Part 5: True North Sports & Entertainment's efforts to acquire an NHL team (Winnip

[eliostar]

The CBC stated that a Winnipeg team would get 13 million in revenue sharing.
Doesn't sound like a strong market to me.

 

[Gump Hasek]

From John Loewen in the CBC clip...

GB indicated that (1995 $) - no one person with a net worth of 600M - wanted to buy the team...

No-one has verified the net worth of M Hulsizer to my knowledge, most estimates I have seen on the forum is 300M in 2011 dollars

Funny how things change

You've a good eye; that stuck in my craw all evening and I was just about to write a post regarding the same issue.

Bettman reportedly told Loewen that it was too bad that the MEC group did not have a single individual with a net worth of 600 million $ to sign the cheques; yet I'm guessing the MEC group as a whole exceeded that threshold though IIRC.

http://www.youtube.com/watch?v=4tdvmhBMUCI

It has been said that the NHL also tend to frown upon investor groups in ownership as one individual should be on the hook for any losses; IIRC the Panthers ownership was restructured recently to account for that.

It is quite interesting though that ESPN reported Hulsizer's net worth is nearly 300 million; impressive, yes. But his investor group seems only able to come up with 70 million dollars to this point, and relies upon a civic government financing the balance. It seems as if ownership standards have been relaxed in this case. I wonder why?

IIRC correctly, did the NHL also not express concerns about the past ownership group structure in Edmonton, eventually leading to the sale to Katz?

Too bad we've no local or national reporter (Brunt/Shoaltz?) currently pressing the NHL regarding these questions. I'm aware that standards change by year. Some actual NHL clarification would be interesting though, versus the usual speculation we're granted from internet lawyers. Why was Winnipeg held to a 600 million dollar individual net worth ownership standard in the 1990's yet Glendale/Hulsizer & group garner a pass in 2011 at sub-300 million?

 

[bodybreak]

Sorry guys, this is'nt happening in Winnipeg, this is Quebec city. At 00:12, signs reads MATCH CE SOIR.

You don't have this in Winnipeg do you?

Ouch, preparing myself for some punches from my friends to the west

http://winnipeg.ca/francais/
http://www.ustboniface.mb.ca/
http://festivalvoyageur.mb.ca/wp/festival-du-voyageur-fr/

I saw those on HNIC tonight, as did many of us. Suffice to say that my jaw dropped. It dropped because clearly no one checked the handiwork of Mr. Oake or his apparently financially challenged staff.

I have had some financial projections in my back pocket for WPG for quite some time but have held off for fear that it would drive some people over the edge, to be perfectly frank.

In short, with the possible exception of the suite revenue (which is still inaccurate, but only in a relatively minor way), the rest of the numbers are ridiculous. THe in-arena sales numbers are the worst in terms of inaccuracy, followed by the broadcast revenue. I will write off the revenue sharing to a simple inability to understand the NHL revenue sharing mechanism. $45M in ticket sales? That seems to contain a number of holes, albeit through making assumptions as to how one could go about that with what Oake stated was 14,500 in average paid attendance.

$80M would be the most optimistic assumption possible, if EVERYTHING went right. $102M is simply either delusional or produced by someone who has no understanding of sports finances. IMO, of course. Playoff games excluded of course.

BY the way: those "100 events" on top of hockey that Oake mentioned? Try about 69, between April 2010 and March of 2011. A fine performance, no doubt, but why exaggerate it by 50%, particularly when it can be counted in about 90 seconds like I just did? If it was 90 or so, I would write that off to a mild exaggeration. Rounding up 69 to 100? Nope.

Shout out to Killion: what do you think about producing $15M in fees from 69 events?

EDIT: I am of course not referring to gross revenue on the non-hockey events, K.

So your numbers would be more accurate than someone who would have talked to TNSE? For ticket revenue, he spelled out 14,500 x $75 x 41 games. As another poster suggested, for the number of non-hockey events, he was using more than just this year. He did also not touch on the company's other revenue streams (MTS IcePlex, MTS Exhibition Hall, luxury hotel to be constructed, casino to be constructed).

I haven't seen this mentioned anywhere yet, but I understood "in game revenue" to include arena advertising, rental agreements, etc. that the company would receive via owning the arena. Does that sound legit, or is that number then too low?

I'd like the Jets back as much as anyone but I'm curious as why you're against having the name of the province used. Its a common practice, especially for teams hoping to draw from a wider geographical base than just the city itself.

