Sale of Tampa Bay Lightning for close to $2B being worked on

[No Fun Shogun]

Lightning working on sale with value close to $2B

According to multiple sources, the Tampa Bay Lightning have begun a multi-stage sale process that will value the team at close to $2 billion.

www.sportsnet.ca

Nothing imminent is expected, but the anticipated buyer is Doug Ostrover, CEO of Blue Owl Capital.

Big market owners would be high fiving each other if a sunbelt team gets sold for that hefty of a sum.

Current owner Vinik would retain operational control for a few years if the deal goes through.

Even if the team gets sold for well under two billion, it'd represent a mighty windfall from the $170M purchase price in 2010.

Per Wikipedia, a sub-entity of Blue Owl is a minority owner of the Phoenix Suns and Sacramento Kings of the NBA.

Blue Owl Capital - Wikipedia

en.wikipedia.org

Click to read more...

 

[PeteWorrell]

That's some nice profit if it goes through.

 

[BKIslandersFan]

Man, feel like Lightning had one of the best owner in the league. You always hate to go in to the unknown territory when it comes to ownership.

 

[JMCx4]

... Even if the team gets sold for well under two billion, it'd represent a mighty windfall from the $170M purchase price in 2010. ...

Many of us might have been betting instead on oil & gas exploration companies in that timeframe ...

 

[mouser]

At first impression $2B sounds like a lot, but when you have Utah paying $1.2B for a team that lifts all boats. Wouldn’t be shocked if the next NHL expansion at some point in future comes in at $2B/team.

 

[Voight]

They're the epitome of success in the NHL and are considered one of the best runs franchises, does not shock me they are selling for a good chunk of change. Vinik took over from two guys constantly fighting each other and was the first owner in team history who actually seemed to give a damn.

 

[gstommylee]

At first impression $2B sounds like a lot, but when you have Utah paying $1.2B for a team that lifts all boats. Wouldn’t be shocked if the next NHL expansion at some point in future comes in at $2B/team.

Doubt it. That probably cause people to not want to bid at all. 2b + the cost of the building just for a hockey team. Houston definitely wouldn't be bidding at a 2b fee. Neither would quebec.

 

[Fenway]

They almost went broke in first season (1993)

 

[LadyStanley]

Check out this Podcast: Surprise Summer Emergency Pod Surprise Summer Emergency Pod

Friedman includes some discussion of sale in pod. Heard $$ of 1.8b to $1.9b so used "around $2b".

 

[aqib]

Man, feel like Lightning had one of the best owner in the league. You always hate to go in to the unknown territory when it comes to ownership.

Its a Mark Cuban type deal where he still runs it despite being a minority owner.

 

[JMCx4]

Doubt it. That probably cause people to not want to bid at all. 2b + the cost of the building just for a hockey team. Houston definitely wouldn't be bidding at a 2b fee. Neither would quebec.

Make that for the NHL's Grand Plan, then.

 

[many76]

This makes Larry tannebaum very happy when his partners buy him out

 

[LeafGrief]

As I posted in the main board thread, this is very much a sign of a bubble. To my knowledge, the Lightning are in the lower-middle of the league in terms of revenue, with just under 200m in revenue in 23-24. The NHL is not the NFL or even the NBA, this is a small(ish) market in a niche sport, and those teams are supposedly now worth 10x their revenue?

There's only so many expansion checks on the horizon, and fans are already fatigued of the gambling ads. The NHL's market share has not grown substantially in years and does not seem to be on the verge of a massive TV deal. Are we really to believe that there's 15+ teams worth $2bn in the NHL, and that even the smallest and most struggling franchises are worth $1bn+? The future profits just aren't there to justify these kind of valuations.

Truly, expansion is the driving force in these valuations. When you've got investment values going up based on payouts from new investors buying in, that's the very definition of a Ponzi scheme. $2bn is likely bagholder money, and I strongly doubt that the owner of a capital firm is buying in because he's willing to shell out a billion dollars to own the Stanley Cup banners.

 

[Albatros]

They almost went broke in first season (1993)

View attachment 900936

The year after:

 

[madhi19]

As I posted in the main board thread, this is very much a sign of a bubble. To my knowledge, the Lightning are in the lower-middle of the league in terms of revenue, with just under 200m in revenue in 23-24. The NHL is not the NFL or even the NBA, this is a small(ish) market in a niche sport, and those teams are supposedly now worth 10x their revenue?

