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-   -   Still believe Forbes? I know I don't. (http://hfboards.hockeysfuture.com/showthread.php?t=114437)

Pepper 11-19-2004 02:19 PM

Still believe Forbes? I know I don't.
 
This is a great example of how shaky Forbes' numbers really are, especially their estimate of the value of the franchise.

From another thread:

In 1998, Forbes valued the Blues at $154 mil. In 1999, they sold for $100 mil. (-54 mil)

In 1999, Forbes had the Penguins valued at $100 mil. They sold for $76 mil. (-24 mil)

In 1999, Forbes had the Caps valued at $145 mil. They sold for $85 mil. (-60 mil)

In 1998, Forbes had the Sabres valued at $91 mil. They sold for $76 mil. (-15 mil)

So on these four recent deals, Forbes values them at $490 mil but when someone actually had to pay for them, they only got $336 mil. Forbes was short -$154 mil on four deals when their valuations faced reality.

In 2000, the NJ Devils were purchased for $175 mil and then sold shortly there after for $124 mil. (-51 mil). Let's face it : this was a pure hosing of a deal when it originally sold.

In 2000, when the Islanders were purchased, $188 million was paid but $85 mil went towards buying the separate cable deal (according to the Pickett deal). The balance of the team went for $103 mil and Forbes had it at valued at $139 mil. (possibly short -36 mil).

So the claim by Forbes that the owners have recently been making out like bandits on asset growth gets very shakey when someone's hand starts to scribble out a cheque for buying an NHL team.


In 1995, the LA Kings were sold for $113 million. In 1999, Forbes valued them at $109 million. When they moved into an arena they invested in for co-ownership in 2000, their value suddenly leaped to $160 million. In other words, they had to put a bunch of money in to get that $160 mil value.


Also the authors of that Forbes article have admitted that they haven't seen the books.

My question to you pro-NHLPA people is this:
How on earth do you still believe that Forbes is telling the truth and owners are lying?? I know that owners do their best to make the situation look as bad as possible but Forbes really has absolutely NO credibility in this issue for several reasons.

PecaFan 11-19-2004 02:43 PM

The author of that article stated that all Forbes does to come up with franchise valuations is take revenue * 2. That's it.

May as well take number of albino season ticket holders and multiply it by 50 million, it'd be just as accurate.

NYR469 11-20-2004 02:34 PM

estimated franchise values (which is what forbes gives) and actually sale price aren't the same. when a franchise is sold it is sold to the highest bidder, it isn't like buying a cd with a fixed price...

if the highest bid was less then the franchise was actually worth then that guy got a bargain, if the highest bid was more then the franchise was actually worth then the guy overpaid. but under nether scenario does the actual value of the franchise change

and i don't need to believe forbes' report to know that bettman is full of crap...when they tell me that the league needs a cap because the rangers lost $$ then i know they are full of crap

SuperUnknown 11-20-2004 02:37 PM

Quote:

Originally Posted by NYR469
if the highest bid was less then the franchise was actually worth then that guy got a bargain, if the highest bid was more then the franchise was actually worth then the guy overpaid. but under nether scenario does the actual value of the franchise change

The value is the price someone is willing to pay... What you say would apply to a cd, not a franchise.

NYR469 11-20-2004 02:38 PM

and you are also ignoring any factors that lead up to the sales of those teams or that occured between the time of those reported numbers and the sales...

the pens and sabres filed for bankruptcy and then were sold for far less than they were actually worth...that doesn't make the original value wrong, that just means that circumstances caused the team to sell for less...

thinkwild 11-20-2004 03:33 PM

I think you also have took at exactly what was bought and sold. Did Buffalo's owner actually buy 100% of the revenue generating value of the franchise. Did Atlanta's? As NYR469 says, it doesnt negate what the franchise is valued at based on its revenue generating abilities.

The Devils may very well have been overvalued, but because of boardroom decisions

Dr Love 11-20-2004 04:09 PM

Quote:

Originally Posted by Pepper
My question to you pro-NHLPA people is this:
How on earth do you still believe that Forbes is telling the truth and owners are lying?? I know that owners do their best to make the situation look as bad as possible but Forbes really has absolutely NO credibility in this issue for several reasons.

So you'll blindly believe what the owners say? They have every reason to give out wrong information. The truth is probably somewhere in between.

BLONG7 11-20-2004 04:24 PM

Quote:

Originally Posted by Dr Love
So you'll blindly believe what the owners say? They have every reason to give out wrong information. The truth is probably somewhere in between.

