PRO HOCKEY Boston firms offer to buy NHL

Owners were cool to the idea of selling the entire league.
BOSTON (AP) -- Two Boston companies have offered NHL owners a way out of their labor woes: Sell the entire league -- pucks, Penguins and penalty boxes -- for more than $3 billion.
Bain Capital Partners LLC and Game Plan LLC made the proposal on Tuesday in New York, where NHL owners were meeting to discuss their next step in the lockout that canceled the entire 2004-05 season. The offer received an icy welcome.
"I don't think it's realistic, and I don't think there's much interest, and I know there's no interest on the part of the Bruins," said Jeremy Jacobs, whose Delaware North Cos. owns the Boston team, its building, part of its TV broadcaster and the concession contracts for several NHL clubs. "And I think it takes 30 (team owners) to do it."
The Toronto Star and Globe and Mail reported Thursday that NHL commissioner Gary Bettman invited the two Boston companies to present the offer. If accepted, the league would become a single entity, an ownership structure where most decisions are dictated by the central office and the teams have the autonomy of a fast food franchisee.
New territory
Sports leagues structured in that way -- Major League Soccer and the WNBA among them -- have been able to avoid some antitrust scrutiny in the courts, and that can translate into greater power in labor negotiations. But it's never been tried with a borderline major league with a strong union, and smaller single entities like the XFL and the WUSA have failed.
Steve Ross, a sports law professor at the University of Illinois Law School, said courts would want to examine whether the new arrangement stifled competition.
"If some investment firm wanted to buy Ford and General Motors and Honda and Toyota, that would be illegal," he said. "I think that would be a huge problem for them."
Steve Pagliuca, Bain's managing director and a part-owner of the Boston Celtics, did not return e-mails seeking comment. Game Plan recently acted as an adviser on the sale of the Ottawa Senators.
Mired in a lockout since Sept. 16, the NHL last month became the first major North American pro sports league to cancel an entire season. The league has said its teams have lost a collective $500 million over the past two seasons.
Offer below value
Before the work stoppage, the total value of the 30 NHL franchises was estimated by Forbes Magazine at $4.9 billion. The Detroit Red Wings topped the list at $266 million, with the Edmonton Oilers last at $86 million. The value of team-owned arenas was part of the assessment.
An offer of between $3 billion and $3.5 billion would translate to between $100 million to $117 million per team.
"What it does say is that there are people out there that see much more potential and value in hockey if the league is run properly," said Andrew Zimbalist, a Smith College professor who specializes in the business of sports. "They think the asset value of the franchises has been so depreciated by mismanagement and the lockout that there's an opportunity to get a bargain."
But the offer has several problems from the start.
First, the outgoing NHL owners would have to agree on how to divide the money, and big market owners might feel that their franchises were undervalued. "Even if it is a good deal for the league as a whole, I think owners are not going to be able to agree how to split up the spoils," Ross said.
A bigger problem is that, by selling their hockey team, owners who also own their buildings or networks might be selling off the synergy that makes the whole thing profitable.
"No independent offer for all their hockey assets can realize the full value of their leverage," Ross said. "It sort of proves what (union head) Bob Goodenow has been saying all along: If that was the only source of income, the owners should like the idea. But the amount of income they derive from hockey is significantly in excess of that."
Bill Daly, the NHL's chief legal officer, issued a statement confirming that the companies offered to buy the league's 30 teams but declined further comment. He told the Globe and Mail that the league was compelled to listen to the offer.
"When someone's offering over $3 billion," he said, "we felt we had an obligation to the board to have them, at least, hear it from the proposed purchaser."
NHLPA senior director Ted Saskin declined to comment on the offer.
"Given that I have no firsthand knowledge of what was proposed, and since the NHL has expressed no interest in pursuing the offer, I see no reason to comment on it," Saskin said.
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