Local Investors To Buy NHL's Nashville Predators

[TreyRandom]

I wrote this for another forum, but I'm sure that the NHL fans here would be interested...

Local Investor Group Signs Binding Letter of Intent to Buy Predators for $193 Million

The Predators aren't going anywhere: a local investor group has signed a binding letter of intent to buy the Nashville Predators for $193M. The group, led by David Freeman, put down a $10M deposit to purchase the team.

There are 8 partners in the group; 7 are local Nashvillians, including David Freeman, CEO of 36 Venture Capital, and Herb Fritch, CEO of Healthspring. The group will wait two weeks before revealing the rest of the local investors. The one outside investor is William "Boots" Del Biaggio III, who will provide financial depth for the group. Freeman stated that Boots is a minority owner, and that there is no condition under which Boots can become a majority owner of the Predators.

Leipold adamantly stressed that he always wanted the Predators to remain in Nashville, and was dismayed that Balsillie was determined to move the team. Leipold stated that the following actions by Balsillie made him reconsider selling the team to Balsillie:

• - renewing the arena lease in Hamilton
  - selling season tickets to the Hamilton Predators, even using the Predators' logo.
  - applying to the NHL for team relocation before applying for ownership

Leipold said that it was clear that Balsillie wasn't going to take the proper steps to become an NHL owner. In late May, Leipold began discussions with David Freeman, and as negotiations began winding down with Balsillie and Del Biaggio, he saw that things with the local group were starting to come together, most notably during the July 18 meeting at the NHL league offices in New York. During the Q&A session, Leipold stated that he was thrilled that the Predators will remain in Nashville.

Regarding the threat of Boots' investment to the team staying in Nashville, Freeman stated, "Boots is not a threat to Nashville... he's not at all. I think that his interests and our interests are extremely similar. We both want to show that hockey can succeed in the heartland of America... we welcome him with open arms." Freeman continued by saying, "We have no interest in breaking the lease... we want to be here for life." However, Freeman stated that the 14,000 attendance number is absolutely crucial to receive revenue sharing from the NHL and to remain profitable. According to Freeman, it will be his decision as to where the team plays, but as far as budgets are concerned, he will be one voice out of approximately five.

Reporters asked questions regarding what assurances there are that the team would not be moving, and Freeman stated that the assurance is Nashville's: Nashville merely needs to buy tickets and show up to the games.

The next step in the process is to draw up a formal legal document finalizing the sale of the team. Afterwards, the investor group will ask the NHL Board of Governors for their blessing. They expect to be approved at the next BoG meeting in mid-September, provided all the legal documentation and paperwork is completed by then.

Congratulations, Nashville! But the battle isn't over... we still have to support the team, every single year.

 

[desy]

Damnit!
They were supposed to come back to Canada

 

[broon]

Originally posted by: desy
Damnit!
They were supposed to come Kansas City

Fixed.

 

[Unheard]

DOES THE HAPPY DANCE!!!! Awesome TR, this is great news!

 

[TreyRandom]

Originally posted by: desy
Damnit!
They were supposed to come back to Canada

"Back to Canada"? They were never in Canada.

 

[Toonces]

turn down a $220 million offer for a $190 million one... that's sound financial sense

Bettman will go to the ends of the earth to make sure an NHL franchise will not come back to Canada where demand far exceeds the supply (southern Ontario could more than easily support another team) while small-market US cities barely scrape by.

good for fans in Nashville. Now where was this type of thinking when Winnipeg and Quebec were in the exact same situation but prospected by US investors, hmm?

 

[clickynext]

It's great that Nashville won't be losing the wonderful sport of hockey!

 

[TreyRandom]

Originally posted by: toonces
turn down a $220 million offer for a $190 million one... that's sound financial sense

Bettman will go to the ends of the earth to make sure an NHL franchise will not come back to Canada where demand far exceeds the supply (southern Ontario could more than easily support another team) while small-market US cities barely scrape by.

good for fans in Nashville. Now where was this type of thinking when Winnipeg and Quebec were in the exact same situation but prospected by US investors, hmm?

If Balsillie hadn't done his antics, he'd likely have gotten approval. He upset enough of the Board of Governors to ensure that his application would be rejected. Thus, there would have been no $220M deal for Leipold to accept.

