December 28, 2013

The Cost of Doing Business

By Neil Stevens | | Twitter

Swarm owner John Arlotta congratulates top pick Logan Schuss at the NLL draft. The Swarm are hoping moves like the trades that landed them the top pick and Schuss will pay dividends in 2014. (Minnesota Swarm)

John Arlotta, the principal owner of the Minnesota Swarm, in October launched a new five-year plan that he hopes will ensure the National Lacrosse League franchise's success long into the future. It began with an "important message" sent to fans in block letters and with an exclamation mark Oct. 9.


Then, the crux of the matter: "Unfortunately, our success on the field and our assistance with the growth of lacrosse in Minnesota has come at the price of tremendous financial losses that are not sustainable over another five years of ownership."

The Swarm's desperate tone dredged up memories of public pleas issued in Calgary by Bruce Banister in 2011, when his team teetered on the brink of financial ruin before the NHL's Flames swooped in and rescued the Roughnecks.

Arlotta insists he is not looking to sell the Minnesota franchise. But he's not too proud to ask for help. That's why he has solicited the Minneapolis-St. Paul community to support the Swarm, which he bought in 2008 with his son, co-owner and president Andy Arlotta — and which has fast evolved into one of the most exciting teams in the NLL.

Uncharted Territory

John Arlotta, 64, grew up in Buffalo and lived in cities such as Baltimore and Denver while owning and managing companies in the health care industry. He's currently the CEO of CareCore National, a South Carolina-based firm with more than 1,300 employees. Lacrosse got into his blood the day he went with friend John Cordish to a Johns Hopkins field lacrosse game.

"It was almost preordained as I look back on it," Arlotta said. "I was on the sidelines with John explaining the game to me. I just fell in love with the sport."

Arlotta is a Notre Dame graduate. The university's impressive lacrosse facility bears his name, which is ironic since he never participated in the sport while in South Bend.

"I came into some good fortune in my life, and my wife and I were looking at how we could give back to Notre Dame," he said. "They needed a better lacrosse stadium to help them get to the next level. We just thought it was a great fit. My wife was a lacrosse player in high school, too, and we were helping both men's and women's programs. The more I was involved in that, the more I fell in love with the sport.''

Arlotta sold a company in Denver at about the same time his good friend Craig Leipold bought the Minnesota Wild, the NHL club that also owned the Swarm.

"He knew I liked lacrosse, so he called and suggested I buy the lacrosse team so we could enjoy our teams together. Being in retirement at the time, I said OK. I brought my son in to run the day-to-day operation. It was an evolutionary thing. Owning a lacrosse team was never intended."

With no previous sports entity ownership experience, the Arlottas were in uncharted territory, especially given the cost to do business in the NLL.

"It's not something that an independent owner can easily make money on," Arlotta said. "Over the five years we've owned the Swarm, we've learned a lot and created a good balance between helping lacrosse grow and developing our franchise. We've cut our losses in half, but we're still losing a significant amount of money, so we've got a ways to go."

The Arlottas lost more than $1 million last season on the Swarm. The first three years were even worse on the balance sheet, as significant injuries drove up insurance coverage premiums.

Flying in non-resident players cost a bundle, too. That's why NLL teams maneuver for players living in their home markets. It costs less to provide them with accommodations than it does to bring them in from Ontario or British Columbia for home games.

"We started to get a handle on things we could control and in the last two years we've refocused on player costs — salaries, appearances, travel costs," Arlotta said. "Moving to the East Division this season is going to save us travel money."

NLL veterans make up to $30,000 for the five-month season. Rookies make about a quarter of that. In recent seasons, the Swarm have retained fewer veterans than other teams, choosing instead to stockpile draft picks and furnish a young team that keeps the payroll manageable.

Arlotta said that approach wasn't based strictly on budgetary concerns.

"I'll take full responsibility for it," he said. "Two seasons ago, what I looked at was this: We had been an OK franchise for a period of time, but we'd never made it past the first round of playoffs and we had one of the highest payrolls in the league. We were playing a certain style of lacrosse that I didn't think was very exciting for our fans.

"I decided we were going to change it up. What did we have to lose? We decided what we wanted were athletic players who would fly up and down the floor and create excitement."

