Everyone who follows the National Hockey League knows how much Jaromir Jagr makes each year, and the common man is disgusted that someone would make that much just to play a game. Everyone knows that any number of clubs are on the verge of financial ruin, that Ottawa and Buffalo were saved from bankruptcy, and that Calgary and Edmonton are in danger of being moved down below the 49th parallel.
What few people really know, because the NHL refuses to make financial information public, is how much its teams and its owners truly make (or lose). All the NHL wants people to believe is that greedy players are holding guns to their heads and holding them up for every cent they're worth. Do you know who owns these NHL teams that are so economically fragile? I didn't really know, so I looked it up. Now I know (mostly). Here they are:
Part 1 -- The Billionaires' Club
According to Forbes Magazine, there were 476 billionaires in the world in 2003. Eight NHL teams are directly owned and operated by nine of these "Richest People in the World" (as Forbes calls them). Most of these teams have had or claim to currently have financial difficulty staying afloat. Two other teams are directly controlled by three more of the world's billionaires through corporations of which they are the largest or controlling shareholders.
Ottawa: Eugene Melnyk saved the Senators from bankruptcy. He is listed by Forbes as the 303rd richest person in the world, worth $1.4 billion. He is also listed by Canada Business magazine as the 14th richest Canadian. He made his fortune through Biovail, a pharmaceutical company that specializes in making time release versions of popular drugs, as well as its own highly successful angina treatment. Under Melnyk, who lives in his cliff-top tax-shelter in Barbados, Ottawa no longer claims financial hardship.
Buffalo: After his failed bid for the governorship of New York, Rochester's Tom Golisano came in and saved the Sabres from Chapter 11. Forbes ranks him #348 in the world, #126 among Americans, with a fortune of $1.2 billion, derived from his payroll company, Paychex (dissatisfied with industry leader ADP, I switched my company over to Paychex many years ago and never once regretted it). Golisano was not the NHL's first choice of savior in his city, but like Melnyk, Golisano made his investment with less concern for how much money he could make than with keeping the franchise in his home area (though both businessmen are smart enough to know that their investments are sure to appreciate down the road, as they have in the past, despite all protests from NHL hardliners).
Tampa Bay: The Lightning claim to be financially weak. Tell that to their owner William Davidson, Forbes's 222nd richest person in the world and 104th richest American, an industrialist worth $1.8 billion. Forbes ranks his company, Guardian Industries (which is where the windshield of your car was probably manufactured), as the 29th largest privately held company in the country, based on 2002 revenues of $4 billion.
Nashville: The Predators, yet another team crying woe, is owned and operated on paper by Craig Leipold, an entrepreneur who made his own minor fortune in the savory business of telemarketing with a firm he long ago sold, Ameritel. But his real money comes from his wife, Helen Johnson-Leipold, who is the daughter of S.C. Johnson, the founder of the S.C. Johnson Company (the Johnson Wax Company) with a fortune of more than $7 billion that makes him the 36th richest man in the world and the 25th richest American. How did Johnson make so much money? He invented, manufactured, and distributed Glade, Raid, Windex, and a huge assortment of other famous household cleaning products that you have no doubt purchased your whole life through (and will continue to do so). His company, now run in units by his children (one unit by Leipold's wife), is the 60th largest privately held company in the country (no longer any larger because it was broken up into those family-run units).
St. Louis: Bill Laurie runs the Blues with his wife, Nancy Walton Laurie, one of the Wal-Mart heirs, the 162nd richest person in the world and 61st richest American thanks to her inheritance, currently valued between $2.3 and $2.9 billion. Despite the Lauries' seemingly bottomless pockets and their team's history of spending freely on player salaries (the worst of which predates their ownership), the Blues currently claim to be in need of cost cutting.
Vancouver: Another team that perennially cries poverty, despite being owned by John McCaw, Jr., the 386th wealthiest person in the whole wide world, and 226th in the US. His $1.1 billion current net worth was inherited from father's cable TV business. His younger brother Craig took over the business, sold the cable concerns, and pioneered the wireless industry (McCaw Cellular was one the most important, influential, and innovative firms when I worked in the industry), parlaying it into an $11 billion sale to AT&T in 1993 that John Jr. no doubt benefitted greatly from (coincidentally, AT&T Wireless has just become an acquisition target itself).
