Sunday, July 13, 2008

'Nashville's last chance'
Boots's plans for Preds revealed



From Day 1, when Boots Del Biaggio's name appeared as part of the "local" group's purchase in Nashville, it was clear he was a snake in the grass — which is why it comes as little surprise that The Tennessean has unearthed documents outlying his intentions to move the team.

But who knew that there'd be a handy PowerPoint presentation behind it all?

In a document entitled "Nashville Predators: Discussion Materials," Del Biaggio used "Portability Value" as a key selling feature in an attempt to bring investors onboard with his minority purchase in the team.

At one point, the piece states that "the NHL has already indicated that this is Nashville's last chance."

In short, the "value" in the Predators franchise was in its ability to be "flipped." A bidding war was what Boots was after, with "Hamilton, Kansas City, Las Vegas, Oklahoma City, Seattle, Winnipeg, among others" listed as likely candidates to "bid hard to attract an NHL team."

According to the presentation: "These cities will offer exceptional arena deals for an NHL team and potentially superior corporate support and fan base than Nashville."

("As an example, Kansas City has already made a very compelling offer.")

Wink, wink.

Bankrupt Boots saw the Predators as one thing: "A portable team." That made them an asset, especially when he could come in at the ground floor, take on very little risk and buy in without any real test of his financial mettle.

The final page of the brief presentation offers a grim portrait of what the financial situation would look like in Nashville should the team's attendance settle on 13,000 a game. It includes an annual $2-million payment to Del Biaggio's group, Forecheck Holdings:
2008-09 projections
Team Revenues: $55.4-million
Arena Revenues: $10.1-million
Total Revenues: $65.5-million

Team Expenses: $68.1-million

EBITDA: -$2.6-million

Interest Expense: $3.7-million
Payment to Forecheck: $2-million
Total Interest: $5.7-million

Deprec. and Amort.: $13-million
Net Profit: -$21.3-million

Net Cash Flow: -$9.8-million
Under Cumulative Net Cash Flow, the figure balloons from $15.7-million in the red after next season to $50-million by 2011-12.

A sinking ship, in other words.

One other note of interest from that page, by way of blogger Dirk Hoag, is that in 2010-11, Del Biaggio's projections make an allowance for a one-time $15-million expansion fee as part of team revenues. The figure would be the equivalent of a $450-million windfall divided among the 30 existing franchises.



This wasn't the only Boots-related news of the weekend, either.

The Tennessean reported on Saturday that Nashville's local group, led by David Freeman, has offered up nearly $10-million to cover Del Biaggio's guarantee to the city. Freeman also said his group has offered to buy Boots's $25-million stake in the team "at a reduced price."

As for a scenario involving a new investor purchasing that share via a bankruptcy trustee, Freeman said they would do so without the extensive privileges Del Biaggio was granted.

On Sunday morning, meanwhile, the San Jose Mercury-News continued its coverage of the saga by picking through the latest allegations against Del Biaggio. In addition to more legal trouble, he may owe nearly $1.5-million to three casinos, one source said.

Additionally, the paper reported, "interviews and court records show Del Biaggio risked large sums on some very speculative deals that haven't paid off."

I imagine the Predators are on that list.
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16 Comments:

At 11:36 PM, July 13, 2008, Blogger Hooks Orpik said...

And to think Mario Lemieux was one bounce in the 2005 lottery draft away from selling the Pens to this guy.

 
At 11:37 PM, July 13, 2008, Anonymous Dave said...

My reading of this scenario is that Gary Bettman could have cut out the middle man and just sold to Jim Balsillie.

So with that being said, what was the benefit of selling to the current ownership group? Was it to keep the team in Nashville? Was it to put up the pretense of trying to make a go of it there before moving the team?

My impression is that Boots Del Biaggio had no connection to Nashville but obviously wanted to get in on owning an NHL franchise. Based on my admittedly limited reading it seems like he has ties to the Anschutz Entertainment Group, which makes sense with the recurring "move the franchise to KC" leitmotif.

