David Morehouse, the president andCEO of the Pittsburgh Penguins, spoke with The Hockey News publisher Graeme Roustan as part of our ongoing Peer-To-Peer series with members of the hockey business world.
Graeme Roustan: Let’s start with what you were doing before you went to Pittsburgh?
David Morehouse: It’s a circuitous route that brought me to Pittsburgh. In November of 2004, I’d just lost the presidential election. Not myself, I didn’t run for president, but I was the traveling chief of staff for John Kerry. After the campaign, (Penguins co-owner) Ron Burkle called me. I was trying to figure out what I wanted to do next. Ron said, “You’re from Pittsburgh, right? Can you go to Pittsburgh, work with the Penguins and try to find out, politically, why they haven’t been able to get an arena deal done, and put a strategy together to get an arena deal?” And I said sure. I thought I’d be here temporarily. For my wife, to talk her into coming to Pittsburgh, we’d live here for a year at the most. So we came and immediately did a political analysis of the appetite for public funding for a new arena, and we found there was little because of the recent stadiums that had just been built in Pittsburgh. So we took a unique approach. Gaming was just coming online in Pennsylvania, so we partnered with a gaming company that, as part of their application program, committed to paying for a new arena for free, and some community stuff around the arena. So we had kind of boxed in the other two applicants, and then the governor at the last minute had a meeting with the three applicants and said, “All of you have to agree to pay for a portion of the new arena.” Long story short, we got an arena deal done.
GR: And you ended up staying in Pittsburgh.
DM: I was going to move out to California and work with Mr. Burkle on private equity, then Mario (Lemieux) asked me to stay on and be team president. I was surprised. I’d never run a hockey team before. Looking back, I went into the job without any experience, and I actually think that was a strength because I knew what I didn’t know. And I had good people around to advise me. We tried things that were different at the time. We came up with innovative ideas because of my ignorance. We did things like have our players deliver the tickets to season-ticket holders’ houses. Obviously, we have 15,000 season-ticket holders and only 20-something players, so we don’t deliver them to everyone’s house, but the way our communications department handles it is they send a camera with one of our players. I think this is the 12th year we’ve done it.
GR: You also had a pretty good player arriving around the time you became president.
DM: We had great scouting and were able to find this diamond in the rough, Sidney Crosby. Obviously, I’m joking. We had the good fortune of winning the draft lottery. So I knew we were getting this generational player, and we were last in the league in everything. We were last in the standings, we were last in all the business metrics. We were last in ticket sales, attendance, TV ratings. Every measure you could think of, we were last. So I thought, “We’re going to have people interested in us, some for the first time, so how do we capture them?” The first thing we did was put together a new strategy, and we designed it to broaden and deepen the brand in the region. Pittsburgh’s a great sports town. It’s known as a football town and always will be, but we also wanted to build it into a hockey town. That was our strategy. In 2007 we made the playoffs, and in 2008, at the all-star break I remember we had a meeting. I was the president, Ray Shero was the GM, Ken Sawyer was CEO, and Ron Burkle was there. I presented where we were budget-wise, and we were $5 or $6 million over the projected budget. Ron asked the question, “Should we go into the trade market?” I remember Ken answered, “We have a five-year plan, we’re not planning on spending to the cap until we get into the new arena.” By then we had a new arena deal on the table. Ron said, “No, the question is, do we have a shot (at the Stanley Cup)?” And Ray said, “Yeah, we have a shot.” And Ron said, “Well, it’s not often you get the answer yes to that question. Do you have someone in mind that you would like to go after?” Ray said, “Yeah,” and Mario said, “Yeah.” So that was kind of the pivotal moment where we set the direction for the team when we went after Marian Hossa and Pascal Dupuis and made it to the Stanley Cup final.
GR: It’s always good to have the backing of ownership.