Los Angeles: Philip Anschutz was so concerned about how much the Kings were losing that he allowed a fan with the requisite financial expertise to examine his books and determine that it was true. This is the same Philip Anschutz whom Forbes ranks as the 62nd richest person in the world (34th richest in the US) with assets worth just shy of $5 billion. He started out building that stake in the oil business and really ratcheted up to the highest levels via Qwest Communications (he still holds $1.275 billion in Qwest stock).
Now, if the name Qwest sounds familiar, that is because it is up there with Enron, Tyco, and MCI among the mega-corporations under fire from the SEC for committing securities fraud in building up its stock price. Four mid-level Qwest executives are already under indictment, and the SEC may indeed have its sights set on Anschutz himself as well as Qwest's former CEO.
Those last two guys are already the target of large lawsuits by institutional shareholders of Qwest. A New York suit on behalf of a large public pension fund was settled, Anschutz paying the amount the fund believed it had been defrauded of. He asked the California Supreme Court to dismiss a suit in that state on the grounds that he had no personal financial ties to California. The court, no doubt considering his ownership interests in Staples Center, the Kings, and other real estate and entertainment holdings as constituting personal financial ties to California, refused to grant a dismissal. With former Kings owner Bruce McNall having done jail time for fraud, it looks like this franchise just can't win.
In addition to Anschutz, the Kings are also owned in large part by commercial real estate developer Ed Roski of Majestic Realty, a near-billionaire ($990 million net worth) who is Forbes's 263rd richest American. Plus, Anschutz and Roski share a joint interest in the Staples Center, the building the Kings play in, with Fox Entertainment, a company owned by the 27th richest man in the country, Rupert Murdoch ($7.2 billion), which also owns 40% of the Rangers.
Colorado: The Avs have thrived in a market that didn't work for skinflint John McMullen (who moved Denver's Rockies to New Jersey to become the Devils way back when) mostly because they are a winning team, but also because they are owned by Stanley Kroenke, the 303rd richest person in the world and 175th richest US citizen (with $1.4 billion) and his even wealthier wife, Ann Walton Kroenke, another Wal-mart heir who herself is the 132nd richest person in the world and 56th richest American, having inherited her $2.7 billion fortune. Kroenke amassed his as a real estate developer who specialized in building shopping centers anchored by Wal-Mart stores. I was unable to determine whether he got the Wal-Mart business through his wife, or whether he met his wife through his Wal-Mart business. Any guesses?
Atlanta: For the moment, still technically owned by Time Warner, awaiting approval of a sale to a group of investors known as Altanta Spirit. The sale leaves TWX with 15% ownership, so largest shareholder Ted Turner, the 199th wealthiest person in the world and 78th wealthiest American with a net worth of $2.3 billion, will still be part of the mix -- especially since two of the nine partners in Atlanta Spirit are related to him (his son Beau and his son-in-law Rutherford Seydel) and two others are close friends of the family (Michael Gearon, Sr., chairmain of the Atlanta Hawks under Turner's ownership, and his son Michael Gearon, Jr.). The other new owners of the Thrashers are discussed in Part 4. Other important Time Warner figures, though they had little to do with the TBS group that ran the Atlanta-based sports concerns: former chairman Steve Case, the 393rd richest American, worth $610 million, still a large shareholder, and still responsible for accounting practices currently being investigated by the SEC; and AOL vice chairman Ted Leonsis, owner of Washington's Caps (see more on him below).
Rangers: Cablevision, with its market cap $7.7 billion, is the entity technically in control of the Rangers, but the people ultimately in control of Cablevision are the Dolan family. Chuck Dolan is the nation's 162nd richest person with his $1.4 billion in personal assets, and that does not even include his sons' personal wealth. Rupert Murdoch, more than five times as rich as Dolan, owns (through Fox Sports) the 40% of the Rangers that Cablevision doesn't own. No wonder the Rangers have so much money to spend.
