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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

OT: Relocation fees to cost Rams, Chargers $645M, Raiders $378M

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Old
07-13-2017, 10:56 AM
  #1
Fenway
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OT: Relocation fees to cost Rams, Chargers $645M, Raiders $378M

Safe to assume that MLB, the NBA and Lord Bettman are watching this carefully.



http://www.espn.com/nfl/story/_/id/1...-chargers-645m

Quote:
The 29 NFL teams that are staying put will each receive a gross sum of $55.2 million over a period of up to 11 years from the relocation fees associated with the moves of the Rams, Chargers and Raiders, sources told ESPN on Wednesday.

The Rams and the Chargers will each pay $645 million beginning in December 2019 and ending in December 2028. Neither the Rams nor the Chargers will receive revenue from the Los Angeles relocation fees.

The Raiders will pay $378 million over 10 years beginning in the year they move to Las Vegas, sources with knowledge of the numbers said. That money will be divided among every team but the Raiders.

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07-13-2017, 11:02 AM
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BigFatCat999
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Almost makes the NHL WANT to relocate teams.

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07-13-2017, 11:15 AM
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rj
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It'd be better to rephrase it "the 3 franchises will be forgoing x amount of their TV rights fee receipts".

Extortion, plain and simple, but that's how cartels work.

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07-13-2017, 12:03 PM
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Quote:
Originally Posted by Fenway View Post
Safe to assume that MLB, the NBA and Lord Bettman are watching this carefully.
... Peer of the Realm now is he?

Quote:
Originally Posted by rj View Post
Extortion, plain and simple, but that's how cartels work.
You said it. Man, that is rich. Unbelievable. Problem being exactly what Fenway alludes to. The NFL just dropped a God almighty boulder in the pond, ripple effect likely to be major as it reaches MLB, the NBA & finally the NHL at the farther edges just as the Ballmer transaction created a sort of Stampede, Gold Rush. Hyper-inflated franchise valuations including Expansion Fee's left in the wake of that Tsunami.

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07-14-2017, 01:40 PM
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Six years ago TNSE paid a $60 mil relocation fee to move the Thrashers to Winnipeg (on a reported franchise value of $110 mil).

Given that franchise values have ballooned up to $500 mil or more, a proportionate relocation fee for an NHL franchise would be $273 million.

GIven how valuable NFL franchises are those fees seem like almost a bargain.

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07-14-2017, 01:56 PM
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Relocation fees are applied to make up the difference in market values to deter owners from moving franchises. There is a reason why the Chargers and Rams are paying much more to move to LA than the Raiders to Las Vegas. The reason why Winnipeg paid only 60 million is because they paid only 110 million for the team but it was worth a lot more in Winnipeg than Atlanta so the league made the Jets pay the difference for a fair market value of 170 million. If the team was allowed to move to Toronto the relocation fee would have been significantly higher. This isn't extortion by the leagues...its just making things equitable for all owners. Winnipeg got really lucky for buying the franchise at the right time.

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07-14-2017, 02:32 PM
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Quote:
Originally Posted by Yukon Joe View Post
Six years ago TNSE paid a $60 mil relocation fee to move the Thrashers to Winnipeg (on a reported franchise value of $110 mil).

Given that franchise values have ballooned up to $500 mil or more, a proportionate relocation fee for an NHL franchise would be $273 million.

GIven how valuable NFL franchises are those fees seem like almost a bargain.
Absolutely. And it pleases me to no end knowing TNSE got in at what are now bargain basement prices when at the time Bettman thought he was being real clever, shrewd in dinging them for the full $170M they had budgeted for the Coyotes.... breaking it up with $110M going to ASG, $60M in Relo fee's. That all in Winnipeg only worth $170M (and remember that price was not set by any metric other than thats what the NHL needed to get out from underneath the Coyotes) when in fact even then the Winnipeg market worth considerably more. And I mean a lot more.

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07-14-2017, 03:56 PM
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I wonder if the Rams should have been given a break on the amount of the relocation fee since they were in effect bringing the team back 'home'. They were also doing the NFL a favor as the league was without a team in the 2nd largest market in the U.S. for just over 2 decades.


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07-14-2017, 04:15 PM
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Originally Posted by rj View Post
It'd be better to rephrase it "the 3 franchises will be forgoing x amount of their TV rights fee receipts".

Extortion, plain and simple, but that's how cartels work.
Pretty much the same thing.

Whether the money comes out of the 3 team's pockets or they don't get their regular share of the TV money, the other owners are getting more than their regular 1/32 share.

