Nashville sale thread--Leipold PULLS OUT of sale, Balsillie's bid OUT

[Fugu]

Were I NHL counsel, I would not be the slightest bit concerned about denying Balsillie and approving someone else with a lower offer even if those others also wanted to move the team. The NHL has no obligation to grant an NHL franchise transfer to Balsillie. They are not under contract with him, nor do they have a duty of care that might create an independent tort. They do not have to treat him fairly. They do not even have to give him a reason for denying his bid.

However there are two parties here, Leipold and the NHL. An owner has the right to own/operate his property without undue interference as long as he abides by the agreements he has accepted in becoming a member of the club (or as the majority rules which all accept as the guiding principle). In this sense, the agreement for the sale is between Leipold and Balsillie. Of course, the NHL has the right to review and approve any transfer of ownership only on the basis of clearly defined NHL rules. These cannot be vague and made up on the fly because such control would basically turn an owner into a silent partner. Yes, the NHL does grant franchises and may be able under extreme conditions to assume control of a team... yet let's not overlook who actually has their money in this. Basically 30 different individuals (or groups of individuals) who mainly will try to protect THEIR asset.

 

[Fugu]

Regarding revenue sharing, that is IMO a complete red herring, as I have mentioned elsewhere. IF Nashville does not receive revenue sharing, then the other teams get more, and perhaps a new team that was previously just outside the cutoff gets a revenue share. A higher revenue team would in fact raise the NHL's minimum revenue sharing commitment. TO's portion would not be lessened UNLESS a replacement team became one of the top ten revenue earners in the NHL, and even then it would change it only very marginally. Those who think that Hamilton would somehow save the Leafs and other teams revenue sharing dollars are barking up the wrong tree.

I'm not sure I follow your reasoning here. Nashville received the largest revenue sharing check of any NHL team last year. The revenue sharing program is supposed to transfer enough money to any team that is in the bottom half of revenue generators to bring them up to the midpoint of the cap. Certain teams are excluded based on the size of their market, regardless of their particular revenue situation. Of course if a low revenue generator all of a sudden leapfrogs to the top half or third, that does not mean that another team will require as much money. I guess I'm saying that an individual team's situation determines what revenue sharing is paid out vs. it being a very specific amount of money each year that HAS to be paid out. And as you know, the amount that can be paid out to any team in sequential years is benchmarked to their own performance vis-a-vis the NHL average for attendance et. al. per the CBA.

If a majority of teams generate enough revenue to be able to reach the cap midrange on their own.... the amount being paid into the revenue sharing plan should decrease, no?

 

[nomorekids]

Leipold has an intent to purchase agreement from Balsillie. The other group cannot get involved until Balsillie's offer is withdrawn/rejected (or whatever escape clauses he has built in are viable and executed).

the LOI expires June 30. If Leipold does not extend it or the board does not vote by then, any other groups are free to place competing bids.

Now, logic would assume Leipold would extend it...but given that he was not thrilled that Balsillie made NO mention of applying for relocation this summer at the time of the sale...maybe he'll be ticked off enough to listen to other offers. Leipold holds all the cards, and regardless of whether he lets the LOI expire, he could easily see what else is out there...and then go back to JB if the other offers aren't what he's looking for.

But the idea that the only way the bid can fall through is if the BOG rejects it or it's withdrawn from either side is inherently false, fyi.

 

[Fugu]

actually you're a little off here. real options do add value to homes. if a home sells because someone wants to knock it down and use the land for something more desirable (whether that be an addition to a neighbouring home, a set of townhouses or even an office tower) then the option exercised is likely exercisable nearby. thus this "real option" gets added to the price of any home in this area.

Certainly there are a few elements of belonging to a league that affect the value of all franchises. The fact that the supply is limited (there are only 30 teams) allows some value to be based on the 'worth' of the NHL as a whole (a collective of 30 teams generating a certain amount of revenue). The more revenue that comes from sources in which all 30 share equally, the more an individual team's value can be based on that portion. In the case of the NHL where the majority of a team's revenue is generated locally, the franchise value has to be based moreso on the team's individual economic attributes. The Predators value is clearly inflated at the moment because two parties were competing for the right to purchase the team with the intent to move it. Why should this sale make the Tampa Bay Lightning or St. Louis Blues increase in value by $100 MM?

 

[Proboscis]

I said I'm sorry but I must politely disagree. I don't think a fully refundable at any moment ticket drive gives a fair view of the picture.