Part 2 -- The Former Billionaires' Club
Five more NHL clubs are owned by individuals who were billionaires in recent years but are not considered billionaires today. Three made their billions in tech companies and saw their net worths plummet when that bubble burst after the 2000 election -- all three remain extremely wealthy nonetheless. One other may very well still be a billionaire -- he is extremely wealthy either way. The fifth lost an entire billion when an earlier wealth bubble burst -- but he is at least a quarter the way back.
Islanders: Charles Wang was worth $1.6 billion in 1999 and was the 278th richest American in 2001 with just shy of a billion ($925 million). He currently holds $496 million of stock in the company that generated his personal wealth, Computer Associates (which has a $16.6 billion market cap), this after cashing in more than $270 million. His partner in owning the Isles, Sanjay Kumar, who succeeded him as chairman of CA after he was forced to resign, holds only $27.8 million in CA stock (having cashed in nearly $130 million already).
Washington: Ted Leonsis, AOL's marketing genius, was worth $675 million in 1999 according to Forbes, but other reports that year, when he purchased the Caps, had him pegged at a billion. He is now believed to have a net worth of $400 million, all of which explains why he was so interested in going over his GM's head to obtain Jaromir Jagr and grant him a ridiculous contract, and why he now regrets it and has tried so hard to unload it (finally to who else but the Rangers?).
San Jose: Greg Reyes, one of the co-owners of the Sharks, was listed in Forbes as the 274th richest person in the world in 2000, worth one billion. At the time, he sold over $380 million worth of shares of his Silicon Valley company, Brocade Communications, a switch manufacturer, for prices ranging from $100 to nearly $340 per share, another nearly $50 million worth late in 2001 when the price spiked backed up into the 40s. In the current market, Brocade sells for less than $10, Reyes's remaining shares worth just $55 million.
I could not peg the worth of Shark co-owner Kevin Compton because what he has earned as a partner in the venture capital firm Kleiner Perkins has mostly been with privately held companies. But his experience with one public company is instructive -- as a board member of publicly traded Citrix, he sold a little over $1,000,000 in 1997 and in late 2000 still held over 125,000 shares, which he either still holds or sold when no longer an insider (and therefore not publicly reported). This isn't much compared to the level of wealth our other NHL owners possess but remember that this just one of many many companies that Compton guided as lead investor. Compton is someone I was slightly acquainted with when I was developing business with a company he chaired in his usual capacity as lead investor. He has chaired many companies of that sort, most of which he eventually took public and cashed in on quite successfully (like the one I dealt with), so we just have to use our imagination on this one.
Montreal: George Gillett was reportedly worth a cool billion in the early 90s when he financed his portfolio of ski resorts through Michael Milken and his junk bond factory. When Milken, Ivan Boesky, and the junk bond market crashed, Gillett lost it all, filing for bankruptcy. He had since re-built his net worth back up to $250 million through another set of ski resorts and the meat processing industry by the time he successfully bid $250 million Canadian for 80% of Le Club de Hockey Canadien and 100% of the Bell Centre, then known as the Molson Centre (the Molson family, the 68th wealthiest in Canada with assets in excess of $440 million Canadian, retains 20% of team).
New Jersey: Technically, the penny-pinching Devils are still owned by YankeeNets, even though the two entities who make up that partnership -- the Yankees and Nets -- have agreed to part ways (the Nets were just sold to a Brooklyn real estate developer, pending approvals, and the Devils may be sold soon as well). YankeeNets' best known and richest member is of course George Steinbrenner. Steinbrenner doesn't crack any Forbes list, probably because his net worth is impossible to pin down -- one report in January 2001 pegged his net worth at $2.7 billion, and he hasn't gotten any poorer since, while another had him at $250 million, but was based on the Yankees being worth $160 million, less than 20% of Forbes's current valuation of $850 million (which takes into account all YankeesNets properties).
Part 3 -- The Billionaires' Wanna-Be Club
Ten teams controlled by billionaires, five more controlled by former billionaires who are still worth hundreds of million. Here are seven more owned in whole or in part by nine members of the Forbes 400 (the 400 wealthiest Americans) or Canadian Business's Rich 100 (the 100 wealthiest Canadians) who are not quite billionaires (the Kings are in Philip Anschutz's billionaires' club rather that near-billionaire Ed Roski's billionaire wanna-be club). Like the billionaires' club, I include two teams owned by corporate entities directly controlled by members of these lists.
