Tuesday, August 21, 2007

New Preds owners cry poor?

Given the group's financial wherewithal and largesse, why would it need to finance 25 percent of the $193 million they have offered to purchase the team. Presumably, if they had simply anted up the entire amount, they wouldn't have to worry about banks pulling out of the deal.

How convenient for the ownership group.
A nice piece by Burnside that gets to the meat of this whole mess, including the tidbit that a freedom of information request was the only reason the plans to change the lease were revealed.

Here's the quote in question from ownership group ringleader David Freeman from yesterday's Tennessean (where John Glennon's been doing some nice work):
"Our banks will not fund the deal without the amended lease because our banks have looked at the deal and said this team won't survive financially without it," Freeman said Friday. "Our bankers are unemotional about the transaction.

"They will make the loan if they think we have a good business plan and they will pass on the deal if they perceive an unacceptable risk. They have seen our projections and know what it takes for us to succeed here."
If the bankers won't touch this floater, who will?

Cue The Forechecker and his mustard-jersey-wearing friends in the comments.

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12 Comments:

At 9:06 AM, August 21, 2007, Anonymous David Johnson said...

One might begin to wonder if this whole local ownership group (plus 'Boots') was largely constructed to engineer a transfer of ownership to 'Boots' and the franchise to Kansas City instead of to Balsillie and Hamilton.

 
At 9:11 AM, August 21, 2007, Anonymous Anonymous said...

rant

Completely ridiculous. Mark my words, this attempt at the sale of the Preds to these guys will fall on its face too - all without (or maybe WITH) Buttman's interference.

So these guys are "better" prospective owners than Balsillie would have been? Really? PROVE IT, because all I see is another boondoggle just waiting to happen and the end result will be that fans of hockey in general will be taking it in the behind once again because of the machinations of a tin-pot dictator who still knows nothing about the game even after being employed in the industry for something like 15 yrs or so...

/rant

 
At 10:19 AM, August 21, 2007, Anonymous Anonymous said...

So, if the Predators get welfare from the city in turn for agreeing to never leave Nashville, and agree to keep tickets at NHL average prices or below yet have a team with a payroll $5 million above league minimum, how the hell is this going to work?
Are the Predators magically start bringing in Maple Leafs types of dollars for their local broadcasts featuring the legendary Terry Crisp?
I doubt that the generous big market teams are going to want to continually bail out this team. It won't pass by the BOG.

 
At 11:11 AM, August 21, 2007, Blogger Paul Nicholson said...

Answer: Because the owners know they will lose money for the next several years. If they emptied their coffers to buy the team, they would have no cash to spend on additional salaries or cover losses in the years to come. it is easier to finance the purchase of the team than it is to declare bankruptcy or get an emergency loan to cover the gap.

It is pretty normal for even billionaires to finance part of a purchase like this.

Burnside is such an idiot.

 
At 11:29 AM, August 21, 2007, Blogger saskhab said...

Yeah, I don't see how people thought they'd just pay the full amount up front with no bank financing... the sale isn't final yet, anyways, and I'm sure getting this financing is one of the conditions the NHL has before they approve it.

 
At 11:33 AM, August 21, 2007, Anonymous Anonymous said...

Bettman will attached two conditions:
Don't Move to Canada and No Canadians allowed to own a team.
Good news though as My Habs will continue to prop up that team.

 
At 11:56 AM, August 21, 2007, Anonymous Anonymous said...

I am Canadian. I frown upon the U.S. sharing OUR game. August 21, 2007.

Tomorrow I will post it again.

This is what we're doing right? Posting the same stuff over and over again, day after day?

Good. I thought I was missing out.

 
At 12:57 PM, August 21, 2007, Blogger Chemmy said...

Do you really think that this is an unfounded attack on Nashville? Do you think the Predators are a well loved team with a solid business plan and that people want them to move to Ontario because they hate Tennessee?

 
At 9:22 PM, August 21, 2007, Blogger The Forechecker said...

*sigh*

They say you shouldn't feed the internet trolls, but I guess I have to bite.

a freedom of information request was the only reason the plans to change the lease were revealed.

FALSE - the Freeman group has been planning to conduct a public discussion of the parameters of this proposal with the Metro Sports Authority prior to the upcoming mayoral election. Once negotiations have have reached a more finished stage with the (soon-to-be-elected) mayor, the proposal would go through the usual public comment and vote before the city council. There has been no attempt to run this through without public oversight. After all, much of this lease negotiation story was covered in the Tennessean more than a week ago.

As to the "cry poor" question, the plan put forth by Freeman's group involves debt that "would be among the lowest in the NHL," so it's not a case of financial wherewithal. Even with any level of debt, however, bankers have their conditions, and Freeman is saying that aspects of the lease have to change for the business model to become viable. Is it the $3-5 million from the city that makes it so, or the transfer of operating profit/loss to the ownership group that would provide incentive to schedule more non-hockey events at the Sommet Center? Freeman doesn't say, of course at this point.

 
At 9:27 PM, August 21, 2007, Blogger The Forechecker said...

Extra bonus link: as far back as August 1, the word was out that Freeman's group was looking to negotiate changes to the lease.

 
At 9:45 PM, August 21, 2007, Blogger J. Michael Neal said...

I think my favorite part is this:

Among the changes being demanded by the ownership group is that the City of Nashville commit to buying any remaining tickets to ensure the average paid attendance reaches the magical threshold of 14,000. That number is among the several triggers that would allow the team to qualify for the NHL's revenue-sharing program, although it does not guarantee it would have access to the funds. In return, the group will remove the out clause from the lease, which would allow the team to buy itself out of the lease if the 14,000 mark isn't met.

Translation: We'll meet halfway. If you guarantee the purchase of enough tickets that the escape clause would never trigger, then we'll void the escape clause. See? Everyone gives up something of value.

Financing through debt is not at all unusual. There are tax reasons why it's dumb to just pay cash for this sort purchase: the interest is deductible. This part, Burnside has wrong.

The rest of it I have to agree with.

 
At 7:56 AM, August 22, 2007, Anonymous Anonymous said...

The probability of Balsillie getting the Preds out of Nashville before the next decade was slim anyway. The 14K paid attendance figure for next season would have been met by the city,even if it meant bridges over the Cumberland River would have been few mm closer to falling. The NHL needs some people with BALLS like Jim BALSillie. The old guard of Jeremy Jacobs (Gary's sugar daddy) and Dollar Bill Wirtz is destroying the league. The league is in dire need of a seismic shakeup. Big Jim can and will deliver. An expansion team for Southern Ontario in the order of 500 million should do the trick. The Sabres and MLSE(Leafs) as well every other team will be paid off. This includes more subsidy for the sad sack tax shelter southern teams (including my Hurricanes and the literally going nowhere fast Nashville Predators, a.k.a. the Tennessee Titanic). The NHL should be ashamed for its treatment of the great nation of Canada and the many great non-Leaf hockey fans in the Golden Horseshoe. The CBC pays big money to show NHL games to the inhabitants. The NHL receives no up-front money from NBC in the States, but yet caters to a potential, and for the most part, non-existent audience in the USA. Arena after arena sits half empty in the American sunbelt, but yet a market literally begging for big league hockey with one of the richest men in the world (who likewise a true lover of the game) as an owner-in-waiting is snubbed. I have been following the NHL closely for 15 years.My last season of keeping up with hockey I feel is getting closer, unless something positive happens. Several things are for sure. I won't watch cars make left turns. I want watch dog fighters play football. I want watch a league where its officials moonlight as gamblers. Or a league that celebrates tainted records. I guess that leaves politics.

 

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