The Lockout Files | At Your Expense by @TonyStabile
Hockey This Week
The Lockout Files: At Your Expense by Tony Stabile
A closer look at the billionaires that are withholding the game for a bigger chunk of the pie.
NHL owners are playing with the emotions of its fans once again.
For the second time in a decade, Commissioner Gary Bettman has locked out the players for a deal that the owners feel “they need to make”. Why would they do this all over again?…because the last time they did it, the fans (us) came back immediately, they business boomed to the tune of a 50% increase of HRR (Hockey Related Revenue), and finally the owners got what they wanted a hard salary cap and an immediate roll back of salaries.
The players on the other hand, some were forced into retirement instead of playing their final year. They all lost a year of salary that they will never get back, plus lost 17.5% of the contract they were signed to. Sounds to me as if the players earned that 57% share they go the final year of this CBA.
Who ends up being the loser in all of this?…the fans. We are the ones that have to sit around and be toyed with by people with more money than most of us will ever see in our lifetime. I must admit, I had never looked up the owners and their backgrounds for all 30 teams and I must say, I was surprised at how wealthy most of them are. Let’s take a look at the list of NHL owners and look at where they make (or made) their money.
The Anaheim Ducks are owned by the Walt Disney company….a company that has $72 billion dollars in assets and which brought in $40 billion in 2011 alone. I don’t think I need to explain this one any further.
The Boston Bruins owner is Jeremy Jacobs, who is the owner in charge of the NHL Board of Governors. Jacobs owns a company called Delaware North Companies, a company which has over $2.5 billion dollars in annual revenue. Delaware North also owns and manages Boston’s TD Garden which is one of the top grossing entertainment venues in the US. TD Garden hosts more than 200 events annually and more than 3.5 million people. Jacobs himself is worth over $3 billion.
New Sabres owner Terry Pegula started a natural gas company called East Resources, which he sold to Royal Dutch Shell Company for $4.7 billion dollars. Pegula owns the Sabers, The indoor Lacrosse team the Buffalo Bandits and the AHL Rochester Americans. He reported net worth is nearly $7 billion.
Clayton Riddell is part owner of the Calgary Flames, he is listed by Forbes Magazine as the 12th wealthiest Canadian with his estimated fortune at $2.5 billion US.
Carolina Hurricanes owner is Peter Karmanos Jr., who is the founder and Executive Chairman of Compuware. Compuware is a company with total assets in excess of $2 billion. The Hurricanes average draw pre lockout was about 12,000 per game, since then the team now averages 16,415.
The Chicago Blackhawks are owned by Rocky Wirtz, who is the President of the Wirtz Corporation, which has commercial real estate, beverage distributors, an insurance company and banks in Illinois and Florida. He is also part owner (20%)of Comcast SportsNet Chicago (which owns the cable rights for the Blackhawks, NBA Chicago Bulls, and MLB’s Chicago Cubs and White Sox).
Stan Kroenke, recently had to relinquish control of the Colorado Avalanche to his son Josh Kroenke. Kroenke, who is married to Ann Walton Kroenke (daughter to WalMart founder Bud Walton), was a wealthy man before his marriage into the Walton family. After Bud’s passing, he and his wife inherited a stake in WalMart which is now worth over $6 billion. Stan Kroenke, who is now the sole owner of the St. Louis Rams, has turned over control of the Avalanche and the NBA’s Denver Nuggets to his son Josh. Kroenke also is the owner of Denver’s Pepsi Center (where the Avalanche and Nuggets play).
One of the NHL’s “struggling clubs” is the Columbus Blue Jackets. Their majority owner is John P. McConnell who is the chairman and CEO of Worthington Industries. Worthington is a leading diversified metal processing company (think steel), and it’s annual sales in the $2.5 billion range. Columbus recently traded their best player Rick Nash to the big market NY Rangers of a prospect (Tim Erixon), a first round pick in 2013 and 2 other players.
