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Posted Jun 11, 2009, 4:48 PM
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The Loyal Opposition
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Join Date: Jul 2008
Location: Winnipeg
Posts: 511
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Makes sense what some of you had just pointed out, that the value is based on what the highest bidder is willing to pay, so to speak.
I'd add that the potential for on-ice success would probably drive up said value, 'cause a team making the playoffs = more revenue (tickets, 'royalties' from broadcasters, increased merchandise sales, etc).
Anyway, here are two articles I came across today that should be of interest (I'm sure Winnipeg wouldn't have to pay an indemnity fee; in fact, such a fee would help Winnipeg vs. Hamilton)...
Coyotes may cost over $400M
NHL shows history of indemnity fees being charged with relocation
Jun 11, 2009 04:30 AM
Kevin McGran
SPORTS REPORTER, Toronto Star
The NHL is threatening an indemnity fee on top of a relocation fee – pushing the price tag for the Phoenix Coyotes to perhaps more than $400 million – if bankruptcy court judge Redfield Baum allows the team to move to Hamilton.
"Relocation is separate from indemnity," said NHL deputy commissioner Bill Daly. "There may be indemnity fees owing if a franchise were ever located in Hamilton."
It's expected the league could ask for more than $100 million (all figures U.S.) as a relocation fee and perhaps as much again in payment to the Maple Leafs and Buffalo Sabres in indemnity for the Coyotes encroaching on their territory.
For example, the Anaheim Ducks paid $25 million for indemnity to the L.A. Kings in 1993 on top of their $25 million franchise fee.
Balsillie spokesman Bill Walker was nonplussed at the notion of an indemnity fee.
"We're looking forward to the NHL making this issue clearer, as Judge Baum suggested, not just for Jim Balsillie but for any other potential bidders," said Walker.
Balsillie, who has offered $212.5 million for the Coyotes, claimed a victory of sorts when Baum advised NHL lawyers to be prepared to put a price tag on the Hamilton hockey market.
There was no word from the court as of last night. The judge had told lawyers from all sides Tuesday he needed to sleep on things before putting pen to paper for a written decision. He may order mediation. He may force the league to come up with a relocation number.
Or the judge, when he finally does make a ruling, may not find he has the power to allow the Phoenix Coyotes to move the Hamilton.
Baum, however, gave the NHL some guidelines in court for what would be a reasonable relocation fee charged to Balsillie. Baum suggested it would be the difference between what a team in Hamilton is worth and what the Phoenix Coyotes are worth. Some have pegged a Hamilton team at $400 million (the Maple Leafs are estimated to be worth about $450 million by Forbes).
The Coyotes' value is closer to $165 million under the terms of Balsillie's $212.5 million bid. Forbes estimated them at $142 million.
The NHL is thinking more along the lines of at least $100 million, if not more, relating the relocation fee to a percentage of the franchise price.
The record is murky on indemnity and relocation fees, but:
A recent New York Times article said the New York Islanders paid a then-record $6 million for the franchise in 1972, and a further $4 million – or two-thirds the franchise value – in indemnity to the New York Rangers.
There was also a payment to Philadelphia for TV rights.
A 1982 Sports Illustrated story said John McMullen paid $30 million for the Colorado Rockies, including $16.5 million in indemnity fees to the Rangers, Flyers and Islanders when they relocated to New Jersey as the Devils in 1982.
If the total price tag is too high, Balsillie may withdraw from the bidding, letting the NHL have its way with the Coyotes.
But yesterday, Balsillie sounded a lot like someone who was ready to sign a cheque.
"However it works out, the issue of a relocation fee, while a new development, does move us one step closer to bringing the Coyotes to Hamilton," Balsillie said in a missive to subscribers to makeitseven.ca. "I want to reassure you we're still moving toward our goal. We're looking forward to instructions from Judge Baum."
The judge suggested Tuesday he wanted the relocation fee settled prior to the proposed June 22 auction, where Balsillie's offer would stand as the opening bid.
http://www.thestar.com/sports/article/649033
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NHL plans auction if Balsillie fails
If RIM boss fails to get his hands on the Coyotes, league has already worked out a backup plan
Paul Waldie
Phoenix — From Thursday's Globe and Mail, Thursday, Jun. 11, 2009 01:19AM EDT
If Jim Balsillie’s bid for the Phoenix Coyotes does not go ahead, the NHL has already laid out plans for an auction for the team.
In court filings this week, the league spelled out how it wants the bidding to proceed. The auction would begin in August, and only “qualified bidders” would be allowed to participate.
To become a qualified bidder, a bidder must agree to operate the club in Phoenix and submit to the NHL consent-and-approval process.
All bidders must put down a $10-million (U.S.) deposit and bids have to be in by Aug. 10. The auction would be held on Sept. 10, supervised by U.S. Bankruptcy Court Judge Redfield T. Baum. Bids must be made in $2-million increments and the highest bid will win, subject to court approval. The league has said $120-million would cover most of the club’s creditors.
Lawyers for the NHL have indicated that if that auction fails to yield a decent bid, the league will hold a second auction for those who want to relocate the club. That auction will also be managed by the NHL and supervised by Baum. Balsillie would be welcome to take part, but the bidding would be subject to NHL rules and would likely include a relocation fee.
So far, according to court filings, one group has signed a confidentiality agreement to gain access to detailed financial information about the club.
http://www.theglobeandmail.com/sports/nhl-plans-auction-if-balsillie-fails/article1177233/
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