When said forthcoming bid has some substance to it, we can hang our hats on it. At this point no one even knows what the amount of the offer is going to be, yet it is being treated as fait accompli? Why is that?
Nashville sale thread--Leipold PULLS OUT of sale, Balsillie's bid OUT
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When said forthcoming bid has some substance to it, we can hang our hats on it. At this point no one even knows what the amount of the offer is going to be, yet it is being treated as fait accompli? Why is that?
Ballsille isn't even out of it completely yet it's been stated. Talks can resume at any moment. The Kansas City group said he doesn't want the franchise. There's no savour. Let's be honest here, hockey shouldnt be in Nashville. Leopold warned the fans last year and the year b4 if they didnt step it up the team would be sold. They didn't care, now since their on the verge of losing it their all trying to make it work. Give me a break!
This is all so eerily familiar to me with the Grizzlies. They were originally sold to Bill Laurie. He came up here and said "what a great day for St Louis!" which was met with stunned silence. Stern hated Laurie for some reason (and was against a team in St Louis) and the deal was blown. Hooray for Stern, right?
A local group was trying to get a consortium together to buy the team but before anything could happen Michael Heisley (sp?) popped up. He bought the team, said he loved Vancouver and was going to give the city a real chance. A few months into the season he said "I've changed my mind" and the most unseemly bidding war from US cities for the franchise started (and believe me, there wasn't an ounce of sympathy from them for Vancouver - and the comments were pretty much the same as those levelled against Nashville now). The truth of the matter was, the franchise was dead in the water as soon as the owner wanted out.
History repeats itself, again.
SoCalPredFan
Registered User
Let's look at the actual numbers, as well as the context for a minute .....
According to ESPN, since 2000:
http://sports.espn.go.com/nhl/attendance?year=2007
2000-01 18 Nashville 15,755 93.3 (non playoffs)
2001-02 26 Nashville 15,501 87.2 (non playoffs)
2002-03 30 Nashville 14,698 82.9 (non playoffs)
2003-04 28 Nashville 14,922 83.9 (lost first round)
2004-05 LOCK OUT -- NO SEASON
2005-06 25 Nashville 15,280 85.6 (lost first round)
2006-07 23 Nashville 15,580 87.1 (lost first round)
####
The context:
1. The first two years, 1998-99 & 1999-00 are not listed. It would be interesting to see these years as well. 01/02 is the third year, and attendance is still pretty high (93% capacity) despite the lousy team.
2. 01/02 fell less than 2% from 00/01. The Preds were a bad team, 3 years removed from expansion.
3. 02/03 fell just over 5% from 01/02. Again, Preds were bad, now 4 years removed from expansion. This was the low point for the Preds from a support standpoint, as they finished last in the league in attendance.
4. 03/04 sees a slight increase (1.5%) as gritty team makes first ever playoff appearance and plays well against Detroit before losing in the first round. Lots of momentum heading into next year ....
5. Lock out happens. Kills ALL momentum.
6. In 05/06, Despite the lock out the year before, team is good and sees 2% increase in attendance from 03/04. Another first round loss (with only 1 win) frustrates fans.
7. In 06/07, team battles for Presidents Cup most of the season, sees another 2% jump from 05/06, only to collapse in the first round of the playoffs yet again. However, playoff tickets for the SJ series sold out for every game, in under 17 minutes. Lots of momentum heading into 07/08.
8. Interesting to point out, only ONCE in their entire history has Nashville finished at the bottom of the league in attendance (02/03). And since the lock out, they've been 25th and 23rd in the two years.
9. I do not have the "paid" attendance numbers. If there is a way to produce these numbers, we can analyze the % increase/decrease year-to-year.
###
My opinion:
This team has NEVER advanced past the first round of the playoffs. Any true hockey fan knows that it's the playoff hockey that really energizes a fan base and creates buzz and excitement around town. The city of Nashville has yet to experience a true playoff atmosphere past the first week of the playoffs. You saw last year with the 17-minute ticket sell-outs that the fans were ready to go into a frenzy for the team ---- and San Jose crushed us a second straight time.