The thing that throws me off is that Boots had a pretty small stake, so it's not like his "ownership" portion is the real driving force here. But the recent developments seems like they put more responsibility on the group that had an obvious interest in keeping the team in Nashville.

Anschutz obviously can't pony up with their substantial resources in an obvious manner as it would violate league rules.

So the long story short is that when it came to solidifying the financial status of the franchise Gary sided with the guy who held a minority stake and doesn't have any cash OVER the guy who is a confirmed billionaire and sold out a stadium on the mere rumor he might be able to bring a franchise to the market.

Strong work commissioner, strong work.

 
At 12:16 AM, July 14, 2008, OpenID sweatrag said...

The question I (and most hockey fans, I'm assuming) want answered is if this is finally Gary Bettman's Watergate; the event that causes the media and those surrounding him to question his ability to run the NHL as commissioner, eventually leading to his resignation or removal from office.

What more does the commissioner have to do, or allow on his watch, to get himself the boot?

 
At 12:48 AM, July 14, 2008, Blogger J. Michael Neal said...

The only word I can come up with to describe this is "tawdry." Maybe "shabby" works, too. It isn't just that this exposes corruption, double dealing, and fundamental incompetence. It's that the goings on are so spectacularly petty. The amounts being discussed are large in one sense, but really shred the image of the NHL as an industry that is anything other than a dust speck in the living room of serious finance.

It reads like a plot of high school girls. You have a clique, jealous of the rich girl, and desperate to keep her from showing them up. It's a combination of amusing and pathetic, and I'd be enjoying this so much if the fans of Nashville weren't getting screwed in royal fashion.

 
At 1:33 AM, July 14, 2008, Anonymous alex said...

The guy's nickname is BOOTS. Hellooooo, how is that not a big hint that this guy might not be the most trustworthy person ever?

 
At 4:03 AM, July 14, 2008, Anonymous Anonymous said...

The Douche Carpetbaggio Story is emblematic of everything that is wrong with professional sports and the jock-sniffing politicians they associate with.

His "investment" was predicated on dangling the Predators until a desperate city/state/province with enough politicians suffering from an edifice complex would agree to steal sufficient money from taxpayers to build the Predators a new day care.

 
At 5:20 AM, July 14, 2008, Blogger Baroque said...

His "investment" was predicated on dangling the Predators until a desperate city/state/province with enough politicians suffering from an edifice complex would agree to steal sufficient money from taxpayers to build the Predators a new day care.

Except Kansas City already has a new day care center ready and waiting for them.

I wonder if the personal animosity is so severe that Balsillie is disqualified for all time from owning a team unless he defrauds the league and buys one through subterfuge. If the owners have reached that level of pettiness, then they are acting like junior high girls (besides, high school girls would use behind-the-scenes character assasination and wouldn't be as obvious as a PowerPoint presentation). :)

 
At 7:48 AM, July 14, 2008, Blogger FAUX RUMORS said...

1) How anyone who has been following the NHL for any length of time can be surprised by this 'revelation' is amazing.
2) This is how this league has been run forever. The only difference now is that the dirt/crap/side deals that have gone on behind closed doors is getting known(at least partly)
3) The list of crooks/felans that have been involved with NHL ownership is colossally large. It seems the league attracts these kinds of people, or is it vise versa?

 
At 10:16 AM, July 14, 2008, Blogger XsavagistX said...

gasp! capitalists trying to maximize their potential earnings via holding people hostage to their products? how was Canada and the United States founded again (great business moves by the way. which in turn originated the game of ice hockey)? why is the US (and Canada) in Iraq/Afghanistan again? same motives, different "businesses" (it keeps the NHL travel going though, so its all interrelated). some people just suck worse at getting their scams done or arent in the Buddy System so a law or group of elite can protect them. lets make money on war and sports, anyone? it would be nice to just enjoy a game for the sole purpose of it being a game. only in the fans childish Utopian dreams while they get fleeced i guess.