I agree that Hamilton would have likely been able to support a team. However, the reason the NHL has expanded to "non-traditional markets" is to increase the overall footprint and popularity of the NHL... most notably, in the US... to increase TV revenues (TV revenues that have likely been mismanaged, but that's a story for another thread). Putting a team in Hamilton doesn't increase the fanbase of the NHL... keeping a team in Nashville does.

 

[desy]

If they must put a team in the States , Seatle would make a lot more sense than deep South

 

[benzylic]

I was hoping they would come to Kansas City. These NHL teams keep throwing KC out there but I thinks its just to get a new stadium for them. Damn you Pittsburg Penguins.

Kansas City is building that all new Sprint Center and the only professional sports team going in it in Kansas City's arena football team, they were perfectly fine at Kemper Arena, how many people actually go to AFL games anyways?

 

[sdifox]

And I was hoping to have a real contender near Toronto to cheer for

 

[LikeLinus]

Ultimately, here's the problem.

The previous owner said he lost over $70 million dollars since he's purchased the Preds. ESPN had a report about a month ago that the NHL was stearing the Preds towards selling the Preds to Kansas City and told them to not consider Canada.

The one non local to be involved with the team is a minority owner in the San Jose Sharks. He apparently was trying to put together a deal in the past to start a team with Kansas City and it never panned out.

Nashville STILL has to average over 14,000 fans over the next two seasons to keep their lease. Not to mention the fact that they will probably continue to lose money at the 15 million a year they have before. I can't see the new group doing much to bring in new fans. There will be a surge this year, but it'll probably drop off within the next 2 years.

This all but opens the possibility for the preds to continue to lose money and the 1 miniority owner to try and make a move to Kansas City within the next 3 years.

The writing really is on the wall. The NHL will approve this deal. The team will continue to lose money. The rest of the owners won't be able to sustain the 15+ million dollars a year and they will eventually have to move the team outside of Nashville.

So that leaves the NHL and a minority owner who both want a team in KC. Very smart business move on both of their parts.

 

[benzylic]

Originally posted by: LikeLinus
So that leaves the NHL and a minority owner who both want a team in KC. Very smart business move on both of their parts.

Not to mention a lot of the KC area wants a hockey team, otherwise the building of the Sprint Center in my opinion is a waste.

Whens the last time the NHL had an expansion team? I know hockey isnt the biggest sport in the U.S. but a lot of the players are from other countries anyways, so if the NHL put an expansion team in Kansas City would that team be able to have a full roster and be competitive in say 5-10 years?

 

[TreyRandom]

Originally posted by: LikeLinus
Ultimately, here's the problem.

The previous owner said he lost over $70 million dollars since he's purchased the Preds. ESPN had a report about a month ago that the NHL was stearing the Preds towards selling the Preds to Kansas City and told them to not consider Canada.

The one non local to be involved with the team is a minority owner in the San Jose Sharks. He apparently was trying to put together a deal in the past to start a team with Kansas City and it never panned out.

Nashville STILL has to average over 14,000 fans over the next two seasons to keep their lease. Not to mention the fact that they will probably continue to lose money at the 15 million a year they have before. I can't see the new group doing much to bring in new fans. There will be a surge this year, but it'll probably drop off within the next 2 years.

This all but opens the possibility for the preds to continue to lose money and the 1 miniority owner to try and make a move to Kansas City within the next 3 years.

The writing really is on the wall. The NHL will approve this deal. The team will continue to lose money. The rest of the owners won't be able to sustain the 15+ million dollars a year and they will eventually have to move the team outside of Nashville.

So that leaves the NHL and a minority owner who both want a team in KC. Very smart business move on both of their parts.

Well, looks like ESPN was wrong, cause they're not going to KC.

No, Nashville, has to get 14,000 FULL-PAID fans this year (we've had over 14,000 attendance for the past few years), which will put the "cure clause" back on a 3-year cycle, where we would have another 2 years "grace period" before having to hit 14k again. That said, Nashville, needs 14,000 EVERY year to get revenue sharing.

There's been a surge the past few years, interrupted only by the lockout. Considering the Predators were 180 tickets short last year, and attendance has risen 7-8% per year, there's very little chance we weren't going to hit it anyway. Pretty easy goal, wouldn't you agree?

 

[TreyRandom]

Freeman was doing an interview today, and he explained a few things...

1) Freeman will be the governor and chairman, but obviously, his won't be the only voice.

