movies coming out in the next year, it seems like Disney can prevail no matter what the state of the industry is. Having said that, there is one area where Disney has proven that it doesn't know how to succeed, professional sports ownership. While virtually everyone has been able to make a profit in the War of a Pro Sports, Disney's track record in the late 90s and early 2000s proved the House of Mouse should really stick to what it knows best. So let's go back in time and see what went wrong for Disney. The year was 1993. Jurassic Park was reminding us to be scared of T-Rex's, Whitney Houston was pledging her undying love with "I Will Always Love You" and the Dallas Cowboys were back-to-back Super Bowl champions. Yes, the Dallas Cowboys actually made it past the divisional round. What a time to be alive. As for Disney, they were riding high with the successful release of the Mighty Ducks, a hockey version of the Bad News Bears. The Mighty Ducks featured Emilio Estebes getting a DUI and having to coach a youth hockey team for community service. Whether or not a convicted drunk should be in charge of a group of children, the film struck a nerve with American audiences, bringing in more than $50 million in box office revenue off a $14 million dollar budget. Suddenly Disney had an idea. What if we could build a professional sports empire and use those assets to create synergies and cross promotion opportunities across our theme parks, movies, animations, products, merchandise, and more. And that's pretty much exactly what happened. In 1993, the Walt Disney Company won the bid for an NHL expansion franchise that became the Mighty Ducks of Anaheim. A less than subtle nod to the movie whose sequel was already in production. At the time, hockey was becoming more popular in Southern California. Wayne Gretzky had just been traded from the Edmonton Oilers to the LA Kings five years earlier, and Gary Bettman, who had a reputation for expanding hockey to non-traditional markets in Arizona, Florida, and Texas, signed off on the deal, becoming NHL Commissioner just a few months later. Disney paid a $25 million expansion fee to the NHL and another $18 million to their new market neighbors, the LA Kings. Joining the NHL for a total price of $43 million dollars, about $10 million less than the Mighty Ducks movie made in home video rentals. Disney was able to negotiate a favorable deal with the newly built but empty Anaheim Arena, giving the company a high percentage share of advertising signage and luxury suites. In fact, before the team had even played a game, the franchise was already worth $100 million dollars. And then on October 8, 1993, the Mighty Ducks of Anaheim held their first home game against the Red Wings, complete with a 20-minute $450,000 pregame show that you have to see to believe. They're steamed hockey fans. It is with deepest pride and greatest pleasure that we welcome you tonight to the pond. We invite you to relax and take your seat as the City of Anaheim, the National Hockey League, and the Mighty Ducks celebrate a new era in sports entertainment. Me, our dance hockey, our guest, Yes Ducks season has come works. Do I ever go around your neck, my friends? Then we'll provide the rest. Why can't I stop the beat? Mighty Ducks, they can't meet me. It's the spirit, it's outrageous. Tell a friend that it's been changed. Despite Lumiere ice dancing and the mascot wild wing playing with a flaming goalie stick, the Ducks lost 7-2 in their first home game. But overall, the inaugural season was a success. They might not have made the playoffs, but their 33 wins set an NHL record for an expansion team. Most importantly though, there were financial wins. The team brought in 10 million dollars in its first season, selling out 90 of their first 93 home games, including 51 games in a row at one point. Over the next three seasons, the Mighty Ducks of Anaheim would bring in between 3 and 7 million dollars. But by 1997, things started to take a turn for the worse. Head coach Ron Wilson was fired after constantly butting heads with Disney's management team, and the team had a wink percentage at or below 500 from 1997 to 2001. Disney done fired team president Tony Tavares at the start of the 2000s, and even though the team reached the Stanley Cup finals in the 2002-2003 season, it wasn't enough to change their eventual fate. Disney's stock price was down almost 50% from its all-time high, and the House of Mouse decided it was time to move on. So, on February 26, 2005, the Anaheim Mighty Ducks were sold to billionaire Henry Samuel E and his wife Susan amid the NHL lockout for $70 million. So while that might be the whole story of Disney's for Andrew Pearl Hockey, their journey in the world of pro sports was only half over. Like the Mighty Ducks experiment, in 1996, Disney was looking to capitalize on another one of its successful films that had ties to a pro sports team. Thankfully, it wasn't the Detroit Lions. I'm talking about Angels in the outfield. Or Remake of the 1951 movie, the 1994 edition featured a foster kid who praised for an Angels World Series win to reunite with his widow father. Clearly, the 90s were not a good time for adult male role models in Disney movies. Starring Danny Glover, Tony Danza, and Christopher Lloyd, the film was a huge success, grossing over $50 million at the domestic box office. Two years after release of the film, the Walt Disney Company decided to try their hand at baseball, purchasing a 25% controlling stake in the California Angels. Disney changed the name of the team to the Anaheim Angels in 1997 and purchased the rest of the franchise from the family of Gene Autry for a total of $150 million in 1998. However, despite winning records in 1997, 1998, and 2000, Disney struggled to make the club appealing to fans. By 2002, their attendance had declined by almost 4,000 fans per game, and the team was struggling to break even financially. Even though the Angels went on to win the Worlds in 2002, beating the San Francisco Giants in 7 games, Disney had had enough of the baseball business and sold the team to outdoor advertising mogul Artie Moreno for $183.5 million in May of 2003. Now, it's easy to look back and call Disney's tenure in pro sports ownership a failure, but objectively speaking, they left a lot of money on the table. Just looking at the numbers, it might be confusing why Disney got out of the pro sports game at all. They purchased both the Ducks and Angels for a combined $193 million and sold the two franchises for $253.5 million. That's a $60 million profit, right? Well, not exactly. That $60 million ignores the fact that Disney invested $100 million into Angels Stadium, so with that in mind, the math speaks for itself. The Mighty Ducks venture yielded a $27 million profit, but adding in the Angels' purchase price, a $100 million stadium investment, the eventual sale for $183.5 million, and the known losses for both franchises, you'll see the return on investment for Disney was a loss of approximately $139.5 million. While that might seem like chump chains to a massive conglomerate like Disney, the real reason why they failed a professional sports ownership is the same reason why only a few sports assets are publicly traded today. Shareholders. Sure, Disney had some management mistakes, not signing Mark McGuire before his home run record breaking season, laying off most of the Angels staff and replacing them with Ducks employees who had no baseball experience, or giving MoVon $80 million only for him to injure his ankle in the first inning of his first game by falling into the dugout trying to catch a foul ball. But ultimately, Disney's sports portfolio conflicted with his duty to deliver shareholder value, and it ended up materially impacting its bottom line. For example, the company's stock was trading at eight-year lows of $13 to $14 per share in the summer of '02, when Disney started to contemplate selling the teams. Mark Cuban put it best when he told the Wall Street Journal, "All owners pick their poison and decide which is more painful, losing money or losing gains. When your stock is being driven to new lows, the win-loss record of one of your holdings is probably not at the top of your shareholders' minds." So even lost synergies were evident at the time, like the Docs are cutting for 80% of the NHL's $1 billion in merchandise sales in 1997. Disney found itself in a lose-lose situation. Maximize profit and upset fans, or spend money to win at all costs and upset shareholders. It's a dilemma that still exists today, and the main reason why most teams are owned by private investment groups that don't have to answer to shareholders. So while it might have been a dark spot on Disney's track record, the odds were stacked against them from the very beginning. And who knows, maybe Thunderbolts will break box office records and Disney tries to capitalize on it by buying the Oklahoma City Thunder.