Given the last Blog topic, it was reasonable to assume that the next question would be: "So how much will a relocated team cost the Winnipeg ownership group?"

Usually businesses are sold for an amount that is some multiple of either annual revenue or annual income. So if a team only makes $1 million profit on revenues of say $65 million each year for the last 15 years, then its' value may be small.

So what value does a team have when it has lost an average of say $2 million each of the last 15 years? Business logic says it is worth zero.

But each franchise has residual value in that new expansion teams (without any draft picks and players in their system, coaches, scouts, admin staff) sold for $80 million last time around.

So I would say the absolute lowest price is that $80 million mark. But that was before Nashville sold for around $165 million (= $193 total price to assume some debt) and Edmonton sold for $200 million (= ~ $135 to $165 million when debt was included).

But really, can Commissioner Bettman expect to sell and relocate out of a bad market for more than $100 million? Especially if several teams need a new city to call home? Bettman is Offside if he thinks that these doomed teams will sell for more. But then again, I couldn't believe how Bettman pulled a Freeman from the proverbial hat in Nashville. A major magic trick indeed!

So now you have two teams selling prices to use as a guide. (Albeit, one with a very poor financial outlook, and one with a much better one that for years was also in very poor financial position).

Now here's some numbers that "muddy" the waters somewhat. Before the lockout, Vancouver sold for under $100 million, Anaheim AND its' arena sold for ~$67 million, 81% of Montreal Canadiens and 100% of the Bell Centre sold for around $175 million total. (George, you are either the smartest businessman around or incredibly lucky, either way what was Molson thinking?) And these are some of the best teams financially speaking in the NHL. All in All, these are much lower compared to post-lockout selling prices of both Edmonton and Nashville.

The real question is: "Do NHL team selling prices before the lockout have any bearing on current team values?" The buyer will say yes the seller will say no.

So in summary, I would guess that a team in financial turmoil will sell anywhere between $80 to $165 million (assuming no debt). This range will slide up or down depending how hurried the buyer is to rid themselves of the team and additional losses and how frantic the buyer is to acquire a team. If Balsillie is involved I think you know what to expect, given his bidding up the Pens to $175 million and the Preds to $220 or $238 million.

Now you can see why the NHL is worried that Buffalo (or any team) may sell for less than $200 million. Team owners only make money when they sell their team in most NHL cities. So if the Sabres go for less than what Edmonton and Nashville went for, it kind of resets the clock back some. Since the Sabres owners spent in total under $115 million for his team out of bankruptcy (doing Bettman a huge favour at the time I might add), then if he sold his team for say $145 milion he would still be making a good return over just a few short years.

Likewise, many failed teams that continue to lose up to $30 million a season were bought for under $75 million. So $100 million cash, especially in this recession, sounds like a great way to exit stage left.

Tom Golisano, the Sabres owner doesn't really owe anyone anything if he sells out for way under $200 million, but as Leipold found out, the NHL BOG has the final say. So really it's the buyer on one side of the table, with the seller and Gary Bettman on the other.

This is why in a very strange way, Balsillie is Bettman's best ally. Bidding up teams, as I mentioned in a previous blog, improves team value which is Bettman's number one job for the 30 bosses he works for.

So if the Winnipeg group offers $140 million for a failing team, don't expect Bettman and the rest of the NHL BOG to be happy to rubber stamp Winnipeg's re-entry. Conversely, if Winnipeg were to offer $165 million or more for a team, you would see extra support by the NHL BOG to make it happen.

In the end, you are buying a team for Winnipeg and buying friends around the BOG table at the same time. Too bad for Balsillie and Hamilton that he didn't have enough acumen to keep his season ticket drive quiet until the final BOG vote. Not only has that cost him years longer trying to get a team, but the NHL BOG probably wants to see even more premium from Balsillie to gain entry into this ultra exclusive club called the NHL.

Just to clarify, there are other ways that BOGs can be "greased" to help you becoming an owner in the NHL, other than shelling out more cash for a team directly. Say Chipman's group makes an arrangement with the (Blackhawks) Wirtz-owned concessions, or (Flyers) Ed Snyder's Comcast's TV and software for rink events. Maybe do a deal for marketing with another owner for Winnipeg rink promotions. And you can see where this leads. All of a sudden many existing team owners can make money off you, if you have an NHL team. Having a very, very busy entertainment complex doesn't hurt either. The True North Centre is one of the busiest non-hockey rinks in all of North America. This allows the Chipman group ample opportunity to parlay that into "existing owner-to-prospective owner" deals.

Although it is pure speculation on my part, the fact that Chipman's ownership group has been very quiet over the last number of years while acknowledging their interest for a team publicly and with the NHL over the same time, leads me to believe that these dominoes are being lined up. With David Asper and Mark Chipman being part of the AllStar weekend in Dallas back in 2004, I figured this was going on or at least starting.

By rushing onto the scene, Balsillie clearly had no time to even have the opportunity to make similar BOG friends. And as we know now, the BOG clearly told Leipold, "sorry we don't want that 'rogue' outsider in our club."

So two lesson come together at the end of this blog: Money talks. And its' not what you know, its' who you know.

Updating the Relocation Score, after one period of play:

Chipman Group: 0 (might be more?, but definitely not less)
Jim Balsillie: -2 (might be less?, but definitely not more)

If you think, I'm Offside, then we're all ears! Have your say in our blog feedback or go onto our Forum and really vent!

Chris
Chair, Manitoba Mythbusters
www.ManitobaMythbusters.com
~ The Reality May Surprise You ~