2) The salary that is spent on players is *entirely* determined by how many fans go to the games. Meaning, they aren't in it to make money. He said they're certainly not in it to LOSE money... they can't do that. But he said that any profit the team sees will go right into salaries. Very encouraging - if Nashville wants a good team, Nashville can have a good team... it's up to us.

3) Boots wanted to join the local group because he wanted a more active role with an NHL team than he had with the Sharks... and the local group welcomes his expertise, and will allow him that active role. That said, he will never be more than a minority owner of the Predators. There's a clause in the agreement whereby if Boots is offered an expansion team in KC or elsewhere, that Freeman and the other investors will buy Boots' share of the team... but Boots won't ever be given THIS team. In fact... Freeman said he doesn't plan on selling... ever... which leads me to:

4) Back to the subject of not making money, not losing money, Freeman stated that he's not in this to make money... he sees it as "Nashville's team"... his purchase of the Predators is simply his way to help Nashville's image as a sports city and as a great place to live and work and do business. He doesn't ever expect to see a dime of profit from his investment, nor does he even expect to get back ANY of the original money he invests. When the radio host mentioned that the team will naturally grow in value as time goes on, Freeman stated that it would... but if he never plans to sell it, then he'll never see that money. As far as he is concerned, the team will remain in Nashville long past he's living.

Man... that's awesome, to hear an owner talk like that. :thumbsup:

 

[LikeLinus]

Originally posted by: TreyRandom
Freeman was doing an interview today, and he explained a few things...

1) Freeman will be the governor and chairman, but obviously, his won't be the only voice.

2) The salary that is spent on players is *entirely* determined by how many fans go to the games. Meaning, they aren't in it to make money. He said they're certainly not in it to LOSE money... they can't do that. But he said that any profit the team sees will go right into salaries. Very encouraging - if Nashville wants a good team, Nashville can have a good team... it's up to us.

3) Boots wanted to join the local group because he wanted a more active role with an NHL team than he had with the Sharks... and the local group welcomes his expertise, and will allow him that active role. That said, he will never be more than a minority owner of the Predators. There's a clause in the agreement whereby if Boots is offered an expansion team in KC or elsewhere, that Freeman and the other investors will buy Boots' share of the team... but Boots won't ever be given THIS team. In fact... Freeman said he doesn't plan on selling... ever... which leads me to:

4) Back to the subject of not making money, not losing money, Freeman stated that he's not in this to make money... he sees it as "Nashville's team"... his purchase of the Predators is simply his way to help Nashville's image as a sports city and as a great place to live and work and do business. He doesn't ever expect to see a dime of profit from his investment, nor does he even expect to get back ANY of the original money he invests. When the radio host mentioned that the team will naturally grow in value as time goes on, Freeman stated that it would... but if he never plans to sell it, then he'll never see that money. As far as he is concerned, the team will remain in Nashville long past he's living.

Man... that's awesome, to hear an owner talk like that. :thumbsup:

Talk is just that....talk.

"Del Biaggio said there is no owner in the NHL who can survive losing up to $15 million a year as Leipold has done recently.

"Success to us will mean not just being able to survive financially, but we want the club to win," Freeman said."

Freeman knows that he cannot sit around and lose 15 million a year.


Of course their agreement keeps from owning majority stake in the team while they are in Nashville. Here's the problem -

"Del Biaggio previously offered $190 million for the team, and has an agreement with the Sprint Center in Kansas City to own any NHL team relocating there. He will be a minority owner in this deal, and Freeman said there are no circumstances where Del Biaggio could become majority owner.

This deal will end Del Biaggio's deal with AEG to bring a team to Kansas City, but he said in a conference call that he will push the NHL to consider putting a team there."

Boots could easily bring in other investors and share a minority stake in the team, then later take on more after the team has already moved to KC.

I just don't think they can make enough money in Nashville (Football city) in other areas to sustain their cost. Remember, ticket sales is a small portion of the overall revenue stream that most teams have. That's why they're losing so much money! People around here like/love the preds, but everyone knows that UT/Vandy/Titans are the big draw. You can't go anywhere without seeing a UT or Titans hat. I rarely see people wearing Preds stuff - other than game night.

