Are NHL teams a bad investment??

Discussion in 'Fugu's Business of Hockey Forum' started by vanlady, Nov 17, 2004.

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  1. vanlady

    vanlady Registered User

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    If NHL teams are such a bad investment why do millionaires and billionaires still buying them?

    Tommorow morning at 10pst the announcement that a 49% stake in the Canucks will be sold. The new owner is rumored to be the majority owner of EA, that's right the guys who make NHL2005. The killer about this deal, it is only for the team, not the arena, the arena is owned by Orca Bay.
     
  2. gr8haluschak

    gr8haluschak Registered User

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    Do you pay attentian to the world of hockey ? If the argument that the Cannots being sold proves that NHL teams are not bad investments I have to question your whole basis on that idea. How long have the 'Nucks been up for sale ? what about the other teams that have been up for sale such as the Ducks, and is Tom Hicks not wanting to dump the Dallas Stars as well ? how about teams like the Oilers and Flames who needed multiple owners to buy them, the reason they were bought - to keep the team in Edmonton/Calgary, even those owners have admitted that. If a NHL team was such "great" investment, no actually a decent investment then owners would be busting down the door to by these teams, and in case of a team likethe Ducks, moving them to a better market.
     
  3. agreed. the canucks were rumored to be put on sale by mccaw for awhile before they were actually sold, and this is a team that is winning and making a profit.
    and i believe (although i have no proof to back it up, its just my personal opinion) that when the senators and sabres were sold, bettman must've promise some sort of cost-certainty in the next cba. otherwise, why would anybody buy those teams, specially the sens, if they are one of the top teams in the league and still lose money, who'd buy them?
     
  4. vanlady

    vanlady Registered User

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    Since the day McCaw bought them, however he has been so selective that he has discounted 15 prospective buyers. Here is an article that shoot you in the foot over the Hicks arguement. According to Hicks it had nothing to do with the economics of sports but the economics of the country that had the team up for sale.

    http://www.dallasnews.com/sharedcon...s/stories/050403dnspostarshicks.1ca06a94.html

    As to the Mighty Ducks, Disney turned down $50 million from Howard Baldwin (yes that Harold Baldwin who ran the Whalers and the Penguins into the ground) who tried a lowball offer.

    The problem with the Ducks is that there is a fairly hefty termination fee and notice provision on the arena lease if you wanted to move the team. The Ducks would need to give Anaheim officials two years' notice on their intention to move, plus pay damages for early lease termination.

    Baldwin wants to move the team to Kansas City and to do so would require a hefty payment plus a two year wait so he tried a discounted offer. Fortunately even Disney is not that stupid. The last thing the NHL needs is Baldwin back in the ownership ranks. He makes Mad Mike Milbury look like a raving genius.

    Comcast was interested at one point in picking up the Angels and Ducks in a package but since they own the Flyers they could not complete.

    Here is what the Sports Business Journal had to say abput the value of the Ducks:

    Quote:
    Normally the Ducks, launched by Disney as an expansion franchise in 1993 and named after a company movie, would fetch between $100 million and $125 million, Phillips said. But with the NHL's weak economic model and uncertain labor future, the team might go at a discount.

    Gordon St Denis, an independent sports investment banker who used to work for Lehman and is now advising two buyers on NHL purchases, agreed.

    “At this time a slight discount is being applied because of the uncertainty related to the CBA," he said.


    Forbes estimate of $110 million falls in that range.
     
  5. vanlady

    vanlady Registered User

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    Actually if the rumors are true Trevor Linden guarenteed has an owner on the NHLPA side. Both of the guys being tossed around are very good freinds of Brendan Morrison, top line center and union rep. Just reported on Global, Aqualini, founding partner in the Maple Ridge Wetlands project with Brendan Morrison.

    I do beleive that John McCaw just very publically flipped the bird at Garry Bettman.
     
    Last edited: Nov 17, 2004
  6. tantalum

    tantalum Registered User

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    How do you figure that? McCaw owns what has been one of the most vocal organziations for some kind of cost certainty (as well as better deals from governments) and he retains majority ownership at this time. So the new guy is friends with some hockey players. A rich local guy friends with other rich local guys. Who would have thought that could happen? Do you not think Gretzky isn't friends with some players? How about Mario? Do you think the wealthy individuals that own the Oilers don't have atleast some of their members being good friends with players? The bottom line is this guy is a business man and he's not going to run up big salaries just because he happens to know people who belong to the NHLPA.
     
  7. SENSible1*

    SENSible1* Guest

    Vanlady

    Do you even read the quotes and articles you post?
     
  8. triggrman

    triggrman Registered User

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    That's what I was thinking.
     
  9. vanlady

    vanlady Registered User

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    No John McCaw has not been. As a matter of fact our GM refused to "endorse" a cap right after the lockout. I suggest you check Nonis's comments. Rumors out in the last few weeks suggest it is Brian Burkes veiws on a cap that got him canned. Oh and the Canucks are in the position there in because of smart business, why would they want a cap and revenue sharing, nobody helped John McCaw when our team was in the hole, our team dug themselves out.
     
  10. vanlady

    vanlady Registered User

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    The reason the economic model is weak is the lack of TV deals, who's problem is that? Did they say anything about player salaries? Noooo. Do they have revenue sharing? Nooo. That is causing the weak economics in the NHL, don't beleive me, I suggest you read anything by Steven Riche.
     
