March 3, 2005

$3.5 Billion Offer For Entire NHL? : Is this as unexpected a turn of events for everyone else as it is for me? Do you think it has any substance?

read story | posted by smithers to Hockey at 7:54 AM CDT (29 comments total)

Seems a little high priced to me, considering they don't have an agreement with the players union. Have to wonder if this isn't a backhanded ploy by the owners to get terms they want from the players.

posted by tdheiland at 8:12 AM CDT on March 3

A pro sports league that owns all of its teams would be at a competitive advantage. There'd be no concerns about anti-trust issues or accusations that owners were illegally colluding to keep salaries down.

However, the idea that you could get every single owner to sell is insane. Too many sports owners are in it for reasons tha t are personal as much as professional.

posted by rcade at 8:15 AM CDT on March 3

No mention of Bettman's future IF the deal got done. I'll take that as a good sign.

At least this offer demonstrates that, to some, the NHL is a viable product if properly marketed, operated, etc.

The offer also sheds light on why the current ownership structure is dysfunctional. [rcade, a 100% team owned league would also function as a whole, rather than displaced competing limbs.] They want it both ways. The League wants to expand, for whatever reason, but the owners don't want to distribute wealth throughout the league. Sounds like a time bomb to me. Or throwing more pit bulls into the pit. Or something.

I have no idea if $3.5B is a fair offer. Weren't the teams just significantly devalued? Split evenly, each franchise would be worth $116,666,666. But that's a useless number considering the vast chasm between revenues amongst clubs.

posted by garfield at 8:41 AM CDT on March 3

Buy low, sell high, that's what I always say.

posted by 86 at 8:44 AM CDT on March 3

Wanted to Buy: Looking for a rapidly depreciating, non-working order business opportunity. Will offer 3.5 Billion.

Sold!

posted by mayerkyl at 10:11 AM CDT on March 3

At least this offer demonstrates that, to some, the NHL is a viable product if properly marketed, operated, etc.

Yes, though it does set a market value of ~$100M/team, which is yet another indication of what terrible shape hockey is in. Forbes estimates that the Redskins, Cowboys, Texans, and Patriots alone are worth $3.7B, even the Cardinals are worth $550M, and their estimate is that even the least valuable NBA franchise is worth $174M.

This is interesting- fits in with recent news bits about how private equity companies are the Next Big Thing. Bain is a serious player in that market, with $17B under management according to their website. So this may well be legit (though I bet they realize that getting the owners of the Rangers, Bruins, etc. to sell will be hard/nearly impossible.)

posted by tieguy at 10:51 AM CDT on March 3

i hope they at least buy the blackhawks so that that franchise can get some life back into it.

what does $3.5 billion get you in other sports?
Manchester United for $1.2 Billion
The Washington Redskins for $952 million
Juventus for $828 mil
And $22 million left over for popcorn or a few WNBA teams.

posted by gspm at 11:19 AM CDT on March 3

A pro sports league that owns all of its teams would be at a competitive advantage. There'd be no concerns about anti-trust issues or accusations that owners were illegally colluding to keep salaries down.

Isn't the WNBA organized something like that? I don't think the league owns the teams, but don't all the players technically work for the league and not the teams?

posted by cobra! at 12:06 PM CDT on March 3

MLS is or was that way, I think. I don't think the WNBA is that way, though I could easily be wrong.

posted by tieguy at 12:09 PM CDT on March 3

This will never work - mostly because it devalues 4 teams - the rest might go for it, but it would be all or nothing, and the Leafs, Rangers, Red Wings and Avalanche I think are worth considerably more than $117 million. Maybe the Canadiens, too (Gillette paid $127, I believe). Ergo; pipe dream.

posted by WeedyMcSmokey at 12:20 PM CDT on March 3

I wonder how the NHL's legal structure is set up, though- if all but four teams agreed to the sale, could the holdouts veto the sale of the league itself? i.e., this group could end up owning 85% of the league's teams, at which point I bet the other 15% don't have much say in how the league is run.

posted by tieguy at 12:26 PM CDT on March 3

OT - I signed up to the NHLFA mailing list, and apparently they've put together a PSA that has been distributed to media outlets across N.A. Check it out, if you are so inclined : http://www.nhlfa.com/psa/

posted by garfield at 12:46 PM CDT on March 3

That's a terrible PSA, IMHO.

To me, the message is far from clear. I assume the PSA is trying to say that hockey has been ruined by money; but that's muddled by the loonie-at-centre-ice imagery, which evokes Gretzky and the 2002 gold medal victory.

Still, great idea.

posted by docgonzo at 1:34 PM CDT on March 3

1) Bain Capital is a very serious set of people, if they made this offer it was not a joke. Very interesting move from my perspective.

2) Nothing in the report suggests that the $3.5B would be split equally, there is no reason to expect it would be.

3) Nothing in the report says that the offer precludes some owners from retaining a stake, Bain and the buyout industry in general often works that way.

4) MLS owns all the franchises and assigns operational control to the companies/people who look otherwise like they own the teams. Even Chivas USA. I think this has worked quite well and allowed the league to generally make decisions on longterm value. For instance, even though nobody stepped up to take the Earthquakes by last fall's deadline, the team is still in business for 2005.