The Dallas Stars are owned by Tom Gaglardi a Canadian businessman. He is the president of Northland Properties which operates hotels and restaurants throughout Canada. Gaglardi bought he Stars from Tom Hicks (who ran the team into the ground). The Stars have lost $92 million dollars the last 3 season and are a team, with new ownership, that can hopefully rebound.
One of the premier NHL franchises is the Detroit Red Wings. Owned by Mike Illitch since the early 80’s, Illitch is also the owner of the Detroit Tigers baseball team and founder of the Little Caesars Pizza franchise. Considering they play in the 4th oldest arena in the NHL and one of the worst cities crime wise in the US, the Red Wings have won 16 division championships, 6 conference championships, 6 presidents trophies and 4 Stanley Cups with Illitch as the owner. Illitch’s net worth according to Forbes is $1.7 billion.
The Edmonton Oilers are now owned by Daryl Katz, a Canadian businessman who is the chairman and CEO of The Katz Group. The Katz Group owns and operates over 1,800 drugs stores across Canada. Katz, is worth an estimated $2.43 billion, which would make him the 16th richest person in Canada.
The Florida Panthers are now owned by Sunrise Sports and Entertainment. Run by Florida businessmen Cliff Viner and Stu Siegel. Not too much available on either man, but Viner recently divorced and sold his $1.7 million home in Boca Raton. Former owner Allan Cohen was considered impulsive, constantly changing direction of the franchise and eventually needing to sell. Cohen still owns a minority stake in the team. His former business partner, former quarterback Bernie Kosar, has since filed for personal bankruptcy.
The Stanley Cup champion Los Angeles Kings are owned and operated by The Anschutz Entertainment Group (aka AEG Live). AEG Live is the second largest presenter of live music and entertainment events (after Live Nation). AEG is the world’s largest owner of sports teams and also is the owner of the world’s most profitable sports and entertainment venues. AEG owns the Staples Center and the Home Depot Center, it also manages the XL Center, The Rose Garden, Rentschler Field in Hartford CT (home field of the UCONN Huskies). It also operates the O2 arena which is the largest such building in England. AEG’s parent company is the Anschutz Corporation which is a privately held company run by Philip Anschutz. Anschutz is the 34th richest person in the world with an estimated worth of $7 billion.
Craig Leipold is no stranger to NHL team ownership. He was the original owner of the Nashville Predators until he sold his share to an investor group in 2007. Leipold claims to have lost $70 million as the owner of the Preds. A year later he purchased the Minnesota Wild. Leipold made his money by starting the company Ameritel. He is married to Helen Leipold, who is the daughter of Samuel Johnson of the S.C. Johnson family. Helen is the Chairman and CEO of Johnson Outdoors.
The Molson family is the owners of the crown jewel of NHL franchises the Montreal Canadians. Brothers Geoff, Justin and Andrew Molson come from the family that owns the Molson Coors Brewing company. The 7th largest brewing company in the world. Molson Coors brought in a whopping $6.7 billion in 2011, and has assets over $12 billion. The Molson’s also own the Bell Centre in Montreal (formerly the Molson Centre) the largest arena in the NHL (in size as well as capacity it’s nearly 4 acres in size!).
The Nashville Predators, (one of the best run organizations in the NHL thanks to GM David Polie and coach Barry Trotz) have been almost relocated twice in the past 5 years. First, former owner Craig Leipold nearly sold the team to RIM founder Jim Balsille, who in turn tried to move a team he didn’t own to Hamilton Ontario. When Leipold decided not to sell to Balsille, he entered into a deal with William “Boots” DelBaggio, who then tried to move the team to Kansas City. A local investor group (of 30 people headed by businessman David Freeman) eventually bought the team and pledged to keep the franchise in Nashville. DelBaggio was a minority investor at the time, but he has since been sent to jail. In 2011, Calgary billionaire W. Brett Wilson has bought a 5% interest in the franchise.
Another team in serious financial trouble is the New Jersey Devils, a team that gave out one of the most lucrative contracts in NHL history last summer. The team owner is Jeff Vanderbeek former executive Vice President with Lehman Brothers (he has since resigned that position to run the Devils). In 2002, Vanderbeek was ranked the 9th highest paid executive with his pay totaling over $29 million. The Devils, who were in the Stanley Cup finals this past spring, play in a brand new arena in downtown Newark. Vanderbeek as recently made a deal with his creditors to allow him an additional 2 years to settle the teams ever growing debt issues.
