The Nashville Predators were about to relocate 15 years ago when a group of local businessmen stepped in to buy the team for $175 million and keep them in Music City. The club is now on the verge of another transaction with former Tennessee Gov. Bill Haslam, who values the franchise at approximately $775 million, reflecting a surge in franchise values across the NHL over the past decade.
The median NHL franchise is worth $1.01 billion — breaking 10 figures for the first time — up 9% year over year. The combined value of the league’s 32 clubs, including owner interests in real estate, venues, television channels and team-related interests, is US$32.4 billion. The Toronto Maple Leafs rank first with $2.12 billion, ahead of the New York Rangers by $110 million.
Like the NFL and NBA, which absorb much of the sports business headlines, the NHL has similar levers that make clubs valuable. David Blitzer, Blackstone’s global head of tactical opportunities, has acquired interests in the five major US sports leagues, including the New Jersey Devils. He laid out his two strongest drivers for investing in sports teams Athletic‘s Invest in Sports event last month.
“These leagues and teams are great content creators,” said Blitzer. “And you have a supply situation where very few new franchises are being formed and the demand for them is growing quite dramatically and you can see a lot of people showing up in different situations to try and get involved in the process.”
Blitzer encountered a fundamental problem that is causing franchise ratings to rise across all sports leagues. More billionaires are being produced every year, and the supply of teams is relatively small. Another plus for these trophy fortunes: most of them are now making profits after years of scraping through or losing money.
The Predators are in the process of adding Haslam as a minority owner. He is the brother of Jimmy Haslam, who owns the Cleveland Browns and Columbus Crew. Bill Haslam will take control of the franchise through 2025 through a series of four payments, the last of which will give the club more than $900 million in enterprise value. Taking into account a discount for the time value of money, the current value of the deal is $775 million, according to people familiar with the transaction, who have been granted anonymity as the details are private. The Preds are ranked 23rd Athletic‘s NHL ratings.
Haslam e-mailed three reasons for his interest in the Predators Athletic. “I’m very optimistic about Nashville as a sports and entertainment hub,” Haslam said. “There are many factors that make Nashville a very desirable city, and I don’t see any of them changing anytime soon. Second, I believe that professional sports in general, and hockey in particular, are good long-term investments. After all, like many people, I love sports and I look forward to enjoying Predators Hockey for a long time to come.”
The $775 million valuation represents 4.7 times the team’s $165 million revenue for the 2021-22 season. It’s about the same multiple of earnings Fenway Sports Group paid in December for the Pittsburgh Penguins, which ranks No. 16 by value. This $900 million transaction is the most expensive purchase for an NHL team.
Many investors see the NHL as good value in a world where MLS clubs sell for more than 10 times their earnings. One of them dubbed the league a “hidden gem” in North American esports, though it remains far less hidden from consumers after ESPN re-signed as a national broadcast partner last season. FSG has been chasing an NBA team for a number of years but failed to land one and instead added the Pens to their Deep Sports portfolio.
NHL teams are valued at just over five times revenue on average, compared to the NFL (7.6), NBA (8.4), and MLB (7.4). Hockey teams have relatively young, affluent fan bases and the same opportunities to grow their business, whether through sponsorships, content, gambling, blockchain or real estate developments, but at a dramatically lower entry price point. The average NFL team is worth $4.1 billion, while the NBA brought in $2.6 billion last year and was expected to bring in $3 billion Athletic‘s Next Franchise Reviews.
Arctos Sports Partners has made private equity investments in at least four NHL franchises: Tampa Bay Lightning, Minnesota Wild, Pittsburgh Penguins (through its FSG interest), and the Devils (through an investment in the team’s parent company, Harris Blitzer Sports & Entertainment).
The Ottawa Senators are widely expected to be the next team to sell. In March, longtime owner Eugene Melnyk passed away, leaving the team to his two children – Anna and Olivia – who are both younger than 25. The team has already interviewed bankers on the sell side, according to several people, and there’s a lot of interest in franchises.
Athletic values the Senators at $655 million, a league high of 21%. In June, the team signed a letter of intent for a much-needed new downtown arena at the LeBreton Flats site. There are still many steps between the letter of intent and an arena opening, but securing that agreement in conjunction with the sale would likely drive the price even higher. It has been more than a decade since an NHL team was sold to Canada (Winnipeg in 2011).
