Buyout offer creates a buzz

Sunday, April 24, 2005

Dallas Stars owner Tom Hicks called it "silly and irrelevant." Boston Bruins owner Jeremy Jacobs said it's not realistic. The Toronto Maple Leafs said they aren't interested. Carolina owner Peter Karmanos, Jr.  said he had a "passing interest and morbid curiosity"  in it, but that was about it.

The offer by two firms to buy all 30 NHL teams for between $3.3 billion and $3.5 billion apparently won't get anywhere, but it did create quite a buzz in the sports world Thursday. 

Buyout firm Bain Capital and sports consulting group Game Plan International made the offer during a half-hour presentation at Tuesday's NHL Board of Governors Meeting in New York.

A source told Reuters that the NHL invited the two firms to make what was described as a "conceptual presentation" to the owners and others at the meeting.

"The meeting was at the request of the NHL and was essentially a conceptual look at how a new entity might maximize value for the league," the source told Reuters.

There were suggestions that a few owners had expressed an interest in the concept, which had been presented to NHL commissioner Gary Bettman about five months ago,  and that is why Bettman invited the two firms to make the presentation on Tuesday.

There was also the suggestion that the this was Bettman's way of rallying the owners to hang tough in the labor battle with the players.

In essence the 30 teams could dump the puck, pull off a permanent line change by selling out to the two firms and let them have the headache of running the league and dealing with the NHLPA. 

Or they could tough it out and make another rush up ice in an effort to make cost certainty a reality in the NHL.

Regardless of the motive, the buyout plan was a hot topic on Thursday. Some found it interesting. Some had questions.

Under the firms' plan the league would be similar to a corporation where each team would be a division within the corporation. The teams would have a set budget at the beginning of the year and would have the freedom to make their own personnel decisions.

Boston Bruins owner Jeremy Jacobs wasn't impressed.

Dallas Stars owner Tom Hicks had his own spin on the offer.

"It’s just a company trying to be opportunistic," he told the Dallas Morning News. "I would say the Stars alone are worth somewhere between $250 and $300 million, so it was really just a silly, irrelevant idea."

Others found the idea intriguing.

"On the surface, it's a really bold concept of trying to essentially take a sports league private," David Carter, a Los Angeles-based sports business consultant, told the Atlanta Journal-Constitution. "What I think is most interesting is that the marketplace is starting to say, 'You guys [in the NHL] can't seem to figure it out; maybe we can come in, acquire what we think is an undervalued asset and make some money.'

"It may end up being an exercise in futility. It'd be very remarkable if anybody was able to buy out the NHL, so to speak."

Marc Ganis, president Sportscorp Ltd., a consulting firm in Chicago, said the unified ownership concept would solve the league's biggest economic problem.

"The biggest problem the NHL has right now is the fact that there hasn't been a connection between salaries and revenue," he told Bloomberg News. "With single-entity ownership you achieve that automatically."

Major League Soccer and the WNBA have a single owner structure, which former Atlanta Thrashers executive Stan Kasten believes is "a cleaner, more efficient way to run a business, any business."

But Kasten, who believes the league will keep its current ownership structure, said changing to the single owner model would be a challenge.

"There are rollups all the time [in corporate America], and that's what this sounds like to me — businesses rolling up into a single entity," Kasten told the Journal-Constitution. "But it would be complex and challenging when you have a long history of multi-employer bargaining."

Those complexities and challenges would surely play out in the courts since the NHLPA would likely mount a legal challenges under labor and antitrust laws. 

The NHLPA didn't have an official comment since it appeared the teams had no interest. Dallas Stars forward Bill Guerin, an NHLPA vice president got a kick out of it.

"It's pretty amazing; it's pretty wild," he told the New York Times. "I've never heard of anything like that. I'm not quite sure what to make of it. Obviously, somebody thinks that they can do better. I don't think somebody would jump into it like that unless they believed in it and thought it was a good product."

Others said the Guerin and the players shouldn't take all this as a positive.

"I think this demonstrates that it may be a very different NHL, and the players might have preferred the days when they might have negotiated with deep-pocketed owners as competitors in a league that was willing to share revenues with them," Ganis, the Chicago consultant, told the Canadian Press.