View Full Version : Quite possibly the worst investment ever
pshreck
03-03-2005, 12:44 PM
3.5 billion dollar bid for all the teams in the NHL (http://sports.espn.go.com/nhl/news/story?id=2003701)
This would put the average NHL team worth over 100 million. I'm sorry, no. Such a risky investment, especially coming right after their season was canceled, and Americans let out a big "what? who cares?".
kenberman
03-03-2005, 02:01 PM
I believe the Forbes valuations done a few years ago - if you added up all the teams - would come to $5B for every team.
w/o knowing anything about you, I would say that the guys at Bain Capital have probably forgotten more about investing than you know.
/images/graemlins/smirk.gif
jakethebake
03-03-2005, 02:07 PM
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I believe the Forbes valuations done a few years ago - if you added up all the teams - would come to $5B for every team.
w/o knowing anything about you, I would say that the guys at Bain Capital have probably forgotten more about investing than you know. /images/graemlins/smirk.gif
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1) valuations done on almost anything a few years ago were out of whack.
2) a few years ago we didn't have a lockout and severe uncertainty associated with the NHL that we do now.
3) Bain? Consultants will put any valuation you want on it for a price.
lucas9000
03-03-2005, 02:09 PM
"Quite possibly the worst investment ever"
like anyone can even know that
http://ffmedia.ign.com/filmforce/image/nap_kip_napoleondynamite_1086820509.jpg
If you own the entire league, you can keep salaries down to the point where you're not losing money. The players will gripe about it, but I'm not feeling sorry for them if they make 500K instead of 2M.
It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
pshreck
03-03-2005, 02:11 PM
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If you own the entire league, you can keep salaries down to the point where you're not losing money. The players will gripe about it, but I'm not feeling sorry for them if they make 500K instead of 2M.
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Right, its not like the players will refuse to play and we wont even have hockey.
Oh wait.
pshreck
03-03-2005, 02:13 PM
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It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
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No, its definetly both. Other sports have had seriously problems being run, but you don't see the whole nation mocking the sport and not caring that it has been canceled. When baseball has problems it usually upsets many a sports fan. Hockey? Honestly, just the die hardest of fans really cared.
mmbt0ne
03-03-2005, 02:14 PM
</font><blockquote><font class="small">En réponse à:</font><hr />
It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
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I know. It's amazing what Isiah Thomas was able to do with the CBA. /images/graemlins/tongue.gif (not a rip on you, just a cheap shot at Zeke)
lucas9000
03-03-2005, 02:14 PM
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often, investors make a killing buying a distressed asset and turning it around.
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apparently that's how andy beal made a lot of his money.
jakethebake
03-03-2005, 02:18 PM
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It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
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Very true. They also often end up with nothing.
kenberman
03-03-2005, 02:18 PM
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1) valuations done on almost anything a few years ago were out of whack.
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Possible. But there has also been inflation, and when you're talking about billions of dollars, that stuff matters.
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2) a few years ago we didn't have a lockout and severe uncertainty associated with the NHL that we do now.
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Uncertainty creates opportunity, and this is why Bain is swooping in. NHL has been around for a long time, and these guys know that they could get a potentially high return business for a reasonable investment.
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3) Bain? Consultants will put any valuation you want on it for a price.
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This isn't Bain Consulting, it's Bain Capital. They are doing a valuation on a business which they will invest their own money in (as well as other people). They have no self-interest in an overvaluation.
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Right, its not like the players will refuse to play and we wont even have hockey.
Oh wait
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Please...
The reason they didnt play is because they wanted an open market.
They will have an open market, but nobody will be paying them what they want. These guys really dont have a choice. Where is Sergei Federov or Martin Brodeur going to get even half of what they make now? They cant exactly take up basketball and be a pro there.
If player X wants to become a free agent and all the teams are controlled by the same firm, the guy is not going to outbid himself for someone.
The idea is wacky but to say the players really have a say is nuts.
Piz0wn0reD!!!!!!
