Confirmed with Link: Senators are for sale - and it’s a Gong Show

[Cosmix]

I'm going by something he said himself at a lecture. He said this when he appeared with Bill Gates back at the time when he gave a lot of money to the Gates Foundation. He said that many/most business borrow money to cover operating costs & cash flow fluctuations because of the tax write offs. So, you'll have to take it up with him.

Another snippet I found on the inter web: "Warren Buffett is stating the basic principle that you do not need to use debt to get rich if you are intelligent. All debt does is increase your risk, while if you are a smart person, you are going to make a lot of money either way."

Also, "At the same time, however, Mr. Buffett has credited much of his success to the float generated by his insurance businesses at Berkshire which is a sort of free leverage. Additionally, his company and/or subsidiaries have also taken out long-term debt.".

Regarding avoiding bankruptcy which is why Buffet feels strongly about using debt leverage to get rich - "He does this at Berkshire by keeping a cash hoard of tens of billions of dollars to ensure that Berkshire can always meet its insurance and other obligations."

I'm going to rewrite my original OP so that I more accurately & better reflect the point I was trying to make.

I think Buffet means not using high leverage with debt to try to boost the returns of the common shares. His insurance company has a lot of cash and liquid assets from payments from his customers that must be invested, so he uses it to buy other companies and avoids debt as leverage. But he still has debt (to his insurance business and otherwise).

 

[Big Muddy]

I think Buffet means not using high leverage with debt to try to boost the returns of the common shares. His insurance company has a lot of cash and liquid assets from payments from his customers that must be invested, so he uses it to buy other companies and avoids debt as leverage. But he still has debt (to his insurance business and otherwise).

Generally yes he is leveraging his cash in his insurance business, but he also recommends against debt in general for those that are already rich. He also doesn't borrow money to cover operating costs (this is what he mentioned in that lecture with Gates) so that he can use the interest as a tax deduction to reduce the taxes his company would pay which is quite common in the corporate world. He cited it was for moral reasons that he didn't do that.

I was also reading that Ed Snider bought the Flyers franchise using his house as collateral from the NHL. Kind of interesting.

 

[Bevans]

I'm going by something he said himself at a lecture. He said this when he appeared with Bill Gates back at the time when he gave a lot of money to the Gates Foundation. He said that many/most business borrow money to cover operating costs & cash flow fluctuations because of the tax write offs. So, you'll have to take it up with him.

Another snippet I found on the inter web: "Warren Buffett is stating the basic principle that you do not need to use debt to get rich if you are intelligent. All debt does is increase your risk, while if you are a smart person, you are going to make a lot of money either way."

Also, "At the same time, however, Mr. Buffett has credited much of his success to the float generated by his insurance businesses at Berkshire which is a sort of free leverage. Additionally, his company and/or subsidiaries have also taken out long-term debt.".

Regarding avoiding bankruptcy which is why Buffet feels strongly about using debt leverage to get rich - "He does this at Berkshire by keeping a cash hoard of tens of billions of dollars to ensure that Berkshire can always meet its insurance and other obligations."

I'm going to rewrite my original OP so that I more accurately & better reflect the point I was trying to make.

I think in general his quote is probably speaking about taking a loan out for purpose of investing and not talking about mortgages. At the end of the day a mortgage is debt and obviously buffet, BH and subsidiaries have mortgages.

I think it would be accurate to say both that Buffet would advise against over leveraging yourself for schemes or tax purposes and that, if he were to buy a business worth close to a billion dollars, at least some of it would be financed.

 

[Bevans]

Generally yes he is leveraging his cash in his insurance business, but he also recommends against debt in general for those that are already rich. He also doesn't borrow money to cover operating costs (this is what he mentioned in that lecture with Gates) so that he can use the interest as a tax deduction to reduce the taxes his company would pay which is quite common in the corporate world. He cited it was for moral reasons that he didn't do that.

I was also reading that Ed Snider bought the Flyers franchise using his house as collateral from the NHL. Kind of interesting.

Also, I may be wrong, but it sounds like he's just saying he doesn't like the Smith Maneouver, which is very specific and different from a Dave Ramsey-like aversion to debt.

The Smith Maneuver: Definition, How It Works, and How to Use It

The Smith Maneuver is a Canadian tax strategy that makes interest on a residential mortgage tax deductible. Borrowers need a readvanceable mortgage to use it.

www.investopedia.com

 

[Cosmix]

pretty sure it’s Gary Bettman who chooses who the new owner will be, not the Melnyk sisters.

Nope. It's the NHL league that determines which new owner is acceptable to the league. Bettman can make a recommendation to the league and communicates the decision to the current and prospective new owner. The Melnyk sisters can prefer the one who offers the best price; however, if the league does not like the proposed new owner because that new owner does not meet the league's criteria for ownership, then the sale cannot proceed. The terms of sale of the franchise to the original owner of the franchise, and any amendments made afterward, would address future sales of the franchise and specify the criteria for a sale.