Conversely, you've seen the difference in markets like Carolina and Tampa when the team goes deep into the playoffs (and in those cases, won the cup).
Secondly:
This team has played EIGHT seasons. EIGHT! For 6 of the 8, they've finished with over 15k in attendance. Since the lockout, they have moved steadily up.
All of this has happened despite VERY LITTLE corporate support. There are reports of Leopold being "blacklisted" and "disliked" in the business community, which may play a part in the lack of corporate support.
But --- the bottom line:
This team has played 8 seasons in a market that had 0 high school teams and very little hockey exposure (minus a few minor league teams). They are not the "worst" in the league in terms of attendance and are on the upswing overall. Furthermore, without escaping the first round of the playoffs, the city has yet to experience the real thrill and fever of playoff hockey, which translates into a stronger and deeper fan base thereafter.
-Tom
According to ESPN, since 2000:
http://sports.espn.go.com/nhl/attendance?year=2007
2000-01 18 Nashville 15,755 93.3 (non playoffs)
2001-02 26 Nashville 15,501 87.2 (non playoffs)
2002-03 30 Nashville 14,698 82.9 (non playoffs)
2003-04 28 Nashville 14,922 83.9 (lost first round)
2004-05 LOCK OUT -- NO SEASON
2005-06 25 Nashville 15,280 85.6 (lost first round)
2006-07 23 Nashville 15,580 87.1 (lost first round)
####
The context:
1. The first two years, 1998-99 & 1999-00 are not listed. It would be interesting to see these years as well. 01/02 is the third year, and attendance is still pretty high (93% capacity) despite the lousy team.
2. 01/02 fell less than 2% from 00/01. The Preds were a bad team, 3 years removed from expansion.
3. 02/03 fell just over 5% from 01/02. Again, Preds were bad, now 4 years removed from expansion. This was the low point for the Preds from a support standpoint, as they finished last in the league in attendance.
4. 03/04 sees a slight increase (1.5%) as gritty team makes first ever playoff appearance and plays well against Detroit before losing in the first round. Lots of momentum heading into next year ....
5. Lock out happens. Kills ALL momentum.
6. In 05/06, Despite the lock out the year before, team is good and sees 2% increase in attendance from 03/04. Another first round loss (with only 1 win) frustrates fans.
7. In 06/07, team battles for Presidents Cup most of the season, sees another 2% jump from 05/06, only to collapse in the first round of the playoffs yet again. However, playoff tickets for the SJ series sold out for every game, in under 17 minutes. Lots of momentum heading into 07/08.
8. Interesting to point out, only ONCE in their entire history has Nashville finished at the bottom of the league in attendance (02/03). And since the lock out, they've been 25th and 23rd in the two years.
9. I do not have the "paid" attendance numbers. If there is a way to produce these numbers, we can analyze the % increase/decrease year-to-year.
###
My opinion:
This team has NEVER advanced past the first round of the playoffs. Any true hockey fan knows that it's the playoff hockey that really energizes a fan base and creates buzz and excitement around town. The city of Nashville has yet to experience a true playoff atmosphere past the first week of the playoffs. You saw last year with the 17-minute ticket sell-outs that the fans were ready to go into a frenzy for the team ---- and San Jose crushed us a second straight time.
Conversely, you've seen the difference in markets like Carolina and Tampa when the team goes deep into the playoffs (and in those cases, won the cup).
Secondly:
This team has played EIGHT seasons. EIGHT! For 6 of the 8, they've finished with over 15k in attendance. Since the lockout, they have moved steadily up.
All of this has happened despite VERY LITTLE corporate support. There are reports of Leopold being "blacklisted" and "disliked" in the business community, which may play a part in the lack of corporate support.
But --- the bottom line:
This team has played 8 seasons in a market that had 0 high school teams and very little hockey exposure (minus a few minor league teams). They are not the "worst" in the league in terms of attendance and are on the upswing overall. Furthermore, without escaping the first round of the playoffs, the city has yet to experience the real thrill and fever of playoff hockey, which translates into a stronger and deeper fan base thereafter.
