The challenge right now is that although Niagara can be a flagship property of the OHL, there is a lot of uncertainty surrounding Major Junior Hockey. Lawsuits out there for players looking to get paid, uncertainty surrounding reorganizing Junior hockey in North America with potentially some sort of realignment coming, and the fact that franchise values have risen to a point where $20+mil is required to take over a team. Niagara is probably more like $25mil. It is a money losing proposition when you factor in Future Value of money. Real business people can turn that $25mil into a lot more money than rolling it through an OHL team. So, it takes someone with deep enough pockets to buy the team as a toy where they don’t really care about making money on the $25mil. That significantly narrows the market.
You have to think with so many NHL players out there worth $50mil or more, you’d get a couple of them together to buy a team but you don’t really see that. There must be a reason, no? The answer is that OHL franchises aren’t prized commodities for people that would run it as a business. You have to be willing to invest in the community and not be concerned about turning a profit.
Someone with $25mil to drop on the Ice Dogs is giving up a 7% ROI which equates to $1.75mil annually. I don’t think there are many teams out there making $1.75mil annually. So, there needs to be an asset appreciation component to buying a team to make up the difference. At 7%, the asset needs to double every ten years. So, in ten years, the team needs to sell for $50mil. Possible? Maybe? I am not too confident about that.
The guys making good money on the OHL are the ones that bought in during the mid to late 90’s and early 2000’s. Their franchise values have doubled twice over. So they are realizing the 7% in asset value increase. Great. Can it stay consistent? 2035, $50mil and 2045 $100mil? Man, that’s tough to see right now.
All this to say that, yes, they can force the sale of the team. But, they need a quality owner to step up and keep the team in Niagara. They pretty much forced a sale with the Burke’s. They ended up with DD. Did he emerge as a winner in an evaluation of the one best suited to take over ownership or was he the one that was able to step up to the plate with $20mil so he’s the guy that got it with relatively no other true interest? Either way, that is a bad sign when thinking about finding a replacement if that ends up the way they want to go.