 

[Golden_Jet]

Nope. It's the NHL league that determines which new owner is acceptable to the league. Bettman can make a recommendation to the league and communicates the decision to the current and prospective new owner. The Melnyk sisters can prefer the one who offers the best price; however, if the league does not like the proposed new owner because that new owner does not meet the league's criteria for ownership, then the sale cannot proceed. The terms of sale of the franchise to the original owner of the franchise, and any amendments made afterward, would address future sales of the franchise and specify the criteria for a sale.

Bettman chooses, and BOG rubber stamps his recommendation, via voting.

 

[Cosmix]

Bettman chooses, and BOG rubber stamps his recommendation, via voting.

No. Bdettman recommends.

 

[Golden_Jet]

No. Bdettman recommends.

Ok Bettman, makes his recommendation and the BOG votes on it, that’s the same thing. Your using semantics now lol.

 

[Micklebot]

Bettman chooses, and BOG rubber stamps his recommendation, via voting.

I think the way it works is the seller choses, Bettman recommends whether or not the board should approve the perspective owner, and the BOG makes the final call (but you're likely correct that it's a rubber stamp).

If there are multiple bidders who Bettman and the BOG could support, it will likely be the Melnyks who decide which offer is accepted. I think the league would want to avoid a situation where an owner selling their team feels slighted that they couldn't take the best offer for suspect reasons. Might put them in legal jeopardy,

 

[Big Muddy]

Also, I may be wrong, but it sounds like he's just saying he doesn't like the Smith Maneouver, which is very specific and different from a Dave Ramsey-like aversion to debt.

The Smith Maneuver: Definition, How It Works, and How to Use It

The Smith Maneuver is a Canadian tax strategy that makes interest on a residential mortgage tax deductible. Borrowers need a readvanceable mortgage to use it.

www.investopedia.com

I think we are on a bit of a tangent here. I only mentioned mortgage when I mentioned Ed Snider. I just found the Snider thing interesting, but wasn't trying to connect it to Buffet. My point in the initial post is that there's different philosophies about using debt and used Buffet as an example. It's a rather complex subject though, and I now wonder if venturing into the subject was wise.

 

[Bevans]

I think we are on a bit of a tangent here. I only mentioned mortgage when I mentioned Ed Snider. I just found the Snider thing interesting, but wasn't trying to connect it to Buffet. My point in the initial post is that there's different philosophies about using debt and used Buffet as an example. It's a rather complex subject though, and I now wonder if venturing into the subject was wise.

Yes I agree its in the weeds.

Suffice to say it is extremely unlikely, to the point of absurdity, that these potential owners would not finance any portion of their purchase of a business, an NHL team, an arena, and a downtown development.

 

[Big Muddy]

Yes I agree its in the weeds.

Suffice to say it is extremely unlikely, to the point of absurdity, that these potential owners would not finance any portion of their purchase of a business, an NHL team, an arena, and a downtown development.

Ya, I tend to agree, but I also can't say I know all that much about these different potential owners other than the little bit that has been mentioned in the media.

For me, the main thing that I hope for is that the new owner (or owners) whoever they are have very deep pockets, and that those deep pockets are on a very solid & secure financial foundation. I would just prefer to escape another Melnyk situation. I don't want to see things erode again a few years after the new owners come on board.

 

[Crosside]

Ryan Reynolds: ‘I will be a frothy, rabies-infused fan’ if he joins Senators ownership group – Sportsnet.ca

 

[AchtzehnBaby]

May, might?

100% owners will borrow money. You don't become a billionaire without debt.

I am on my way to being a billionaire?!

 

[bert]

Hearing rumblings that the ownership group will be Andlauer as the majority teaming up with a local developer ( I speculate its probably Claridge), Alfie and Reynolds. He is apparently selling his Habs shares to Desmarais as you cant own any part of more than one team. Take it for what you will.

 

[Golden_Jet]

Hearing rumblings that the ownership group will be Andlauer as the majority teaming up with a local developer ( I speculate its probably Claridge), Alfie and Reynolds. He is apparently selling his Habs shares to Desmarais as you cant own any part of more than one team. Take it for what you will.

Yep , those rumblings been going for a week now. One of a few rumblings going on.

I think the way it works is the seller choses, Bettman recommends whether or not the board should approve the perspective owner, and the BOG makes the final call (but you're likely correct that it's a rubber stamp).

If there are multiple bidders who Bettman and the BOG could support, it will likely be the Melnyks who decide which offer is accepted. I think the league would want to avoid a situation where an owner selling their team feels slighted that they couldn't take the best offer for suspect reasons. Might put them in legal jeopardy,

No the seller does not choose.

 

[Micklebot]

No the seller does not choose.

Except they kind of do, when you own something you get decide whether to accept an offer, Bettman can't force the Melnyk's to accept an offer they don't like. Where it gets dicey is if they want to sell to a party the BOG won't approve. the league can veto a sale, they don't chose one.

It wasn't the league that hired Galetto sports, the Melnyk's did. Here's a quote from the league relating to whe the pens sold,

Franchise transactions are negotiated privately between buyers and sellers," said NHL executive vice president of communication Gary Meagher said in an email. "The League is typically not involved in those negotiations unless asked to by the parties."

