Forbes slams Levitt report

[c_mak]

Now we have both sides numbers?.. Ok are the players missing something.. Both reports, report a loss. does noone see this as amusing that the two sides are now arguing over how much they lost.???. If you have a business that is lossing money isn't that bad?
I don't side with either of them but .............
I think the players look more ridiculis claiming "look they only lost this much they, the owners, lie" This forbers article is a win for the players

 

[Tom_Benjamin]

So arena revenue is hockey revenue, but arena expenses are not hockey expenses? So instead of under reporting profits, you want them to over report them? Were you involved with Enron?

It wasn't me that wanted it both ways. Bryden was declaring he was going broke with his hockey team and using arena taxes as a reason. What I said at the time - and still say - is that rink revenues and team revenues should be set against team and rink expenses. Count 'em both.

When the books were finally published, both made good money before interest and taxes.

A few years ago when they were looking for a government bailout for Canadian teams, it was reported that several of the Canadian teams were paying more in "property taxes" than all the US teams combined. Large enough taxes to wipe out the profit of Toronto, so ignoring them is not insignificant.

Shhh. Don't bring this one up. The bailout was required to save hockey in Canada, remember? If we did not pay up taxes, US arena subsidies and player payrolls in American dollars was going to kill NHL hockey in Canada. Bryden even announced he was going to sell and relocate.

The teams did not get their subsidy. It turned out hockey in Canada was not doomed even though there was no subsidy. "Wolf, wolf" shouted Bryden and the fans believed. "The sky is falling, the sky is falling," echoed every Chicken Little.

What happened? Oh yeah. Nothing.

Tom

 

[thinkwild]

Well something slightly more than nothing happened. It turned out apparently that 5 of the 6 Canadian teams were in the most profitable of the league. Even Edmonton was one of the more profitable teams. That leak may not be good for the team. Now their fans may start questioning management a bit. Only Ottawa appears to have lost money during the transition to new ownership, although the franchise value has already risen and they may still be structured to create a loss.

 

[QQQ]

Here ya go, according to Forbes Magazine the NHL only lost 93 million in 03/04. Have a read, according to them, most of the money losing teams are losing money for a reason, go figure. Now who looks like a liar?

http://www.forbes.com/free_forbes/2004/1129/124.html

On reflection of this finding of the NHL losing only 93 mil the NHLPA with their solution are giving more than enough to help fix the problem. Maybe they should scale back their offer.

 

[SwisshockeyAcademy]

On reflection of this finding of the NHL losing only 93 mil the NHLPA with their solution are giving more than enough to help fix the problem. Maybe they should scale back their offer.

Yes scale it back tomorrow. That will get a deal done quickly.

 

[PecaFan]

What taxes do the Canucks pay to the city of Vancouver? What taxes do the Canadiens pay to the city of Montreal? They pay corporate income tax on profits.

Montreal pays at least *8.2 million a year* in property taxes to the city.
http://montreal.cbc.ca/regional/servlet/View?filename=qc_taxes20042502

Tampa evidently pays a million a year.
http://www.fieldofschemes.com/news/archives/2004_02.html

You're supposedly a Canuck fan, and don't know how much they've complained in the past about the millions in taxes they have to pay to all the various levels of govt?

 

[Tom_Benjamin]

Montreal pays at least *8.2 million a year* in property taxes to the city.
http://montreal.cbc.ca/regional/servlet/View?filename=qc_taxes20042502

What does whether the Forbes report includes taxes have to do with the Bell Centre? The story says that the arena pays property tax. It might matter if the Forbes report valued hockey rinks, but it doesn't. The Forbes report values hockey teams.

Tom

 

[djhn579]

What does whether the Forbes report includes taxes have to do with the Bell Centre? The story says that the arena pays property tax. It might matter if the Forbes report valued hockey rinks, but it doesn't. The Forbes report values hockey teams.

Tom

In determining team values we include all collateral revenue sources, such as real estate, broadcasting, cable, sponsorships and concessions.

http://www.forbes.com/free_forbes/2004/1129/124.html

When Forbes says they include all collateral revenue sources, the only real estate I can think of would be what the rink and associated parking lots sit on... It sure sounds like they are determining the value of the team based on the owners other holdings...

The article does go to great lengths to show that the teams that are increasing in value are the teams where the owner has used the team to leverage cable companies and other revenue that is not directly related to the team.

 

[Tom_Benjamin]

In determining team values we include all collateral revenue sources, such as real estate, broadcasting, cable, sponsorships and concessions.

http://www.forbes.com/free_forbes/2004/1129/124.html

When Forbes says they include all collateral revenue sources, the only real estate I can think of would be what the rink and associated parking lots sit on... It sure sounds like they are determining the value of the team based on the owners other holdings...

The article does go to great lengths to show that the teams that are increasing in value are the teams where the owner has used the team to leverage cable companies and other revenue that is not directly related to the team.