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07-14-2017, 04:18 PM
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I love that the Chargers are paying many hundreds of millions of dollars to be a secondary tenant for a schmuck owner in a city that never wanted them in the first place.

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07-14-2017, 08:25 PM
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Elephant Igloo
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Originally Posted by objectiveposter View Post
The reason why Winnipeg paid only 60 million is because they paid only 110 million for the team but it was worth a lot more in Winnipeg than Atlanta so the league made the Jets pay the difference for a fair market value of 170 million.
The relocation fee for the original Jets to move to the much larger and much more prosperous city of Phoenix must have been HUUUGE! Same with Quebec City and Denver.

http://www.thehockeynews.com/news/ar...ve-to-winnipeg
Quote:
It should be noted that the relocation fee for the Thrashers seems to have come out of nowhere. There was no relocation fee when the Minnesota North Stars moved to Dallas in 1993, when the Quebec Nordiques moved to Colorado in 1995, when the Winnipeg Jets moved to Phoenix in 1996 and when the Hartford Whalers relocated to Raleigh, N.C., in 1997.
Oh, my mistake.

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07-14-2017, 09:26 PM
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Quote:
Originally Posted by Elephant Igloo View Post
The relocation fee for the original Jets to move to the much larger and much more prosperous city of Phoenix must have been HUUUGE! Same with Quebec City and Denver.

http://www.thehockeynews.com/news/ar...ve-to-winnipeg

Oh, my mistake.
Wa wa wa cry me a river. Let me guess you think Bettman hates Canada and imposed unnecessary fees on a team moving to Canada!

The only people that got screwed by the relocation fee was A$G and they deserved every bit of it with how they poisoned the Atlanta market.
True North paid exactly what they wanted to pay and the NHL took a portion from A$G for destroying a potentially strong market.

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07-14-2017, 09:34 PM
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Quote:
Originally Posted by Elephant Igloo View Post
The relocation fee for the original Jets to move to the much larger and much more prosperous city of Phoenix must have been HUUUGE! Same with Quebec City and Denver.

http://www.thehockeynews.com/news/ar...ve-to-winnipeg

Oh, my mistake.
I'm sure if Bettman really had his way, ASG would have gotten nothing except a nice big middle finger from the league with $170 million being all relocation fees spread among the rest of the teams.

It's also worth noting that Carolina didn't involve a transfer of ownership, and both the Quebec and Winnipeg sales involved extremely large amounts being paid for the team. Atlanta was a bargain-basement deal because ASG just wanted to dump them, hence the need for relocation fees. If Montreal were bought tomorrow for $110 million for the purpose of relocation to the US, you'd better believe there'd be massive relocation fees there as well.

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07-14-2017, 09:56 PM
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True North was earmarked to pay 170 million either way. That's what the NHL wanted for the Coyotes when they owned them and were nearly sold to them is history went down different in AZ.

ASG wanted 110 for the Thrashers so the 60 million relo fee was really made up on the fly to suit that transaction on it's own island. If ASG wanted 130. The relo. fee would have been 40 mil.

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07-14-2017, 10:49 PM
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Originally Posted by Mightygoose View Post
True North was earmarked to pay 170 million either way. That's what the NHL wanted for the Coyotes when they owned them and were nearly sold to them is history went down different in AZ.

ASG wanted 110 for the Thrashers so the 60 million relo fee was really made up on the fly to suit that transaction on it's own island. If ASG wanted 130. The relo. fee would have been 40 mil.
My theory on this is that Betman didn't want ASG to profit from killing the Atlanta market. Bruce Levinson claimed they lost around $100 million during the years they owned the team so letting them keep $110 million (before fees to the Reign Group or whoever they were) basically let them break even

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07-15-2017, 02:37 AM
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Originally Posted by OmniCube View Post
I love that the Chargers are paying many hundreds of millions of dollars to be a secondary tenant for a schmuck owner in a city that never wanted them in the first place.
What's even funnier, is the Chargers weren't willing to invest nearly as much on a stadium of their own, in a city they called home for 57 years.

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07-15-2017, 04:52 PM
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Elephant Igloo
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Originally Posted by Gnashville View Post
Wa wa wa cry me a river. Let me guess you think Bettman hates Canada and imposed unnecessary fees on a team moving to Canada!
I think that the league, given the economic climate of the mid-1990s, was not going to complicate the substitution of Quebec City and Winnipeg for Denver and Phoenix. Benign neglect.

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07-15-2017, 04:55 PM
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I guess all it remains to be seen is HOW MUCH IS IT, to make Canadian dollar not matter, or the alignment, or the conferences, or what-ever-argument-league-used-to-deny-expansion-to-Quebec-city.

