Wanna buy a hockey league?
Posted 03 March 2005 - 06:58 AM
Wanna buy a hockey league?
Partners would take entire NHL
Owners cool to all-or-nothing deal
A powerful Wall Street buyout firm and an upstart sports advisory company have made a dramatic joint proposal to buy all of the NHL's 30 teams for as much as $3.5 billion (U.S.).
Bain Capital Partners LLC and Game Plan International, both based in Boston, tabled the offer in a 30-minute presentation to NHL owners on Tuesday in New York, three sources told the Toronto Star.
The companies were invited to make their pitch by NHL commissioner Gary Bettman.
Bain managing partner Steven Pagliuca, co-owner of the NBA's Boston Celtics, and Game Plan, which recently acted as an adviser on the sale of hockey's Ottawa Senators, are betting that many NHL owners would welcome the chance to get out of the hockey business.
The NHL, which because of its ongoing player lockout recently became the first major North American pro sports league to cancel an entire season, has said its teams have lost a collective $500 million (U.S.) over the past two seasons.
It's unclear whether many of the league's owners, especially those with teams in large markets like Toronto, Boston and New York, would accept the offer.
Maple Leaf officials declined to comment, as did a Game Plan spokesman. Representatives for Bain and the NHL couldn't be reached.
A person familiar with the matter said no subsequent discussions between the league and the two companies were scheduled.
Response to the Bain/Game Plan proposal from more than 100 people at the meeting was muted.
Several in attendance said just one of the owners there asked a question of Bain and Game Plan — how the $3.5 billion pot might be divided between owners?
"They told us they had a formula to compensate each owner based on the revenue and assets and size of market of each team," said one owner who attended the meeting.
"I'm not sure how serious you can take the offer because it's an all-or-nothing deal. You need all 30 owners on board to make it work."
If the owners ultimately accepted an offer of $3.5 billion that would put the average franchise value at about $117 million, although large-market teams like the Maple Leafs would be worth far more.
Forbes magazine estimated the average NHL franchise value was $163 million in 2003-04, although several recent team sales have fallen far short of that figure.
Last week, for instance, Walt Disney Co. sold the Anaheim Mighty Ducks for $75 million.
The sale included a $15 million training facility.
"Hockey can be a real tough business with the slimmest of profit margins, obviously," said Jeff Phillips, a sports banker at investment firm Houlihan, Lokey, Howard & Zukin.
"You can justify investing in a team if you're winning, but if you're a small- or mid-market and you're losing money, I can see where it would lose its lustre," Phillips explained.
Using an overhead projector and PowerPoint slides, Bain and Game Plan officials outlined their view of how the NHL would evolve under a single-ownership structure.
If it was owned by a single entity, the NHL would operate in a manner similar to a large corporation, owners were told.
Each team, like a division within the company, would begin the year with a set budget and act autonomously on personnel decisions.
The purchase would not be dependent on the NHL reaching an accord with the players, and a sale would not affect the status of the NHL Players' Association as the bargaining agent for players under U.S. and Canadian labour laws.
And the move, Bain and Game Plan said, would help bolster the league's revenue because all of the teams would work together to generate more local television, sponsorship and revenue instead of competing against one another.
The move would also cut down significantly on the league's operating costs.
The Bain-Game Plan consortium told the NHL owners that it had arranged for a large Canadian-based financier to join its efforts.
While the group didn't name any prospective partners, Bain, which has $48 billion in assets under management, partnered in 1999 with the Ontario Teachers' Pension Plan in an investor group that bought Shoppers Drug Mart., Canada's largest drugstore chain.
The teachers are majority owners of the Maple Leafs.
Posted 03 March 2005 - 07:18 AM
Im not so sure about this idea. I believe that in sports since the beginning, some teams are just going to generate more revenue then others, and to me, if they want to invest more into their product on the ice, then they should have that luxury. The keys in the world of the NHL is to ensure the salaries do not get out of control and the players and owners all get what should be coming to them, plus ensure the payroll gaps between the haves and the have-nots are not out of control (to me in baseball, more teams are just flat out cheap, they CAN spend more $ but they do not choose to IMO, hockey is a little different)
I just do not believe it would be fair if the Buffalo Sabres, to use my team as an example, would get the same exact revenues that teams like New York and Toronto would get, teams like the Leafs were built to what they were over time and generate much more revenue and they earned that.
