I have been a really good boy this year so I am putting my Christmas wish list in early. Can you please bring me my own NHL franchise for Christmas next year? I hear they make lots and lots of money…Jim
I rushed out mailed my letter last week. I sent it Priority Post to the South Pole. They tell me the North one is melting! To my shock, Santa sent a reply back today. Let me read it to you all.
Ho, ho, ho! Are you crazy son? I do not know which of my naughty elves spiked your egg nog, but I can tell you for certain that I have 31 other little boys and girls who would disagree with you about the NHL teams making lots and lots of money. Some of these kids do not play nice together either Jimmy. They only care about themselves. Did you know they shut the league down one year?
So I am going to save you a lot of trouble and money and not grant your wish. Instead you can have a copy of the Forbes Business magazine that tells you what really is happening in the NHL today. Read it carefully. There is a lot of scary stuff if you dig deep enough.
I remember one nice boy; 26 years ago asked me for an NHL team and I granted him his wish. He used to be a billionaire, but today he is only a multi-millionaire because he lost over 250 million dollars on the present I left him. No wonder he does not write me letters any more. Careful what you wish for Jimmy. Maybe you should learn how to play football. They make real money…Santa ( Forbes: 2017 Dallas Cowboys Valued at $ 4.2 Billion )
Now that I have all attention let me start by publishing the latest NHL numbers from Forbes Magazine in an article dated November 2016. These audited numbers are based upon the 2015-2016 season and were supplied by the NHL. It is important to note that Forbes rates many major sporting leagues and they apply the same criteria to all their articles posted. Meaning they have no predetermined prejudice for one team over another.
So if you disagree with their findings you would do yourself good to remember this fact. No place for emotions or personal favourites in this exercise. Hope you enjoy the read.
|Forbes Magazine – November 2016: NHL by the Numbers for 2015 -2016 Season|
|Rank/Team||Current Value||1-Yr Change||Debt to Value||Revenues||Operating $|
|1. NYR||$1.25 billion||up 4%||0-No debt||$219 mil.||$74.5 mil.|
|2. MON||$1.12 billion||down 5%||19%-$213 mil.||$202 mil.||$76.9 mil.|
|3. TOR||$1.1 billion||down 4%||10%-$110 mil.||$186 mil.||$68 mil.|
|4. CHI||$925 million||No change||0-No debt||$173 mil.||$34.4 mil.|
|5. BOS||$800 million||up 7%||0-No debt||$169 mil.||$33.5 mil.|
|6. PHI||$720 million||up 9%||0-No debt||$160 mil.||$24.7 mil.|
|7. VAN||$700 million||down 6%||11%-$77 mil.||$146 mil.||$29.6 mil.|
|8. DET||$623 million||up 4%||0-No debt||$137 mil.||$6.1 mil.|
|9. LAK||$600 million||up 3%||12%-$72 mil.||$142 mil.||-$0.4 mil.|
|10. WSH||$575 million||up 2%||23%-$133 mil.||$136 mil.||$11.7 mil.|
|11. PIT||$570 million||up 2%||20%-$114 mil.||$178 mil.||$25.7 mil.|
|12. DAL||$500 million||up 11%||29%-$145 mil.||$144 mil.||$20.9 mil.|
|13. SJS||$470 million||up 6%||11%-$52 mil.||$141 mil.||$7.1 mil.|
|14. EDM||$445 million||down 2%||21%-$94 mil.||$117 mil.||$15.4 mil.|
|15. ANA||$415 million||up 4%||15%-$62 mil.||$121 mil.||-$1.2 mil.|
|16. CGY||$410 million||down 6%||7%-$29 mil.||$121 mil.||$18 mil.|
|17. MIN||$400 million||up 5%||28%-$112 mil.||$136 mil.||$5.6 mil.|
|18. NYI||$385 million||up 18%||52%-$200 mil.||$114 mil.||$2.7 mil.*|
|19. COL||$360 million||No change||0-No debt||$115 mil.||$6.3 mil.|
|20. OTT||$355 million||down 4%||32%-$114 mil.||$118 mil.||$6.3 mil.|
|21. WPG||$340 million||down 3%||38%-$130 mil.||$112 mil.||$11.4 mil.*|
|22. NJD||$320 million||down 3%||81%-$259 mil.||$126 mil.||-$0.9 mil.*|
|23. STL||$310 million||up 15%||21%-$65 mil.||$ 129 mil.||$3.2 mil.|
|24. TBL||$305 million||up 17%||0-No Debt||$127 mil.||$3 mil.|
|25. BUF||$300 million||No change||27%-$81 mil.||$116 mil.||$1.1 mil.|
|26. NSH||$270 million||up 6%||31%-$84 mil.||$116 mil.||-$2.2 mil.|
|27. CBJ||$245 million||up 8%||31%-$76 mil.||$100 mil.||-$2.4 mil.|
|28. ARI||$240 million||up 9%||57%-$137 mil.||$101 mil.||-$8 mil.*|
|29. FLA||$235 million||up 26%||49%-$116 mil.||$100 mil.||-$15.4 mil.*|
|30. CAR||$230 million||up 2%||54%-$125 mil.||$99 mil.||-$15 mil.*|
It is unfortunate not to have the latest info that would take into account the 2017 season, but you have seen the patterns. For example all the Canadian teams lost market value due to the falling Canadian dollar. But factor in the fact that Ottawa had a long term run in the Stanley Cup playoffs in 2017 and Toronto and Edmonton also played in the postseason in 2017 and that would definitely increase their bottom line over 2016.
|Surprises in the above Forbes information:|
|Teams with No Debt: Rangers, Hawks, Bruins, Flyers, Wings, Avalanche, and the Lightning.|
|Teams with Lots of Debt (*): New Jersey, $259 million in debt, 81% Debt to value; Arizona at $137 million in debt, 57% Debt to value; Carolina $125 million in debt, 54% Debt to value; New York Islanders, $200 million in debt, 52% Debt to value, Florida,$ 116 million in debt, 49% Debt to value; Winnipeg, $130 million in debt, 38% Debt to value. ** As of June 30, 2017, Arizona is now $ 250 million in debt and lost $ 20 million dollars for year 2017. The NHL holds $ 100 million of their debt.
This illustrates a key point that Other Rick and I were discussing in a previous post…Debt to Value ratios. Think of it as equity in your home. When you go to mortgage your home and the bank looks at the value of your home and the percentage you wish to borrow against it…same idea. The second part of your mortgage application is your income and daily expenses.
With the NHL, the bank looks at the value of your team. That usually corresponds to the income your team generates every year after paying annual operating costs. So the more money you make the higher the value of your team usually. They also consider local market factors.
Here is the rub. You have to make money! You can’t just print it. When you have eight teams posting a loss in 2016 and eight more only making from 1 to 7.1 million dollars a year profit…that is half the league!
That keeps the values of NHL franchises in those cities low. No income.
What did the NHL do?? Somebody in the NHL brass got the bright idea to sell new franchises for $500 million dollars each. Their logic was if they sold new franchises for $500 million dollars, then everybody’s NHL franchise would be worth at least $500 million dollars!?
Do you realize how stupid this logic was?
They could not fudge the team’s annual incomes so they created an artificial value for a NHL team.
Back to my home mortgage example. The next time you go and ask to remortgage your home, be sure to tell your loan officer it is worth 40 percent more now. If they ask why, tell them, “Well that is what the NHL did.”
Part two of this fascinating story will follow shortly. We will examine the income side of the ledger and see who is in real trouble. More teams than you think.
Thanks for reading.