03-03-2005, 02:23 PM
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"Quite possibly the worst investment ever"
like anyone can even know that
http://ffmedia.ign.com/filmforce/image/nap_kip_napoleondynamite_1086820509.jpg
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awsome.
kenberman
03-03-2005, 02:23 PM
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Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
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Recognizing these situations is one way Private Equity firms like Bain make boatloads of money.
jakethebake
03-03-2005, 02:24 PM
"This isn't Bain Consulting, it's Bain Capital. They are doing a valuation on a business which they will invest their own money in (as well as other people). They have no self-interest in an overvaluation."
I didn't read the article. I thought the reference was to the Forbes valuations someone mentioned. My bad. It's actually probably not a bad investment, but the deal will never ever get done for so many reasons.
jakethebake
03-03-2005, 02:27 PM
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Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
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Recognizing these situations is one way Private Equity firms like Bain make boatloads of money.
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They also lose a lot. It's all about diversification. You get into enough deals cheap enough to have a positive risk-adjusted expected return. But you don't expect to make money on all of them. In fact you expect to lose your shirt on quite a few.
kenberman
03-03-2005, 02:30 PM
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Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
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Recognizing these situations is one way Private Equity firms like Bain make boatloads of money.
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They also lose a lot. It's all about diversification. You get into enough deals cheap enough to have a positive risk-adjusted expected return. But you don't expect to make money on all of them. In fact you expect to lose your shirt on quite a few.
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agreed. They certainly know every deal won't work out, but they don't know which ones those are /images/graemlins/smirk.gif
They go into every deal thinking it's a winner.
lu_hawk
03-03-2005, 02:32 PM
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Such a risky investment, especially coming right after their season was canceled
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the only reason somebody might be able to make money buying the whole NHL is because their season was cancelled. you make money buying things that nobody wants.
pshreck
03-03-2005, 02:34 PM
Here is a deeper perspective from me.
Bain knows that hockey is almost dying. They know that it is not a safe investment. However, they know this also... on the slight chance that they turn everything around over maybe 5 years... ticket sales, ratings, merchandise.... the 3.5 billion dollar value could EASILY be 10 billion, and on its way up.
The really risky aspect of the whole thing, is that Bain obviously thinks that value of the league will never go kaput, meaning that even if they lose a few hundred million, they will still have a few billion dollars value (like now) in all the teams, and will be able to sell them off. This is what gets me... there is potential that in 5-10 years time, the NHL is worth about as much as professional lacrosse. I know that is extreme, but its possible.
All in all, I think potential risk is definetly higher than potential reward.
woodguy
03-03-2005, 02:35 PM
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It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
Bain might be guessing that the problem with hockey is not the brand itself but in the poor running on the organization.
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Agreed.
The NHL has long been its own worst enemy.
Under Ziegler it was bad, but under Bettmen it went out of control.
The product is proven, but mismanaged.
Most people in the business of sport agree that hockey is the most entertaining game to watch live, they have just never had the proper management to make the changes nessesary to make it into the most exciting game on T.V. and truely cash in like the other pro sports.
From my own experience I bought 50% of a failing business and turned it around pretty quickly. Why? Because most businesses are extremely mediocre and it doesn't take much to outperform the competition. Any business is more about people than product.
The NHL has (in the past) had a great product and mediocre management.
Now the have a mediocre product and horrid management.
Sounds ripe for a turn around to me.
Regards,
Woodguy
(Edmonton, Alberta)
pshreck
03-03-2005, 02:37 PM
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Most people in the business of sport agree that hockey is the most entertaining game to watch live
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Ok, I make a ton of sweeping generalizations, but this one....
I think most people agree that hockey live is better than hockey on tv, more so than the difference in any other sport. But Ill take the NFL, MLB, or NBA in a live game any day over live hockey.
razor
03-03-2005, 02:41 PM
One entity owns the whole league - Now revenue sharing is easy, they have total control over ALL television rights (ie. local and national) and ALL merchandising.
Strike is over immediately bacause the ownership group simply accepts the Players last offer. No need for a salary cap now... as the ownership group controls each team's player budget.
Also with one ownership group, dumping a few weak franchises is no big deal.
While some teams certainly are losing money, a team like the Maple Leafs is a GOLD MINE.
Other teams like Minnesota and Columbus might not make a lot or any money but they get great fan support, with revenue sharing they can continue to exist.