They may stay a few years, but ultimately I think they'll have a very hard time and will move.


http://www.rctimes.com/apps/pb...08020401/1106/SPORTS02

""I'm sweating, but I think it's because it's so hot and I'm walking to the arena,'' Freeman said Wednesday, minutes before he and Leipold held a press conference at Sommet Center. "That's $10 million nonrefundable. It's a significant risk I'm putting up with Craig.''

He's sweating a 10 million dollar check, but you think he can sustain a 15 million dollar loss a year?


"He has a great interest in making sure Nashville is very successful. If Nashville doesn't succeed, I don't know that Kansas City would, or that they would get the opportunity.''

Even Freeman is worried about it? He goes on to say:

The local group starts with a debt service of approximately 25 percent of the purchase price. If Leipold couldn't make it a financial go after 10 years, why does the Freeman group think it can make it work?

Freeman said an integral part of the equation is getting help from Metro.

"We're going to need some assistance from the city to restructure our deal so that we have incentives. The current deal does not have any incentives for the club to run the arena efficiently,'' Freeman said. "Everybody acknowledges that.''

So they need help from the city also.

It boils down to a crap shoot. It may or may not succeed.

Then lets move on to the fire sale the preds have had. We're going to suck, plain and simple. There's no way we're going to finish 3rd in the NHL and have another 110 win season. Do people come out to watch losing teams? Does attendance increase when you lose? It may for a year or two, but they need MONEY to get new players and keep this team at the top. Money I don't see them having a lot of.

 

[TreyRandom]

Originally posted by: LikeLinus
I just don't think they can make enough money in Nashville (Football city) in other areas to sustain their cost. Remember, ticket sales is a small portion of the overall revenue stream that most teams have. That's why they're losing so much money! People around here like/love the preds, but everyone knows that UT/Vandy/Titans are the big draw. You can't go anywhere without seeing a UT or Titans hat. I rarely see people wearing Preds stuff - other than game night.

And KC's *not* a football city?

Vandy is absolutely *not* a big draw, and they're a non-factor as far as competing with the Predators is concerned:
1) They rarely fill the stadium
2) The tickets are dirt cheap
3) They play only a handful of home games
4) They play only on Saturday, a day that the Preds normally sells out anyway.

Sure, UT and the Titans are big... but UT's 3 hours away, and they play only on Saturday - again, a day that the Preds sell out anyway.

Okay, ticket sales are only a portion... but the local group is buying Powers Management, the company that runs the concessions, as well!

Originally posted by: LikeLinus
Then lets move on to the fire sale the preds have had. We're going to suck, plain and simple. There's no way we're going to finish 3rd in the NHL and have another 110 win season. Do people come out to watch losing teams? Does attendance increase when you lose? It may for a year or two, but they need MONEY to get new players and keep this team at the top. Money I don't see them having a lot of.

There's been no such fire sale. Nashville wouldn't have spent $8M on Timonen or $5M on Hartnell, regardless of whether they spent to the cap or not. Kariya would have stayed (and the Preds would have signed him) if there were no uncertainty about the team moving. Mason's stats are identical to Vokoun's over the past two years - I can dig them up if you'd like to compare them - so we lose very little there. Plus, we've signed several solid players to replace the ones we've lost: Gelinas, Bonk, de Vries, Ortmeyer. Sorry... I don't see where there's been a "fire sale". The team is quite solid due to superior drafting. If not for that, yeah, I'd be worried. But the team looks great! What's wrong with the following players?
--
Sullivan - Arnott - Dumont
Gelinas - Legwand - Radulov
Erat - Bonk - Ortmeyer
Hordichuk - Nichol/Fiddler/Smithson - Tootoo/Ellison (yep, we're filled to overflowing with forwards)
--
de Vries - Hamhuis
Suter - Weber
Zidlicky - Zanon
--
Mason - Rinne
--
Doesn't look too bad to me!

Guess we'll just have to disagree.

 

[JeffreyLebowski]

What, they only need 14,000 tickets sold a season to make money? DAYUM. The Stars can do that in 2 games easily

 

[LikeLinus]

Originally posted by: TreyRandom

Guess we'll just have to disagree.

I don't care about KC. This isn't about KC and what type of town they are.

All you can do is pick on Vandy? Their stadium may (or may not - I don't attend Vandy games) be half full, but they have 34,000 attendance per game. They have over 12,000 season tickets sold alone.

http://nashville.bizjournals.c...tory5.html?jst=s_cn_hl

You don't have a clue what you're talking about. Do I even need to get into MTSU and TSU?

