July 1, 2009
Sports Finances - - NHL Style
The Montreal Canadiens have a new owner. Someone in the family that brews Molson beer paid something north of $500M to buy the team and the arena they play in. The previous owner, George Gillett, is a 50% owner of the Liverpool soccer club in England - - along with Texas Rangers’ owner Tom Hicks - - and Gillett needed to sell some holdings outside that Liverpool asset to raise capital just as Hicks has the Rangers up for sale after Hicks sports enterprises defaulted on a series of loans in the $450M range. This is sort of interesting for two reasons…
First of all, it made NHL ownership meetings look a bit unseemly. Tom Hicks still owns the Dallas Stars; George Gillett owned the Montreal Canadiens; simultaneously, those two men are equal partners in a completely separate business interest. I guess no one on the NHL Board of Governors can spell “conflict of interest”.
Secondly, this is interesting because of the price that the Canadiens’ franchise drew. Down in Phoenix, there is another NHL team up for sale and the latest news is that Jerry Reinsdorf will lead a group bidding to buy the team for $148M and to keep the team in Phoenix. I guess no one on the NHL Board of Governors has connected the dots that when you put a franchise in a place where there are lots of fans and lots of interest in the sport, you get a more valuable property than when you put an ice hockey team in the middle of a desert.
The Reinsdorf bid is interesting for another reason. Recall that the NHL successfully blocked the sale of the team to Jim Balsillie for $212M on the provision that he would immediately move the team to southern Ontario. That means that the creditors of the bankrupt Phoenix team will now have $64M less money to spread around to cover the debts of the team. Obviously, I would defer to the lawyers out there who read these rants to explain why the other creditors – the NHL itself is one of the largest creditors of the bankrupt team – do not file a motion with the bankruptcy judge asking that the NHL claims go to the back of the line here since it was the NHL that took $64M out of the “kitty” for the creditors to share.
The finances of sporting enterprises have derailed. The fault lies ultimately with sports fans; the greedy player agents and the slimy owners are merely the implementers of the fans’ illogic. Consider:
Last year Jake Long got about $30M to sign his NFL contract before he ever played a down in the NFL. It seems as if he will be a good player but when the Dolphins signed him, he might have been Tony Mandarich.
This year, Matthew Stafford got about $40M to sign his NFL contract before he ever plays a down in the NFL. Is he Peyton Manning or is he Tim Couch? We will know in a couple of years; he has $40M no matter what.
In the NBA, guaranteed contracts to the tune of about $125M are handed out to players who are “good” but are not nearly among the elite players on the game. Jermaine O’Neal and Rashard Lewis come to mind here.
In baseball, the Washington Nationals – a team going nowhere – decided it made sense last winter to pay Adam Dunn $10M. For what? So he could hit .250 and strike out 175 times?
These expenditures are the tip of the iceberg; there are tons of other examples and the way NBA teams are lining up to go on a spending frenzy after the next season portends some more humongous overpayments. However, the blame for all this belongs with the fans who complain but then go ahead and pay the added – and sometimes outrageous costs that allow the owners to pass along these ridiculous deals to the players via their agents. The Yankees’ “$2700 seats” are only one outrageous example of fans paying the freight here. Ticket prices in lots of other baseball venues are sky high; NFL teams routinely charge a couple of hundred dollars a game for decent seats; NBA ticket prices are significantly overpriced considering that most regular season NBA games aren’t worth watching at all. Yet, fans continue to pay those prices and that leads advertisers to believe that paying huge ad dollars to TV networks must be sensible since these folks must have loads of disposable income.
As Sonny and Cher sang years ago,
“And the beat goes on…”
Ricky Rubio – one of the myriad point guards drafted by the Minnesota Timberwolves in the recent NBA Draft – reportedly does not want to play in Minnesota and would rather play in New York for the Knicks. Rubio’s agent says that they also have offers to have Rubio play in Turkey and in Spain. Who knows if those offers are real or imagined? Here is what I conclude from the story as it has unfolded so far:
Despite David Stern’s best efforts to make the NBA into a global sporting enterprise, the following for the NBA and the dissemination of NBA news in Spain cannot be all that great. If it were, why would Ricky Rubio want to play for the Knicks? Has he seen that team play anytime in the last three years or so?
Here is an item from Brad Rock in the Deseret Morning News that puts perspective on one of the stories making the rounds these days:
“ESPN the Magazine is planning an October edition on the beauty of the human body, complete with photos of athletes posing ‘nude but artfully covered.’
“We already have that, don’t we?
“I think it’s called Wrestlemania.”
Finally, here is an observation from Greg Cote in the Miami Herald about the Dolphins top draft pick this season:
“Dolphins No. 1 draft choice Vontae Davis supposedly was arrested in Illinois, but claims mistaken identity related to his wallet being stolen. Not good when a cornerback is the one getting picked.”
But don’t get me wrong, I love sports…
