While we sit anticipating the next surprise in the Phoenix Coyotes off-ice saga, there has been some thought that the Atlanta Thrashers may be the next club looking to jet out of town.
Some media and fans have suggested that if Gary Bettman went to such lengths to fasten the Coyotes to the Arizona desert, we can be assured that he will do likewise to keep the Thrashers in Georgia especially given the size of the city’s television footprint nationally.
Those same NHL stakeholders may be OFFside upon further review. And the potentially nasty lessons found in Atlanta should be well understood by NHL fans in Manitoba who dearly want another home team to support.
Given the size of the Atlanta market, there are many reasons for the NHL to pull out of the stops to ensure the Thrashers never move. Many past news articles and blogs have detailed these so now on to deeper analysis.
The Thrashers are owned by Atlanta Spirit, a group of eight investors from Boston, Washington and a lone one from the local area. Spirit also owns the Philips Arena in which the team plays as well as the NBA Hawks. The WNBA Dream plays out of the arena also, but they are owned by Ron Terwilliger who is not part of the Spirit group.
On the face of it, the situation looks positive in that all revenues made by the rink outside of these sporting events goes back into the same pockets that own the hockey team. While it is true that luxury suite revenues are shared nearly 50/50 with the Hawks, those same suites go for much more since fans get to see NHL, NBA and WNBA games. This singular owner model essentially is the best model for an NHL team to survive and be successful.
Winnipeg’s situation compares nicely. The company known as True North Sports & Entertainment (TNSE), essentially owned by Mark Chipman and David Thomson, own the MTS Centre, the concert promotion business, the AHL Manitoba Moose and hopefully an NHL team soon. This parallels the positive Atlanta model as it does most successful NHL teams.
Past blogs have spoken about the fractured Spirit group trying to buy out one member of the group, Steve Belkin. However, to ensure context is evident, a short background is included. While the remaining members are hockey fans to a certain extent, the truth is that most are NBA first, and potentially second, leaving the Thrashers essentially to Bruce Levenson, the most quoted ownership member on Thrasher matters. It is clear that these owners will have to cut a substantial cheque to rid themselves of the Belkin distraction and his roughly 30% stake overall. Levenson may be the only opposed member of Spirit, should the group decide to pay Belkin with Thrasher sale proceeds. Thus, in one quick alley-oop, the Spirit group rids themselves of Belkin (and potentially Levenson) without having to draw any or as much cash out of their pockets to do so.
There are other benefits through the sale for Spirit to consider. This Thrasher sale also safeguards their beloved Hawks and conveniently opens up another 41 nights for events that actually make money, as opposed to burn it as demonstrated in Thrasher annual losses. Another very important fact is that the Hawks would keep nearly 100% of the luxury suite revenues for themselves where the NBA is clearly the drawing card for local fans and businesses. In effect, the Hawks will make more money with the NHL’s departure and concert promotions has more nights to make even more money for the Spirit conglomerate as a whole. It should be pointed out that the remaining 6 or 7 partners would keep not just 70% of the profits but all 100% with Belkin gone.
With the Thrashers consuming capital each season, the only question for Spirit is why wait any longer? So for an offer of $100 million (as the Lightning alone just sold for) or $140 million (as the NHL paid for the Coyotes), the team could be punted by Spirit as soon as their 7 year non-relocation agreement expires conveniently on September 21, 2010. (Mark your calendars!) So clearly the motive is ripe for the Spirit group to sell the Thrashers for some time now as the Belkin distraction has been in the courts for years already.
It is very conceivable that the Spirit has been quietly shopping the NHL team in that same timeframe. There is evidence to support this theory. In case you may not know, ESPN has linked Winnipeg interests to the Thrashers long before Al Strachan reported virtually the same story in October 2009.
So the Thrasher owners probably want to sell the team.
What about Gary Bettman finding another group wanting to keep the team in Atlanta, if not right in Philips Arena? It has been reported that efforts to find “new investors” are ongoing in Atlanta for over a year. As we have learned with several troubled teams already, this has become NHL-speak for “we’re wanting out”. So with nary an owner to be found, it is possible that what Gary Bettman has done twice for Tampa Bay, he may not be able to do for Atlanta. Surely, if a Jeffrey Vinik-in-waiting was to be had, Spirit may have already pulled the plug on their tenure.
Is it possible that Atlanta is unworkable with any new owner at Philips Arena? Given a cursory look at Thrasher books (or past media reports alone), it is fairly clear that a potential owner would become jaded quickly. Consider the current ownership has access to all these extra revenue streams and yet the Thrashers still turn in losses. If a team were bought to play as a tenant in Philips Arena then an additional rental cost needs to be included into any business plan and several current revenue streams would be deleted from the ledger. If the team is to remain at Phillips Area and unless the Thrashers’ new owner also becomes a new member of Spirit to gain access to rink-related revenues outside of hockey, then the Thrashers are essentially done. That is as clear as the red ink that has flowed almost since day one when Ted Turner and his media empire brought the NHL back to Georgia over a decade ago.