-Tom
kdb209
Registered User
- Jan 26, 2005
- 14,870
- 6
As has been mentioned several times in this thread, you can make some inferences on paid attendance in '05-'06 and '06-'07 from the league comp and gate numbers leaked by the Globe and Mail:
http://www.theglobeandmail.com/v5/content/pdf/NHLweb.pdf
The avg number of comped tickets dropped from 1815/gm in '05-'06 to 1718/gm in '06-'07. Deducting those numbers from the attendance numbers above gives a good estimate of paid attendance - paid attendance increased from 13,465 in '05-'06 to 13,862 in '06-'07.
The increase in paid attendance happened despite a 16.1% increase in ticket prices - yielding a 19.9% increase in gate revenues per game.
These are very compelling arguments but they really could be made about almost any franchise that has been moved in any sport. The truth of the matter is that modern sports is dominated by billionaries and it's at their descrition where teams end up, regardless of the local community. The Grizzlies - the worst team in NBA history - still had a core following and good corporate support. Didn't matter. No local billionarie wanted to buy them.
The "anti-toronto" sports fan? - my guess is 90% of hockey fans in southern ontario (at least the area from which hamilton/cambridge will draw most of their season ticket holders from) are leaf "died in the blue wool" fans. yea, some of those leaf fans might buy seasons tickets just because they like hockey and can't get them at the ACC, but i think you are overestimating the number of "anti-toronto" and in particular "anti-leaf" fans out there. i've been a blackhawk fan for over 40 years (yea i know they've sucked for the past decade) - i hate the leafs, but i'm not going to change allegiance to the blackberries just because they play nearby - i probably would go to the games the hawks play there & perhaps a couple more, but that is it.
the leafs have legions of fans based on tradition passed down from generations - it certainly isn't because of their play on the ice the past 40 years - sittler (from the waterloo area) is still wildly popular because he played for the leafs 3 decades ago! - gilmour is still regarded as some kind of hero for his efforts in the early 90s even tho they didn't even make it to the finals! competing against that kind of tradition and mindset is not going to be trivial by any means, especially if MLSE starts to get their management act together for the hockey team like they did with the "basket case" raptors (sorry couldnt' resist) of just one short year ago.
none of those teams is close (or big) enough to threaten taking away dollars from the leafs - ever been to HSBC when the leafs are in buffalo? - almost half the crowd is toronto fans even tho buffalo has dominated toronto on the ice over the past decade.
hamilton with a rich owner will be a completely different story - that is a direct threat to leaf dominance right in the heart of leaf country (ie. southern ontario) - the pie isn't going to get bigger with another nhl team moving here - it is going to have to get carved up for hamilton/cambridge to be financially viable - leafs will do their utmost (& already are from what i can tell), to make life very difficult for a new brazen would-be owner who wants to eat their lunch. and if the leafs ever get their act together in management & on the ice, hamilton/cambridge will have a very tough time competing on & off the ice for the hearts & minds of disgruntled leaf fans...
think rangers vs. islanders for a good comparison. even tho the islanders had a dynasty & won 4 cups in 50 fewer years than the rangers have been around in winning their 4 cups, the rangers are the most popular hockey team in the new york metropolitan area by a wide margin & there is nothing on the horizon that will change that imo.
Fourier
Registered User
I admit up front that in what I am about to write I am pulling numbers
out of the air since there does not seem to be any way of getting
an accurate value for almost anything in this process. If you want to disagree, fire away.
Assume that Balsillie was to finance $190 of the purchase price. If Leipold is currently
financing $55 million, then at 7% over 25 years the carrying cost of
the incremental financing alone would be about $11 million a year. If we assume that
the current revenue excluding the revenue sharing is $46 million then the Preds
would have to increase direct revenue by 25% under constant costs to make up the
extra financing, never mind to bring the franchise into the black. The "good" news
is that costs seem like they will substantially decrease. However, if revenues
increase substantially revenue sharing will drop. This makes the $238 million
purchase price with a substantial portion being financed a significant barrier to
turning the Preds into a profitable team in the short run.