With revenue sharing you could also move a couple of the weaker teams back to Winnipeg and Quebec.
razor
03-03-2005, 02:45 PM
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All in all, I think potential risk is definetly higher than potential reward.
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I don't think there is much risk at all.
pshreck
03-03-2005, 02:46 PM
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All in all, I think potential risk is definetly higher than potential reward.
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I don't think there is much risk at all.
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If you make a statement like that, please explain. And remember that the NHL has been losing tons of money for the past few seasons. No risk indeed. Okkkkkkkkkk go.
woodguy
03-03-2005, 02:48 PM
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Ok, I make a ton of sweeping generalizations, but this one....
I think most people agree that hockey live is better than hockey on tv, more so than the difference in any other sport. But Ill take the NFL, MLB, or NBA in a live game any day over live hockey.
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I like sweeping statements and generalizations. /images/graemlins/grin.gif
I have read that and heard it from US sources like ESPN etc., so its not just my Canadian bias.
I think it is usually referred to in terms of the swift pace of the action, which can be non-stop for 4+ minutes, unlike the 3 major sports which are very stop/start/stop/start type of action.
I love baseball, but it can be painfull to watch live.
Football is awesome live, and the speed of NFL games is unreal, but there is 5 minutes of inaction for every 1 minute of action.
NBA probably comes closest to the NHL for non-stop action and excitement, but it still doesn't come up to the NHL standard, which can be exhausting.
I say all this with the cavet that the game in the last 5 years has been horrible for action compared to what it was in the 15 year preceding.
Today's NHL can be barely watchable at times as well.
Regards,
Woodguy
pshreck
03-03-2005, 02:50 PM
Interesting argument, but I dont think that 'most people in the business of sport' think hockey is the most fun to watch live. At least not in the U.S.
deacsoft
03-03-2005, 02:51 PM
My last girlfriend was the worst investment ever.
Shajen
03-03-2005, 02:52 PM
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Ok, I make a ton of sweeping generalizations, but this one....
I think most people agree that hockey live is better than hockey on tv, more so than the difference in any other sport. But Ill take the NFL, MLB, or NBA in a live game any day over live hockey.
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I like sweeping statements and generalizations. /images/graemlins/grin.gif
I have read that and heard it from US sources like ESPN etc., so its not just my Canadian bias.
I think it is usually referred to in terms of the swift pace of the action, which can be non-stop for 4+ minutes, unlike the 3 major sports which are very stop/start/stop/start type of action.
I love baseball, but it can be painfull to watch live.
Football is awesome live, and the speed of NFL games is unreal, but there is 5 minutes of inaction for every 1 minute of action.
NBA probably comes closest to the NHL for non-stop action and excitement, but it still doesn't come up to the NHL standard, which can be exhausting.
I say all this with the cavet that the game in the last 5 years has been horrible for action compared to what it was in the 15 year preceding.
Today's NHL can be barely watchable at times as well.
Regards,
Woodguy
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I agree, Hockey is the best sport to watch live. I've been to the big 4 of sports here in the US too. Hockey = teh suck on tv.
razor
03-03-2005, 03:04 PM
Not all teams lose money. Some teams make a TON of money. A team like the Leafs are a license to print money.
With one ownership group you can quickly dump or move weak franchises.
You can set a team payrolls which will increase the profits of teams like the Leafs, Wings, Rangers, Flyers, Avs which in turn can be used to subsidize some markets that aren't as strong.
In this system you don't have to worry about each team making money, just as long as each team has a strong fan support, has a reasonably competitive team and that overall there is more revenue than expenses.
Voltron87
03-03-2005, 03:07 PM
I think the NHL needs fewer teams. Dump the crappy ones who lose money, consolidate more talent into the remaining teams, improve the quality of play. But what do I know.
razor
03-03-2005, 03:14 PM
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Hockey = teh suck on tv.
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I personally don't think hockey on tv is that bad. HOWEVER, I (as most canadians) grew up watching hockey on tv. I suspect that because of this it's much easier for us to follow the puck and thereby enjoy watching the game on tv. Those new to the sport or don't watch it much seem to have difficulty following the puck and thus Hockey does indeed suck on tv.
