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The wrong kind of wheeling & dealing
$3.5 billion offer a sad day
3/6/05 - By Mike Lee

Could things get any worse? Imagine you're the NHL , then ask yourself that same question. After throwing in the towel on the entire season two weeks ago, the league received a major league slap in the face last week when an investment group from Boston offered up $3.5 billion to take over ownership of the league itself and all 30 teams. 3.5 billion U.S. greenbacks is nothing to sneeze at considering the size of healthy mergers and acquisitions in the business world, but this offer is more along the lines of a hostile takeover.

Hostile, in that it comes at a low point in the league's history, and an even lower point in Commissioner Gary Bettmen's tenure as league Grand Pooh-bah. The offer is an indictment on the shambles that the lockout and the state of the league.

If you use the Forbes report as a baseline, the cumulative value of the 30 teams in the NHL tallied just under $5 billion. That means Bain Capital Partners, and Game Plan International, the two firms that pitched the proposal to the NHL last Tuesday, opened the bidding at a 30% discount if you believe Forbes.

What Bain and Game plan essentially did is offer the league to take over the league for market value, but the league had to throw in the South East Division and parts of the Atlantic and Central Divisions a gratis. Heck, most of those teams aren't worth a dime anyway, so what the heck.

The offer, when divided by 30, comes out to $116 million per team. Given that only six teams on Forbes list were valued at less that amount, the offer reeked of death bed scavenging. As it turns out, the offer was only an "initial feeler" thrown out by the investment group, but it was a sad statement nonetheless.

Any assiduous due diligence by the league would have headed off any such meeting before it even took place. The fact that the offer was allowed to be leaked to the media was either another blunder by the league or a gamble they hope will continue to turn public sentiment in their favor.

Perhaps Bettmen and his cronies believe that by positioning the state of affairs in such a sorry light, fans will continue to side with the notion that the league is in dire financial straights. If that's the case, then the league's state of affairs has sunk to a new low.

Owners like Detroit's Mike Illitch, says that his team has no interest in any such offer, but that's to be expected. Illitch's Red Wings top Forbes list at $266 million, so a pittance of an offer for his franchise obviously doesn't make much sense. The real question is, what amount would jostle Illitch's attention?

If Bain and Game Plan were to come back and pony up an amount that was able to distribute "fair market value" to each existing owner, would the owners change their tune? The one given in big business, is that any can be had for the right price.

Given that the Mighty Ducks of Anaheim were sold for $75 million last week (a 32.5% discount below Forbes valuation), then perhaps the offer was closer on the mark than it would appear.

The offer as a whole makes no sense, unless the investment group making the offer has an unlimited surplus of capital to burn. Consider the fact that you still need to operate these franchises and the TV money has all but dried up. But then, has anything made sense the past five months in the hockey world?

Hey buddy, can you spare some change? I'm trying to buy a professional sports league that is steeped in history and tradition. No, I didn't day "team". I said "league". Blistery condition? No, I said, "history and tradition". No, really. I'm serious.

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