It also shows why the local bid has a somewhat better chance of being succesful
than it might seem at first glance. With equity reported at $100 million+ and with a
home town discount to say $180 million it is very possible that the proposed local
ownership group will face only a slight increase in carrying costs, say 1-2 million.
How do the Preds turn this around? It will be tough. Pred supporters have suggetsed
that the teams losses were about 13.5 million per year over the last two years. If
Kariya and Forsberg don't sign and if the cost of replacing the players who have left
averages about $600k, then the Preds could see a salary saving of close to $8 mil
this year. I will add in $3 mil for the naming rights. (This is very speculative since
I could not find confirmation of the actual number and I do not know if any
of the reported $9 mil paid to the Preds to end the previous deal was included
in the revenue of the last two years. I understand that the name did not change
until February of this year). Lets say that the ticket drive is very successful and that
there are an additional 1200 tickets sold that together with ancillary spending each
generate $100 per game. This gives about $5 mil more. Add this up and you
are actually $2.5 mil on the positive side. However, adding $8 mil in revenue
could cause a clawback in revenue sharing and with added costs due to
inflation I will take back the $2.5 million so we are now even.
However, we have not covered any of the carrying costs. The scenario
assumes a substantial increase in season tickets which I think will happen.
But it also assumes few if any losses on the walk-up side. The Preds
without Timonen, Hartnell, Kariya, Forsberg and Vokoun are not a
lock to compete for the Presidents Cup. They are a team with
a $31 million dollar payroll in a league with a cap of about $48 mil.
Moreover, next year almost all of the young, fairly inexpensive
core have contracts that run-out. Much of the salary savings could
be eroded just to stay pat. To compansate revenues would likely
have to increase by more than 15% when you factor in another
potential decrease in revenue sharing associated with higher overall
revenues.
Balsillie would still be running into a major cash-flow issue. I am not so sure
how long he (or any absentee owner) would be willing to put up with this
in Nashville. The proposed local group might be facing less of a burden because
of greater equity. Still, my concern would be the make-up of such a group and its
sensitivity to cash calls. This was a touchy point with Edmonton's EIG. Many of the
group did not seem to interested in the prospect of countinualy pumping more money into the team.
Last edited:
Does anyone know if the Preds reduced ticket prices in any of the years immediately before the lockout and in the first post-lockout year? That is a significant increase in avg ticket price and thus revenue, however it would be nice to know if the trend has been positive over any significant period of time.
I can state that ticket prices were reduced for the first year post-lockout (I believe back to "day one" prices), being a partial package owner.
David Singleton
Agree that you've developed a nice argument with the corresponding data provided to see how you've derived your conclusions.
I cannot stress how surprised I was that Leipold pulled the trigger this year. Like you said, the team really seemed to be building momentum and certainly was clearly on its way to contending for years to come. A great pipeline of young players was available, and some very good UFA signings (not sure about Arnott, but hey, no one's perfect) were made to raise to the next level. As a Wings fan, I know I was glad to have another good team in the division seeing that I had season tickets (and I don't feel the value is there for nearly 40%!!! of my home dates now....even w/St. Louis on the rebound).
Leipold wants out. He doesn't want the Preds in Nashville and he doesn't seem interested in being the guy to move the team himself. I agree that 8 yrs is not enough time to really know with 100% certainty that a franchise will fail-- especially as you guys say that Leipold burned a few bridges in the corporate neighborhood. Yet his expectations appear to be what is driving this. These expectations were not met. To those of us analyzing this, we may be able to say that his expectations then were unrealistic. Did he believe that one could start from scratch in an untested market and have financial "success" (as in no losses) within 10 years? What was he sold on when he bought into the league? Why did he buy an expansion franchise? Many of us have pointed out that the odds of winning a cup - if everything is equal - is 1 in 30 years and everyone takes turns. If winning the Cup is the only way to gain acceptance in newer markets, I can't say that bodes well for the league in general then.