Disagree with "Me" as you may, but check this out

http://en.wikipedia.org/wiki/Fire_sale

"The Nashville Predators are currently also engaged in a fire sale, and the term is being used frequently in connection with the team. It is believed that if the attendance level drops below 14,000 per night, the team's owner's (the team will probably be sold), will be able to exit the lease for a penalty. One of the top teams in the league in the 2006-07 season, many analysts expect the team to be one of the leagues worst in the 2007-08 season after the talent hemorrhage."

http://sports.espn.go.com/nhl/columns/story?id=2908877

You have no actual comment on the financial situation either?

Either way, I suspect they will survive for a few years, but I can't see them staying here in the long term if they can't stop bleeding money. If the new group is worried about a 10 million dollar deposit and they don't want to spend 8 million on a star.... good luck.

 

[TreyRandom]

Originally posted by: LikeLinus
I don't care about KC. This isn't about KC and what type of town they are.

All you can do is pick on Vandy? Their stadium may (or may not - I don't attend Vandy games) be half full, but they have 34,000 attendance per game. They have over 12,000 season tickets sold alone.

http://nashville.bizjournals.c...tory5.html?jst=s_cn_hl

You don't have a clue what you're talking about. Do I even need to get into MTSU and TSU?

Disagree with "Me" as you may, but check this out

http://en.wikipedia.org/wiki/Fire_sale

"The Nashville Predators are currently also engaged in a fire sale, and the term is being used frequently in connection with the team. It is believed that if the attendance level drops below 14,000 per night, the team's owner's (the team will probably be sold), will be able to exit the lease for a penalty. One of the top teams in the league in the 2006-07 season, many analysts expect the team to be one of the leagues worst in the 2007-08 season after the talent hemorrhage."

http://sports.espn.go.com/nhl/columns/story?id=2908877

You have no actual comment on the financial situation either?

Either way, I suspect they will survive for a few years, but I can't see them staying here in the long term if they can't stop bleeding money. If the new group is worried about a 10 million dollar deposit and they don't want to spend 8 million on a star.... good luck.

You specifically mentioned moving the team to KC. That's the only likely destination, at the moment, what with Boots as an investor.

Not picking on Vandy... I'm just stating that the ticket prices are low, which means it's quite likely that the few fans that go to Vandy games can afford to also go to Predators games... and I don't believe any of the game times conflict (afternoon vs. evening).

I do have a clue what I'm talking about... let's not get into personal attacks, 'k? I'm an MTSU graduate, and unfortunately, they're having trouble bringing in the fans as well. Those that do go to the games find that the ticket prices are very affordable. And, like Vandy games, the schedules don't conflict with Preds games.

The Titans games aren't cheap, so I can see where someone might not be able to afford both the Titans and Preds. That said, if price isn't a problem, the games rarely overlap.

Yeah, Wikipedia is certainly an authoritative source on the topic... :roll: Guess we'll have to see what this year brings as far as whether they are among the "leagues worst".

No, I have no other comment on the financial situation. I've already said what needed to be said, above: if the team hits 14,000 per game, they'll break even, but have a salary floor team... if they hit 16,000 per game, they'll have a mid-salary-cap team... and if they sell out every night, they'll have a high-salary-cap team. That was stated by the new owners... not something from my own logic.

 

[TreyRandom]

Here's a link to a blog regarding the sale of the Predators and the alleged "fire sale". Says basically the same things I said.

 

[meltdown75]

I'm glad they stayed in Nashville but I think it would be pretty cool to have one more Canadian team. I'd like to see it in Winnipeg though, not in Hamilton or Kitchener / Waterloo.

 

[Pepsi90919]

god damn it, i want them in hamilton :|

(sorry meltdown75)

 

[meltdown75]

Originally posted by: Pepsi90919
god damn it, i want them in hamilton :|

(sorry meltdown75)

well the fan base and the arena are already there, but I just think that the Winterpeggers are hungrier for it

 

[TreyRandom]

Originally posted by: meltdown75
I'm glad they stayed in Nashville but I think it would be pretty cool to have one more Canadian team. I'd like to see it in Winnipeg though, not in Hamilton or Kitchener / Waterloo.

I also think it'd be great to have another Canadian team... just not the Preds. :thumbsup:

Do you think that Winnipeg could get their arena renovated to hold more than 15,000? Or would that be large enough?