|
NHL Franchises May Be Adding Luster as Predators' Value Swells
05/06/2007 |
 |
 |
Jim Balsillie's $220 million purchase of the Nashville Predators last month may reflect renewed confidence in the future of the National Hockey League.
In selling the Predators, Tennessee businessman Craig Leipold almost tripled the $80 million he paid for the expansion team in 1997, even though the club lost $15 million this season and is ranked in the bottom third of the league in attendance.
Balsillie, co-chief executive officer at BlackBerry maker Research In Motion Ltd., paid almost 3.7 times the Predators' annual revenue, more than what teams had typically sold for in recent years. A collective bargaining agreement signed with players after the league canceled the 2004-2005 season may be part of the reason. It capped team payrolls, introduced revenue- sharing and is helping offset a smaller television audience.
``The league continues to be on the rebound, attendance and revenues are strong, and the limited number of teams to buy right now is driving demand,'' said Rob Tilliss, chief executive at investment banking firm Inner Circle Sports LLC in New York.
NHL franchises had been selling for 2 to 3 times revenue, according to Gordon Saint-Denis, managing director of the sports advisory and finance group of New York-based lender CIT Group Inc. The Predators had $46 million in revenue this season and received an additional $14 million in revenue sharing generated by teams in larger media markets, according to the Nashville team.
NFL, NBA
National Football League teams generally sell for 4 to 6 times revenue, National Basketball Association teams 3 to 4.5 times revenue and Major League Baseball teams 2.5 to 4 times revenue, Saint-Denis said.
Most franchises have recovered from the labor lockout that canceled the 2004-2005 season, NHL Commissioner Gary Bettman said in an interview. League attendance this year averaged a record 16,961 fans a game, up from 16,550 the year before the lockout. And Bettman said revenue will increase 7 percent to a record $2.33 billion.
``This is a strong business now,'' Bettman said. ``We don't worry about teams going bankrupt. We are no longer scrambling for survival.''
Leipold, during a press conference, said corporate interest was lacking in Nashville and attendance was below the league average, even though the team made the playoffs three seasons in a row. Professional hockey can only succeed with local support, said Marc Ganis, president of SportsCorp Ltd., a Chicago-based sports consultant.
``The league is turning around, but you don't pay $220 million to stay in Nashville,'' Ganis said. ``He's buying two things: a terrific team on the ice and the ability to move it into a better market.''
Balsillie's office, responding to an e-mail request for comment, directed all inquiries to Predators spokesman Gerry Helper, who declined to comment on whether the team would move to another city.
No Specific Plan
Bettman said during a May 28 press conference that the Canadian-born Balsillie told him last week that he had no specific plans to move the team. Research in Motion is based in Waterloo, Ontario.
The sale of the Predators followed the 2006 purchase of the St. Louis Blues by Dave Checketts, former president of Madison Square Garden. Checketts, who wouldn't disclose the team's revenue or what he paid, said in an interview that he bought the team because he was confident the labor deal would boost its value.
``Revenue streams were low, but we had a new agreement that provided cost certainty and a salary cap,'' Checketts said. ``That's why I stepped up and bought.''
The St. Louis Post-Dispatch reported that he paid $150 million, citing unidentified people close to the negotiations.
Television Trouble
Even with the gains made in the labor contract, the league trails its counterparts with broadcast agreements.
The NHL is in the second season of a three-year, $207 million contract with Comcast Corp.'s Versus Network, which reaches about 72 million U.S. households -- 21.4 million less than Walt Disney Co.'s ESPN, which held the rights before the lockout. The league is also in the second year of a revenue- sharing agreement with General Electric Co.'s NBC. In March, it extended the agreement through next season with an option for the 2008-2009 season.
Fewer Viewers
Regular-season games were seen in an average 160,134 U.S. households on Versus this year, compared with an average 416,000 households when it was on ESPN during the 2003-2004 season.
``TV dollars are the mother's milk of major American sports,'' Ganis said. ``Despite all the good things the league has done, without meaningful broadcast revenue, they will always be fighting an uphill battle.''
The NHL generates $177.8 million, or about 7.6 percent of its revenue, from national television contracts this season, the league said. Major League Baseball gets about 18 percent of its $5.5 billion in revenue from national broadcasts, and the NFL about half of its $6 billion in revenue from television.
``If you compare the health of our league now to others, sponsorships, ticket sales, online activity, we're like the NBA,'' said America Online Vice Chairman Ted Leonsis, owner of the NHL's Washington Capitals and part owner of the NBA's Washington Wizards. ``TV is our missing piece.''
(Source: Bloomberg.com)
|
| Back |
|
|
|
|
 |
|
