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How does the Canucks 50% sale affect Bettman's credibility??

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11-21-2004, 02:25 PM
  #1
kurt
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How does the Canucks 50% sale affect Bettman's credibility??

Everyone seems to argue over whether Forbes was accurate or not, and whether Leavitt was right or not. The problem is, there's just about as many ways to define 'Hockey Revenue' as there are people bickering about it.

However, I do find it interesting that Bettman talks about how the league is basically about to crash into the Sun, yet the Canucks sold 50% of their franchise for a rumoured $115-125 million.

I don't know about most of you, but the idea of paying millions of dollars to lose money isn't my idea of fun. Oh, and last time I checked, the Canucks were a small market club.

On another note, how huge is the Raptors bench? They just rallied from a 19 point deficit in the 4th quarter to take the lead! Damn.

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11-21-2004, 02:43 PM
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Quote:
Originally Posted by kurt
However, I do find it interesting that Bettman talks about how the league is basically about to crash into the Sun, [...]
Let's not get carried away with overstatements, shall we ?

Quote:
Originally Posted by kurt
[...] yet the Canucks sold 50% of their franchise for a rumoured $115-125 million.
Since the real numbers are not out, there's no point in considering them yet.

Quote:
Originally Posted by kurt
I don't know about most of you, but the idea of paying millions of dollars to lose money isn't my idea of fun. Oh, and last time I checked, the Canucks were a small market club.
Indeed, it doesn't sound fun. But that doesn't paint the whole picture. Another take on this would be that the given investor speculates an outcome in the current impasse greatly in favor of the owners. Hence ensuring rapid growth for his investment.

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11-21-2004, 02:52 PM
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Quote:
Originally Posted by kurt
Everyone seems to argue over whether Forbes was accurate or not, and whether Leavitt was right or not. The problem is, there's just about as many ways to define 'Hockey Revenue' as there are people bickering about it.

However, I do find it interesting that Bettman talks about how the league is basically about to crash into the Sun, yet the Canucks sold 50% of their franchise for a rumoured $115-125 million.

I don't know about most of you, but the idea of paying millions of dollars to lose money isn't my idea of fun. Oh, and last time I checked, the Canucks were a small market club.
New owners are counting on the system to improve (=they expect a salary cap) and Canucks are one of the few profitable teams already.

So to answer your question, it doesn't affect it any way.

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11-21-2004, 04:03 PM
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Quote:
Originally Posted by Orange
Indeed, it doesn't sound fun. But that doesn't paint the whole picture. Another take on this would be that the given investor speculates an outcome in the current impasse greatly in favor of the owners. Hence ensuring rapid growth for his investment.
actually, if there is revenue sharing in the new agreement, it hurts the sale value of the canucks, since it will reduce their profitability if they are forced to share.

dr

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11-21-2004, 04:30 PM
  #5
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Originally Posted by DementedReality
actually, if there is revenue sharing in the new agreement, it hurts the sale value of the canucks, since it will reduce their profitability if they are forced to share.
What you describe is still speculation. You speculate that the new deal would lessen the value of a franchise while another investor speculates the opposite. I don't really care who's right or wrong, it's not my investment. But that new investor wouldn't be the first to speculate in that particular way. When George Gillette bought the Montreal Canadian, he specifically said that he invested in Bettman's ability to negotiate a new and better CBA. So whoever bought 50% of the Canucks probably thought the same.

But if it was my investment, I would also speculate that way. Revenue sharing, combined with a cap would improve the Canucks value in the long run. It's true that Vancouver reported a profit, but don't forget they were in the red not so long ago. Fact is there is much uncertainty from year to year as far as profits are concerned. Uncertainty plays against a business' value. With revenue sharing in place and cost certainty in the form of a cap, there would be much less variations in a team's profits from year to year thus enhancing it's market value.

Take the NFL for example. Revenue sharing didn't lessen any franchise's value, quite the contrary !