Having the team named Winnipeg Jets didn't keep people living outside the city from supporting the team. I don't see having the team named Manitoba turning on more fans to the NHL. The "buzz" being felt from all the possible relocation talk in the media is happening across the province, and most outlets are referring to the return of the Winnipeg Jets, even though they acknowledge now and again that there's no guarantee the reincarnation of NHL hockey in Winnipeg would take on that name.

 

[GSC2k2*]

ok... just to keep track: John Shannon, gives hope that the Coyotes might stay = reputable

Scott Oake: shows numbers that suggest the NHL could work well in Winnipeg = financially challenged.

Gotcha.

1. Please demonstate where I said that John Shannon was credible. I won't hold my breath. THis is twice I have challenged you to do so.

2. My point above regarding the financials presented by Scott Oake is not based on SCott Oake. It is based on the numbers themselves.

Your logic is disjointed.

 

[Krautso]

Having the team named Winnipeg Jets didn't keep people living outside the city from supporting the team. I don't see having the team named Manitoba turning on more fans to the NHL. The "buzz" being felt from all the possible relocation talk in the media is happening across the province, and most outlets are referring to the return of the Winnipeg Jets, even though they acknowledge now and again that there's no guarantee the reincarnation of NHL hockey in Winnipeg would take on that name.

I did say that I would like to see the Jets name used my question was, IF the name were to change why would it be lame to use Manitoba in the name? I'm not questioning the nostalgia of using the Jets or whether people from outside the city will support the team. Its not uncommon and there is a rationale behind using Manitoba instead of Winnipeg. I know I'll be there often no mater what they call it

 

[CorbeauNoir]

Thompson also had plans of building a hotel and parkaid right beside the arena so that would be extra revenue.

Also to note from my understanding Thompson owns almost all of the land in downtown Winnipeg. So if he spent money on the team to create a competitor it would only benefit him greatly with the boosts downtown Winnipeg would get.

This is what people don't seem to get; an NHL team in Winnipeg wouldn't operate as an isolated venture, it would be part of a SYSTEM under TNSE's control that goes beyond the arena itself. That's not to say revenue for the team isn't an important consideration, but I guarantee you TNSE have done their homework on this more thoroughly than someone who says "hurp durp I figured all the numbers out but conveniently held of on saying anything about it until more positive projections showed up under the flimsy justification that I might make anonymous people on an internet message board upset. Oh, and while I may mercilessly belittle those more positive projections because they dont involve Hamilton in any way, under no circumstances will I show anyone the raw data of my own number-crunching that unquestionably prove the team wouldn't work."

 

[thinkwild]

A $75 avg ticket price in Wpg? Wow, that seems high. Perhaps single seat costs for Gold games, but avg season ticket price of $75 a seat? Impressive.


Now that everyone is aware of how owners use synergy of operations to increase wealth we say therefore Winnipeg can afford the team because of the unrelated to hockey arena revenues. But once games are underway, you know they'll be claiming hockey losses that require more collective bargaining concessions, or collective bargainings removal altogether.

Based on those numbers, it's possible that Winnipeg will not be eligible to receive any Revenue Sharing - and they certainly wouldn't get anywhere near $13M.

If a Club's "Available Team Player Compensation" (57% of the teams Gross Preseason and Regular Season Revenues) exceeds the "Targeted Team Player Compensation" (a payroll of the Cap Midpoint minus $4M plus benefits) then that Club does not receive any revenue sharing. If it is less, then revenue sharing makes up that difference.

For this season, a team with Gross Pre- and Regular Season Revenues of > ~$87M would not receive revenue sharing (based on a Cap Midpoint of $51.4M and benefits of $2.2M/team). A team with ~$80M in revenues would get ~$4M, a team with ~$70M would get ~$10M.

If the Club had a Actual Club Salary less than the Cap Midpoint, they would still be eligible for an allotment equal to that difference as part of the Final Escrow Disbursement if excess escrow funds were available, with some limitations - 57% of (gross revenues + revenue sharing) + escrow allotment < Cap Midpoint.

This is a great point, thanks for the clarity. I think we often forget how revenue sharing works. For Winnipeg to get the revenue sharing CBC is budgeting for them, they need to make far less revenues than CBC is budgeting for them.

I dont find anything wrong in this system with revenue sharing; i see no reason for it to have negative connotations any more than than the Green Bay Packers existence. And perhaps, the owners need to increase revenue sharing for the good of the league. Will anyone hold their breath for that not coming out of player clawbacks?

Furthermore, to budget for revenue sharing requires that team growing at a faster rate than the league. But with a small arena and maxed out $75 avg ticket prices, and a perpetual cap floor team, how long is that going to be sustainable?

I'd like the numbers to make sense, but im having a hard time believing them.