Shajen
03-03-2005, 03:16 PM
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Hockey = teh suck on tv.
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I personally don't think hockey on tv is that bad. HOWEVER, I (as most canadians) grew up watching hockey on tv. I suspect that because of this it's much easier for us to follow the puck and thereby enjoy watching the game on tv. Those new to the sport or don't watch it much seem to have difficulty following the puck and thus Hockey does indeed suck on tv.
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Normally I don't pay much attention to hockey during the regular season, especially when my Blackhawks are out of the running usually after the second week of the season. /images/graemlins/tongue.gif It does take me a while to get used to following the puck in the playoffs, but yeah, you get used to it relatively quickly.
youtalkfunny
03-03-2005, 04:35 PM
"An investment firm and a sports advisory company reportedly made a joint proposal to buy all 30 NHL teams for as much as $3.5 billion."
Why are you people taking this subject so seriously?
Did the "Internet sportsbook pays thousands for grilled cheese sandwich" topic generate this much debate?
These guys make wild purchases/offers for the PUBLICITY.
Do you really think Wayne Allen Root has $3,500,000,000?
kenberman
03-03-2005, 05:01 PM
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"An investment firm and a sports advisory company reportedly made a joint proposal to buy all 30 NHL teams for as much as $3.5 billion."
Why are you people taking this subject so seriously?
Did the "Internet sportsbook pays thousands for grilled cheese sandwich" topic generate this much debate?
These guys make wild purchases/offers for the PUBLICITY.
Do you really think Wayne Allen Root has $3,500,000,000?
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I don't think you read the story, and investigated who the actual parties involved are. You should.
CORed
03-03-2005, 05:19 PM
Girlfriends are not an investment. They are an entertainment expense.
JPinAZ
03-03-2005, 07:46 PM
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With one ownership group you can quickly dump or move weak franchises.
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And that's the key problem with the NHL. It's very much a regional sport. Bettman & Co. have tried to treat it like a national sport for too long. Do teams really belong in Columbus, Raleigh, Nashville, & a few other places?
InchoateHand
03-03-2005, 07:48 PM
20-24 teams. 30 is stupid.
razor
03-03-2005, 08:06 PM
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Columbus
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I think Columbus draws very well.
youtalkfunny
03-04-2005, 12:37 AM
"...Game Plan, which recently acted as an adviser on the sale of the Ottawa Senators..."
You were right, I didn't read it.
I was wondering why everyone was so caught up in an offer made by Dan Pastorini, Jack Price, Joe Wiz, and Brian Duffy.
kenberman
03-04-2005, 12:46 AM
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"...Game Plan, which recently acted as an adviser on the sale of the Ottawa Senators..."
You were right, I didn't read it.
I was wondering why everyone was so caught up in an offer made by Dan Pastorini, Jack Price, Joe Wiz, and Brian Duffy.
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bain capital is one of the most prestigious PE companies in the country, and their managing partner owns the Celtics.
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Other teams like Minnesota might not make a lot or any money but they get great fan support, with revenue sharing they can continue to exist.
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You're right on with almost everything you said. Minnesota makes a boat load and 1/3 of money.
DesertCat
03-04-2005, 03:43 AM
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This would put the average NHL team worth over 100 million. I'm sorry, no. Such a risky investment, especially coming right after their season was canceled, and Americans let out a big "what? who cares?".
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I think this is brilliant. The union will soon fold and they will have significant cost reductions and cost certainty. They'll also be able to tweak the rules to make the game more watchable and popular, without have the players union able to veto it.
Trying to buy this business at it's cheapest, when it's on the verge of a huge comeback, is very smart, IMHO.
Kenrick
03-04-2005, 04:51 AM
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It might be a great investment. often, investors make a killing buying a distressed asset and turning it around.
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Two or three years ago, a couple ex-Microsoft guys and the broadcast.com guy bought the entire Professional Bowlers Tour for 5 million. Since then, with more advertisers, prize funds have doubled or more, there are more people wanting to compete, ratings are way up, and I'd have a hard time believing they aren't making a profit already. It was a sinking ship and they made it mainstream again.
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