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11-21-2004, 05:20 PM
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Quote:
Originally Posted by Orange

Take the NFL for example. Revenue sharing didn't lessen any franchise's value, quite the contrary !

I disagree. As much as the teams are worth with no revenue sharing in football the Redskins, Cowboys, Eagles, and Patriots to name a few would see the value of their franchises jump by a large amount.

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11-21-2004, 05:24 PM
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Originally Posted by John Flyers Fan
I disagree. As much as the teams are worth with no revenue sharing in football the Redskins, Cowboys, Eagles, and Patriots to name a few would see the value of their franchises jump by a large amount.
All teams are more valuable in a stable, prosperous league. I think if the NHL did away with thier salary cap and revenue sharing, the value of all teams would fall, including the ones you mentioned above. This is just speculation though, on both our parts...

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11-21-2004, 05:28 PM
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Quote:
Originally Posted by kurt
Everyone seems to argue over whether Forbes was accurate or not, and whether Leavitt was right or not. The problem is, there's just about as many ways to define 'Hockey Revenue' as there are people bickering about it.

However, I do find it interesting that Bettman talks about how the league is basically about to crash into the Sun, yet the Canucks sold 50% of their franchise for a rumoured $115-125 million.

I don't know about most of you, but the idea of paying millions of dollars to lose money isn't my idea of fun. Oh, and last time I checked, the Canucks were a small market club.

On another note, how huge is the Raptors bench? They just rallied from a 19 point deficit in the 4th quarter to take the lead! Damn.
Do you think it is possible that the new partner talked to the current owner, reviewed all the books to his satisfaction, and then talked to several of the other owners and Bettman to guage how firm the NHL was in their position on the lockout before he committed to purchasing a 50% interest in the team?

Would you make that investment without at least doing the above?

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11-21-2004, 05:31 PM
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Quote:
Originally Posted by djhn579
All teams are more valuable in a stable, prosperous league. I think if the NHL did away with thier salary cap and revenue sharing, the value of all teams would fall, including the ones you mentioned above. This is just speculation though, on both our parts...
IMO the NFL would still be the most popular sport in the US. Revenue sharing and the fact that all TV money is from a national network and not broken up locally like the rest of the sports is what allows the Packers, Cardinals etc. to compete with the big boys.

I still believe that without it, the top teams would be worth more, and the lesser valued teams would be worth much less.

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11-21-2004, 05:40 PM
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Quote:
Originally Posted by John Flyers Fan
I disagree. As much as the teams are worth with no revenue sharing in football the Redskins, Cowboys, Eagles, and Patriots to name a few would see the value of their franchises jump by a large amount.
And I agree. They would soar ... but it wouldn't last. As the league gets less competitive, the poorer teams' value will fall. As they fall, so will the league's overall value. Finally, it would start hitting those before mentioned teams.

With revenue sharing you create stability and it's normal for a stable system to grow slower. But the point is that one single franchise can't go so high above the league's mean value before it starts going down again. By giving a chance to the "poorer" team's value to grow, you also ensure overall growth. This gives all teams a higher growth ceiling over time. Take away revenue sharing and the league would never have become what it is today !

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11-21-2004, 05:50 PM
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Quote:
Originally Posted by Orange
But if it was my investment, I would also speculate that way. Revenue sharing, combined with a cap would improve the Canucks value in the long run. It's true that Vancouver reported a profit, but don't forget they were in the red not so long ago.
Call me suspicious about some of this profit the Nucks are supposedly making. They went from losing $20m per year to making $25m per year. I don't see where they are getting that $45m turnaround. Forbes has them pegged at making $1.3m before loans and depreciation. Which is it? Orcabay may have shifted profit from the nucks in dark years to make it look worse. Now that they are wanting to sell the team they shift the profit to the Nucks to make them look more valuable to buyers, but this lowers the Orcabay revenue. How much they are shifting around revenue is hard to say, they might not be shifting any around at all and they may in fact be $45m better off. The dollar going up, full houses, better TV revenue, playoffs certainly help, but $45m is a lot to account for. It'd take a closer inspection to find out exactly.