DM: When Mario and Ron made that decision, if we hadn’t made the playoffs, we would’ve (lost money). I think Ron’s business acumen along with Mario’s hockey knowledge, it’s the best example of how they came together. They set the precedent that, if we can answer yes to that question, we’re going to do everything we can to win the Stanley Cup. Since that time, they’ve never said no to anything that anyone on the hockey side has asked for that would make the team better, including building a $72-million practice rink that’s also a medicine facility. It’s the best of its kind in the NHL. Our players can go through the dressing room to the MRI room right in our practice facility. We also used that facility to build a youth hockey base in Pittsburgh. We started Learn to Play programs. The first program we did, Crosby came to us and said, “I want to make hockey more affordable for kids who can’t afford it.” So we went to Dick’s Sporting Goods and Reebok and said, “Would you partner with Sidney Crosby and the Penguins in giving free hockey equipment to kids between five and seven?” And they said yes. That first year we gave out 600 sets of free equipment. The next year we gave 1,000. Every year since then, we’ve averaged 1,000 sets of free equipment for five- to seven-year-olds. Then we funnel them into the Learn to Play programs in their area. Then they become a Sidney Crosby’s Little Penguin. Then I brought in Rich Hixon, who was running our AHL Wilkes-Barre team, and told him to build a hockey pyramid that was designed to grow hockey in Western Pennsylvania, and he did. Ten years later, we’ve doubled or tripled the number of kids playing hockey in the region, and we’ve increased the talent level to the point where last year we had two national champions in USA Tier 1 hockey. The under-14 girls won the national championship, and so did the under-16 boys. A couple years prior to that, the under-18 boys won the national championship. So we’ve been developing hockey players and growing the game. We’ve basically put a hockey stick in every kid’s hand in Western Pennsylvania.
GR: You had a foundation, and then you built upon that foundation. And here we are today, you have the model that other teams are following. Do you find Seattle and Vegas and non-traditional hockey markets are looking at what you did and trying to replicate it?
DM: We’re actually learning from them. I think the league has gravitated toward the business side. It’s good for all of us when we all do well financially. So I definitely have our executives go to different markets to see what different teams are doing. We go to different leagues to see what different leagues are doing. What Vegas did was tremendous. It’s going to be hard to replicate. I’d hate to be Tim Leiweke in Seattle, but I’m excited about it. That’s a good market, too. You know, my original charge was not just to run a hockey team, but to try to build the best organization in sports, respected for our culture of excellence on and off the ice. Our mission is to win the Stanley Cup, inspire fans, positively impact the community and advance the game of hockey. So that’s our DNA, and we’ve lived up to that DNA by winning three more Cups since 2007-08. That takes a lot of people and a lot of talent, both on and off the ice. It starts with ownership, and having the business operations team that we have, but also look at the people we have on our hockey operations side. Ray Shero was here, the great coaches that have come through Wilkes-Barre that have been coaching throughout the league. Jim Rutherford is a Hall of Famer. In my mind there’s no one better. He was able to come in and take a talented group of hockey players and, along with Mike Sullivan, turn them into a team that won two consecutive Cups, which is very hard to do in a salary-cap system. We became successful on the business side through marketing, and then we just basically took what was happening on the business side and institutionalized it and made it our business strategy. Innovation was a big part of it. In the ’08 Cup final, we had a big screen in front of Mellon Arena, and we had 20,000 people show up outside. I remember NBC not wanting us to do it. It was taking away from television ratings, the league was hot and cold on it, they told us to take it down. Now it’s part of every Stanley Cup final.
GR: You’ve been in Pittsburgh for 12 years. What are your goals in the next few years?
DM: In the last 12 years, there have been two teams that won three Cups and one team that won two. We want to be the first team to not rebuild, but basically retool around the stars we have and win another Cup. That’s a challenge, and that’s going to keep me here. As long as Ron and Mario are here, I couldn’t ask for a better working environment. Jim Rutherford, he’s moving in the opposite direction age-wise, he gets younger every year instead of older. As long as he’s running the hockey side of things, I’m sticking around. We have a great organization. Our goal is the same, our mission is the same. Our goal is to win the Stanley Cup. That becomes harder when you’ve been there a few times, when you know how hard it is to go through the playoffs. It’s the hardest trophy to win in sports. So we’re going to try to win another, maybe even two. There are a lot of challenges, there’s enough to keep me here. We have a 28-acre plot of land across the street we’re developing. It’s going to revitalize the entire neighborhood and transform the city. I feel honored to be here and have the bosses and the opportunities I have. I run a hockey team, what could be more fun?
Listen to the full Q&A with David Morehouse atTheHockeyNews.com/P2P