Somewhere inbetween, sounds right. Somewhere in between... I wonder if this could apply to these #' 1.8M and 1.3 M...........maybe someone should call Gary and Knob!!! Inbetween sounds like a negotiating phrase... you could be on to something!

xerburt 11-20-2004 04:41 PM

Quote:

Originally Posted by NYR469
estimated franchise values (which is what forbes gives) and actually sale price aren't the same. when a franchise is sold it is sold to the highest bidder, it isn't like buying a cd with a fixed price...

if the highest bid was less then the franchise was actually worth then that guy got a bargain, if the highest bid was more then the franchise was actually worth then the guy overpaid. but under nether scenario does the actual value of the franchise change

this sounds like ebay 101 ;)

Pepper 11-21-2004 07:22 AM

Quote:

Originally Posted by Dr Love
So you'll blindly believe what the owners say? They have every reason to give out wrong information. The truth is probably somewhere in between.

Read my post, I clearly said that owners are trying to make the situation look as bad as possible, IMHO that's pretty clearly said that I don't believe their numbers either.

GKJ 11-21-2004 08:10 AM

Whoa. Just because teams were sold for less than Forbes says they're worth, automatically makes their value that much less? Wrong.

Pepper 11-21-2004 08:18 AM

Like it was explained earlier, franchise value is the value that is actually paid for it, all others are estimates more or less.

Forbes has a clear trend of overestimating values of NHL franchises which makes the most recent estimation unreliable at best, downright misleading at worst.

And once again, Forbes hasn't even seen the books so their estimates are automatically very unreliable.

Charge_Seven 11-21-2004 09:30 AM

Quote:

Originally Posted by Pepper
My question to you pro-NHLPA people is this:
How on earth do you still believe that Forbes is telling the truth and owners are lying?? I know that owners do their best to make the situation look as bad as possible but Forbes really has absolutely NO credibility in this issue for several reasons.

My reasoning is not that I accept the Forbes numbers, it's that I believe the NHL is also avoiding the truth with their numbers. If you take the owners numbers as truth you're certainly one of the most trusting individuals in the world. I think the real number is somewhere in the middle (leaning towards Forbes numbers) however what I'd really like to see is how much of this "lost" money is paid to companies that the person who's "losing" the money owns.

Orange 11-21-2004 09:50 AM

Quote:

Originally Posted by NYR469
the pens and sabres filed for bankruptcy and then were sold for far less than they were actually worth...that doesn't make the original value wrong, that just means that circumstances caused the team to sell for less...

Quote:

Originally Posted by go kim johnsson
Whoa. Just because teams were sold for less than Forbes says they're worth, automatically makes their value that much less? Wrong.

There is no such thing as "original value". It's impossible to calculate. The only value that matters is the market value. This value is determined by the price people are willing to pay to acquire a franchise. (think stock market)

The value listed by Forbes is a projected market value. An estimation of want they think a buyer would be willing to shell out for a particular franchise. And just like any prediction made by any economist I've ever known, Forbes' predictions are far from the mark.

Now, the financial situation of a company counts against it's value. You can't say a buyer got a bargain because a franchise filed for bankruptcy. That counts against it's current market value. To summarize, a team didn't "sell for less" because of bankruptcy. A team's value was lessened because of bankruptcy, inevitably lessening it's selling price on the market.

Orange 11-21-2004 10:09 AM

Quote:

Originally Posted by GregStack
My reasoning is not that I accept the Forbes numbers, it's that I believe the NHL is also avoiding the truth with their numbers. If you take the owners numbers as truth you're certainly one of the most trusting individuals in the world. I think the real number is somewhere in the middle (leaning towards Forbes numbers) however what I'd really like to see is how much of this "lost" money is paid to companies that the person who's "losing" the money owns.

I find it funny how the consensus on these boards is now that the numbers are in between the two reports. The Forbes report is so fundamentally flawed that it hurts my eyes reading it. But to the subject at hand : I trust the NHL commissioned report to be right on the target as per the owner's definition of revenue.

Now I don't really put myself in a compromising situation since as long as the owners are responsible for the definitions, they can't be wrong ! But that's just it, NHLPA have yet to come up with what they consider the revenue to be. They're only yapping left and right that not all revenues are included in the Levitt report. Well define for us what those are and we can have a constructive debate. In the meantime, the only definition I have and willing to accept is the owner's definition.

Pepper 11-21-2004 11:12 AM

Quote:

Originally Posted by GregStack
My reasoning is not that I accept the Forbes numbers, it's that I believe the NHL is also avoiding the truth with their numbers. If you take the owners numbers as truth you're certainly one of the most trusting individuals in the world. I think the real number is somewhere in the middle (leaning towards Forbes numbers) however what I'd really like to see is how much of this "lost" money is paid to companies that the person who's "losing" the money owns.

I hope you weren't talking to me since I clearly said that owners try to make the numbers look as bad as it's possible and I most certainly don't believe it's the truth (well, if there's such thing as truth here).