But then again, a lot of people watched Al Gore's movie and believe everything in it %100.

In 1990, the season ticket deposits of $100 were not refundable in the event that Hamilton got a team. 13,000+ were sold in just a few days.

Also in 1990, Ottawa took in fully refundable $50 deposits over a much longer time span that the Hamilton sales campaign and wound up with a total number of about 7000, I believe.

 

[nomorekids]

I find it very unlikely that a group of people who couldn't be bothered to even watch the Predators would spend 140 million (since thats apparently whta the team is worth, so I'll gow ith that number) on a team thats lost something like 50 million since coming into the league.

You don't know who is involved, how much money they have, or what their involvement with the team is. I have an inkling, if the rumors are true...and I think you're underestimating how much power a third party could hold and how much of a bid they could generate. Remember, Nashville's situation has IMPROVED from year to year...there was no downward trend, and in most cases, an apathetic corporate market...especially in a market as diverse and affluent as the greater Nashville metro area...isn't an insurmountable obstacle. Leipold swears he did everything he could to get Nashville's big business players in on the action, but what exaclty did he do?

a) gave away tickets, as everyone does
b) had a few shoddily produced "GET YOUR BUSINESS INVOLVED!" tv ads
c) embarassingly had reps go door to door.

I think that Leipold\Violetta didn't have a clue, and shot themselves and their credibility in the foot once and for all with their absurd threats to black out playoff home games in 05-06 on local tv. Leipold's regime has long had a checkered reputation in the Nashville business community, going back to the first couple seasons(in which the team not only MADE money, but averaged well over 16K a game). It didn't help that he didn't even LIVE in Nashville(the Leipolds live in Racine, Wisconsin, if you didn't know) and had no personal connection to anyone in town. If the Ingrams, Frists, Wagners, Meech's...or any of the bigger corporations(Dell, Nissan, HealthSouth, etc) were to get involved, these are entities with VAST networks of contacts, positive reputations, and the ability to do what Leipold never could. The Predators aren't a lost cause for profit in Nashville, and I think that if this group is savvy, they realize that...and that they do have those variables in their possession to do what Leipold couldn't. Maybe they fail and end up selling down the road...but I think a local holding could do wonders for the team. Leipold even acknowledged that, back when he was looking for a local minority owner to sway interest over.

 

[Fugu]

the LOI expires June 30. If Leipold does not extend it or the board does not vote by then, any other groups are free to place competing bids.

Now, logic would assume Leipold would extend it...but given that he was not thrilled that Balsillie made NO mention of applying for relocation this summer at the time of the sale...maybe he'll be ticked off enough to listen to other offers. Leipold holds all the cards, and regardless of whether he lets the LOI expire, he could easily see what else is out there...and then go back to JB if the other offers aren't what he's looking for.

But the idea that the only way the bid can fall through is if the BOG rejects it or it's withdrawn from either side is inherently false, fyi.

I believe that everything I've seen says the purchase agreement can be extended if more time is needed, and that Balsillie has this option. The agreement is pretty binding on both parties as long as none of the out clauses either party has as an option eventuate. You see, Balsillie is putting time and money into a process that will allow him to buy the team. Leipold has taken the risk that the buyer is serious and has the means to purchase the team absent any disqualifiers, and has effectively removed the Preds from the market. All his effort now has to be fulfill his side of the agreement in order to make the sale.

 

[nomorekids]

I believe that everything I've seen says the purchase agreement can be extended if more time is needed, and that Balsillie has this option. The agreement is pretty binding on both parties as long as none of the out clauses either party has as an option eventuate. You see, Balsillie is putting time and money into a process that will allow him to buy the team. Leipold has taken the risk that the buyer is serious and has the means to purchase the team absent any disqualifiers, and has effectively removed the Preds from the market. All his effort now has to be fulfill his side of the agreement in order to make the sale.

Balsillie can request the extension, but the onus is on Leipold to extend it.

As for the "binding" nature of the LOI, it's really...not binding. Either party has full options to withdraw at any time, should something happen not to their liking. It'd be a breach of etiquette, but not illegal.