Boston: Jeremy Jacobs is one of the most outspoken hardline owners who wants to rein in player salaries and break the players' union. He knows what it's like to have the people paying you over a barrel -- he owns Delaware North, the 147th largest private company according to Forbes with $1.6 billion in annual revenues, a company that specializes in providing food service in sports arenas, airports, tourist attractions, and other such places where Jacobs can get away with charging two, three, four times more for refreshments than places where people have a choice. He inherited this lucrative business from his father, who started out selling peanuts and popcorn at sports venues in 1913. Jacobs, who will spend only as much as is necessary to ensure playoff revenue but never enough to win a championship (the Bruins haven't won a Cup in over thirty years), is the 303rd richest person in the US, worth $875 million, which he doesn't have to dip into to keep the Bruins afloat since they earn a tidy profit every year, not even including his interest as owner and operator of the Fleet Center or his part ownership of NESN, the cable network that carries Bruins and Red Sox games.
Calgary: This will come as possibly the biggest surprise of all. One of the franchises that cries poverty the loudest, that complains the most about the potential loss of Canadian teams, is owned by some of the wealthiest people in all of Canada. The Flames are owned in roughly equal shares by eight people. N. Murray Edwards runs Edco Financial Holdings, a private merchant banking corporation (one of Edco's investments, in Imperial Metal, is worth nearly $50 million to Edwards), and Penn West Petroleum, a Canadian oil company, and is ranked as the 41st richest person in all of Canada with a personal fortune of $757 million made developing the rich oil and gas fields of Alberta. Clay Riddell is chairman and CEO of Paramount Resources, a publicly traded oil and gas company, and has amassed enough wealth ($628 million) to be the 50th richest Canadian. Allan Markin chairs Canadian Natural Resources, a gas and oil company with a $7.25 billion market cap and revenues of $1.2 billion over the first nine months of 2003.
I couldn't find numbers for the other five co-owners, but their resumes put them right up there with these guys. Alvin Libin, CEO of Balmon Holdings, a management services and investment company, has interests in real estate, oil and gas, and financial services. Bud McCaig owns Trimac, one of North America's largest trucking companies, which he helped found in 1945 and which generates $400 million a year in revenue. The Seaman brothers have been in various oil, gas, and resource concerns for more than 50 years -- Byron Seaman chaired Bow Valley Energy until his brother Doc Seaman (head of Dox Investments) took over. And the front man for this ownership group, Harley Hotchkiss, the one always complaining in public about what a raw deal he and his partners are getting in the NHL (whom he fronts as well as Chairman of the NHL Board of Governors), manages his own oil, gas, real estate, and agricultural enterprises.
The gall of this group of rich local men, planning to hold the NHL hostage in order to save a few bucks on player salaries when the real source of their problems is a series of poor management decisions, is possibly without parallel.
Toronto: 13% of Canada's most lucrative franchise is owned by current chairman Larry Tanenbaum, #42 on Canada's Rich 100 with $740 million he inherited along with Canada's largest road construction company. Tanenbaum controls the Leafs with the backing of the team's silent majority shareholder, the Ontario Teachers' Pension Fund and its C$68 billion assets, owners of 58% of the team. The remainder of the company is split between Ken Thomson, the richest man in Canada with $22 billion in Canadian currency (also 13th among Forbes's richest people in the world measured in US$ -- 14 billion of them), and Toronto Dominion Bank, an institutionally-held public company with a market cap of $22 billion. Thomson's holdings are via Bell Globemedia, a Canadian media conglomerate with myriad holdings that include The Globe and Mail, a newspaper that covers the Leafs, CTV, a TV station that covers the Leafs, and TSN, a sports network that covers the Leafs and its competitors. BCE, aka Bell Canada, the Canadian version of AT&T's former Bell System monopoly in the US that has a current market cap of $22 billion, is the largest shareholder in Bell Globemedia. That adds up to enormous financial backing for the Leafs -- entities worth over $100 billion Canadian combined! Not to mention the synergies provided by its incestuous relationship with some of Globemedia's interests.