We can build all the cases we want about the Preds' potential viability in Nashville, but someone with deep pockets has to believe that too, and they have to be willing to lose some money until the team can stand on its own. The real problem here is the ownership, perhaps being too impatient or to unrealistic about how this would go... but now that we are here, you have to find someone else who's willing to put their millions into it. I know there's a group bid in the works, so let's see if that eventuates into anything substantial, and if they're any more willing to put money into the franchise that apparently Leipold is not.
Thanks, David. Do you know if the current avg ticket price of ~$40 is the highest it's ever been in Nashville? Or if the change from 2005-06 to 2006-07 was basically a jump back to pre-lockout prices? (Not mutually exclusive conditions.
)Thanks, David. Do you know if the current avg ticket price of ~$40 is the highest it's ever been in Nashville? Or if the change from 2005-06 to 2006-07 was basically a jump back to pre-lockout prices? (Not mutually exclusive conditions.
Off the top of my head, I do not.
After doing some real work (read: what I'm paid to do), I'll research that during my lunch hour.
David Singleton
PredNation.com
Northern Dancer
The future ain't what it used to be.
Egil
Registered User
So, now that Balsille has gotten the Nashville Corporate community on board with the Prefs, and perhaps gotten a local ownership group to come forward, what team is next on the needs help list? Balsille is doing a great job of being the NHL's boogeyman when a market needs help.
I never disagree, I just dissect!
Which I believe is the reasonable basis for the conclusion that Balsillie really doesn't care, and doesn't have much interest in staying in Nashville. I think most people have accepted that. I said Leipold was the wild card, in the sense that he decided which sale is more likely (assuming Balsillie has a strong case)... Leipold would probably prefer the extra $60 MM if he could get it (assuming sale prices of $180 vs. $238 MM). Absent that, the local bid may be as good as it will ever get IF it does happen. It also should indicate a bit of an overvaluation from JB and perhaps others if business metrics are any criteria of significance....
I think some people are confusing the buying and selling side (not you). The buyer has to decide what price is acceptable, how they finance that, and what to expect over the course of the ownership run. Once Leipold closes, he's done. He cashes the check, and goes back to Wisconsin never to be heard from again (and I doubt he accepts any deal where he has to finance the sale himself if he has any option not to do so).
I think the additional $100 per game for an additional 1200 STH's is a bit high. Some may only buy a soda and a hot dog, while others will buy the entire keg. Not everyone buys merchandise, and certainly not at every game, so..... The closest figure available from the NHL is from Levitt where these extras are all lumped into the "In-Arena" category. Generally that runs about 50% of the Gate Receipt portion for the league as a whole. Maybe someone else has better numbers? Team Marketing is a bunch of jibberish that tracks the cost of attendance for a family of four. This includes: four average-price tickets; four small soft drinks; two small beers; four hot dogs; two game programs; parking; and two adult-size caps. If you divide that by 4, it seems you get the 40-50% additional revenue beyond the avg ticket price.
Or they continue to do the same, rely on cheaper, younger talent similar to what the Capitals are doing. Leonsis says he won't spend on significant UFA's until the kids on the team are mature enough to carry the team further. I'm not familiar enough with the Preds prospects and depth charts to comment further. As for revenue sharing, it is a bit of double-edged sword. A team has to increase revenues quite significantly in order for it to be worth giving up the guarantee of a revenue sharing check. I know the CBA has some protective measures built into it regarding how much growth they have to show, but if a team just beats the league average (which may be as low as 2-3 %), they still qualify at 100%. As long as they are in the bottom half of revenue generators, they'll get revenue sharing. Their own investment into building a winner has to have the promise that they can make enough of a leap to risk losing the revenue sharing portion. Some may decide that cutting costs and spending to the floor is more lucrative than the alternative.
I also am not sure if anyone covered how the Preds turn their operation into the 60:40 corporate:individual support template required to make a go of it in the modern NHL?
Crazy theory here, but maybe Liepold is making the market seem a bit more untenable than it actually is?
I think we can all (or most of us) agree that Ballsillie is vastly overpaying for this franchise.