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07-15-2017, 05:08 PM
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I also think that if the Flames were to move to Houston, whether by the same ownership group or by sale to Houston interests, trading an old arena in a small market for a newish arena in a huge market would command a relocation fee to the tune of $0.00.

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07-15-2017, 06:30 PM
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Originally Posted by Elephant Igloo View Post
I also think that if the Flames were to move to Houston, whether by the same ownership group or by sale to Houston interests, trading an old arena in a small market for a newish arena in a huge market would command a relocation fee to the tune of $0.00.
Absolutely right, and I'll explain why.

When Peter Karmanos expressed an interest in getting one of the 1992 expansion teams, he was told that the price tag was $50 million. He publicly asked why he'd do that when he could buy an existing team for $15 million, so he bought the Whalers for much less than an expansion team.

The 1993 expansion teams were $50 million each.

When Quebec was sold in 1995, it was for $75 million.

When Winnipeg was sold in 1996, it was for $68 million.

When Edmonton was being sold in 1997, it was for $82 million.

The next four expansion teams bought in at $80 million each.

What the Winnipeg and Quebec sales did not do was damage the market for teams; in fact, it was pushed higher.

Fast forward to 2011, when Atlanta was dumped. Not sold, dumped. The price tag on that ended up being $110 million to ASG, $60 million relocation fee. So it ultimately cost $170 million to buy and move the team.

Far from the previous sales, this would have significantly damaged the marketplace for existing teams rather than even keeping it stagnant. That's why the NHL assessed a relocation fee. If you want a billion-dollar Maple Leafs or Canadiens franchise, you need a stable cushion at the very bottom; if you want a Maple Leafs or Canadiens franchise worth half that, then don't assess the relocation fee.

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07-15-2017, 06:51 PM
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Originally Posted by Mayor Bee View Post
Absolutely right, and I'll explain why.

When Peter Karmanos expressed an interest in getting one of the 1992 expansion teams, he was told that the price tag was $50 million. He publicly asked why he'd do that when he could buy an existing team for $15 million, so he bought the Whalers for much less than an expansion team.

The 1993 expansion teams were $50 million each.

When Quebec was sold in 1995, it was for $75 million.

When Winnipeg was sold in 1996, it was for $68 million.

When Edmonton was being sold in 1997, it was for $82 million.

The next four expansion teams bought in at $80 million each.

What the Winnipeg and Quebec sales did not do was damage the market for teams; in fact, it was pushed higher.

Fast forward to 2011, when Atlanta was dumped. Not sold, dumped. The price tag on that ended up being $110 million to ASG, $60 million relocation fee. So it ultimately cost $170 million to buy and move the team.

Far from the previous sales, this would have significantly damaged the marketplace for existing teams rather than even keeping it stagnant. That's why the NHL assessed a relocation fee. If you want a billion-dollar Maple Leafs or Canadiens franchise, you need a stable cushion at the very bottom; if you want a Maple Leafs or Canadiens franchise worth half that, then don't assess the relocation fee.
Good explanation.

When the Atlanta Flames were sold to interests in Calgary back in 1980. It went for 16 million which was an unheard of amount for an NHL team bacm then.

So no relocation fee was charged therd either as it was a tide that lifted all boats.

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07-16-2017, 03:55 AM
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There was a transfer fee in the case of the nordiques

http://www.thecanadianencyclopedia.c...e-to-colorado/

Figures within the link are in canadian dollars.

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07-16-2017, 11:16 AM
  #23
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Originally Posted by BigFatCat999 View Post
Almost makes the NHL WANT to relocate teams.
NHL fees would be smaller given they are the smallest of the 4 major leagues in NA. NFL is a 14 billion dollar industry while the NHL comes in at 4-5 B.

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07-16-2017, 01:30 PM
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Good explanation.

When the Atlanta Flames were sold to interests in Calgary back in 1980. It went for 16 million which was an unheard of amount for an NHL team back then.

So no relocation fee was charged therd either as it was a tide that lifted all boats.
That was a large amount for the team considering it was only one year earlier the 4 former WHA teams paid $ 6 million apiece as an expansion fee to join the NHL. I guess Calgary was desperate to get a team.


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07-16-2017, 02:47 PM
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Originally Posted by Boris Zubov View Post
What's even funnier, is the Chargers weren't willing to invest nearly as much on a stadium of their own, in a city they called home for 57 years.
I hope the Chargers fold. Disloyal waste of a franchise.

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