Mark Chipman Courtesy MTSCentre.ca

The concern shared by some is whether or not the prospective ownership group for the NHL’s return to Manitoba would actually step into the faceoff circle when it counted. Some even suggest that this group doesn’t have the money to do so, contrary to what group spokeperson and/or leader Mark Chipman has said publicly in the past. Some even suggest that an owner still needs to be brought on board that is more akin to riding a white horse as a hockey messiah than businessperson.

The public would be OFFside to believe that Winnipeg needs a hockey messiah as owner. (But if he/she wants to ride into the scene, who would turn him/her away?)

The news today is that the NHL’s bid price for the Coyotes is $140 million. This is most likely the auction winning bid being the highest in the end. Balsillie's $212.5 million bid needs to have relocation fees deducted (which according to Judge Baum and the Raiders II case is equal to the value of a Hamilton franchise minus the value of a Phoenix franchise). Then compensation to the Leafs and Sabres would also have to come out of that total offer. So you could say that $212.5 million is knocked back by minimum $50 million for relocation plus at least $25 million each for the two teams at a minimum. Using almost best case numbers for the Balsillie camp that leaves the creditors a total of $112.5 million under his bid. This works out to being roughly a season of Coyote losses short of the NHL’s buzzer-beating bid.

Is $140 million a doable goal for Chipman’s group to buy the team from the NHL and move it with NHL blessing “back to Bannatyne”? Considering that the Jets sold for $67 million in 1996 without meaningful revenue sharing and a salary cap, that $140 million figure sure looks good compared to other post-lockout team sale prices.

Given that the NHL will allow up to 50% of a clubs value to be borrowed money, Chipman’s group has many options to consider. The group has deep pockets to start with. And if they don't want to sell some of their business interests to raise 100% of the price to buy a team, they could personally use those businesses as colateral in the borrowing process to buy the team from the league.

Although lenders have tightened access to capital, this shouldn’t be a problem for True North’s group. Borrowing $70 to $100 million against a rink that generates millions in profit each year on its own is pretty safe. The rink itself is worth closer to $150 to $180 million to replace as construction costs have gone up since 2004.

So altogether you would think that that is a doable goal. Especially considering that these folks funded and borrowed money initially and bared most of the MTS Centre cost themselves, you would think it would be even easier to borrow money now due to demonstrated success that the rink has shown on the bottom line. Also considering the rink is either totally paid off now (in just 5 years) or is almost debt-free depending on which news report you believe is the strongest indication of the money being generated out of this machine.

On the hockey side, there is strong potential for a Winnipeg team to draw good (several million) profits each year using the most conservative estimates and still icing a very competitive team.

See the interactive financial scenarios here: (Click on Summary – Tab 2 to start)
http://www.manitobamythbusters.com/facts_figures/Financial%20Scenarios%20V3%20CM.xls

And by the way, zero revenue sharing dollars are needed in this analysis. Only if the dollar crashes, will revenue sharing be required. But again that was the main reason Canadian teams were happy to include it into the new CBA.

Adding in playoff revenues and non-hockey related revenues the rink generates and you have a potential to really cash in.

One can only dream of the tax writeoffs that the club and rink and any potentially borrowed amount offers the owners' personal financial portfolio.

So it seems certain that the purchase price wouldn’t be out of the question. But what about the will to win?

Concerns surround whether the ownership group would really want to jump into NHL action while AHL hockey is nothing but successful both on the ice and on the balance sheet.

The above financial scenarios provide a sanity check to see if public statements made by Mark Chipman are only wishful thinking or as some suggest a ploy to prop up AHL Moose ticket sales. Having lived through the nightmare of the seemingly endless arena debate and the eventual loss of the team, fans needed to know whether this hope was real or not worth any further investment of time or emotion. Only true fans most recently in Quebec, Manitoba, Connecticut, Pennsylvania, Tennessee and now Arizona can truly understand that loss and going through that grieving process. So it is understandable how once burned twice shy applies heavy skepticism even for the rabid of fans. The good news is that the numbers do make sense - alot of sense!

These doubts in our ownership hopefuls can be put to rest when one gains insight into those last days to save the Jets. The reality is that the loss of the Jets greatly affected and changed these people, most of which were in those boardrooms right there through the bitter end.
(See www.myNHLincludesWinnipeg.com for more details.)

This potential ownership group realized long before now that not buying the team was a huge mistake for them and the community. And when you hear them talk about this loss, you can understand more that it isn't all about profit or rate of return. On the other hand, the numbers still do need to make sense to them.

On the other side of the puck, one realizes that those corporate supporters also learned what they have lost, which will lead to even stronger support than the adequate level it was before. And this support from the fans help the ownership hopefuls decide to jump into that faceoff dot ready to take on the challenge.

Because it means that much to all of us.

So when and if the NHL calls Mark Chipman and says:
- $140 million for the team
- starting play in Winnipeg for the 2010-11 season
- with a relocation fee of $1.00 and a
- $10 million non-refundable deposited to the NHL on November 1, 2009 with
- balance due by September 1, 2010

Will Mark Chipman even hesitate to say "We have a deal."?

Based on Gary Bettman's April 4th email, Mark Chipman is probably finalizing plans to be ready for such a call. Since he has been pursuing his dream of NHL ownership now for several years, it is very likely that he and his group have completed this preparation long ago. And that call from the NHL might come as early as Thursday September 10th when the gavel drops in an Arizona courtroom.

To say nothing about several other failing teams thinking about relocation and watching intently the same courtroom.

If you have any thoughts to share, skate down to our forum at www.mbmbforum.com

Chris
Chair, ManitobaMythbusters.com
www.ManitobaMythbusters.com
www.myNHLincludesWinnipeg.com

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