Thinking of buying a National Hockey League team? Now is one of the best times ever, according to sports valuation experts. If that's true, Canadian billionaire Jim Balsillie's pending US$175-million takeover of the Pittsburgh Penguins may be one of his smartest decisions yet. That's even though the co-CEO of Research in Motion is paying more than three times what the franchise was going for prior to the 2004-05 lockout. Today, Forbes magazine pegs the value of the Penguins at US$133 million in its just-released annual ranking of NHL teams. That sum is a far cry from the US$332 million the Toronto Maple Leafs are worth, but then the Leafs pull in twice as much revenue as the Penguins, own their arena and play in a hockey-mad city that buys tickets whether the team wins or loses.
Still, on-ice success has little to do with how valuable a particular franchise is, says Drew Dorweiler, a Montreal-based chartered business valuator at Wise, Blackman LLP, who has been valuating sports teams for more than a decade. Dorweiler says the most important factor is owning the arena, because it allows proprietors to call their own shots. They can control costs and revenues, add other pro teams and install more luxury and corporate box seats, which can double their ticket revenue. Other important but less visible assets include community demographics, broadcasting rights and selling various content packages and partnerships. "Toronto is a perfect example of how all these factors contribute together and translate into value," says Dorweiler. "The Leafs haven't won a Cup since 1967, there are no real superstars on the team aside from Mats Sundin, and yet for years they've been selling out every single game with some of the highest ticket prices in the NHL."
That players have little overall value makes sense when you look at a team from a long-term perspective. Players get hurt or traded and eventually retire, leaving little of lasting value to their teams. They don't hand down patents, technical knowledge or innovative practices for others to build on. In short, they are temporary hired help. Still, many point to budding superstars Sydney Crosby, Evgeni Malkin and Jordan Staal as key reasons why Balsillie is buying the Penguins. But Dorweiler says it's far more likely Balsillie sees other values, such as the NHL's salary cap that brings cost certainty to the league, thereby boosting franchise values from pre-lockout days.
Yes, the Penguins need a new home of some kind. But if a proposed US$290-million arena, to be built by the Isle of Capri casino chain in exchange for a new slot machine parlor in downtown Pittsburgh, doesn't materialize, Balsillie can always move the team. Sports teams are very portable assets. Likely destinations? How about Las Vegas, the biggest U.S. market without a top-tier professional team in any sport. Seattle and Portland might work, and Hamilton, Ont. could be in the running, too. Balsillie obviously sees an upside, and one that is warranted, says Dorweiler. "I think it's reasonable to anticipate that there will be further growth in team value because of convergence, finding new ways to make money from providing content whether it be Internet, mobile phone and that kind of thing."
Ultimately, the wisdom of Balsillie's purchase will be judged several years or even decades-down the road. Like any business, an NHL franchise shouldn't be bought to flip in a few years for a quick profit. It's a long-term decision that is no longer based on sentimentality or bragging rights. "Because of all the ways to maximize cashflow and value, coupled with escalating team values, these franchises are largely bought for investment reasons," says Dorweiler.
The value of the Penguins has increased some 31% since 2004, but Dorweiler says the Forbes valuations are, if anything, conservative. So Balsillie's proposed purchase is much better than it looks on paper.
It's easy to take a few shots at the business that is the Vancouver Olympics, but there may be no better city in Canada to host such an event, according to sports research company ArkSports Ltd. The London-based company last month released its Ultimate Sports City Rankings, and Vancouver came out 11th. Number one? Melbourne, Australia, which hosted the Commonwealth Games earlier this year. Paris, Sydney, Berlin and London rounded out the top five. Vancouver was the only Canadian city to make the initial cut of 20 cities, and it rated tops for quality of life one of 11 factors ArkSports analyzed. Other factors included public sports interest, number of annual and historical events, facilities, transportation and government support.
Speaking of Vancouver, Aquilini Investment Group is purchasing the remaining 50% of the Vancouver Canucks and GM Place arena it doesn't already own from Seattle billionaire John McCaw. Aquilini initially bought into the NHL franchise in 2004. The purchase price was not revealed, but Forbes says the Canucks alone are worth US$192 million, up 30% in value from 2004.
The Canadian Radio-television and Telecommunications Commission has granted a digital channel to TSN, allowing the all-sports network to distribute two national feeds. TSN will only be allowed to use 10% of its total quarterly broadcasting schedule for the digital channel-or about 2.4 hours of programming a day. Just enough time for a separate hockey game to be aired.
Can't get enough hockey? You might want to check out Bell ExpressVu's Centre Ice with MultiVu service. It allows subscribers to watch six games simultaneously on one screen, with real-time scores and alerts from other games scrolling along the bottom. ExpressVu customers can also now get TSN Extra, which offers up the latest sporting news and stats for subscribers watching TSN.
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