Is it foolish and unrealistic for NHL owners believing their club is worth $650M?

[LeHab]

Oh, don't get me wrong, I'm not saying it's foolish to ask for $650,000,000. The fool is the one who pays it.

Again, Tampa and Ottawa as examples: both sets of owners who paid the expansion fees went belly-up. They never should have paid $50,000,000, wasn't worth it. Original Nashville ownership ended up selling, refusing to absorb any more losses. Devils/Rockies/Scouts owners went TU multiple times. The Islanders' expansion fees ($6 million to the NHL and $5 million to the Rangers) were a boat anchor around their necks for years and years; original managing partner Roy Boe bailed in '78. Expansion cousins the Flames didn't last much longer, with Tom Cousins dumping his distressed asset in 1980. (might have ended up breaking even given he sold to the Calgary group for $16 million)

Like any investment there is risk.

 

[LeafShark]

They seem to like entertainment on demand, which kills TV shows since you can watch them whenever you want. However, since everyone's on twitter all the time, you need to watch sports live to not get it spoiled. That's a huge part of the reason sports broadcast rights are going up in value like they are. Can't skip commercials when you're watching live.

Sports are violent. Also you have to keep up to date with social media or you are behind. Besides you can stream the broadcasts illegally or go on your smartphone/device during commercials.... besides millennials have no money to spend on extra cars and beer when they have to study. The score and the highlights are enough anyways to have a half decent discussion. Yes, we're watching live, but we're also gaming, texting, tweeting, gaming, and watching youtube at the same time. Also f*** corporations.

 

[gstommylee]

I don't think Seattle was actually worth the 650m (given the new arena was yet to be done) but yet ours owners agreed to pay it.

 

[BattleBorn]

The reason they were willing to pay what they're paying is the same reason any of these other groups of investors from the Vegas round should have been willing to pay.

Seattle needs an arena, the fact that this city was still trying to pass off Key Arena like it's San Diego and the San Diego Sports Arena is insanity. The arena will make money whether there's a team in it or not.

 

[KevFu]

Oh, don't get me wrong, I'm not saying it's foolish to ask for $650,000,000. The fool is the one who pays it.

Right, but at the same time, sports franchises are a limited commodity who's value continues to rise.

$8.8 million dollars in 1973 is the equivalent of $50 million and change today.
But if you bought the New York Yankees for $8.8 million in 1973, the franchise is worth $3.7 billion today.

And that's why you do it,.

 

[gstommylee]

The reason they were willing to pay what they're paying is the same reason any of these other groups of investors from the Vegas round should have been willing to pay.

Seattle needs an arena, the fact that this city was still trying to pass off Key Arena like it's San Diego and the San Diego Sports Arena is insanity. The arena will make money whether there's a team in it or not.

Maybe 650m if the arena was already done and open but with out the arena, eh i don't think the team was really worth 650m.

 

[BattleBorn]

Maybe 650m if the arena was already done and open but with out the arena, eh i don't think the team was really worth 650m.

I've got a feeling we'll never see a day when the Seattle NHL team ever sells for less than $650MM unless something crazy happens.

 

[gstommylee]

I've got a feeling we'll never see a day when the Seattle NHL team ever sells for less than $650MM unless something crazy happens.

If Seattle had an arena plan ready with a NHL guy with money it would been 500m back in 2015

 

[BattleBorn]

If Seattle had an arena plan ready with a NHL guy with money it would been 500m back in 2015

In the meantime, all that would change now is a few more years of hockey in Seattle and saving some rich dudes a hundred million or so.

 

[GuelphStormer]

If they are willing to pay $650M, then its worth $650M.

yes, to the party who bought it.

but perhaps not to the next party considering purchasing it, or the banks providing loans, or the cities considering building a new arena, or the taxman, or ...

i might be foolish enough to buy a chewed pencil from you for $100, but that has no bearing on it's objective, actual worth.

 

[BKIslandersFan]

yes, to the party who bought it.

but perhaps not to the next party considering purchasing it, or the banks providing loans, or the cities considering building a new arena, or the taxman, or ...

i might be foolish enough to buy a chewed pencil from you for $100, but that has no bearing on it's objective, actual worth.