 

[william_adams]

Certainly there are a few elements of belonging to a league that affect the value of all franchises. The fact that the supply is limited (there are only 30 teams) allows some value to be based on the 'worth' of the NHL as a whole (a collective of 30 teams generating a certain amount of revenue). The more revenue that comes from sources in which all 30 share equally, the more an individual team's value can be based on that portion. In the case of the NHL where the majority of a team's revenue is generated locally, the franchise value has to be based moreso on the team's individual economic attributes. The Predators value is clearly inflated at the moment because two parties were competing for the right to purchase the team with the intent to move it. Why should this sale make the Tampa Bay Lightning or St. Louis Blues increase in value by $100 MM?

nobody is saying that there is a linear relationship between a single overpayment and another franchise's worth, but it does in general, increase the value of every franchise.

this is the second team he's tried to buy. it's a higher offer than he put forward for the penguins... there's inflation already.

furthermore, one has to assume that he is overpaying because he thinks that he can make more money in Hamilton than he could in Nashville. In the revenue sharing world that is the NHL, that does increase the value of every team

 

[Fugu]

I said I'm sorry but I must politely disagree. I don't think a fully refundable at any moment ticket drive gives a fair view of the picture.

But then again, a lot of people watched Al Gore's movie and believe everything in it %100.

A lot of people believed that Osama bin Laden and Saddam Hussein were buddies working on Nukes together with weapons grade uranium imported from Nigeria, so much so that a war was waged to the tune of $400 billion spent... and counting.

What on earth does that prove about Hamilton's ticket drive in case an NHL team shows up?

 

[Fugu]

Balsillie can request the extension, but the onus is on Leipold to extend it.

As for the "binding" nature of the LOI, it's really...not binding. Either party has full options to withdraw at any time, should something happen not to their liking. It'd be a breach of etiquette, but not illegal.

I politely will continue to disagree while I look this up. I do not believe this is an accurate portrayal of the situation. If people could withdraw from agreements whenever something came up that they didn't like... agreements wouldn't be worth all the attorney fees paid to draw them up. [cue GC or Wettie]

 

[nomorekids]

I politely will continue to disagree while I look this up. I do not believe this is an accurate portrayal of the situation. If people could withdraw from agreements whenever something came up that they didn't like... agreements wouldn't be worth all the attorney fees paid to draw them up. [cue GC or Wettie]

Think of an LOI in this case as being similar to an athlete "verbally committing" to the University of Michigan to play football. The LOI basically says, "some time soon, if all goes as planned, we will sign papers(binding) to get this sale underway."

To this date, the sale has not moved past the "Let's do it" stage. If you go on to a car lot and say, "I'll take this car!" you're not committed to pay for it until your name is on the bill of sale. Like I said, Balsillie could likely be very angry with Leipold if he backed out, but it is in his right to do so. Nothing is irrevocable yet, according to the discussion on XM this afternoon, at least.

 

[Fugu]

nobody is saying that there is a linear relationship between a single overpayment and another franchise's worth, but it does in general, increase the value of every franchise.

How much? The Ducks were sold for $75 MM, including a practice rink, while St. Louis was sold for $150 MM. The key here is that there was not a long list of suitors, and several factors to consider for each individual sale. As for the Pens...

this is the second team he's tried to buy. it's a higher offer than he put forward for the penguins... there's inflation already.

Inflation has nothing to do with it (the economic definition of price inflation due to the costs of inputs increasing). He bid as high as he needed to go in each case in order to find the seller's price. That's it!

furthermore, one has to assume that he is overpaying because he thinks that he can make more money in Hamilton than he could in Nashville. In the revenue sharing world that is the NHL, that does increase the value of every team

He's overpaying firstly because he was trying to outbid another prospective buyer. How high he was willing to go would be determined by his own expectations on how much money he could make (or lose or be willing to lose, etc.).

 

[nomorekids]

How much? The Ducks were sold for $75 MM, including a practice rink, while St. Louis was sold for $150 MM. The key here is that there was not a long list of suitors, and several factors to consider for each individual sale. As for the Pens...



Inflation has nothing to do with it (the economic definition of price inflation due to the costs of inputs increasing). He bid as high as he needed to go in each case in order to find the seller's price. That's it!





He's overpaying firstly because he was trying to outbid another prospective buyer. How high he was willing to go would be determined by his own expectations on how much money he could make (or lose or be willing to lose, etc.).

Worth noting as well, and something I wish more people realized.

238 million is not JUST for the Nashville Predators. It INCLUDES Leipold's other company, Powers Management, which has been fairly successful and profitable in its time in Nashville.