 
At 10:30 AM, July 14, 2008, Anonymous Keith said...

"What more does the commissioner have to do, or allow on his watch, to get himself the boot?"

You mean, aside from quintuple league revenues, negotiate a salary cap, save Calgary, Edmonton and Ottawa's franchises by convincing American owners to support the league's first revenue sharing plan in decades and have the NHL broadcast continuously on American national TV, which was not the case when he arrived?

 
At 10:38 AM, July 14, 2008, Blogger namflashback said...

Why is Paul Kelly in all of this?

The league is now permitting ownership deals which are not "maximizing hockey related revenue."

If the players are in partnership with the league, they should have some say in "arbitrary" approval/disapproval of franchise sales.

"Boots" was passed through due diligence with nary a whisper because of his ties to Anshutz.

 
At 12:19 PM, July 14, 2008, OpenID tersa said...

Dave said...

Boots Del Biaggio had no connection to Nashville but obviously wanted to get in on owning an NHL franchise.

Del Biaggio was already in on owning an NHL franchise before he became involved with the Nashville ownership group: he was a minority owner of the San Jose Sharks.

What I suspect happened is either (a) he wanted to have a larger ownership stake in the team, and/or (b) he was really out to move a team to Kansas City, an arena he had a sweet deal with, and/or (c) he'd already tried and failed to convince the Sharks' ownership group to move there.

As for his nickname, 'Boots'...c'mon, people, layoff. It was a family nickname. His grandfather, who was the origin of the "family money", was also called Boots, and he is William Del Biaggio III.

 
At 12:52 PM, July 14, 2008, Blogger Adam C said...

It doesn't look to me that Del Biaggio was at all interested in owning a hockey team. Rather, his plan was to significantly increase it's resale value and then 'flip' it in short order.

Much like people who purchase run-down houses for the sole purpose of 'flipping' them, he couldn't actually afford the original purchase, but planned instead to make enough money on the resale to pay off his buy-in debts. Plus a handsome profit.

Unfortunately (for him) it looks like some of his other high risk schemes have fallen apart and now everything is coming out in the open.

Like Mirtle, I'm very interested here in the implication that Bettman has quietly promised owners a new round of expansion within the next few years.

 
At 1:00 PM, July 14, 2008, Anonymous stephen said...

Boots Carpetbaggio, hehe that made me laugh. Starring Gary Bettman and Phil Anschutz in Mean Girls. It would make a great editorial comic.

I have never really been certain what Boots' actual investment was. The numbers seemed to vary with each story, but the remaining ownership group are going to buy out his $25 million share for $10 million? So everything works out well for the Freeman group?

Similar to Melnyk getting a great deal on the Sens due to Brydens partners bankruptcy i guess, the situation was played well.

However, wasnt there something about Boots also guaranteeing $55mil in debt or something? Who took that on?

--
Juicy leak though, I wonder who the expansion teams are going to be? I guess the owners may get those expansion fees before the PA negotiate any better arrangements for decision making and profit sharing in them?

What if Boots did manage to convert his preferred shares into common shares and move the team to Kansas City? And then paid rent on the facility he got a sweet deal on to AEG? Is that rent HRR?

 
At 1:27 PM, July 14, 2008, Anonymous Anonymous said...

Bring back Alan Eagleson and John Ziegler. Old school honest men.

 
At 8:46 AM, July 17, 2008, Anonymous survivorofEXTINCTION said...

So...are the Predators staying or what? I'm getting sick of all the vague articles. I guess it's just "wait and see" because no one will give anyone a straight answer. Yes, we're TOLD the "local investors" are dedicated to keeping them here, but so were the "investors" in Winnipeg. Why don't they go pick on Florida or Phoenix...Nashville LOVES their ice hockey.

 

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