 

[Tnuoc Alucard]

The BOG does, the sisters could certainly lobby the BOG if they have a preferred bidder that's vetted. Say Group #1 offers $1 Billion but Bettman recommends group #2 who offered $900 million - could get the BOG to go over Bettman's head so they get more money.

Pretty sure that Bettman has the upper hand in recommending to the BOG, who the next owner(s) should be. Ryan Reynolds meeting with Bettman, and getting his recommendation to be part of the deal, to whomever wants to be the new owner also shows it’s more or less Bettman’s call.

 

[Big Muddy]

Except they kind of do, when you own something you get decide whether to accept an offer, Bettman can't force the Melnyk's to accept an offer they don't like. Where it gets dicey is if they want to sell to a party the BOG won't approve. the league can veto a sale, they don't chose one.

It wasn't the league that hired Galetto sports, the Melnyk's did. Here's a quote from the league relating to whe the pens sold,

Thanks for digging that info up.

By info, I mean this:

"Franchise transactions are negotiated privately between buyers and sellers," said NHL executive vice president of communication Gary Meagher said in an email. "The League is typically not involved in those negotiations unless asked to by the parties."

 

[Tnuoc Alucard]

Except they kind of do, when you own something you get decide whether to accept an offer, Bettman can't force the Melnyk's to accept an offer they don't like. Where it gets dicey is if they want to sell to a party the BOG won't approve. the league can veto a sale, they don't chose one.

But does an NHL Franchise “owner” truly own the franchise? I don’t think so, as it would allow an owner to do almost anything they wanted to, with the franchise. Any perspective new owner has to abide by the conditions of the sale (of the Senators) which are pretty much laid out by the NHL BOG, which Bettman is the Commissioner. Don’t know the exact legal terminology, but it’s more like an NHL “owner” is granted the right to operate a franchise, by the NHL, but does not actually own it outright. If that were the case, franchises would relocate to greener pastures way more often than they do now.

If the Sisters wanted to sell to Jim Basille, I think the NHL BOG, and Bettman would nix that sale in a heartbeat.

Nope. It's the NHL league that determines which new owner is acceptable to the league. Bettman can make a recommendation to the league and communicates the decision to the current and prospective new owner. The Melnyk sisters can prefer the one who offers the best price; however, if the league does not like the proposed new owner because that new owner does not meet the league's criteria for ownership, then the sale cannot proceed. The terms of sale of the franchise to the original owner of the franchise, and any amendments made afterward, would address future sales of the franchise and specify the criteria for a sale.

And by the “NHL” you mean the BOG, which Bettman is the selected commissioner, who oversees the sale of Franchises.

 

[Daffy]

Is their anything from stopping the Vancouver Canucks from selling a very minority share to Ryan Reynolds?

 

[Alfie11]

Not only that, but with the Sens, it's a "Hollywood" story waiting to be told, underdog team between 2 largest NHL franchises, new ownership, new front office, new coach, young up and coming stars, new building being built. There's soooo many different stories and avenues they can follow.

I just don't think there's the same PR potential with Vancouver and it's clear the league wants a PR boost from this.

Very much so. Sens have the right situation (redemption arc) and the right personalities (Tkachuk et al.) to make for a good show/documentary.

 

[Cosmix]

But does an NHL Franchise “owner” truly own the franchise? I don’t think so, as it would allow an owner to do almost anything they wanted to, with the franchise. Any perspective new owner has to abide by the conditions of the sale (of the Senators) which are pretty much laid out by the NHL BOG, which Bettman is the Commissioner. Don’t know the exact legal terminology, but it’s more like an NHL “owner” is granted the right to operate a franchise, by the NHL, but does not actually own it outright. If that were the case, franchises would relocate to greener pastures way more often than they do now.

If the Sisters wanted to sell to Jim Basille, I think the NHL BOG, and Bettman would nix that sale in a heartbeat.


And by the “NHL” you mean the BOG, which Bettman is the selected commissioner, who oversees the sale of Franchises.

Yes, BOG.

Generally yes he is leveraging his cash in his insurance business, but he also recommends against debt in general for those that are already rich. He also doesn't borrow money to cover operating costs (this is what he mentioned in that lecture with Gates) so that he can use the interest as a tax deduction to reduce the taxes his company would pay which is quite common in the corporate world. He cited it was for moral reasons that he didn't do that.

I was also reading that Ed Snider bought the Flyers franchise using his house as collateral from the NHL. Kind of interesting.

That must be a very special "house"!

Is their anything from stopping the Vancouver Canucks from selling a very minority share to Ryan Reynolds?

Probably something in the NHL rules and regs regarding ownership requiring BOG approval.

 

[Cosmix]

Very much so. Sens have the right situation (redemption arc) and the right personalities (Tkachuk et al.) to make for a good show/documentary.

RR would provide a boost to PR if he were to become a part owner of any NHL team. The boost would be bigger if it were in a bigger market.

 

[Micklebot]

Yorkie breaking some sales news on coming in hot,

Says the sale needs to be finished by March because there's some stuff going on in the background and estate tax and stuff that needs to be settled before then.

Starts around 30:45