There's only so many expansion checks on the horizon, and fans are already fatigued of the gambling ads. The NHL's market share has not grown substantially in years and does not seem to be on the verge of a massive TV deal. Are we really to believe that there's 15+ teams worth $2bn in the NHL, and that even the smallest and most struggling franchises are worth $1bn+? The future profits just aren't there to justify these kind of valuations.

Truly, expansion is the driving force in these valuations. When you've got investment values going up based on payouts from new investors buying in, that's the very definition of a Ponzi scheme. $2bn is likely bagholder money, and I strongly doubt that the owner of a capital firm is buying in because he's willing to shell out a billion dollars to own the Stanley Cup banners.

It's not that crazy a valuation. 10 times 200m would put it at 2B. You pay a premium because of the rarity of the asset. There only 32 seats at that table and some of those seats are never hitting the market. It would be interesting to know if the Bolts have other assets on top of the hockey team. The interesting angle is possible expansion in the near future, Vinik would factor that in for sure.

 

[ps241]

As I posted in the main board thread, this is very much a sign of a bubble. To my knowledge, the Lightning are in the lower-middle of the league in terms of revenue, with just under 200m in revenue in 23-24. The NHL is not the NFL or even the NBA, this is a small(ish) market in a niche sport, and those teams are supposedly now worth 10x their revenue?

There's only so many expansion checks on the horizon, and fans are already fatigued of the gambling ads. The NHL's market share has not grown substantially in years and does not seem to be on the verge of a massive TV deal. Are we really to believe that there's 15+ teams worth $2bn in the NHL, and that even the smallest and most struggling franchises are worth $1bn+? The future profits just aren't there to justify these kind of valuations.

Truly, expansion is the driving force in these valuations. When you've got investment values going up based on payouts from new investors buying in, that's the very definition of a Ponzi scheme. $2bn is likely bagholder money, and I strongly doubt that the owner of a capital firm is buying in because he's willing to shell out a billion dollars to own the Stanley Cup banners.

I'm kind of with you on this but also admit there is a phenomenon or dynamic that I know less of. in a recent article on the surge in WNBA valuations I saw this written:

"Overall, Sportico has WNBA teams trading at a 7.3x revenue multiple. This is lower than the NBA (11x), MLS (9.6x), and NFL (8.8x). But it’s higher than every other major U.S. sports league, including the NWSL (7.1x), MLB (6.7x) and NHL (6.2x)."

This was written pre Lightning sale so there would need to be an upward adjustment to revenue multiple now I guess. I am only sourcing this to give us an idea of the landscape.

It's not that crazy a valuation. 10 times 200m would put it at 2B. You pay a premium because of the rarity of the asset. There only 32 seats at that table and some of those seats are never hitting the market. It would be interesting to know if the Bolts have other assets on top of the hockey team. The interesting angle is possible expansion in the near future, Vinik would factor that in for sure.

Its a fascinating topic. Pro Sport property valuations have been exploding. If I was an owner like Vinik, Cuban, or any other I would absolutely be looking at taking chips off the table if I could retain the operating rights to the team. In Cuban's case I found his reason's facinating.

What Selling The Dallas Mavericks Means For Mark Cuban And The Future Of The Team

The NBA Board of Governors voted 29-0 to approve Cuban’s sale of the majority stake in the Mavericks to Miriam Adelson and the Dumont family on Wednesday.

www.forbes.com

As he mentioned he would rather own 27% of a watermellon than 100% of a grape but the part that I found most interesting is this quote:

“Media companies are going out of business. Or they’re consolidating. That world is changing. And so what went from an advantage was not so much an advantage anymore,” Cuban told media members Wednesday.

“If you look at the teams that spend the most money right now, it’s not because of their media deals. It’s because of their real estate empires that they’ve built,” Cuban continued. “And I have no knowledge in that at all. It’s been hard enough learning the pharmacy and basketball business, let alone trying to learn real estate as well.”

 

[LeafGrief]

I'm kind of with you on this but also admit there is a phenomenon or dynamic that I know less of. in a recent article on the surge in WNBA valuations I saw this written:

"Overall, Sportico has WNBA teams trading at a 7.3x revenue multiple. This is lower than the NBA (11x), MLS (9.6x), and NFL (8.8x). But it’s higher than every other major U.S. sports league, including the NWSL (7.1x), MLB (6.7x) and NHL (6.2x)."

This was written pre Lightning sale so there would need to be an upward adjustment to revenue multiple now I guess. I am only sourcing this to give us an idea of the landscape.





