Yesterday, Forbes published its annual story on NHL team valuation, which was some of the best fiction I have ever read. They even went so far as to title the list “The Business of Hockey” when it would have been better titled “The Fiction of Hockey”.
In the 2021 Money & Power edition of The Hockey News coming out in a few weeks, we will not be including Forbes NHL team valuations as we have in the past because they miss the basic premise of business valuation; what price would a seller sell the business for?
I am not sure if the Forbes staff writers ever bought or sold a company before or bid on an NHL franchise, but I have on many occasions dating back to 1989 and they just don't get it. The value of an NHL franchise is the minimum price that a seller would be willing to sell their NHL franchise for and that is it, no more or no less.
It doesn’t matter one iota what the gross revenues are, the net operating income is, the earnings before interest, taxes and depreciation are. It doesn’t matter what the TV contract value is or what the split of revenues are between owners and players. It doesn’t matter what an investment banker, lawyer or writer says.
The only thing that matters is that good old supply and demand valuation model that dates back to the cave man when one cave man had made and owned the first spear and the other cave man wanted to acquire that spear. The price was set by the cave man with the spear and the cave man without the spear paid the price, whatever it was if he really wanted it as he had zero negotiating power. It's the golden rule: he/she with the gold, rules.
It is totally laughable to see that their 31st place Arizona Coyotes are worth $285 million dollars, their 30th place Florida Panthers are worth $295 million dollars or the 29th place Columbus Blue Jackets are worth $310 million dollars. Go ahead, call and make those offers and see what they say after the laughter on the other end of the phone subsides. My guess is you should not repeat those two words to your grandmother as mine would have threatened me by offering to wash my mouth out with a bar of soap.
There are only 32 NHL franchises, most already owned by billionaires and there many more billionaires and billionaire partnerships out there who want to own one. There is no way that any current NHL franchise could be bought for less than $650 million today and to suggest otherwise is quite insulting to the owners of Forbes’ No. 12 selection, the Dallas Stars on down the list.
No NHL owner would take a penny less than $650 million today and all of them know that the minimum valuations will only increase in the coming years to $1 billion, so my guess is that they wouldn’t even take your $650 million dollars today.