 

[GSC2k2*]

that's an awesome comment.....why would anyone go over the edge upon reviewing your stab in the dark on the financial potential of an NHL team in winnipeg....i am quite certain that you have no inside information regarding the revenue streams available to TNSE.....

Why indeed? Peter, would it interest you to know that I have been cyberstalked, including by a WPG fan who shall remain nameless? Why do you think that is? Why is it that some people lose their minds on here because a Canadian disputes the Winnipeg orthodoxy? Your tent is very wide, Peter. In addition to many adults like you and others, there are some folks (again, not all, but some) that bay at the moon, like that cyberstalker above and a few others I have encountered on Twitter and elsewhere (I would recount some of the vile things a few were saying, but I will not, in order to further avoid associating you or the respectable WPG supporters with their vileness). Reading some comments on other forums, I am sure that even you must get a little taken aback by some of them. I know I am.

i will not disagree that the $102m number seems high and the analysis not terribly valid....the broadcast revenues in particular...odd since it came from the CBC, the single largest TV contract the NHL has...you would think that would be the one number you could be confident in....maybe they know something we dont?

I doubt that whoever wrote the numbers on the back of Scott Oake's envelope was too connected with TV contracts. IMO, of course.

there were however other numbers in that 'study' that were not included.

luckily these off the cuff reviews are meaningless...the only thing that matters is that the guy willing to put his money on the table believes his market studies prove a viable business case.....and that the NHL agrees with him....it appears that we will find out soon enough if all the talk from the NHL and TNSE was just blowing smoke or if it is real.

I hope your hopes have not been artificially raised by people with their own agenda. That's all.

We will see whether the NHL really agrees with Mr. Chipman or not.

Incidentally, calling them "meaningless" suggests that all of our discussions are meaningless! How dare you!

he obviously has....which explains why he wont touch the coyotes without $200m in handouts over 5 years.

Again, calling a deal a "handout" where he has to (a) hand over any hockey team's best-rturning asset (parking is a gold mine for anyone that has it) and (b) receive money for running an arena equal to the amount he has to pay to run it, and (c) commit to thirty years of apparently endless losses (according to some) is a distortion of the word "handout". It is like saying that I am going to give Toyota a handout when I buy my next car.

 

[tradeyoumooseforjets]

Scott Oake didn't even talk about the BIGGEST source of revenue for any team, PARKING revenue. Surely those add up to 10 of millions a year like in Phoenix?

 

[GSC2k2*]

A $75 avg ticket price in Wpg? Wow, that seems high. Perhaps single seat costs for Gold games, but avg season ticket price of $75 a seat? Impressive.

While I share your skepticism, I would think that the market would bear more than a top level ticket price of $75 for single seats. I would expect the top priced ticket would be in the $120-150 range of the best seats in the house.

Now that everyone is aware of how owners use synergy of operations to increase wealth we say therefore Winnipeg can afford the team because of the unrelated to hockey arena revenues. But once games are underway, you know they'll be claiming hockey losses that require more collective bargaining concessions, or collective bargainings removal altogether.

The NHL cannot desire for the removal of collective bargaining. Any sports league finds it extremely favourable to have collective bargaining. THe NHL is not the state of Wisconsin.

This is a great point, thanks for the clarity. I think we often forget how revenue sharing works. For Winnipeg to get the revenue sharing CBC is budgeting for them, they need to make far less revenues than CBC is budgeting for them.

I was trying to think of a succinct way to say this. Well done.

Furthermore, to budget for revenue sharing requires that team growing at a faster rate than the league. But with a small arena and maxed out $75 avg ticket prices, and a perpetual cap floor team, how long is that going to be sustainable?

I'd like the numbers to make sense, but im having a hard time believing them.

As I have been saying for years, even if they do okay at the beginning ... then what? Ticket prices have to go up >5% per year, so in 5 years ticket prices are averaging $95?

 

[Roughneck]

While I don't understand why the $75 keeps getting thrown around, but even if a team in Winnipeg had the lowest ticket price for Canadian teams at say, $50, with luxury boxes and sellouts you're still going to see at least $35-40M in revenue. That's not a terrible starting point for a profitable franchise, as relatively meagre as it may be when compared to its Canadian counterparts. That's not too far off the likes of San Jose, Buffalo and Anaheim (at least at a glance). That still means they'd need $50M in other revenue to get into the Oilers and Flames range but do they need to get to that range to be profitable?