Among the teams that lose money on a yearly basis are the New York Islanders. The Islanders are owned by Long Island resident Charles Wang, whose net worth has been estimated anywhere from $1.5 billion to $890 million. He bought the team in the midst of turmoil and continues to lose a truck load of money each season. The problem is his lease and building, which expires after the 2015 season. With no new plans for development at this time, the team is being wooed by the brand new Barclay’s Center which opens in downtown Brooklyn this fall. Moving the Islanders out of Nassau and into a major market could be just what this franchise needs. Wang has reportedly lost nearly $200 million since buying the team in 1999.
Technically the New York Rangers, located in the heart of midtown Manhattan, are owned by Madison Square Garden Inc., that only mean that the owner is none other than James Dolan. Dolan, son of Cablevision founder Charles Dolan, owns Madison Square Garden, the Rangers, the New York Knicks and a host of other businesses. Dolan is also the chairman and CEO of Cablevision Systems Corporation, a company that grossed $7.230 billion back in 2008. Cablevision is the 8th largest cable provider in the US. Dolan, who is among the biggest spenders of the NHL owners, has recently been reined in by his GM, and has learned sometimes less is more. The Rangers reached the conference finals this past season and are in good position once the lockout ends (as long as the cap isn’t reduced by too much).
Eugene Melnyk saved the Ottawa Senators from bankruptcy in 2003. He founded Biovail Corp in 1989, and during an 11 year span as CEO, Biovail saw their revenue grow from $19 million in 1995 to $1.067 billion in 2006. Melnyk, who now resides in Barbados, is the sole owner of the Senators and the Scotiabank Place where the Sens play. He also owns Melnyk Racing Stables and Winding Oaks Farm in Ocala Florida.
Since 1967, the Philadelphia Flyers have been owned by Ed Snider. Snider, is the chairman of Comcast Spectacor the company which owns the Flyers, the Wells Fargo Center, Comcast Sportsnet and Global Spectrum a facilities management company. His teams have been the most aggressive in past seasons signing players to huge contracts such as Kimmo Timonen, Ilya Bryzgalov, Scott Hartnell, Daniel Briere etc. He also has orchestrated trades for players like Chris Pronger and moving players out like Mike Richards and Jeff Carter. He also signed off on the huge RFA deal to Nashville defenseman Shea Weber, trying to poach their Captain and perennial Norris Trophy Candidate from the notably small market Predators. Though the deal backfired and Nashville matched the deal.
In one of the more poorly conceived ideas in recent NHL history, hockey in the desert isn’t going as planned. The Phoenix Coyotes, who have endured 5 different ownership groups since 1996, is now being controlled by the NHL until the sale to local businessman Greg Jamison is completed later this year. Jamison has had all kinds of problems securing financing (due to the team’s poor attendance) and seems to be just another stop gap. The NHL, after realizing a second time that Atlanta was not an NHL market, should eventually see the Coyotes need to be moved, and they probably will move back to Canada at some point or another.
The Pittsburgh Penguins are a model franchise now that they have secured 2 of the best players in the NHL and have a brand new arena which they now sell out nightly. The addition of Sidney Crosby and Evgeni Malkin rejuvenated a morbid franchise which is now among the best run in the NHL. Much like the Washington Capitals, the Pittsburgh is a known entity and it just took a new building and some superstars to bring back the fans. The NHL is hoping for similar renaissances to happen in New Jersey and Long Island. Mario Lemiuex and Ron Burkle are the owners of the Penguins and run the franchise very well.
Hockey in San Jose, another very well run organization, is owned by a group of businessmen called the San Jose Sports and Entertainment Enterprises. Among the owners are original Sharks owner George Gund, Stratton Sclavos (former President of VeriSign), Floyd Kvamme (Executive VP at Apple), Hasso Plattner (cofounder of SAP AG), and Tom McEnery (former mayor of San Jose). New Phoenix owner Greg Jamison was also an investor but sold his share to purchase the Coyotes. The Sharks are one of the model franchises in the NHL as they have won 6 division championships and have made the playoffs each year from 2007 through this current season.