These are the reasons you end up with a system like the NBA which calculates based on formulas rather than exact figures.




Quote:
Vancouver president and general manager Brian Burke said Wednesday that the team, which lost $38 million in the fiscal year before he arrived in 1998, will turn a profit for the first time during his tenure. But he quickly cautioned against Canadian teams celebrating too soon.
Thats actually a $63m turnaround.


Last edited by me2: 11-21-2004 at 06:06 PM.
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Old
11-21-2004, 05:51 PM
  #12
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Quote:
Originally Posted by Orange
And I agree. They would soar ... but it wouldn't last. As the league gets less competitive, the poorer teams' value will fall. As they fall, so will the league's overall value. Finally, it would start hitting those before mentioned teams.

With revenue sharing you create stability and it's normal for a stable system to grow slower. But the point is that one single franchise can't go so high above the league's mean value before it starts going down again. By giving a chance to the "poorer" team's value to grow, you also ensure overall growth. This gives all teams a higher growth ceiling over time. Take away revenue sharing and the league would never have become what it is today !
Then explain the New York Yankees & the Boston Red Sox. Their values are going through the roof, while franchises like the Reds, Pirates, and Royals are floundering and failing.

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11-21-2004, 06:13 PM
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Quote:
Originally Posted by djhn579
Do you think it is possible that the new partner talked to the current owner, reviewed all the books to his satisfaction, and then talked to several of the other owners and Bettman to guage how firm the NHL was in their position on the lockout before he committed to purchasing a 50% interest in the team?

Would you make that investment without at least doing the above?
If there's uncertainty about the CBA, why wouldn't he wait until the issue was cleared up?

He must feel that even if the owners don't get the hard cap they're looking for, the team is still worth what he's paying for it. If not, why wouldn't he wait?

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11-21-2004, 06:22 PM
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Quote:
Originally Posted by BlackRedGold
If there's uncertainty about the CBA, why wouldn't he wait until the issue was cleared up?

He must feel that even if the owners don't get the hard cap they're looking for, the team is still worth what he's paying for it. If not, why wouldn't he wait?
If his conversations made him very comfortable that an new economic system would be put in place, why should he wait? If he does wait, the price could go up since other buyers could become interested.

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11-21-2004, 09:26 PM
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Originally Posted by djhn579
If his conversations made him very comfortable that an new economic system would be put in place, why should he wait?
How are conversations going to change anything? There's no evidence that the NHL is going to get what it wants.

There's no way to determine how the labour war is going to end. Anyone who is betting serious money on one way or the other might as well go to Vegas since the odds are just as good there.

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11-22-2004, 12:27 AM
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Quote:
Originally Posted by DementedReality
actually, if there is revenue sharing in the new agreement, it hurts the sale value of the canucks, since it will reduce their profitability if they are forced to share.

dr
Does anybody have more info whether this is actually true, is there such a clause?

vanlady in the "Forbes slams Levitt report" -thread:

"Isn't a new owner for Vancouver waiting to see if the new CBA contains revenue sharing before signing (by the way if the new CBA does contain revenue sharing the deal falls through)"

http://www.hfboards.com/showthread.p...6&page=8&pp=15

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11-22-2004, 01:44 AM
  #17
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Quote:
Originally Posted by kurt
However, I do find it interesting that Bettman talks about how the league is basically about to crash into the Sun, yet the Canucks sold 50% of their franchise for a rumoured $115-125 million.

I don't know about most of you, but the idea of paying millions of dollars to lose money isn't my idea of fun. Oh, and last time I checked, the Canucks were a small market club.
Don't get caught up with that 115-125 million number. It also includes 50% of GM Place, which cost like 160 million back in 1995 to build.

So, given that the building has depreciated over the past decade, it's still worth in the 120 million range give or take. So, that's about half of what the new owner paid for his stake in the franchise/building.