I do know that Oakes' rather generous predictions would make a Winnipeg team earn more revenue than both Alberta teams which undoubtedly makes them pretty high. But assuming that the smallest market team in Canada also brings in the smallest revenue, how low can they be while making a profit (and for arguments sake let's say they'd be higher spending team, with $60M for players). $80M? $90M? More, less?

 

[bleuet]

http://winnipeg.ca/francais/
http://www.ustboniface.mb.ca/
http://festivalvoyageur.mb.ca/wp/festival-du-voyageur-fr/




So your numbers would be more accurate than someone who would have talked to TNSE? For ticket revenue, he spelled out 14,500 x $75 x 41 games. As another poster suggested, for the number of non-hockey events, he was using more than just this year. He did also not touch on the company's other revenue streams (MTS IcePlex, MTS Exhibition Hall, luxury hotel to be constructed, casino to be constructed).

I haven't seen this mentioned anywhere yet, but I understood "in game revenue" to include arena advertising, rental agreements, etc. that the company would receive via owning the arena. Does that sound legit, or is that number then too low?



Having the team named Winnipeg Jets didn't keep people living outside the city from supporting the team. I don't see having the team named Manitoba turning on more fans to the NHL. The "buzz" being felt from all the possible relocation talk in the media is happening across the province, and most outlets are referring to the return of the Winnipeg Jets, even though they acknowledge now and again that there's no guarantee the reincarnation of NHL hockey in Winnipeg would take on that name.

I know, Jonathan Toews mother was born near St-Georges-de-Beauce Qc and Toews came in Qc in the summer to improve french.

Fun video, did not know about it, I'd like to buy a vowel

 

[LadyJet26]

Thompson also had plans of building a hotel and parkaid right beside the arena so that would be extra revenue.

Also to note from my understanding Thompson owns almost all of the land in downtown Winnipeg. So if he spent money on the team to create a competitor it would only benefit him greatly with the boosts downtown Winnipeg would get.

Thomson is competing with Auxworthy of the University of Winnipeg to own the most land in downtown.

 

[Gryph]

I think some people don't understand how much money Thomson really has. This month Forbes came out with their annual "worlds 20 richest people", where Thomson placed 17th with a fortune of 23 billion. We're talking about an avid hockey fan, born and raised in Toronto.

http://www.forbes.com/2011/03/09/billionaires-20-richest_slide_17.html

 

[debar]

Absolutely hate it when the thread turns into a big anti-winnipeg this, anti-phoenix that.

Obviously TNSE has done their homework, and as a company they have a lot of revenue streams that may not directly link with the MTS Centre. TNSE has across the street the MTS Exhibition Centre that has a big revenue stream (don't know exact amounts) also the MTS Ice Plex which will be used for a top notch practice facilities but also was used for minor hockey tournament and community tournaments. Also some of the U17 tournament was played there late last year.

Personally I have no clue how its going to come out in the wash, but obviously someone who wants to buy a team has some kind of idea.

 

[thinkwild]

I think some people don't understand how much money Thomson really has. This month Forbes came out with their annual "worlds 20 richest people", where Thomson placed 17th with a fortune of 23 billion. We're talking about an avid hockey fan, born and raised in Toronto.

http://www.forbes.com/2011/03/09/billionaires-20-richest_slide_17.html

I think you'll find most owners in sports are incredibly wealthy men. And yet they still lockout the players because they cant survive without getting more money from their employees and hold local governments hostage for subsidies and tax breaks.

Its important that he's wealthy in that he can afford to play the game. But its not important in that he will underwrite losses for the team long term. Far more likely, the team if it loses money, will go into debt, perhaps to Thomson, and then after several years claim a new cba is needed because they are too far in debt. Or that they should be able to sell their franchise for a nice $100mil capital gain since they can no longer make money in Winnipeg without taxpayer subsidized bonds.

There are richer men than Thomson currently owning sports teams who are crying poor.

 

[Le Golie]

Absolutely hate it when the thread turns into a big anti-winnipeg this, anti-phoenix that.

Obviously TNSE has done their homework, and as a company they have a lot of revenue streams that may not directly link with the MTS Centre. TNSE has across the street the MTS Exhibition Centre that has a big revenue stream (don't know exact amounts) also the MTS Ice Plex which will be used for a top notch practice facilities but also was used for minor hockey tournament and community tournaments. Also some of the U17 tournament was played there late last year.

Personally I have no clue how its going to come out in the wash, but obviously someone who wants to buy a team has some kind of idea.

Of course TNSE has done their homework BUT, some guy who posts on a hockey message board has pulled some numbers out of his arse... he has yet to unveil these numbers, but they are obviously more important than TNSE's research! So some of the best business men on the planet and the hope of NHL hockey in Winnipeg are all doomed. Because this message board poster's numbers are really, really important. No really, people care about this guy's numbers.

