Phoenix XL - Rich Man's World
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10-20-2011, 04:57 PM
Join Date: Dec 2002
Location: 48th State
Originally Posted by
Please explain to me how a for-profit business which doesn't make a profit can routinely gain in value year over year. Is it valued as a nonprofit or as simply a loss leader in a larger entity?
The latter. A team is only as valuable as the league it plays in. It's more or less why some NFL owners could care less about the product on the field. They've made so much off of appreciation of the franchise value itself there's no incentive to be competitive. Hockey doesn't really have that luxury, but with revenue sharing and the like, franchise values are more intertwined. A team like the Leafs or Habs that is rolling in history and cash ala the Yankees is going to have a higher value, sure, but that doesn't mean you necessarily have to make money on a yearly basis to make money in the long run for teams like the Coyotes or Preds.
Think of the NHL as a brand, and the franchises as 30 outlets of that brand. An overall improvement in the brand is far more powerful than any astronomical leap (or fall) in 1 outlet value.
A good rule, though, is that people own teams as part of their ego and not their portfolio. People who turn things around drastically like Jerry Jones are the exception, not the rule.
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