Checking on a Bid to Buy the NHL

A labor dispute wiped out the 2005 National Hockey League season and threatens the future of top-flight hockey in the United States. Two private equity companies propose a solution: they want to buy the entire NHL.

SCOTT SIMON, host:

Remember the National Hockey League? Normally the season would be ending right about now with the Stanley Cup Championships but, of course, this season was canceled in February because of a labor dispute. Players and owners have been trying ever since to work out a new contract, but with little success. These troubled times in the NHL come as encouraging news for two private equity companies. Bain Capital and Game Plan say they want to buy the entire league. Some team owners laughed at the idea when it was first announced, but now you don't hear so much laughter, as NPR's Tom Goldman reports.

TOM GOLDMAN reporting:

In March, Bain Capital and Game Plan made their sales pitch. `Hockey owners,' they said, `your business is broken. It's losing huge amounts of money. Players and owners are at war. Here's your way out. For more than $3 billion,' they told the owners, `we'll buy all 30 NHL teams from you and turn those 30 distinct ownerships into one.'

Mr. MARK GANIS (President, Sports Corp.): There have been leagues that have started out as a single entity ownership like major-league soccer, but none have actually been owned by individual team owners and brought private under a single umbrella.

GOLDMAN: Mark Ganis is president of Sports Corp., a company that consults on team acquisitions.

Mr. GANIS: So this would be a unique step in the history of US sports.

GOLDMAN: Unique and crazy, said many owners and players. From the owners' perspective, how could the lump sum of 3 billion or so dollars be divided in a way that acknowledges some teams are worth much more than others? From the players' perspective, why would they want a single entity ownership? The players, after all, like the way salaries go up when so many individual team owners compete for talent. So in March, the general response to Bain and Game Plan was `Thanks. But we'll stick to the labor negotiations.' Now it's June and they're still negotiating.

Mr. GANIS: The situation has changed in the last few months.

GOLDMAN: Again, Mark Ganis.

Mr. GANIS: The realization is beginning to hit home that despite the best efforts of the negotiators, they may never come to an agreement that is satisfactory to the league and to the Players' Association.

GOLDMAN: Meaning, perhaps, replacement players next season or another canceled season, or maybe Bain and Game Plan and a sweeter deal. They've now offered owners $4 billion for the league and a plan for how to split the money. The payout to the teams with the highest value would average $225 million. The teams with the lowest value would get, on average, $75 million. Not bad, says Mark Ganis, when you consider the last NHL team sold, the Mighty Ducks of Anaheim, earlier this year, went for about $65 million.

Mr. GANIS: The Mighty Ducks of Anaheim are not the club with the least value in the National Hockey League, not by a long shot. So that means you've got clubs that should garner less than 65 million, so when Bain is offering 75 or a hundred million for those lower revenue clubs, that looks awfully attractive.

GOLDMAN: NPR requested interviews with several owners from low revenue clubs, but none responded. Neither did representatives from Bain and Game Plan. But according to The Wall Street Journal, about one-third of team owners have shown some support for the plan. Skeptics still outnumber believers, however. Buying an entire sports league is an enormous endeavor. But Washington State University economics Professor Rodney Fort says just because it's never been done before doesn't mean it can't happen.

Professor RODNEY FORT (Washington State University): I think everything is for sale. The issue, I think, boils right down to, `Well, what is the National Hockey League worth? And is anybody actually going to make that kind of an offer to try to buy the whole thing?

GOLDMAN: Bain and Game Plan have made their offer, knowing full well the league's worth continues to dwindle without any games. On top of that, ESPN announced this week it won't broadcast NHL games next season, thereby denying the league tens of millions of dollars in rights fees. Meanwhile, the bargaining continues. Three straight days of negotiations between players and owners ended last night. Still no deal. Tom Goldman, NPR News.

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