If NHL can get $650M somewhere then who cares what other parties think?

 

[Hoek]

It's not like they were desperately looking to add teams. Might as well ask for the moon and make it worth it if you are going to expand.

 

[GuelphStormer]

If NHL can get $650M somewhere then who cares what other parties think?

why put a monetary value on it at all then? because sooner or later, pro sports franchises get bought and sold. but if its a vanity purchase, then sure, fair value becomes less meaningful.

anyone know if ballmer could sell the clippers right now for what he paid for them?

 

[BKIslandersFan]

why put a monetary value on it at all then? because sooner or later, pro sports franchises get bought and sold. but if its a vanity purchase, then sure, fair value becomes less meaningful.

anyone know if ballmer could sell the clippers right now for what he paid for them?

The very definition of market value is the max amount one can get for selling something.

If NHL can get 650M then that’s the market value.

 

[GuelphStormer]

The very definition of market value is the max amount one can get for selling something.

If NHL can get 650M then that’s the market value.

i didnt mean market value, i just meant value. buying and selling big league sports teams isn't really a market, per se, because of the scarcity of goods (ie., few franchises). a market presumes multiple buyers and sellers. regardless, its easy to imagine any buyer paying a premium well above actual value in this context, just like that $100 chewed pencil i bought, doesn't mean thats the actual value, just what i was willing to pay.

 

[BKIslandersFan]

anyone know if ballmer could sell the clippers right now for what he paid for them?

Definitely. Rockets sold for close to that amount.

i didnt mean market value, i just meant value. buying and selling big league sports teams isn't really a market, per se, because of the scarcity of goods (ie., few franchises). a market presumes multiple buyers and sellers. regardless, its easy to imagine any buyer paying a premium well above actual value in this context, just like that $100 chewed pencil i bought, doesn't mean thats the actual value, just what i was willing to pay.

A value is what you think its worth. Just because YOU think a team is not worth 650M does not make it true. A person who can spare 650M and want a team values the team at 650M and pays the price.

I don't think a chewed pencil is worth $100 but if there is someone with money and desire to pay $100, to them , its worth $100.

 

[GuelphStormer]

A value is what you think its worth. Just because YOU think a team is not worth 650M does not make it true. A person who can spare 650M and want a team values the team at 650M and pays the price.

I don't think a chewed pencil is worth $100 but if there is someone with money and desire to pay $100, to them , its worth $100.

i guess i wasnt clear. a value is not necessarily just what you think something is worth. a bank will not provide to you a mortgage for a house for which you have overpaid. just because someone thinks something is worth $650M doesn't make it true. value is both absolute and relative. no doubt, the relative value is personally valid, but when anyone overpays for a good, the absolute value is questionable. worth is not the same thing as value.

recall how the NHL manipulated the value of the coyotes a couple years ago simply to satisfy ownership/taxation requirements of financing. that the league valued the team at $305M at that time did not make it true. folks laughed at that valuation.

 

[gstommylee]

Only reason why Vegas went for 500m and Seattle 650m and the rockets going for how much it did is post Steve Balmer dropping 2b on the clippers. The last 2 expansion Prices were that high cause of Bettman's ego after seeing what the clippers went for. If clippers didn't change ownership or went for way way less than it did. I don't see Expansion coming close to what it did for Vegas and Seattle.

 

[BKIslandersFan]

i guess i wasnt clear. a value is not necessarily just what you think something is worth. a bank will not provide to you a mortgage for a house for which you have overpaid. just because someone thinks something is worth $650M doesn't make it true. value is both absolute and relative. no doubt, the relative value is personally valid, but when anyone overpays for a good, the absolute value is questionable. worth is not the same thing as value.

recall how the NHL manipulated the value of the coyotes a couple years ago simply to satisfy ownership/taxation requirements of financing. that the league valued the team at $305M at that time did not make it true. folks laughed at that valuation.

What’s overpay? There was no other way Seattle was getting a team without having to pay 650M.

Bank example is awful. There are alternative houses that can be compared to the house that borrower wants to overpay for. There are no alternatives if Seattle group wants an NHL team.