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11-22-2004, 05:13 AM
  #18
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Originally Posted by BlackRedGold
How are conversations going to change anything? There's no evidence that the NHL is going to get what it wants.

There's no way to determine how the labour war is going to end. Anyone who is betting serious money on one way or the other might as well go to Vegas since the odds are just as good there.
If the people this guy talked to said that the owners were united and were going to hold out for the deal they want, and they sounded sincere enough, why wouldn't he buy? Vancouver is still profitable anyway, so there is even les risk than if he was to buy a part of the Sabres.

We could guess all we want, but the point I what really matters is that this has no effect on the NHL's position.

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11-22-2004, 08:29 AM
  #19
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Quote:
Originally Posted by djhn579
If the people this guy talked to said that the owners were united and were going to hold out for the deal they want, and they sounded sincere enough, why wouldn't he buy? Vancouver is still profitable anyway, so there is even les risk than if he was to buy a part of the Sabres.
.
because people dont make these kinds of investments based on "conversations".

dr

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11-22-2004, 08:41 AM
  #20
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Originally Posted by DementedReality
because people dont make these kinds of investments based on "conversations".

dr

Really? When you go to invest a lot of money in something, you do research into the business, but you are not going to talk to people that are in the business or that were in the business before you make a decision? If I was going to invest that much money, I'd either wait until the labor situation was resolved, or talk to as many people in the industry as possible to find out where they were trying to go with the lockout. If I wasn't satisfied with their answers, I wouldn't invest.

Of course, I could be totally wrong. I certainly don't have that kind of money to invest. But if it was my money, I would want to be as comfortable as possible before investing money in a business that is in a lockout like this.

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11-22-2004, 09:52 AM
  #21
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Originally Posted by Street Hawk
Don't get caught up with that 115-125 million number. It also includes 50% of GM Place, which cost like 160 million back in 1995 to build.

So, given that the building has depreciated over the past decade, it's still worth in the 120 million range give or take. So, that's about half of what the new owner paid for his stake in the franchise/building.

An asset's value isn't based upon how much it cost to produce.

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11-22-2004, 10:01 AM
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Originally Posted by BlackRedGold
An asset's value isn't based upon how much it cost to produce.
No, it's based on how much someone will actually pay for the asset. Forbes has been consistently and laughably wrong in over-valuing NHL franchises.

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11-23-2004, 10:47 PM
  #23
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Quote:
Originally Posted by me2
Call me suspicious about some of this profit the Nucks are supposedly making. They went from losing $20m per year to making $25m per year. I don't see where they are getting that $45m turnaround. Forbes has them pegged at making $1.3m before loans and depreciation. Which is it? Orcabay may have shifted profit from the nucks in dark years to make it look worse. Now that they are wanting to sell the team they shift the profit to the Nucks to make them look more valuable to buyers, but this lowers the Orcabay revenue. How much they are shifting around revenue is hard to say, they might not be shifting any around at all and they may in fact be $45m better off. The dollar going up, full houses, better TV revenue, playoffs certainly help, but $45m is a lot to account for. It'd take a closer inspection to find out exactly.


These are the reasons you end up with a system like the NBA which calculates based on formulas rather than exact figures.






Thats actually a $63m turnaround.
How much do teams get in revenue per game assuming the game is sold out? I think Burke said something close to a million? In the dark years, between 96 and 99, the Canucks averaged something like 12-14k per game? GM place holds almost 19k, so when you factor in home games for the Canucks have sold out for the past two years, plus playoffs (helloooo skyrocketing ticket prices), it can be possible. Let's not forget the payroll of the Canucks under Quinn was among the highest in the League at one time. Then there's the SportsAction type deal that Burke managed to get the Canucks, so there's a boost in revenue too.

However, it depends what you consider hockey revenues. There could have been some creative shifting by Orca Bay, since they have other ventures besides the Canucks. Sorta what has been rumoured to be going on with the Rangers and CableVision.

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