 

[Stanley Foobrick]

Canadian billionaire Jim Balsillie launched a ticket drive and ad campaign in southern Ontario today, in an effort to prove Hamilton has what it takes to become the future home of the NHL's Nashville Predators.
http://www.ctv.ca/servlet/ArticleNe...illie_hamilton_070614/20070614?hub=TopStories

Jim Balsillie wants to prove Hamilton is a viable NHL market.
http://www.tsn.ca/nhl/teams/news_story/?ID=210730&hubname=nhl-predators

Those and the various other reports saying the samething pretty much say it all. But don't stop coming here, I would never want anyone to leave the board, the reason they are here to see ideas and opinions.



I believe Balsillie's offer has to fall through first, and that isn't likely to happen.

I was actually looking for a quote of Balsillie or his representative saying, "I WANT this team in Hamilton", not a qoute from a TSN headline.

 

[Fugu]

Think of an LOI in this case as being similar to an athlete "verbally committing" to the University of Michigan to play football. The LOI basically says, "some time soon, if all goes as planned, we will sign papers(binding) to get this sale underway."

To this date, the sale has not moved past the "Let's do it" stage. If you go on to a car lot and say, "I'll take this car!" you're not committed to pay for it until your name is on the bill of sale. Like I said, Balsillie could likely be very angry with Leipold if he backed out, but it is in his right to do so. Nothing is irrevocable yet, according to the discussion on XM this afternoon, at least.

The better analogy that most of us would understand is the process of buying a house. When you make an offer to a seller, you have to give them a deposit, which they keep if they accept your price. The conditions of what you can do to get out of the agreement without giving up your deposit or suffering any legal action from the seller is spelled out in the contract. The seller also agrees to certain things including no longer being able to accept another contract that supercedes yours.... Time limits can be put on the process, however the reason that there is a delay certainly gets considered, and probably this is very clearly spelled out in the purchase agreement entered into between the two parties.

 

[Stanley Foobrick]

A lot of people believed that Osama bin Laden and Saddam Hussein were buddies working on Nukes together with weapons grade uranium imported from Nigeria, so much so that a war was waged to the tune of $400 billion spent... and counting.

What on earth does that prove about Hamilton's ticket drive in case an NHL team shows up?

Really simple, don't believe everything you read or are told. You your own brain to think things out for yourself. Not everyone is always telling you the whole story.

 

[nomorekids]

The better analogy that most of us would understand is the process of buying a house. When you make an offer to a seller, you have to give them a deposit, which they keep if they accept your price. The conditions of what you can do to get out of the agreement without giving up your deposit or suffering any legal action from the seller is spelled out in the contract. The seller also agrees to certain things including no longer being able to accept another contract that supercedes yours.... Time limits can be put on the process, however the reason that there is a delay certainly gets considered, and probably this is very clearly spelled out in the purchase agreement entered into between the two parties.

Nothing I have heard has put it that way. In fact, everything I've heard(and you can imagine, I've a vested interest in the situation, and I follow it pretty closely) says just the opposite. This is a handshake agreement, at this point.

 

[redwingz40]

Always remember when it comes to Leopold, the entire truth is never spoken, and the facts are twisted 90% of the time. Guy speaks with a forked tongue most of the time. Remember, they WONT tell the entire story because IF there is going to be a relocation, the Sonnet Center will be empty next season during Preds games. I dont know if moving another team to Ontario will work or not, but reading that if the sale doesnt go through, leopold may cut payroll, which will make the teams attendance drop along with that 110 point standing. I have some friends that are season ticket holders in nashville, so im hoping for their sake that this doesnt happen. Only thing they need to change is to create some new chants for section 303, the [insert goalies name] sucks and the [im blind im deaf I wanna be a ref] are so peewee league football. Get something new, plus it sounds stupid to chant someone sucks when youre losing.

 

[Seth Lake]

nobody is saying that there is a linear relationship between a single overpayment and another franchise's worth, but it does in general, increase the value of every franchise.

this is the second team he's tried to buy. it's a higher offer than he put forward for the penguins... there's inflation already.

furthermore, one has to assume that he is overpaying because he thinks that he can make more money in Hamilton than he could in Nashville. In the revenue sharing world that is the NHL, that does increase the value of every team

While I don't want to get into a long and drawn out debate (granted, I'm sure we will see it go there), I want to point out to you that one of the key differences between Pittsburgh and Nashville is that Pittsburgh has what could be considered the league's worst arena and an expiring lease (yes, I've been to Mellon Arena...was even there for the "fire" game against the Maple Leafs). On the other hand, Nashville has a very new and modern building with more luxary boxes and other amenties that is getting several major upgrades this summer free of charge. In addition, with the sale, Powers Management is being included and they run the day-to-day operations of the Sommet Center and receive revenue from all events at the building.