Detroit: Mike Ilitch is #381 on the 2002 Forbes 400 with a net worth of $575 million and a near-miss for the 2003 list despite an increased net worth of $585 million, built on his Little Caesar's pizza chain, which in 2001 generated $80 million in profits on nearly $800 million annual sales, as well as his interest in the Wings, the Tigers, and the Tigers' Comerica Park. Unlike some of his wealthier fellow owners, Ilitch is willing to spend some of his money on his team, and has three Stanley Cups to show for it.
Dallas: Tom Hicks stands in 350th place on the Forbes 400 with a personal fortune of $725 million. He made all of this as a financier specializing in leveraged buy-outs, the food sector being his area of expertise (he bought Dr. Pepper and 7up for $45 million and sold it for $700 million two years later!). He has not been shy of spending, especially on his Texas Rangers, though he now wants the Stars to shed salary.
Anaheim: Owned by Disney, which is run by Michael Eisner, #385 in the Forbes 400 with $630 million. Eisner often finds himself opposed by Walt Disney's nephew Roy Disney, himself 294th on the 400 with $900 million in assets. Disney recently resigned as vice chairman in protest of Eisner but remains the largest individual shareholder.
Philadelphia: Ed Snider cashed in his ownership of the team he founded to Comcast Spectacor, which now owns 66% of the Flyers. Brian Roberts, who runs Comcast, with its $80 billion market cap, is #388 on the Forbes 400 with personal assets of $625 million. Roberts inherited Comcast from his father.
Part 4 -- The Secret Society
Well, not secret really -- just unknowable for a hack like me with no resources other than Google and the internet (if anyone can help me peg any of these guys down better, I'd appreciate it). Here are seven team owners who appear to be of considerable means. I present some circumstantial evidence that leads me to believe that, but I have no hard estimates of their personal wealth:
Chicago: Bill Wirtz is the hardest of the hardliners among NHL owners when it comes to player salaries. And why not? His father Arthur ran the Blackhawks back in the day when the Norris family treated players like indentured servants, in part by controlling four of the six "original" NHL teams, three of them illegally or semi-legally at best (Art Wirtz was the front man for Jim Norris's secret outright ownership of the Hawks, used as a farm team for his beloved Red Wings, the team he publicly owned -- Norris ended up in prison for violating anti-trust statutes).
The only way to gauge Wirtz's personal assets, which are not publicly known, is through the company he controls, the Wirtz Corporation, the 373rd largest privately held company in the US in 2001 according to Forbes with $36 million in net profit on $865 million in revenue (they have since fallen off the top 500 after declining steadily from 1999 to 2000 to 2001). What business is the Wirtz Corp in? Liquor distribution, real estate, ownership of the Blackhawks, and half ownership of the United Center, the building they play in. Mismanaged on the ice for time immemorial, the Hawks haven't won a Stanley Cup in 42 years, going on a certain 43, and have won only three in toto since 1927, fewer even than the Rangers.
Columbus: John McConnell brought the expansion Blue Jackets to his hometown even though Columbus is hardly a major league city. He made his fortune as owner of Worthington Industries, a steel company he owns 20% of with his son (his son runs the company now that he has retired to run the Blue Jackets). Worthingon has a total market cap of $1.5 billion on the strength of $2.2 billion in sales and $95 million in net earnings per annum. The McConnells' current stake in Worthington is worth $45 million -- I cannot determine how much they hold in other assets or how much Worthington stock they sold in the past, but I do know they now hold 15 million fewer shares than they reported themselves to hold at the end of August, 2000, the average price of their stock in the intervening months ranging between $12 and $20 per share, making their sales worth somewhere between $180 and $300 million. So it's no reach to assume that the order of magnitude of their wealth is on par with the wealthier of NHL owners.