David Checketts was once the President and CEO of Madison Square Garden Inc., His company, SCP Worldwide purchased the St. Louis Blues in 2005 and he immediately brought in his old friend John Davidson (once considered the best TV color man in the NHL), to run the organization which had been run into the ground by the former ownership. The Blues have only missed the NHL playoffs 8 times in the past 44 years (which is an amazing stat). The Blues continue to turn out huge attendance numbers as they sold out every home game during the 2010-11 season.
After the crazy years of the Oren Koules ownership term, the Tampa Bay Lightning were purchased by Hedge Fund guru Jeffery Vinik. Vinik managed the Fidelity Magellan Fund from 92-96 where his returns averaged 17%. He then left Fidelity and started his own Hedge Fund Vinik Asset Management where he made investors 93.8% his first 11 months. By 2000, Vinik had returned his investors $4.2 billion to focus on his own portfolio. He is also an minority shareholder of the Boston Red Sox.
Maple Leaf Sports and Entertainment (better known as MLSE) owns the Toronto Maple Leafs, the NBA’s Toronto Raptors, the AHL’s Toronto Marlies and the Air Canada Centre which the Raptors and Leafs play their home games. Richard Peddie is the CEO, and since he has taken over MLSE, it has more than tripled its value to $1.5 billion. As of 2008, the Toronto Maple Leafs are the NHL’s most valuable franchise. Prior to GM Brian Burke taking over, the Maple Leafs would have no issue dolling out huge contracts to players. Burke has taken more of a build from within approach, though he made one of the worst deals in franchise history trading 2 first round picks (both lottery picks) and a 2nd round pick to the Boston Bruins for budding star Phil Kessel. The 2 1st rounders turned out to be top prospect Tyler Seguin and stud defense prospect Dougie Hamilton.
Francesco Aquilini is the sole owner of Orca Bay Sports and Entertainment (the company that owns the Vancouver Canucks and the Rogers Arena). Aquilini was first a minority owner, then bought out his partner John McCaw Jr. to become the sole owner in 2006. Aquilini’s net worth has been estimated at $5 billion. His recent divorce had raised some questions about his ownership status, though that seems to have been resolved. The Canucks are said to be worth about $300 million, 7th among NHL clubs.
The Washington Capitals, another franchise that was in turmoil before the 04 lockout. In 2000 the team was purchased by current owner Ted Leonsis. Leonsis made his money after his company was bought AOL and he became a top executive with the company. Leonsis owns the Capitals, the NBA’s Washington Wizards and the WNBA’s Washington Mystics. As with most other owners, he also owns the Verizon Center located in Washington DC. Leonsis is worth over $1 billion and a product of Georgetown University.
And Finally the new Winnipeg Jets. The Jets (previously the Atlanta Thrashers), were purchased by the True North Sports and Entertainment Limited (TNSE). TNSE was founded in 2001 by Mark Chipman who was the co-owner of the highly successful Manitoba Moose. When the Jets relocated back to Winnipeg, the Moose were relocated to St. John’s Newfoundland and renamed the St. John’s IceCaps. Chipman, TNSE’s chairman, is also the president of the Megill-Stephenson Company which is involved with car dealerships and real estate.
As you can see, the owners are not this list of men who are trying to save every penny to hold on to their hockey teams. Most teams are owned and run by corporations that bring in millions of dollars annually. There are some teams in trouble financially, some by mismanagement, some by real estate and lease problems, and some by location issues. If the league can come up with an effective revenue sharing system, to help out teams like the Coyotes, Devils, Islanders and Stars until they can right their ship, there isn’t any reason for players to take such a drastic cut to their share of the pie. Split it down the middle and stop asking for the rollback on the salaries you’ve already promised to pay.
For Hockey This Week ….I’m Tony Stabile
Follow Tony on Twitter @tonystabile