The purchase price for the Predators is also inflated due to the bidding war between the Balsillie camp and the KC group that saw Balsillie eventually elevate his bid to the $238 million range.

I think many of us can agree that each NHL purchase price is unique based on the circumstances surrounding the purchase. Anaheim was the last franchise to be sold and went for $75 million, Pittsburgh was being sold for what $175 million, Nashville is attempting to finalize a deal for $238 million, and even as we speak there is a bidder for Edmonton that I know increased his bid yesterday, but I know is far below the Nashville proposed purchase price.

I'm not saying that this purchase would affect the values of the other NHL franchises in any way. I don't know that answer and won't spectulate about that. My point is that the Nashville sale price is unique to the current market for the Nashville franchise. It does not have much to do with the Pittsburgh proposed sale price or whatever the next sale price of an NHL franchise will be. They are each valued based on their own merits.

 

[Fugu]

Really simple, don't believe everything you read or are told. You your own brain to think things out for yourself. Not everyone is always telling you the whole story.

My brain already told me it is a clever publicity campaign, aimed at several audiences. It also proves that a lot of people are interested in the idea, both in the area and apparently all around the rest of the hockey following world. He's building a prototype.

 

[GSC2k2*]

I politely will continue to disagree while I look this up. I do not believe this is an accurate portrayal of the situation. If people could withdraw from agreements whenever something came up that they didn't like... agreements wouldn't be worth all the attorney fees paid to draw them up. [cue GC or Wettie]

LOI's are on many (but not all) occasions not worth very much. As always, it depends on the wording. I have drafted LOI's which were merely "agreements to agree" (which are not worth the paper on which they are printed), LOI's with some teeth in them (ie they continued an express obligation to negotiate in good faith, or an agreement to agree based on certain express principles, such as "the price shall not be less than X", or an agreement to negotiate based on a draft agreement which was attached), and LOI's which included both binding and non-binding obligations and accordingly are much more worthwhile. It all depends on the stage to which the deal has advanced at the time of the LOI and what the parties are trying to accomplish with the LOI. Even with the realtively useless type of LOI described first above, sometimes they have a business purpose (rather than legal), in that they focus the parties on the deal and lend a sense of weight to the dealings that impacts on the sensibilities of the parties (it makes the negotiations "feel" like they mean more).

I have no idea where the Balsillie/Leipold LOI might be on this continuum.

 

[Artyukhin*]

Balsillie can request the extension, but the onus is on Leipold to extend it.

what about your free agents come july 1st?

 

[nomorekids]

LOI's are on many (but not all) occasions not worth very much. As always, it depends on the wording. I have drafted LOI's which were merely "agreements to agree" (which are not worth the paper on which they are printed), LOI's with some teeth in them (ie they continued an express obligation to negotiate in good faith, or an agreement to agree based on certain express principles, such as "the price shall not be less than X", or an agreement to negotiate based on a draft agreement which was attached), and LOI's which included both binding and non-binding obligations and accordingly are much more worthwhile. It all depends on the stage to which the deal has advanced at the time of the LOI and what the parties are trying to accomplish with the LOI. Even with the realtively useless type of LOI described first above, sometimes they have a business purpose (rather than legal), in that they focus the parties on the deal and lend a sense of weight to the dealings that impacts on the sensibilities of the parties (it makes the negotiations "feel" like they mean more).

I have no idea where the Balsillie/Leipold LOI might be on this continuum.

Now, obviously there could be confusion on the part of the media, but everything that's been said to this point leads me(and others over on the Preds board) to believe that this LOI is closer to the former than the latter.

I also don't think that it would make much sense for Leipold to automatically extend the LOI, if in fact there are other interested parties. If I think that KC or a group in Nashville has the potential to match or better Balsillie's offer, it's in my best interest to at least hear it out. Balsillie has committed himself to the point that his entire reputation demands that he give Leipold that liberty should he want it.

 

[Seth Lake]

what about your free agents come july 1st?

That's something that we all want to know and I don't think we'll have an definitive answer by July 1st other than if Leipold is still the owner, then he will have to set the budget as he sees fit.

On the other hand...Balsillie, through his mouthpiece Rodier, has said that there would be no budgetary restrictions and Poile would be free to spend up to the cap. Personally, I think that is lip service...especially if the sale is delayed and all the key free agents (particularly our own) are signed with other teams.