News Article: Forbes 2018 NHL Values - VGK up 15% in first year. Est. $180m in revenue

[LadyStanley]

The NHL’s Most Valuable Teams

Not a bad return.

But the most important team in the NHL may be its newest: the Vegas Golden Knights, which, in 2018, became the league's first expansion team to make the Stanley Cup finals in its debut. The Knights took in $180 million in revenue in the past year—the tenth highest in hockey—and $53 million in operating income, the fifth highest among the league's 31 teams. The Knights are now worth $575 million, 15% more than their expansion fee.

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[IceNeophyte]

The NHL’s Most Valuable Teams

Not a bad return.

The only fallacy here is that starting up the team only cost the expansion fee. I'll wild guess it was more like $550M, more like a 5% increase. Still respectable.

 

[BattleBorn]

The only fallacy here is that starting up the team only cost the expansion fee. I'll wild guess it was more like $550M, more like a 5% increase. Still respectable.

It's likely safe to assume that the vast majority of the additional costs were financed.

I've never read anything detailing it, but I assume City National wasn't just paid with cash.

 

[LadyStanley]

The expansion fee does not include the cost of building the practice facility neither.

So, they haven't included that asset in the value of the franchise either.

 

[IceNeophyte]

It's likely safe to assume that the vast majority of the additional costs were financed.

I've never read anything detailing it, but I assume City National wasn't just paid with cash.

Financing is considered an equal investment to cash, except that there is ongoing interest expense involved.

As far as the practice facility, it would be considered in the overall value of the organization, and therefore its expense should be considered as capital cost.

Finally, there is valuation based on revenue stream, which is what Forbes did, and valuation based on what the organization would command from a potential buyer, and I think, Seattle's $650M fee used as a benchmark, the real market value of the team is more in the 650 to 700 range, including all assets and the organization's minority stake in TMobile Arena.

 

[BattleBorn]

If financing came out as cash, the revenue figures included in most of these evaluations would be completely off.

Hell, Boston just threw $100MM into TD Center and somehow managed $36.8MM in income on $191MM in revenues with their $76MM or so payroll if we're to believe Forbes. That's prior to paying for staff, travel, etc.

 

[IceNeophyte]

If financing came out as cash, the revenue figures included in most of these evaluations would be completely off.

Hell, Boston just threw $100MM into TD Center and somehow managed $36.8MM in income on $191MM in revenues with their $76MM or so payroll if we're to believe Forbes. That's prior to paying for staff, travel, etc.

Because the $100M was a capital expense, it is recognized over the life of the improvements, like probably 20 years or longer. It only fits into the income statement equation as it is depreciated. Say, if it's 30 years, and their method is straight line, that would be expensed at $3.333M per year.

 

[BattleBorn]

Because the $100M was a capital expense, it is recognized over the life of the improvements, like probably 20 years or longer. It only fits into the income statement equation as it is depreciated. Say, if it's 30 years, and their method is straight line, that would be expensed at $3.333M per year.

Yeah, so the financing means it's not included in the initial inestment calculation. That was the point. We also know a good portion of the expansion fee was financed, so their entire calculation is weird when you see the 22% debt to value figure.

Either way, the $550MM investment isn't really real.

 

[Vegas Mac]

The NHL has an extremely underrated product in US sports media, but fans are recognizing said value in droves right now. I see more NHL sweaters nowadays than ever and with the expac success of Vegas and the success they're going to have in Seattle their influence and fan involvement/awareness on the west coast is very much on the rise.

Lot of doom and gloom out there wrt the lockout. But to my eye at least the NHL product is better than MLB and on par with the big two (NFL & NBA) while offering to rich investors a buy-in that is a fraction of the price of those sports. Fans are turning to hockey right now and recognizing how great it is. And the NHL has a decade or so of growth ahead of it that will be the envy of the other major sports leagues IMO.

 

[Boris Zubov]

The NHL has an extremely underrated product in US sports media, but fans are recognizing said value in droves right now. I see more NHL sweaters nowadays than ever and with the expac success of Vegas and the success they're going to have in Seattle their influence and fan involvement/awareness on the west coast is very much on the rise.

Lot of doom and gloom out there wrt the lockout. But to my eye at least the NHL product is better than MLB and on par with the big two (NFL & NBA) while offering to rich investors a buy-in that is a fraction of the price of those sports. Fans are turning to hockey right now and recognizing how great it is. And the NHL has a decade or so of growth ahead of it that will be the envy of the other major sports leagues IMO.

The NHL on-ice product is leaps & bounds ahead of both the MLB & the NBA & it's not even close. I'm not entirely sure how anyone can watch either of these two sports to be honest. Over the last 20-25 years, both leagues decided they'd rather be more "entertainment" than competitive. I'd argue that the NFL is also heading down that path.

 

[hangman005]

The NHL on-ice product is leaps & bounds ahead of both the MLB & the NBA & it's not even close. I'm not entirely sure how anyone can watch either of these two sports to be honest. Over the last 20-25 years, both leagues decided they'd rather be more "entertainment" than competitive. I'd argue that the NFL is also heading down that path.

I don’t know about MLB but NBA it seems if you aren’t a fan of maybe like 4 teams you might as well not watch, your teams not getting anywhere