It is entirely possible that the Atlanta Spirit has effectively tied Gary Bettman’s hands in this situation. If Spirit says that the team has to be sold and that they will not really welcome the new owner as their tenant, then there remains little recourse for the NHL, regardless how much Gary Bettman wishes to retain Atlanta in the NHL. If the situation becomes vindictive then Gary Bettman may work things so that any sale of the Thrashers becomes a non-starter with the NHL Board of Governors. On the other side of the puck, the NHL may also welcome a sale if it is to a prospective owner or a market that the NHL covets. Clearly being the richest NHL owner by far, David Thomson and his media empire just might have the NHL and Spirit seeing eye to eye on a potential sale. Thomson as Forbes magazine’s Top 20 richest people in the world brings the NHL potentially much more in media terms than the footprint and number of TV screens lost when the Thrashers leave town. This tradeoff may have already been discussed and informally approved at the NHL Board level. Unconfirmed reports suggest that this was ongoing before the Coyotes when bankrupt.
What becomes an even longer shot to keep the team in Atlanta is for the Thrashers to move to another rink within the city. Philips is by far the best venue for large scale concert promotions. By moving to another rink, the lack of access to all revenues through a tenant-owner scenario still remains. As but one example for the lack of rink options, Gwinnett Center in Duluth, Georgia seats only 13,000 in total, 11,500 for hockey and is presently home of the ECHL Gwinnett Gladiators. Is it reasonable that someone with huge deep pockets and that loves NHL hockey enough would buy or build an arena and buy the Thrashers to keep the team in Georgia? Considering the NHL team becomes essentially a “loss-leader” for a concert promotion business, it is very unlikely due to the team’s financial history. Given the clout of Atlanta Spirit it seems unreasonable to think that they would have trouble finding a new owner by now if the team showed value in the current city. Spirit would have already found that owner to essentially replace Belkin if that value would be clear and large enough.
So with few suitors for the Thrashers and only one decent arena in which to house an NHL team, time patience and money may be in short supply for the NHL’s second attempt in bringing the City of CNN and Coca-Cola onside. Thus, Gary Bettman may choose to live and fight another battle instead.
“Here Come Your Winnipeg” hard lessons for NHL supporters in Manitoba.
By way of the agreement with governments in the building of the MTS Centre, no new rink that seats more than a few thousand can be built within the Greater Winnipeg Area that would receive any sort of government help. Should the TNSE ownership wish to sell their “new” NHL team in the distant future, the new owner would likewise have to buy, not only the team but a large stake in TNSE itself in order to receive access to those non-NHL revenues which have become the lifeblood of the entire league. Given David Asper’s commitments to the CFL Blue Bombers, a “Spirit of Manitoba”-like group of business people potentially without the Asper family may have to assemble to become that new ownership group.
Only this time that group would most likely have to buy both the team and a good portion of the rink via TNSE. To put that challenge into perspective, in 1995, the local business community couldn’t close a deal to buy the team for $67 million. In fairness to them, the team then had no where to play with any reasonable expectation of break-even much less profitability, so to say the will to do so would be an understatement of the century and rightly so without an arena.
With MTS Centre turning into a cash cow for TNSE that excuse won’t hold water unless the group can’t afford both the team and rink as well which is entirely possible. In which case, the Spirit of Manitoba II may disband quickly if access to those non-NHL revenues are deemed critical to success and profitability, which seems most likely.
Since the governments would be legally bound not to build a second rink within Winnipeg, few options remain for a savior or group of saviors in which to operate. Of course, a second rink would be played against the MTS Centre for every musical act coming through town, so both rinks may become financially less stable in that situation, leading to a potential collapse of both arena business models. And after the 1990s, we all know how badly the public will receive any effort on behalf of governments to cover potential team losses. This is a non-starter even given the large tax infusion that a team brings to all three levels of government every year it calls Manitoba home.
As the faces of TNSE, Mark Chipman and David Thomson, are our only practical savior to bring NHL hockey back to Manitoba and they are possibly the only savior to keep the team here once it arrives.
The lesson is simple if the NHL returns to Manitoba. Those memories of 35,000 Save Our Jets supporters at The Forks and our children breaking open their piggybanks to help buy the team, better remain vivid while we support the next NHL team through thick and thin. This NHL support also needs to be generationally galvanized almost akin to a level like national pride, while the rest of the nation watches us in our “second chance”. Otherwise, we may find ourselves like Atlanta, with roughly the same setup, who will lose the NHL twice and there’s nothing any Spirit can do to save the team from leaving. Heaven forbid, but that is a day where our community pride will be the last thing we will be thinking about.
Based on what is already public knowledge, a wise fan programs ticketmaster's number into their cell and a credit card is kept handy. When the big announcement arrives, it will be a fan stampede to grab season tickets bigger and faster than any of the hundreds of concerts that has ever sold out the MTS Centre. Word to the Wise!
If you would like to sound off, blast your comments at our forum!
Chris
President, www.myNHLincludesWinnipeg.com
30,000 Unique Visitors Monthly And Growing
~ The Reality May Surprise You! Excite You! ~
XML Feeds
Permalink