 

[dkehler]

There are richer men than Thomson currently owning sports teams who are crying poor.

There are?

 

[Grumpz]

I saw those on HNIC tonight, as did many of us. Suffice to say that my jaw dropped. It dropped because clearly no one checked the handiwork of Mr. Oake or his apparently financially challenged staff.

I have had some financial projections in my back pocket for WPG for quite some time but have held off for fear that it would drive some people over the edge, to be perfectly frank.

In short, with the possible exception of the suite revenue (which is still inaccurate, but only in a relatively minor way), the rest of the numbers are ridiculous. THe in-arena sales numbers are the worst in terms of inaccuracy, followed by the broadcast revenue. I will write off the revenue sharing to a simple inability to understand the NHL revenue sharing mechanism. $45M in ticket sales? That seems to contain a number of holes, albeit through making assumptions as to how one could go about that with what Oake stated was 14,500 in average paid attendance.

$80M would be the most optimistic assumption possible, if EVERYTHING went right. $102M is simply either delusional or produced by someone who has no understanding of sports finances. IMO, of course. Playoff games excluded of course.

BY the way: those "100 events" on top of hockey that Oake mentioned? Try about 69, between April 2010 and March of 2011. A fine performance, no doubt, but why exaggerate it by 50%, particularly when it can be counted in about 90 seconds like I just did? If it was 90 or so, I would write that off to a mild exaggeration. Rounding up 69 to 100? Nope.

Shout out to Killion: what do you think about producing $15M in fees from 69 events?

EDIT: I am of course not referring to gross revenue on the non-hockey events, K.

Frankly I don't care how inflated CBC's numbers are, nor do I care what TNSE is using in their assessment of how viable this market is.

The last time I checked, they were paying COLD HARD CASH for this team.

No financing.

No subsidies.

100% out of pocket cash!

 

[thinkwild]

How much cash? Seriously, i dont know the asking price. Are there relo fees? But really i cant imagine they would pay cash, its the financing that leads to the wealth generation

 

[BrianSTC]

A $75 avg ticket price in Wpg? Wow, that seems high. Perhaps single seat costs for Gold games, but avg season ticket price of $75 a seat? Impressive.

Why?

Ticket prices in Edmonton are as follows:

Gold Club:$236.75
Silver Club: $212.25
Executive: $150.75
Executive Terrace: $138.75
Terrace: $112.25
Colonnade: $82.75
Gallery: $55.25
Standing Room: $50.75

Maybe you can get tickets cheaper but this is direct from the Ticketmaster prices list.

 

[Roughneck]

How much cash? Seriously, i dont know the asking price. Are there relo fees? But really i cant imagine they would pay cash, its the financing that leads to the wealth generation

All they need is a few thousand briefcases full of $100 bills (unless they want to pay in U.S. bills, but where's the fun in that), its not that hard.

There's a mint in Winnipeg, maybe they could make up a set of million dollar bills with Thomas Steen's face on it just for this sale.

 

[AllByDesign]

Cash? No way no how. Chipman's cheque is just a loose term. Financing would be involved if this transaction ever comes to pass.

The numbers posted by the CBC are inflated projections, not to take away from the fact that the COG's parking revenue projections are inflated.

An average ticket price of $75 is sustainable for the time being. I wouldn't pay the estimated prices, but I am in the minority on that front in Winnipeg. All if this matters not for the time being. There are currently no teams available to move here. In the mean time the Moose have an incredibly entertaining product available. Poised to make a deep playoff run. Worth the support of the citizens of the city.

 

[PeaSouper]

There are richer men than Thomson currently owning sports teams who are crying poor.

Which of the 16 people in the world richer than David Thomson are you talking about?

 

[Grumpz]

Cash? No way no how. Chipman's cheque is just a loose term. Financing would be involved if this transaction ever comes to pass.

The numbers posted by the CBC are inflated projections, not to take away from the fact that the COG's parking revenue projections are inflated.

An average ticket price of $75 is sustainable for the time being. I wouldn't pay the estimated prices, but I am in the minority on that front in Winnipeg. All if this matters not for the time being. There are currently no teams available to move here. In the mean time the Moose have an incredibly entertaining product available. Poised to make a deep playoff run. Worth the support of the citizens of the city.

I'll give you that so I guess my point is TNSE has the ability to purchase a team with cash. I would imagine there are benefits to finance part of the purchase, however TNSE doesn't have their hands out. This will be entirely on them, not me and my neighbors.