But I really don't understand people who trust Forbes' numbers when they haven't even seen the books and with Forbes having a very poor track record when it comes to estimating the value of a franchise!!

Charge_Seven 11-21-2004 11:14 AM

Quote:

Originally Posted by Orange
I find it funny how the consensus on these boards is now that the numbers are in between the two reports. The Forbes report is so fundamentally flawed that it hurts my eyes reading it. But to the subject at hand : I trust the NHL commissioned report to be right on the target as per the owner's definition of revenue.

Now I don't really put myself in a compromising situation since as long as the owners are responsible for the definitions, they can't be wrong ! But that's just it, NHLPA have yet to come up with what they consider the revenue to be. They're only yapping left and right that not all revenues are included in the Levitt report. Well define for us what those are and we can have a constructive debate. In the meantime, the only definition I have and willing to accept is the owner's definition.

To debate the definition of revenue is pointless and ridiculous. There is only one definition of true revenue, and to debate otherwise is redundant. The owners are not responsible for the definition at all, they're responsible for the manipulation of people (such as yourself) into believing that you can pick and choose what is part of your revenue. Quite similarly to when they do end up getting a cap put into the league, they'll be the ones twisting the meaning of "salary" to be able to pay a player more, and remain under the cap.

If you want to believe that the owners have presented the "truth" then go ahead, it's possible that they have, however very unlikely. If someone wants to completely believe the Forbes article, then go for it. But the massive range in numbers can only be explained by manipulation of the date/facts on both parties.

Charge_Seven 11-21-2004 11:21 AM

Quote:

Originally Posted by Pepper
I hope you weren't talking to me since I clearly said that owners try to make the numbers look as bad as it's possible and I most certainly don't believe it's the truth (well, if there's such thing as truth here).

But I really don't understand people who trust Forbes' numbers when they haven't even seen the books and with Forbes having a very poor track record when it comes to estimating the value of a franchise!!

I was simply using your post as the starting ground for my comment.

Also, guaging the value of franchises year to year can be quite difficult. Did anyone take into account players that joined, or left the franchises during those years when coming up with those figures? Also, I don't believe there are very large markets for the sale of NHL franchises, normally there is only one, or two suitors for the team, making it a buyers market, and not a sellers market. It's kind of like when one gets something appraised, you need a buyer who believes it's worth that price as well, and quite normally you don't get that price.

Like I said though, I don't trust the Forbes, or the NHL's numbers. I fall on the side of supporting the players as I'm sure you can guess, but I don't completely disagree with the owners when they say they'd like a cap of sorts. I'd like a complete compromise, of a soft cap with a luxury tax, sitting around $45-50,000,000 as the cap.

Pepper 11-21-2004 11:37 AM

Quote:

Originally Posted by GregStack
Also, guaging the value of franchises year to year can be quite difficult. Did anyone take into account players that joined, or left the franchises during those years when coming up with those figures? Also, I don't believe there are very large markets for the sale of NHL franchises, normally there is only one, or two suitors for the team, making it a buyers market, and not a sellers market. It's kind of like when one gets something appraised, you need a buyer who believes it's worth that price as well, and quite normally you don't get that price..

Yes, gauging the value of a franchise is very hard and Forbes has a CLEAR TREND of overvaluing the franchises. In the last 6 years Forbes overestimated the value of NHL franchises by 45% on average (their estimation being always higher than the actual price paid for a franchise). Player movements is one thing but most likely very minor variable and doesn't even begin to explain how they got it so badly wrong.

So would any of the pro-NHLPA posters here answer this question:
Is there ANY evidence of Forbes getting their numbers right this time when their track-record is beyond horrible in the last 6 years?? I most certainly haven't seen it.

Quote:

Originally Posted by GregStack
Like I said though, I don't trust the Forbes, or the NHL's numbers. I fall on the side of supporting the players as I'm sure you can guess, but I don't completely disagree with the owners when they say they'd like a cap of sorts. I'd like a complete compromise, of a soft cap with a luxury tax, sitting around $45-50,000,000 as the cap.

It's funny how the most rabid pro-NHLPA people are fans of big teams such as Leafs, Flyers and Rangers. I can understand that you don't want to give away the only advantage they have over smaller teams that allows them to patch up the mistakes done by horrible managing (there are exceptions like Flyers) but they should look at the bigger picture. Oh and $50M softcap is about the same as doing nothing, effects are marginal and the gap between biggest and smallest payrolls will be around $40M or 100%.

Pepper 11-21-2004 11:41 AM

Quote:

Originally Posted by GregStack
To debate the definition of revenue is pointless and ridiculous. There is only one definition of true revenue, and to debate otherwise is redundant.

