Tuesday, July 22, 2008

Mr. Bungle - More Nashville News

The soap opera that is playing out among the NHL's Nashville Predators ownership group continues to unfold. In Canada, this situation is viewed as a hockey story; a struggling team in a struggling market. Meanwhile, in the US, this has become a business story, as hundreds, perhaps thousands of people have lost millions in the fraudulent dealings of Predators minority owner William "Boots" Del Biaggio.

Any Voice readers looking for further developments should be reading Brad Schrade's articles at http://www.thetennessean.com/ , a Nashville newspaper. Mr Schrade has done a tremendous job researching this situation, and has revealed such startling facts, it is hard to believe TSN and the other Canadian sports networks have next to nothing at their sites pertaining to these latest developments.

The fall-out of Del Biaggio's actions continue to spread throughout the league; his bankruptcy papers list former Predators and current Minnesota Wild owner, Craig Leopold, as a creditor owed $10 million, AEG Facilities Inc, a company that manages Sports Arenas and whose parent company owns the already financially strapped LA Kings, is seeking $7 million previously loaned to Del Biaggio. The FBI delivered subpoenas to the Metro Sports Authority, which acts as a Landlord on behalf of the city of Nashville. Federal Authorities are seeking any documents related to the finances and financial conditions of Del Biaggio and the Predators.

The biggest news revealed in The Tennessean article by Mr. Schrade was the discovery of a computerized presentation dated January 2008. According to the article, the presentation featured charts and slides with such titles as "Portability Value" and was marked "Strictly Confidential". Del Biaggio was telling potential investors Nashville was not a viable market and would never work long term, an investment in the team would speed up the process of moving the team to Kansas City. If the Predators somehow became a success in Nashville, Del Biaggio planned to remain as a minority owner. However, if the team failed and lost $20 million by 2009-2010, a secret agreement brokered by NHL Commissioner Gary Bettman would allow Del Biaggio and his new investors to assume majority control from David Freeman and move the team from Nashville. For Bettman to personally match-up a local group led by Freeman, with an outside investor holding a secret agreement to move the team is a real slap in the face to the city of Nashville, regardless of your opinion on Southern hockey teams.

Also from The Tennessean; Canadian Entrepreneur Doug Bergeron was approached to invest in the Predators last September. Said Bergeron, " Boots bragged to me that he was able to convince Bettman's office to overlook the need for his audited financial statements because it was too much work."

Too much work?? As reported here earlier in The Voice, Ottawa Senators owner Eugene Melnyk referred to the Audit process as "intrusive, very, very intrusive". In my opinion, it is more likely Mr. Bettman couldn't afford the time to investigate "Boots" Del Biaggio. Bettman seems determined to keep re-located teams out of Canada, personally blocking the sale of the Predators to Canadian business genius Jim Balsillie. The Commissioner has often stated his bosses are the team owners, and until they state otherwise, he must be on the right track. Well, in a league desperate for revenue, there is no US television deal in place that actually pays money to the NHL. Bettman's secret deal not only jeopardizes the Predators; he devalued the other franchises by stopping the sale to Balsillie. The value of the Predators franchise was listed at $110 million, the RIM owner offered well over $200 million, which would have increased the value of the 29 other teams.

In 1967, when the league expanded from the Original Six to twelve teams, the expansion fee was $2 million. When teams like Ottawa and San Jose entered the league, the fee was $50 million. The general consensus among hockey insiders is that the NHL plans to expand to 32 teams in the next 5 - 7 years with teams in Las Vegas and Kansas City at a price tag of $150 - $200 million each for prospective owners. Say what you will about K.C., it has the highest TV ratings for hockey in the US for cities without a franchise. An NHL team in K.C. would actually be a good fit, and Bettman's secret deal in Nashville would have taken away a "sure thing" for expansion success there.

An internal NHL report reveals that coming out of the lock-out, (which many insiders and fans now question the need for as the Salary Cap hits $56 million), an estimated $733 million of the leagues $2.2 billion in revenue was generated in Canada. The six Canadian teams now account for 31% of the $1.1 billion in ticket revenue. Some insiders have that number as high as 40%. So, let's check Mr. Bettman's economics here; 6 teams generate 40%, 24 American teams generate the other 60% and yet re-location to Canada is not an option according to Bettman.

The strength of the Canadian dollar alone has increased the spending power and value of the six Northern teams. Since the lock-out, Canadian franchises are worth 25% more now just on the strength of the dollar, add to that the insatiable appetite for hockey in Canada and you have to wonder, how long will team owners support franchises in Phoenix (they lost a reported $30 million last year alone), Atlanta, Florida and Columbus? It is time for Bettman's bosses to get their heads out of the sand.

One other item I have wondered about for a few years and I'm yet to find an answer... During the lock-out, one of the teams alleged to have two different sets of accounting books was the Philadelphia Flyers and owner Ed Snider. One book showed an operating loss for the Flyers, while the real books actually showed a profit. The NHLPA was quite adamant that this was happening all over the league. Snider could lease his Arena to his hockey team for a large amount and then claim a loss, etc. So, as mentioned, the NHL's TV deal in the US on NBC pays them nothing. The league left an ESPN deal that paid, to get on Versus - the cable channel no one can get, which is on Comcast, which is partly owned by Snider. So my question to readers, please e-mail me an opinion - How does an NHL team owner accused by the NHLPA of shady accounting, sign a television deal with the NHL that puts absolutely nothing in the NHL coffers and yet puts ad revenue in Snider's bank account?

Have a great sports day everyone...

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