So what? Forbes take a piece of the rink revenues and calls them hockey revenues. The rink revenues that are left in the rink have to cover the property tax. The team doesn't pay property tax on those revenues.

Tom

 

[SuperUnknown]

What does whether the Forbes report includes taxes have to do with the Bell Centre? The story says that the arena pays property tax. It might matter if the Forbes report valued hockey rinks, but it doesn't. The Forbes report values hockey teams.

Tom

It's clear that the Forbes includes the rinks in the teams values.

 

[Tom_Benjamin]

It's clear that the Forbes includes the rinks in the teams values.

Forbes definitely does not.

Tom

 

[thinkwild]

A few years ago when they were looking for a government bailout for Canadian teams, it was reported that several of the Canadian teams were paying more in "property taxes" than all the US teams combined. Large enough taxes to wipe out the profit of Toronto, so ignoring them is not insignificant.

Not sure how things stand today, they might be paying a reduced tax, but they are still paying something.

In Ottawa's case, if my memory serves, the profitable Corel Centre (not the money losing team) were paying $4mil in property taxes. And were charged with paying off the highway offramp to the arena, them being the only devlopment in the middle of a cow pasture. Also all expenses were in American dollars.

Bryden successfully lobbied to have the property tax bill cut from $4mil to about $1mil. With all the new land development around the arena now, the govt also agreed to spread the offramp charges through all the new land development charges in the area now benefitting from the arena and new offramp. Development that was also part of the initial reason for building the arena there, and made a lot of money for the various owners as it is now being fully developed. The Canadian dollar also zoomed enough to cover previously stated deficits. We are talking well over $10mil a year overall in savings.

Yet they still need a salary cap.

 

[SuperUnknown]

Forbes definitely does not.

Tom

It includes the LA Clippers rent paid to the rink in the LA Kings revenues...

 

[Tom_Benjamin]

It includes the LA Clippers rent paid to the rink in the LA Kings revenues...

So what? That is miles from saying that the Forbes valuations includes the rink. When Forbes says the Kings are worth $193 million, they are definitely not saying that the Kings and the Staples Centre are worth $193 million. It is ridiculous to call the property tax paid by the Staples Centre an expense of the LA Kings. It is ridiculous to say that the property tax paid by the Bell Centre is an expense of the Montreal Canadiens. The property tax affects the profitability and the valuation of the rink. It does not affect the profitability of the team.

It is like Peddie disputing the Forbes report because MLSE has debt. What does the MLSE debt have to do with the value of the Toronto Maple Leafs?

Tom

 

[PecaFan]

What does whether the Forbes report includes taxes have to do with the Bell Centre? The story says that the arena pays property tax. It might matter if the Forbes report valued hockey rinks, but it doesn't. The Forbes report values hockey teams.

Ah, I see. So your position is that the *revenues* from the rink should be included in hockey discussions, but the expenses shouldn't be.

Can't say the inconsistency surprises me.

 

[thinkwild]

Ah, I see. So your position is that the *revenues* from the rink should be included in hockey discussions, but the expenses shouldn't be.

If Sens owner Melnyk, works out a deal with a Bank, to buy board advertising, and a luxury suite, as well as rink ads and work with the foundation, these are rink revenues or team revenues? I can see a valid case for designating them as rink revenues. Unless you are trying to desgnate a revenue figure that players get a percentage of. If the team wasnt in Ottawa, what would the value of that business deal be? I say next to nothing.

In Wirtz's case, it seems $0 of that is desgnated hockey revenue. And the players are expected to cave.

 

[SuperUnknown]

So what? That is miles from saying that the Forbes valuations includes the rink. When Forbes says the Kings are worth $193 million, they are definitely not saying that the Kings and the Staples Centre are worth $193 million. It is ridiculous to call the property tax paid by the Staples Centre an expense of the LA Kings. It is ridiculous to say that the property tax paid by the Bell Centre is an expense of the Montreal Canadiens. The property tax affects the profitability and the valuation of the rink. It does not affect the profitability of the team.

It is like Peddie disputing the Forbes report because MLSE has debt. What does the MLSE debt have to do with the value of the Toronto Maple Leafs?

Tom

If you include the revenues made by the rink, you need to include the expenses. Anyway, I think it is ludicrous and stupid to do so, and I would probably have failed my accounting exams if I had submitted such an idea.

 

[codswallop]

Not really getting why the Forbes valuations are being taken so seriously by some. As long as I can remember they have always been "educated guesses", as someone else here put it. And another poster was correct in saying that valuations don't mean much of anything. If someone is buying a team they will go through their due diligence, using info that Forbes doesn't have and subsequently come up with a more accurate number.

You don't even have to go back very far back to see this. At the time of their sale, Forbes had the Hawks and Thrashers valued at somewhere close to $340M combined. The accepted offer for the eventual sale was $250M, and that included the operating rights to Philips Arena as well. Either Forbes was way off in their valuation, or AOL/TW got royally screwed in the deal. Gonna have to go with the former on that one.

Take it with a grain of salt.