Ebitda

Discussion in 'Fugu's Business of Hockey Forum' started by GabbyDugan, Dec 17, 2004.

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  1. GabbyDugan

    GabbyDugan Registered User

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    One aspect of this lockout that I've wanted to know a little bit more about is why the Toronto Maple Leafs have "gone along" . I'm an Oiler fan, which naturally usually makes me a bit suspicious of the Maple Leafs anyways. However, even an Oiler fan has to be incredibly naiive to believe a one-size-fits -all lockout solution isn't going to simply reward the "small markets" for being small and punish the big markets for simply being big and rich. There has to be some kind of payoff for the Toronto Maple Leafs to give up $ 50 million in earnings.

    After all, they have no hope of keeping all their current players with a salary cap, and they would have to send a couple of the players in the $ 5 million range to teams like the Nashville Predators or Minnesota Wild or some other team that would have to raise their payroll to reach the salary floor. Toronto would have to contribute to any revenue sharing scheme year after year., meaning they would not only have to trade a guy like Mats Sundin (example only) to Nashville, they would still have to pay, indirectly, much of his salary

    Toronto would no longer be able to sign any UFA they felt like at any price. The Toronto Maple Leafs would be a generic NHL hockey team - a couple of "stars", a smattering of veteran journeymen, and a handful of eager but raw youngsters.

    Michael Grange, a writer with the Toronto Globe and Mail goes a step towards explaining the lockout in terms of "what's in it" for a team like the Toronto Maple Leafs.

    http://www.theglobeandmail.com/servlet/story/RTGAM.20041217.wxleafs1217/BNStory/Sports/

    "Industry insiders say the venerable franchise stands to forgo $50-million in earnings before interest, taxes, depreciation and amortization (EBITDA) if the National Hockey League lockout wipes out the 2004-05 season.


    But those with knowledge of the team and the workings of the MLSE board and Ontario Teachers Pension Plan's Merchant Bank — majority owners of MLSE at 58 per cent — suggest the organization might have another reason to encourage Bettman to stick with his guns than simply being loyal to the cause.

    When Teachers led a plan last year to streamline MLSE's ownership structure, one of the motivations was to make it easier for the two long-term institutional investors — the pension fund and TD Capital, which owns a 14-per-cent stake — to sell when the time was right."
     
  2. mudcrutch79

    mudcrutch79 Registered User

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    They probably figure that the cut in revenues due to revenue sharing is outweighed by the salary relief. If the place is going to be jammed anyway, what do they care if they have an average team?
     
  3. PecaFan

    PecaFan Registered User

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    The same reason the players offered 24%.

    A small loss now that will be more than made up in the future, when the cap forces salaries down. And remember, the NHL wants very little revenue sharing, unlike the NHLPA, which also helps them.
     
  4. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    correct, the league expects the players to bear the burden of supporting small markets, not other owners.

    although, TOR didnt mind taking the expansion money !

    dr
     
  5. IWD

    IWD ...

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    Neither did any other team in the league.
     
  6. In the long term, they will always sell out the ACC, with a team of stars or a team of scrubs.
    A salary cap, with the high prices that Toronto tickets will always bring, ensures HUGE profittability.
    And huge increase in the worth of the franchise.
     
  7. GabbyDugan

    GabbyDugan Registered User

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    Which, if I am reading this article correctly and in it's proper context, is the point the author is trying to drive home. If the revenue streams are maxed out and the equity value of the team is no longer going to grow by leaps and bounds, selling time is drawing nigh...

    The real payoff for Ontario Teachers Pension Plan's Merchant Bank is taking advantage of the increase in the value of the franchise (and, by the way, when did the OTTP get their own Merchant Bank? they sure have a mountain of assets).

    http://www.otpp.com/web/website.nsf/web/MajorInvestments

    At this point, running a hockey team and skimming off $50 million in earnings every year doesn't mean much to the OTTP Merchant Bank when the franchise can be sold for a huge profit and the proceeds from the sale folded into the bank's assets. Let the next owners worry about the quality of the product, but selling the team when the payroll costs are way low should make the sale a breeze.

    Something I've been wondering about in all of this is if we might see some dramatic structural changes in ownership of NHL teams . For instance, somewhere on a dusty shelf sits the Rod Bryden/John Manley plan to save the Ottawa Senators. It ultimately was scuttled by the Fleet Bank of Boston and CIBC, but it was a fantastic investment opportunity when combined with the huge tax breaks for wealthy Canadians who don't quite have enough assets to set up their own Income Trusts. I wouldn't be surprised to see the Ontario Teacher's Pension Plan Merchant Bank broker a similar offering when this lockout ends.
     
  8. thinkwild

    thinkwild Veni Vidi Toga

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    I thought it was a fantastic investment opportunity because of the tax breaks. The Snapple guy was close to partnering with Bryden, but in the end, his auditors couldnt approve it because they were an above board company that had rigid rules on investments. Was it Manley that actually called Fleet bank to presumably reassure them the tax situation was genuine?

    Getting cost certainty would seem beneficial if they were trying to sell franchises.

    But revenues maxed out? Id of thought they were currently bottomed out. Nashville, Atlanta, Cmb, Minn would seem to have a lot of revenue room available. Perhaps selling or relocating Ana or Car becomes easier though. Is cost certainty meant so that Disney doesnt lose out when selling?
     
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