When it comes to franchise valuations for NHL teams, the only numbers that matter are how much buyers are willing to pay. THN owner W. Graeme Roustan lists his valuations for all 32 NHL teams.
W. Graeme Roustan's NHL team valuations are part of The Hockey News Money and Power 2024 hockey business annual, which also includes the Top 100 People of Power & Influence in hockey, Q&As with significant people across the hockey world and reports on every NHL team. It's available now at THN.com/free.
In my sixth annual piece on NHL team valuations, I have some very recent experience to rely on, having been in the sale process for the Ottawa Senators in 2023. Although I cannot share with you any of the information that I received and examined as part of the due-diligence process, what I can and will share with you is my current thoughts on the valuation of an NHL franchise today.
Never once in the Ottawa Senators sale process did I or anyone else in the process who has since compared notes with me, ever mention the Forbes or Sportico valuation numbers as a benchmark. As I have explained in pretty much all of my previous five valuation articles in past Money and Power issues, the financial models that they use have absolutely nothing to do with the sale price.
No multiple of EBITDA or other financial formula was ever used in determining the price paid for the franchise. The sale price was only determined by who was willing to pay the most for the Ottawa Senators through a vigorous sale process.
The sale process is a standardized auction process designed to sell a business, one that I have been involved in many times in my career with some success. Typically, they are conducted quietly and outside of the earshot of the media to avoid any public attention. However, this was definitely not the case here.
This sale process was conducted by the estate of Eugene Melnyk, who had engaged Salvatore ‘Sal’ Galatioto, an icon in the sports business industry, to head up the sale process. Galatioto is truly a legend and one great guy to spend some time with. In my case, he’s been a good friend and fellow Second World War aviation buff.
The price of an NHL franchise is relayed to the potential buyer as a price that the seller is willing to sell the franchise for. In the case of the Senators, Galatioto told me the minimum number that the Melnyk estate needed to see from me and my group, and there was no negotiating whatsoever, as there were others who were willing to meet and beat that price.
The only possible use that I can see that comes from a Forbes or Sportico valuation was best told to me by Gary Bettman himself in an interview for the Money and Power issue. He said: “A value put against us in other enterprises is important in terms of the recognition of what we are, not because somebody’s turning around and selling their franchise tomorrow. Although that could happen.”
When taking these Forbes and Sportico valuations in context, when compared to franchise valuations in other sports leagues, it is recognition of the value of the game on the ice and how it has also grown year over year measured against other major leagues. In that context, valuations can add to the story of the success of the NHL both on and off the ice each year over the previous year.
In my Q&A with Bettman as part of this issue, I suggested that since the Senators were sold for close to $1 billion, the new floor of the valuation of any NHL franchise is $1 billion, and he responded by saying, “You would think that is the floor, but I even think that floor is too low.”
He went on to say, “It’s really about branding. It’s really about perception. Yes, if you are an owner of a club, you want to know that your investment is more valuable, but to me, it also represents the importance of the league, of the game and the teams. So, seeing an increased valuation, it’s not that owners, most owners, any owners, are selling anytime soon, it’s really putting a stake in the ground in terms of how strong we are as a game and a league.”
At the end of the day, there are only 32 NHL franchises as of today, with more possibly to come as Bettman alluded to in the video interview. These limited numbers of franchises change hands at a much slower rate than the creation of billionaires each and every day around the world. Sports franchises are prized possessions, and the prices for these franchises will continue to soar no matter what some media companies calculate their valuations are, except mine, of course, since I use a much different methodology, first-hand, multiple sale-process experience since 1989.
I expect the NHL will expand by adding two new teams in the next few years, and I believe the markets to be are Atlanta and Houston. Anyone interested in signing up for one of those two new franchises should expect to pay at least a record $2-billion U.S. franchise fee. When I asked Bettman if my assessment of a $2-billion franchise fee was in the ballpark, he responded by saying: “Whether it is $2 billion or $2.5 billion or $2.7 billion, I think that is the range I believe the owners would want to be in if we were going to consider expansion.”
After the huge success both in selling and launching new franchises in Vegas and Seattle, the NHL has never been in a stronger position to expand the league to 34 clubs. Because of this, they can and will get full value for new franchises due to the product on the ice and the financial success off the ice.
Back in 2005, Bain Capital had offered to buy the entire league for $3.5 billion and reportedly raised their offer to $4 billion before Bettman, backed by the owners, politely declined. Today, the collective valuation of the 32 clubs tops out at $50 billion dollars. I asked Bettman to look back at that time when Bain made the offer in relation to today’s valuation, and he snapped back: “It would have been a helluva deal for them.”
NHL Team Valuations