Its a fascinating topic. Pro Sport property valuations have been exploding. If I was an owner like Vinik, Cuban, or any other I would absolutely be looking at taking chips off the table if I could retain the operating rights to the team. In Cuban's case I found his reason's facinating.

What Selling The Dallas Mavericks Means For Mark Cuban And The Future Of The Team

The NBA Board of Governors voted 29-0 to approve Cuban’s sale of the majority stake in the Mavericks to Miriam Adelson and the Dumont family on Wednesday.

www.forbes.com

As he mentioned he would rather own 27% of a watermellon than 100% of a grape but the part that I found most interesting is this quote:

“Media companies are going out of business. Or they’re consolidating. That world is changing. And so what went from an advantage was not so much an advantage anymore,” Cuban told media members Wednesday.

“If you look at the teams that spend the most money right now, it’s not because of their media deals. It’s because of their real estate empires that they’ve built,” Cuban continued. “And I have no knowledge in that at all. It’s been hard enough learning the pharmacy and basketball business, let alone trying to learn real estate as well.”

I'd be inclined to think that the NFL would be the gold standard from which to benchmark, because they're the most popular league and therefore the teams will have the most value in their brands. The flagship teams, such as the Leafs, Rangers, and Habs, would probably tolerate higher multiples on average, due to the value of the brand being greater than that of a mid-range popularity team. I'd also argue that the MLS and WNBA could tolerate higher multiples because they have more potential for growth (the WNBA has been exploding in popularity recently).

If an NHL team is suggesting to sell at a significantly higher multiple than an NFL team, and a ~50% increase over recent NHL multiples, that still strongly indicates "bubble" to me. Some upwards trend is sensible in line with all of their competition, but this strikes me as an outlier. As you say, the whole market is exploding across multiple leagues, and that can absolutely overheat, which I think this one is.

 

[DuklaNation]

Lot of sports franchise owners are cashing in recently.

 

[KevFu]

I'm kind of with you on this but also admit there is a phenomenon or dynamic that I know less of. in a recent article on the surge in WNBA valuations I saw this written:

"Overall, Sportico has WNBA teams trading at a 7.3x revenue multiple. This is lower than the NBA (11x), MLS (9.6x), and NFL (8.8x). But it’s higher than every other major U.S. sports league, including the NWSL (7.1x), MLB (6.7x) and NHL (6.2x)."

This was written pre Lightning sale so there would need to be an upward adjustment to revenue multiple now I guess. I am only sourcing this to give us an idea of the landscape.

A bubble is usually when value is given to an kind of thing that doesn't necessarily make it an investment on it's own and can't be sustainable. And I don't think that sports franchises fit that mark.

The market price for TV rights fees was the closest sports will get. Because teams were getting TV deals based on the relative nature of other sports teams that wasn't a 1-for-1.

For example, the Cincinnati Reds got a TV deal that was like 80% of what the Dodgers were getting, because "baseball teams are worth that much." That was very bubbly, because it wasn't based on "The Dodgers have X viewers, Cincy has 80% of that, so Cincy gets 80% the money."


But with sports teams, the exclusivity is the selling point for owners. The value can come from the tax breaks you get from an asset which can "lose money" on paper, on purpose, at a tiny amount, but RETAIN ITS escalating value...

For example, Kodak was an anchor of the stockmarket indexes, but when they started to lose money to digital photography.... they (a) don't get to draft Instagram with the #1 pick like a sports team does. And (b) they don't have any power of the other index companies to say "We're not going to allow Instagram into the league."


And women's sports teams valuations are blowing up for the same reason MLS' teams did: It's "Major League" revenue at "Minor League" expenses. (Yeah, their TV deals are like a quarter or an eighth of the big boys... but their payrolls cost less than ONE player in those leagues!).

You could have gotten an MLS team for $25m and paid $2m in total salary. That's what caused their value boom. Now it's like $500m for a team, but still only $30m payroll.

WNBA and NWSL teams are the same thing now. Angel City FC exists because their lead investor saw that Megan Rapinoe's net worth was higher than the valuation of her team and immediately called the NWSL to buy an expansion team.

A Minor League men's team is like $10m to $25m, but only appeals to small towns; while the Indiana Fever are on National TV like 30 times this year.

(There's gonna be a CBA fight in women's sports over "hey, you're making $50m in revenue and we're getting $5m, we need our salaries doubled, tripled..." But that's still gonna work for a long time before they get to diminishing returns).