Business is (Relatively) Good

Callum Crawford, Ryan Benesch, Andrew Watt, Mitch Belisle and Jeff Gilbert were important veterans for coach Joe Sullivan last season, when Minnesota had the best home record in the league and reached the division final for the second straight year.

"Attendance at home was rising as we went through the season," Arlotta said. "We have a young, exciting team that is very athletic. And that's what we wanted. It's worked well. Yes, we have traded away veterans to get first-round picks. But we felt that if we were patient over time, we'd have a star-studded team. We got eight of the first 19 players selected in the draft the last two years. That is substantial. Nobody can look at our team and say we don't have the talent."

Arlotta's decision to deal Benesch, the franchise's all-time goals leader, to Buffalo in July did not go over well with some Swarm fans. But Minnesota had the No. 1 draft pick in its pocket, snaring Ohio State's Logan Schuss to fill the void.

"To be able to continue with the philosophy we have, we have to continue to make those choices," Arlotta said. "I've studied this carefully. If you put first-round picks on the floor and combine them with some good veterans, there's no reason why you can't win now."

Minnesota has a thriving lacrosse community. The state's US Lacrosse chapter has nearly 15,000 members, ranking it in the top 10 of 64 chapters. Andy Arlotta has been a driving force behind the Swarm's push to expand the indoor game to match that to the extent that 1,500 young people are playing box lacrosse in the state today, John Arlotta estimated.

"That's an incredible feat coming from zero," he said. "That will have a tremendous impact on our attendance over time as these kids grow up."

Neil Stevens' NLL 2014 Season Preview (in projected order of finish)

NLL East Preview

1. Rochester Knighthawks
2. Minnesota Swarm
3. Toronto Rock
4. Buffalo Bandits
5. Philadelphia Wings 

NLL West Division

1. Edmonton Rush
2. Calgary Roughnecks
3. Vancouver Stealth
4. Colorado Mammoth
» Where are the Americans? 

Without TV deals to fill NLL coffers, the majority of the franchises struggle to break even, which is why some critics say lacrosse will never be more than a fringe sport. Arlotta disagrees.

"The league has been stable the last couple of years," he said. "There are more arrows pointing up than down right now.''

The Swarm's immediate goal is to increase season ticket sales to 4,000 from last season's 2,500. Would Arlotta shutter the franchise if they don't reach it?

"Not at all," he said. "We don't make short-term decisions. Our first five-year plan didn't get us where we want to be and now we have a new five-year plan. The 4,000 isn't going to get us to break even, but it'll show progress. Any business wants to see progress.''

Minnesota averaged 8,741 fans in eight home games at Xcel Energy Center during the 2013 season, ranking fifth among nine NLL teams. (Colorado and Buffalo, annually the league's highest revenue-producing franchises, averaged more than 15,000.) Breaking the 10,000 barrier for home attendance is a tough slog in the NLL. The Swarm drew their best crowds in their final two home games with 10,167 and 12,214.

"I'm very bullish on the league," Arlotta said. "I'm really excited about the new CBA. We've created a stable labor situation that will help bring other teams into the league. The changes we've been making have created tremendous excitement. Fans who get into it absolutely love the game. Now we're asking our fans for help, and we've been getting a favorable response."

Back on the Floor

Schuss wants to be part of Minnesota's next evolution.

"It's an unbelievable feeling,'' he said of being the No. 1 pick. "Growing up in a lacrosse community [in Delta, British Columbia] and looking up to players and following pro lacrosse for so many years, it's a dream come true."

The Swarm will need him to produce immediately, given Benesch's departure.

"I really don't see there being too much pressure," he said. "I do know that I need to step up and be a player who can supply goals. That's why I'm working so hard to get ready."

The Swarm also will benefit from the return of Andrew Suitor, a defender and the 2012 NLL Transition Player of the Year. Suitor played in five games last season before suffering a season-ending knee injury in a game against Edmonton.

"It's hard to watch the game you love being played by others, when all you can do is stand on the sidelines," said Suitor, who has worked with multiple trainers to be ready for Minnesota's opener Dec. 28 at two-time defending NLL champ Rochester. "I can't wait."

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