  11. triggrman

    triggrman Registered User

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    maybe you should read this big study Levitt did.
     
  12. vanlady

    vanlady Registered User

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    I have read it in depth with an economics professor (my sister), she almost choked. Oh and by the way, did you know that Levitt isn't even an accountant, hes an investment advisor.
     
  13. SENSible1*

    SENSible1* Guest

    And this is relevant because Levitt singlehandedly wrote the report, right?

    Is your sister an accountant?
     
  14. SENSible1*

    SENSible1* Guest

    The reason the economic model is weak is because a dispraportionate % of revenue goes to salaries. If the game wasn't given any TV coverage, but still generated a profit, it would remain a good investment.
     
  15. vanlady

    vanlady Registered User

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    No and she doesn't pretend to be, unlike Mr Levitt. Oh and just to give you some perspective, the Levitt report took 300 hours to write, that is 10 hours per team. When the accountants moved into Ottawa during the bankruptcy, it took them 3 weeks to finish the audit. Boy Levitt must have been real thourough.
     
  16. vanlady

    vanlady Registered User

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    Read the whole article, they compare the NHL to the NBA and NFL. As the writer puts it compared to these two the NHL has a weak economic model due to the lack of TV revenue, compared to the other major sports.
     
  17. vanlady

    vanlady Registered User

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    Oh and for those of you that think that the NHL is a weak investment. In 1996 John McCaw bought the Canucks for 100 million. Today he is selling 49-50% of the team for 130-150 million. That is more than doubling and close to tripling his investment in 8 years.
     
  18. chara

    chara Registered User

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    From Ottawa, I'm quite familiar with the Sens situation. Present owner Eugene Melnyk didn't buy the team conditionally on a new cost effective CBA.

    Guaranteed it will help him turn a small profit but Melnyk is a billionaire hockey fanatic. For example, he pays tens of thousands of dollars just to get satellite coverage of his junior team beamed into a small pub in the Bahamas. Melnyk has always maintained that he is willing to lose a few bucks, but just a few bucks. Moreover, there is no outstanding loan on the building or the team that couldn't be paid off in a heartbeat.

    Ownership in Ottawa could live with or without a new CBA. However, the financial model doesn't make sense and Melnyk has said that he is committed to fixing it.
     
  19. tantalum

    tantalum Registered User

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    Perhaps you should read things closer. I never said cap.

    Burke wasn't fired. His contract ran out...that is a HUGE difference from being canned. It wasn't views on a cap that that decision was made. It was a long cantakerous relationship with MacCammon, most likely the Bertuzzi deal, and money that Burke was commanding (when there was a baby Burke waiting in the wings with either Tambelini or Nonis). Burke has gone on record with his solution to the labour impass which btw is not a cap system but a luxury tax one. And yes they are in the position because of smart business...BURKE'S SMART BUSINESS.

    You like to talk about rumours a whole heck of a lot so rumour has it you're for the most part completely full of it.
     
  20. tantalum

    tantalum Registered User

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    Did you take into acoount his losses in majoity of those years? Did you take into account the building cost?

    You've seen the details hmmm? So enlighten us. Is it $130 mil for the team or the team and a share of the building? Given your bible (Forbes :rolleyes: ) has the canucks valued at $148 mil one of three things must be true. 1) He has bought part of the building built worth a substantial amount of money 2) He has completely lost his mind and overpayed by atleast 200% 3) Forbes is completely out to lunch on valuations.

    According to you Forbes is bang on so then it must be choice #2...the guys a lunatic who doesn't know how to do business.

    I don't think that's the case. I do know Forbes is usually out to lunch so my guess is #1. Hey I could be wrong but I'd be absolutely shocked if it was choice #2 and he paid full share price for a minority interest in the team. If he did it was done with some assurances or he is crazy.
     
  21. vanlady

    vanlady Registered User

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    Brian Burke wouldn't know smart business if it bit him in the butt. Dave Cobb is the business mind behind the Canucks, anyone in Vancouver will tell you that.

    Do you know what drove the relationship between McCammond and Burke? They got along fine for years until Bettman started making lockout noise. The Bertuzzi deal had nothing to do with it and both McCammond and McCaw have said that.

    Oh and at season ticket holder events Brian Burkes adnausium support of Bettman got real old, and as the season went along last year you could feel the chill develop between McCammond and Burke, by Ice and Dice it was absolutely arctic.
     
  22. dawgbone

    dawgbone Registered User

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    Does the name Lynn Turner ring a bell?

    If you read the report:

    a) It Should.

    b) You wouldn't make a comment that Levitt isn't an accountant.
     
  23. SENSible1*

    SENSible1* Guest

    Another aspect of the sale that is interesting.

    How were the parties able to determine the definition of revenue needed to calculate each parties share of future profits/losses?

    I thought this was an impossible task. HMMM...maybe the PA is just putting up a smokescreen to hide their greed and it is really possible for two parties to agree on a set of books for a franchise.
     
  24. tantalum

    tantalum Registered User

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    Of course it is. It comes down to one thing...unless the PA puts forth a reason to go through those revenue/expense discussions they aren't, quite frankly, eligible to discuss such things. If they want to assume some "risk", as minimal as it would be they have a say in such matters. This new owner didn't get to look at the books either until Orca Bay deemed they had firm interest from this guy.
     
  25. triggrman

    triggrman Registered User

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    vanlady do you know who Levitt is?
     
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