NHL teams generated $6.1 billion in revenue during the 2021-22 season, including non-NHL events such as concerts, in cases where the team owner also operates or owns the venue. It was almost three times the previous year, when COVID-19 restrictions wrecked team finances for a league that relies heavily on goals and lacked the big TV deals that prop football and basketball.
But a bad year didn’t dampen the appetite for these teams. “These are generational assets with a 20- or 25-year time horizon,” said Drew Dorweiler, a valuations specialist at boutique investment bank IJW in Montreal, in a phone interview. “And they’re low-risk assets with content that’s only going to get more valuable and desirable.”
A handful of teams, mostly in Canada, opened the 2021-22 season with fan capacity limitations, but it was overall a year of tremendous recovery in NHL finances. The $1 billion escrow debt owed by players to the league as a result of the previous revenue shortfall and the CBA provision to split revenue 50:50 is expected to be repaid by the end of this season. Thanks to the sales recovery, this is well ahead of the original forecasts. According to NHL Commissioner Gary Bettman, hockey earnings, which determine the salary cap, were $5.4 billion last season. Non-NHL events and portions of luxury suite and sponsorship revenue are not included in HRR.
The Maple Leafs are the most valuable team for the second year in a row. Toronto is the best hockey market in the world and the Maple Leafs are the only game in town compared to three NHL franchises in the New York market. The club is a financial juggernaut, including Scotiabank Arena, which is also owned by Maple Leaf Sports & Entertainment. The Leafs posted an estimated $284 million in revenue, net of revenue share, during the Covid-affected 2021-22 season. It was second just behind the Rangers, who made more than $30 million in revenue by reaching the Eastern Conference Finals. The Leafs were rebounded in the first round of the playoffs.
Rangers joined the Leafs as the NHL’s only $2 billion franchises after their value increased 7% to $2.01 billion. MSG Sports, which owns the team, has increased ticket prices for the 2022-23 season and says the playoff run has helped boost demand for tickets, suites and sponsors. It will also be the team’s first full year of sports gaming partnerships, following the legalization of betting in New York State and signing deals with BetMGM, Caesars Sportsbook and DraftKings.
“These partnerships demonstrate the unparalleled exposure we offer to companies trying to reach consumers in the New York market,” said Andrew Lustgarten, CEO of MSG Sports, during a earnings call in August.
The Montreal Canadiens ($1.7 billion), Chicago Blackhawks ($1.44 billion) and Boston Bruins ($1.41 billion) round out the top five teams. The top 12 clubs by value all have real estate or NHL-related businesses averaging more than $200 million by our calculations as teams increasingly look beyond the NHL franchise to expand their reach (click here for a detailed methodology). .
Catch the Vegas Golden Knights ($975 million, No. 12), who have been a recent expansion hit and should top $200 million this season before a playoff setback. It owns a 15% stake in its venue, T-Mobile Arena, but has also built a business outside of the NHL club. Its AHL franchise, Henderson Silver Knights, generates more revenue than any other AHL team. The Knights operate the Arena Dollar Loan Center, which also hosts Indoor Football League, G League, and Big West Conference basketball championships. It also hosts youth hockey tournaments in Henderson as well as at its training facility, the City National Arena in Vegas.
Clubs at the bottom of the NHL financial table are all up by double-digit percentages, including the Carolina Hurricanes ($615 million), Columbus Blue Jackets ($600 million) and Florida Panthers ($595 million). These teams continue to lose money most years, but are subsidized by the NHL’s revenue share scheme, which sends 6% of HRR to underperforming teams each year. Bankers put the starting price for all but one NHL franchise at around $600 million.
The biggest unicorn in the NHL — and not in a good way — is the Arizona Coyotes ($465 million), who are worth more than 20% less than the Panthers. But even their value is up 13% as they opened the 2022-23 season in a 5,000-seat college arena on the Arizona State campus. The move will either bring them closer to a new building in Arizona or a relocation. Either would trigger a value boost, and the $465 million serves as a sort of put option for either of those two scenarios.
The Leafs, Coyotes and every NHL club in between have a new revenue opportunity with the introduction of jersey advertising this year, and more prospects will develop, like the new digitally enhanced dashboards, as the technology cycle progresses.
“The NHL has a very passionate following in North America,” said Rob Tilliss, founder of Inner Circle Sports, in a phone interview. “It runs deep and having a truly hardcore following is a huge benefit as we continue to move towards digital streaming and a more targeted world of advertising.”
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