Actually it's not and that's the whole problem. Revenues of the arena don't belong to the team so they shouldn't be used against them because not all teams don't own their arena.

It's not that simple as you seem to think.

Orange 11-21-2004 11:49 AM

Quote:

Originally Posted by GregStack
To debate the definition of revenue is pointless and ridiculous.

No it's not. Not debating it is pointless and ridiculous. The current impasse has a lot to do with the two parties not agreeing on what constitutes the current owner's related revenues.

Quote:

Originally Posted by GregStack
There is only one definition of true revenue, and to debate otherwise is redundant.

Not quite. As per the NHLPA, parking lots revenues around a stadium should count in the equation. Obviously if someone else than the team owner owned the parking lot it could not be part of the equation, so why consider it if it's part of an owner's portfolio. IMO, only revenues from direct hockey operations should count. The NHLPA would not agree.

Both parties will have to debate the definition of revenues. All further negotiations should take place on agreed upon definitions. Not doing so will make the debate redundant because they'll always come back to what they consider part of the revenues and what's not.

Quote:

Originally Posted by GregStack
The owners are not responsible for the definition at all, [..]

And I never said they were. But I know how they define revenues ... now let's hear how the players define it !

Quote:

Originally Posted by GregStack
[...] they're responsible for the manipulation of people (such as yourself) into believing that you can pick and choose what is part of your revenue.

:shakehead
Yeah, I'm clearly incapable of independent reasoning ! Comments like these make people lose their credibility.

Quote:

Originally Posted by GregStack
Quite similarly to when they do end up getting a cap put into the league, they'll be the ones twisting the meaning of "salary" to be able to pay a player more, and remain under the cap.

This is a possibility I'm not oblivious to. That's why it would be in the best interest of the small markets to clearly define what salary is in the CBA, to restrict the possible bending of the rules by richer teams.

Charge_Seven 11-21-2004 01:09 PM

Quote:

Originally Posted by Pepper
Actually it's not and that's the whole problem. Revenues of the arena don't belong to the team so they shouldn't be used against them because not all teams don't own their arena.

It's not that simple as you seem to think.

So what you're saying is that since only some owners own their arena's, all teams arena revenues should be left out? What about the teams owners that DO own their arena's?

Lexicon Devil 11-21-2004 01:15 PM

Quote:

Not quite. As per the NHLPA, parking lots revenues around a stadium should count in the equation. Obviously if someone else than the team owner owned the parking lot it could not be part of the equation, so why consider it if it's part of an owner's portfolio. IMO, only revenues from direct hockey operations should count. The NHLPA would not agree.
So parking shouldn't count as revenue just because it could potentially be outsourced? So I guess concessions shouldn't be included either? And what about the $5 service charge that the Ottawa Senators add on each ticket? That shouldn't count because Ticketmaster would be doing something similar anyways?

That's ridiculous. The bottom line is that the owners are making boatloads off of parking, concessions and service charges. Those revenue streams only exist because of the players.

Charge_Seven 11-21-2004 01:18 PM

Quote:

Originally Posted by Pepper
It's funny how the most rabid pro-NHLPA people are fans of big teams such as Leafs, Flyers and Rangers. I can understand that you don't want to give away the only advantage they have over smaller teams that allows them to patch up the mistakes done by horrible managing (there are exceptions like Flyers) but they should look at the bigger picture. Oh and $50M softcap is about the same as doing nothing, effects are marginal and the gap between biggest and smallest payrolls will be around $40M or 100%.

Of course fans of teams that have been consistently successful in the money making aspect of the game are going to want their team to continue to use their money. There's absolutely no question that's going to be the case. Heck, we're the ones who gave them the money in the first place by supporting them, why would I want to see that money go elsewhere?

However, if you believe that once the Leafs aren't allowed to pay higher than other teams that no players will sign there, then you are sadly mistaken. The Leafs will then be able to draw more heavily on the fact that they are one of the largest fan bases in the hockey world, and along with the Canadiens, and other beloved hockey franchises pick up marquis free agents on the basis of being the players childhood team, and the team they dreamed of playing with all along. (clearly I'm not saying in every scenario) however we all know it would happen more if players aren't paid ridiculous ammounts of money as they are now.

Charge_Seven 11-21-2004 01:19 PM

Quote:

Originally Posted by Lexicon Devil
So parking shouldn't count as revenue just because it could potentially be outsourced? So I guess concessions shouldn't be included either? And what about the $5 service charge that the Ottawa Senators add on each ticket? That shouldn't count because Ticketmaster would be doing something similar anyways?

That's ridiculous. The bottom line is that the owners are making boatloads off of parking, concessions and service charges. Those revenue streams only exist because of the players.

My favourite part is that more often than not the "out-sourced" job goes to a friend, or to a company that the OWNER OWNS!


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