Posted 03 March 2005 - 11:05 AM
Now that we are going to have a season, I can post these...
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Posted 03 March 2005 - 11:14 AM
It would be like old time baseball all over again.
No way I see this happening, nor do I agree with it.
Posted 03 March 2005 - 11:22 AM
Posted 03 March 2005 - 11:57 AM
...save for the fact that there's no way to fairly assign marketing budgets to different teams around the league, when you have St. Louis competing against two other teams for ticket dollars and the Devils competing against (roughly) 12...
...and the fact that a certain amount of that "revenue pot" would have to be committed to new arena construction, and then who makes that decision...
...and that fact that while increased revenue sharing is vital to the continued vitality of the league, I will ask the same questions for the hundredth thousandth time: WHAT REVENUE?!
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Posted 03 March 2005 - 12:11 PM
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Posted 03 March 2005 - 12:12 PM
I would invest in this.
IN LOU WE TRUST @Manta04
Posted 03 March 2005 - 12:19 PM
This is a very interesting scenario in which the players will be nothing but employees in a professional sport. This would solve many of the NHL's ill and improve the marketablity of the game.
I would invest in this.
Ya, I wish I could get a piece of this action if all the owners agreed to sell.
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Posted 03 March 2005 - 12:37 PM
Posted 03 March 2005 - 03:31 PM
IN LOU WE TRUST @Manta04
Posted 03 March 2005 - 04:33 PM
exactly right. the mls is owned by one corporation (that anshultz, the kings owner is head of).
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Posted 03 March 2005 - 09:24 PM
What are the advantages to this? It won't solve the problems between the owners (or if it was to sell, "owner") and employees (players).
Recently, Forbes magazine stated that the average NHL club was worth $163 million in 2003-04, but if the owners do decide to go through with the proposal that would lower the value of each team to about $117 million, although the larger-market clubs would be still be worth more.
Is that supposed to be good?
The two businesses feel that this move would add to the league's revenue because the teams would work as a whole, rather than individuals trying to beat each other.
Correct me if I'm wrong, but itsn't that the Board of Governors job to make the league work as a whole? And how are trades done? This is a bad idea in my mind.
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Posted 03 March 2005 - 09:39 PM
Costs would be lower, revenues higher, and the labour situation would be entirely different since the league would be a single entity. You don't have to worry about the Rangers or Avalanche driving up the salary scale for smaller clubs anymore - which would be much less inflationary.
He also gave examples of how all local TV contracts would be consolidated so that if you lived in Boston and the Bruins were not playing that night they could show another game in that market.
In spite of the fact that it is a near impossibility that the league will actually sell (how can they possibly convince all 30 owners?), the system itself made a whole lot of sense. Too bad it's pie in the sky.
What was not discussed and what I wonder is - would it be possible for the current NHL owners to form a new corporation and basically buy itself? The equity of each team's actual value could be equal to their stake in the new single entity, so the owner of the Red Wings would own a higher percentage than that of the Ducks. The current owners and execs could them become (true) franchisees. There is probably a legal reason why it can't happen and they'd still have the challenge of getting all 30 owners to agree to it.
Posted 03 March 2005 - 10:18 PM
This scenario is outrageous...this isn't the ill-fated roller hockey league of several years back...this is the friggin NHL for crying out loud! This is the NHL, a league with a proud and rich history...not the Arena Football League! This is the NHL...not the XFL, WHA, NASL, MLS...this ain't professional indoor lacrosse, the Professional Rodeo Association, the Women's Professional Fast Pitch Softball League...or any "minor league", and or, irrelevent sporting endeavor on the horizon.
Enough with this nonsense - I cannot believe the NHL board even gave this two seconds of their time.
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