5) This could be a very good thing for the NHL, especially if Bain recognizes that a big reason for recent problems is that everybody made decisions based on the (incorrect) assumption that the NHL was moving into the top 5 North American "leagues".

posted by billsaysthis at 1:49 PM CDT on March 3

Yes - all of that is true. However, I don't think the NHL decided to go through all the trouble of the lockout only to cede ownership to a third party. The only thing that is interesting is that $3.5 billion, by all estimates I've seen, is a number that seems unnecessarily high - with the league currently valued at around $1-1.5 billion. DO they know something we don't? Or do those previous estimates not include ownership of arenas and other assets - media, basketball teams, what have you.

posted by WeedyMcSmokey at 2:00 PM CDT on March 3

I suppose that's one way to go about revenue sharing.

posted by DrJohnEvans at 2:09 PM CDT on March 3

From the article:

"Before the work stoppage, the total value of the 30 NHL franchises was an estimated $4.9 billion, according to Forbes Magazine. The Detroit Red Wings topped the list at $266 million, with the Edmonton Oilers last at $86 million. The value of the arenas are part of the assessment."

I don't think some of you guys read the assignment.

posted by Samsonov14 at 2:59 PM CDT on March 3

The NHLFA is small time. It was started by a few Ottawa Senators fans, and they've used the claim of representing all NHL fans to stump for such provincial causes as ending Alexei Yashin's holdout from the Sens and getting the NHL out of the Southern U.S.

posted by rcade at 3:15 PM CDT on March 3

ya, the nhlfa email I receieved asked for money and to solicit friends to join. not what i like to see.

posted by garfield at 3:20 PM CDT on March 3

The value of the arenas are part of the assessment

Well, that changes everything. If you're including more than just the rights to the NHL franchise (arena, media ownership, etc) . . . I'd say $3.5 billion seemed a little low, except the owners have spent the last x years poor-mouthing the value of their toys.

This still seems like a couple of Bain executives bull-shitting at a cocktail hour and then daring each other to show up on Monday and do it.

posted by yerfatma at 3:44 PM CDT on March 3

i doubt the arenas are part of it. according to the league, that isn't part of a team's revenue.

posted by garfield at 4:17 PM CDT on March 3

Right, which is how the league defines revenue. The IRS and Forbes, OTOH, define it as all cash inflows. Most people in the business of buying business would do the same (well, technically it's more like profits over the real interest rate minus a growth factor, but you know what I mean).

posted by yerfatma at 7:47 PM CDT on March 3

Possible answer to why the proposal was given, and made public, [and by coincidence happens to be the best posting on Eklund since the season was cancelled and his cover of optimism blown]:

"Bettman did it for a simple reason. He wants the owners to know where they are. He is bracing them for what is coming. He and Goodenow have been discussing options to end this, and the players hold all the cards again. The deal needs to be made quickly and everyone knows it. The next season has to be sold. Bettman allowed this proposal to be heard as a way to soften the coming blow."

posted by garfield at 1:33 PM CDT on March 4

Heh. The Times alternately suggests that this is a way to force the players' hands- 'if you don't settle soon, the other options are way, way worse than just using scabs.' This hinges on the assumption that (as a one-owner entity) a B(ain)HL would be exempt from most labor laws and be able to screw the players as badly as they want. This makes sense to me- as the changes over the past decade in IndyCar prove, the power in any sporting league resides with the owners of the key brands. As long as you own the big brands (in the Indy case, the Speedway, and in the sports case, the brands of the Original Six) you can screw the players any way you want. People will eventually come back to the teams, and not to the players.

posted by tieguy at 2:43 PM CDT on March 4

See, I like this development, because it puts an optimistic spin on the league (it's still seen as a viable business) while remaining a totally unrealistic option. It gives fresh press to the situation, which is healthy. Of course, there is absolutely no way that the owners would ever go for this, and everybody realizes this, so we don't have to worry.

posted by DrJohnEvans at 3:36 PM CDT on March 4

btw, the group is upping its offer. $3.5B is 'starting point'

posted by garfield at 4:09 PM CDT on March 4

I remember when Issiah Thomas bought all of the teams in the CBA and proceded to run the League into the Ground. The League has risen from this ashes but it isnt the league it was before Thomos took over. Now he seems to be doing the same thing to the NIcks......

Oh well, It would be an interesting developement with the NHL

posted by daddisamm at 4:19 PM CDT on March 4

3.5 bill is wayyyyyyy too low. i mean, my gosh. if i were to buy it at least be 1 trillion.

posted by Jimbob1077 at 6:30 PM CDT on March 4

I can vouch for the smalltime-ness of the NHLFA. I talked to one of them on the phone once. Just a couple of high-tech workers who like hockey (esp. Ottawa), but don't have much sway.

This offer won't happen, no matter what, by the way. Even if they double their offer. You would have to offer serious incentives beyond $115M per team in order to get Cablevision, MSLE, etc., to sell. Double the offer and then try it.

posted by Succa at 9:11 PM CDT on March 5

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