Could this not be similar to a situation where, you live in a $200k house. You like your house and have no plans to move. You would like to make some improvements. But, some guy knocks on your front door one day, out of the blue, and offers you $1 million for your house because he just wants it and he has that money to spend.
Not only would you jump at that offer, you'd probably fight tooth and nail to make sure you get it done.
One of the key provisions of the agreement is the Powers Management deal, where Power Mgmt (and Leipold indirectly) received quite a bit of revenue from the Arena.
Not saying he didnt lose any money, but 70 million just seems really high to me when you consider the Powers Management deal, and couple this with the fact that he floated no intentions of selling anything but a small percentage of the team until Ballsillie's offer came around blew everyone away, maybe, just maybe, we're not really getting the whole picture of the financial viability of NHL hockey in a growing market like Nashville.
Just kicking around some thoughts this morning.
I think we can all (or most of us) agree that Ballsillie is vastly overpaying for this franchise.
Could this not be similar to a situation where, you live in a $200k house. You like your house and have no plans to move. You would like to make some improvements. But, some guy knocks on your front door one day, out of the blue, and offers you $1 million for your house because he just wants it and he has that money to spend.
Not only would you jump at that offer, you'd probably fight tooth and nail to make sure you get it done.
One of the key provisions of the agreement is the Powers Management deal, where Power Mgmt (and Leipold indirectly) received quite a bit of revenue from the Arena.
Not saying he didnt lose any money, but 70 million just seems really high to me when you consider the Powers Management deal, and couple this with the fact that he floated no intentions of selling anything but a small percentage of the team until Ballsillie's offer came around blew everyone away, maybe, just maybe, we're not really getting the whole picture of the financial viability of NHL hockey in a growing market like Nashville.
Just kicking around some thoughts this morning.
Fourier
Registered User
Actually, I completely agree. I was trying to be as generous as possible to
compensate for potential revenue streams that I have not considered.
I also did not say that these numbers assume at least the same number
of freebies as in past years. Freebies buy beer but empty seats do not
so it is somewhat ironic that replacing a freebie by a paying customer
does not return full benefit.
Sotnos
Registered User
These are all things I'd really like to hear the answers to. Did Leipold go into this with both eyes open in the first place? Did the NHL? I really wonder.
While it certainly doesn't hurt, who is saying it's the only way or what evidence is there to suggest this? LA hasn't won a Cup, yet they're at 90%-95% capacity and seem to have a very strong following. Tampa was having an upward trend in attendance & finances before they won anything, similar to Nashville now. Growing a fan base takes time, stable ownership & market that's not over-extended with sports teams already, from my observations. A little winning never hurt anyone though.
Fugu, a group of influential business leaders has put together a group to help grow the corporate side of it. They are actually doing this indepedent of Predators, and are targeting a growth of 3000 corporate tickets and increasing the Predators sponsorship. The people they have on the board are actually Nashvillians, and know more how to connect to this areas businesses so I do have faith.
SoCalPredFan
Registered User
More local press regarding the community stepping up to sell tickets:
http://www.nashvillepost.com/news/2007/6/27/franklin_business_jump_in_to_save_preds
I would be SHOCKED if the Preds didn't hit 14k paid this year.
-t
http://www.nashvillepost.com/news/2007/6/27/franklin_business_jump_in_to_save_preds
I would be SHOCKED if the Preds didn't hit 14k paid this year.
-t
And who made you the god of hockeyism?
Just because you and some others are ignorant elitists doesn't mean a certain city "shouldn't have hockey".
Some people could really use a life. If you spend every waking moment fretting about whether a city has hockey or not, it's probably a good sign that you should point the barrel of your gun at your head and pull the trigger already.
So Nashville gets to keep their team, big whoop. Let's all have hissy fits like 4 year old girls.
Good luck with the team, Nashville fans and ENJOY SOME HOCKEY. Something that most people around here seem to forget to do. It's just a game.
nomorekids
The original, baby
Excellent post. Sums up pretty much all I have been thinking about those types of comments.
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