March 22, 2023
How attractive are the Sens for potential buyers?  We're about to find out |  CBC News

How attractive are the Sens for potential buyers? We’re about to find out | CBC News

Professional sports franchises don’t often come up for sale — especially Canadian NHL teams — and according to a University of Guelph professor, that means there could be significant interest in buying the Ottawa Senators.

What kind of money does someone need to even consider buying the Sens, and what’s in a deal of this magnitude?

Ann Pegoraro, the university’s chair of sports management, said someone with big pockets would have to buy the team, which is valued at $655 million by Sportico.

“With the valuations of most sports franchises soaring, it’s common today to have multiple owners,” she said in an email.

“It’s possible that a few groups will form to bid for the senators.”

Moshe Lander, a sports economist at Concordia University, said the logistics of a sale aren’t all that different from buying a home.

“You’re not expected to be able to write a check for $655 million,” he said.

“You can go to the bank and try to structure a deal that’s borrowed money and that’s probably the usual way of doing it.”

How attractive is the team for interested parties?

The last time a Canadian team was involved in a sale, the team wasn’t technically Canadian.

In 2011, the Atlanta Thrashers were acquired by True North Sports and Entertainment Ltd. bought and relocated to Winnipeg where they became the Jets.

In 2008, the Edmonton Oilers were sold to Darryl Katz for about $200 million — according to Sportico, the Oilers are now worth $1.29 billion — a pretty good return on investment.

So it’s clear that Canadian NHL teams don’t come up for sale all that often and can be quite lucrative — something Lander says is intended.

“What the NHL is doing on purpose is making sure that not every market has a team, and that creates excess demand,” he said.

“[The NHL keeps] that desire so it’s a toy for billionaires to play with. And there are a lot of billionaires who sit on the sidelines and say, ‘Man, I’d like to get into the game of hockey.'”

But what would make the Senators team attractive to buyers?

Pegoraro pointed out that according to Sportico’s valuations, the team is up 21 percent from last year (the biggest increase in the league), to a value of $655 million.

“With the last one [memorandum of understanding] for a new arena they are certainly an attractive buy,” said Pegoraro.

“The overall supply of sports franchises for sale is limited, particularly in hockey, so all of these factors combine to make the Senators attractive.”

Reynolds gestures to a fan when he is recognized during a break in play as the Ottawa Senators take on the Vancouver Canucks in Ottawa on Tuesday. (Justin Tang/CP)

Lander said the “devil is in the details” when it comes to whether the Arena deal is positive or negative for a potential buyer.

How much money – if any – will come from the government? How soon can work begin?

“It’s promising right now, but it’s not enough to add value and it’s not enough to attract buyers,” he said.

What can a buyer expect in terms of return on investment?

Pegoraro said the average NHL franchise is currently worth $1 billion, which is roughly five times their annual income.

Using the NHL’s Nashville Predators as an example, Pegoraro said the returns can be quite high.

The team was sold for $175 million 15 years ago and is now worth $775 million according to Sportico’s latest estimates.

Lander said most teams don’t make much profit in the team’s yearly operations and true value is discovered when a team is sold.

“It’s possible that the Senators’ new owners will see a higher valuation for the club within a year of ownership,” Pegoraro said.

“Maintaining growth will be crucial as new ownership drives the team’s move [arena] and to build their legacy as NHL owners.”

Individual owner or group?

Pegoraro said that with the ever-increasing cost of obtaining a sports franchise, it’s common to have multiple owners (hello Ryan Reynolds!).

So would it make sense to land a celebrity for a percent or two of the total value, or does that complicate things?

“Celebrities bring excitement, attention, new audiences, and form a co-branded-like relationship,” Pegoraro said.

“We already saw Ottawa fans hugging Ryan this past weekend.”

Wrexham AFC co-owners Ryan Reynolds and Rob McElhenney visited the Racecourse Ground on 28 October 2021. (Action Images/Reuters)

She used the examples of Justin Timberlake and Lebron James, who each owned small percentages of the National Basketball Association’s Memphis Grizzlies and English Premier League’s Liverpools.

Not to mention that Reynolds already owns a team with Rob McElhenney from it’s always sunny in Philadelphia: Wrexham AFC of the National League in England, the fifth tier of football in that country.

How long will it take?

Pegoraro said deals of this magnitude could take a while to close, with many factors to consider.

Each league will have its own processes for completing a sale, although she said belief in bidding will start to heat up in the coming weeks.

If that happens, a sale could happen by the New Year, but it’s a tough question to answer.

#attractive #Sens #potential #buyers #find #CBC #News

Leave a Reply

Your email address will not be published. Required fields are marked *