[NHL] Wanna buy a league? Somebody does.

By Fred Derf
in The Sporting Arena

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Grand Master

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Mar. 3, 2005. 08:37 AM

Wall St. firm wants to buy NHL

Owners cool to all-or-nothing deal

RICK WESTHEAD

BUSINESS REPORTER

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.

http://www.thestar.com/NASApp/cs/ContentSe...id=968332188492

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Grand Master

Fred Derf Veteran

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Mar. 3, 2005. 08:20 AM

Boston suitor's NHL bid highly unlikely to take off

DAVE PERKINS

SPORTS COLUMNIST

There is no suggestion that the Boston-based firm of Bain Capital Partners LLC intends those last three letters to stand for Let's Lose Cash.

But, geez, didn't these guys read the Arthur Levitt Report?

Comes the head-shaking news that Gary Bettman invited Bain and a sports consulting company named Game Plan International to make a pitch to the 30 National Hockey League owners this week in New York. As colleague Rick Westhead reports, it was this: We'll give you $3.5 billion (all figures U.S.) for the entire league. That's all 30 teams, plus at least one stick, just in case we need a place to put Bob Goodenow's head.

The question from the Toronto table reportedly was, "Does that offer include Richard Peddie?''

It will never fly, of course. The 30 owners of the NHL franchises could not agree on what to have for lunch, much less how much they would agreeably share to get out of the business.

Can't you just hear Claude Lamoureux and the gang at the Ontario Teachers Pension Plan, which owns the biggest hunk of the Maple Leafs, figuring out that average offer of $117 million per team and wondering where the extra zero was?

Teachers certainly know about Bain and big tickets. Teachers bought Alliance Laundry Systems from Bain for $450 million a couple of weeks ago. In 2003 they hooked up to buy Samsonite, the luggage makers. Teachers might well consider the Toronto Maple Leafs worth as much as Alliance Laundry, which makes Speed Queen washers and services coin-op washeterias. If they do, that $3.5 bil' won't go far.

Naturally, there would be takers, owners hoping anyone comes along with a couple of bags of nickels toot sweet to get this lockout-stained mess off their hands. Reportedly, one owner asked the musical question, "How much for me?'' This would indicate only 29 others are thinking about it.

Those anxious to get out might be dreaming of becoming the next John Bitove, the first owner of the Raptors. Remember back in the days when the Raptors looked like they were about to turn to chalk and red ink was beginning to rain. Along came Allan Slaight to fire the shotgun clause that got Bitove out with his money intact. Bitove always regarded that as a gift from the gods.

Anyway, one must assume these Wall Street guys, with billions at their disposal ? and Bain is said to control $48 billion in assets ? seldom wander around throwing money at lost causes. If they're offering $3.5 billion, they think it's worth more and maybe a lot more. That's despite the Levitt Report, which trotted out the usual gloom-and-doom figures that the owners lost a collective $500 million in two years and so on. Bain is willing to take its chances, apparently.

All this happy talk of billions and fresh, well-heeled suitors might well be the message Bettman is trying to get out to his troops. It's the idea, rather than the specifics, that matter here to keep spirits up.

The commish, an employee of the 30 owners, is charged first and foremost with preserving franchise values. His obvious and so far unsuccessful union-busting plan, which has resulted in the lockout that has obliterated the entire season ? at great cost to some teams, such as the Maple Leafs ? has devastated some franchise values. We'll know exactly how much when the next Forbes magazine valuation comes out.

There couldn't be an NHL side worth today what it was worth even a year ago. Not even the Leafs ? and remember, they alone have Rob Babcock lighting fuses under the other half of the company. No, with the doors closed and everybody completely unsure of what will transpire next, the billionaires are entitled to be nervous about the worth of their property.

So this might well be Bettman's way of saying, "See! Somebody on Wall Street loves us! They really love us!''

What else could it be?

http://www.thestar.com/NASApp/cs/ContentSe...id=968867503640

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IndianPimp99

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I think the $3.5 billion could actually buy all but the 5 most expensive teams at their current value. (Read it on ESPN I think). That would mean that they would own everyone but the Red Wings, Rangers, Flyers, Stars, and Avalanche.

They would control a large part of the league and have an immense amount of power within it.

Sadly though, I don't think the NHL would do this. SImply because if they did sell the league to one group with a group vision in mind I'm pretty sure the new group would consider folding some franchises, or putting them on hiatus until the league can better support itself.

Grand Master

Fred Derf Veteran

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I think the $3.5 billion could actually buy all but the 5 most expensive teams at their current value. (Read it on ESPN I think). That would mean that they would own everyone but the Red Wings, Rangers, Flyers, Stars, and Avalanche.

They would control a large part of the league and have an immense amount of power within it.

Sadly though, I don't think the NHL would do this. SImply because if they did sell the league to one group with a group vision in mind I'm pretty sure the new group would consider folding some franchises, or putting them on hiatus until the league can better support itself.

585562993[/snapback]

It's an all or nothing deal. They wouldn't exclude the top five.

Grand Master

Ji@nBing

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I don't know what to think about this. On one hand, I would hate to see the Canadian teams go to an american owner. Also, what if in the future the owner decides he wants to sell the league? It would be pretty hard to find another owner than wants to make that kind of investment. The league may die because of it.

On the other hand, it might be really good for hockey if it worked. By it's nature having one owner would keep player salaries under control because you don't have owners trying to outbid eachother for players. I also read somewhere that it would be easier to promote the league this way (though I don't see exacly how).

It will never happen though because of course some owners won't want to sell.

Grand Master

Ayepecks

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It was just a hypotetical proposal.. not meant to be taken as an offer at all...

And pretty much everyone has said no way they are interested in this, i haven't heard anyone take it seriously...

585573299[/snapback]

Uh, it wasn't exactly hypothetical... the owners voted it down. Just because it wasn't a good offer doesn't mean it wasn't an offer.

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