Carolina: Peter Karmanos made his fortune with the software firm Compuware. What he holds today in Compuware shares was worth over $600 million in 1999 but only $125 million now -- a disturbing trend that does not augur well for his personal finances. What I have no way of knowing is the value of other assets he holds (Worthington, Eclipsys, Zi, Taubman Centers among them -- in yet another example of the incestuous nature of NHL business dealings, Karmanos is on the board of directors of Worthington Industries, owned and operated by the McConnells of the Blue Jackets). Nor am I sure how much Compuware stock he sold when the tech sector was riding high -- the closest I can come is $25 million in sales of Compuware stock, but that information does not appear complete, as it doesn't account for a million share discrepancy between what he holds now and what was reported by that source. $125 million is a lot of money, but not enough to keep a major league franchise afloat through hard times -- how much higher than that is his true net worth?
Florida: Alan Cohen "retired" from running his drug company, Andrx, in 2001 in order to purchase and run the Panthers. Andrx specialized in manufacturing generic versions of popular drugs -- and in winning the lawsuits brought upon it for patent infringement by the original makers of those drugs (Andrx won a suit brought on it by Eugene Melnyk's Biovail for copying its popular angina drug). While I cannot peg his personal wealth, I was able to determine that Cohen sold nearly $215 million worth of stock by the time he left Andrx and still held $162 million worth (which would be worth $64 million at today's stock price). Perhaps not personally satisfied with the Panthers as an avocation (maybe because they are perennial losers), he recently returned to his root industy and started up a new pharmacutical company.
Minnesota: Bob Naegele is the owner of the Wild. He started out with Naegele Outdoors, a billboard company he inherited from his father, selling it for $400 million in the early 80s. He then bought a fledgling sports equipment company, re-named it Rollerblade, revolutionized roller-skating to a worldwide craze that continues unabated, and sold it for a reported $175 million, almost all of it capital gains. In addition to the Wild, he co-owns the Wild's home arena, the Xcel Energy Center, with Timberwolves owner Glen Taylor (the 209th richest person in the world and 110th richest American with a fortune worth $1.8 billion).
Phoenix: Steve Ellman legitimized his bid for the Coyotes by partnering with Wayne Gretzky, Gretzky often mistaken as the primary owner of the team. Here is one owner that I could not find a single number for, only a description of him (a self-description on the Coyotes' web site) as an international developer of retail, entertainment, office, and commercial real estate. The Coyotes' new home in the Phoenix suburb of Glendale has come under criticism for being inaccessible, but one has only to look at Ellman's resume and the overall plans for the development site -- mall, cultural center, hotels, offices, residences -- to understand how Ellman is synergyzing his ownership of the team with his other financial interests (real estate), and how much in assets that would normally entail.
New Jersey: Though still technically owned by YankeeNets, the Devils are soon to be owned solely by the Nets half of that partnership, through an entity called Puck Holdings. Lewis Katz and Ray Chambers are the principals of that ownership group, in the process of selling the Nets, possibly selling the Devils, and retaining their 50% ownership of YES network. Katz made his fortune owning a parking lot chain in New York and other cities, Kinney Systems, now a subsidiary of Central Parking, to whom Katz sold Kinney for $225 million the year before he bought the Nets. When he purchased the Nets, he pledged all his profits to New Jersey inner city charities (no word on what he does with the profits from his other sports holdings).
Investment banker turned philanthropist Ray Chambers, estimated by Forbes to be worth $200 million way back in 1988, bought in solely to move the teams to his hometown Newark to promote its urban renewal (like Katz, donating his Nets profits to charity). He is now selling because that project is dead (how much of that Newark real estate or any related development concerns he might have an interest in, if any, I have no way of knowing). Chambers is a New Jersey businessman who made his money with Wesray Capital, in partnership with Nixon Treasury Secretary Bill Simon (WES stands for William E. Simon, Ray is of course Chambers), a firm that lives on as WR Capital without them. Frank Walsh, once chairman of Wesray and a minority partner in the Nets (and possibly Puck Holdings), pleaded guilty to securities fraud committed while a board member of the infamous Tyco.
Their successful investment banking partnership specialized in leveraged buy-outs, the popular 80s Wall Street pastime that resulted in massive layoffs. An example of Wesray's success: They acquired Avis for $263 million in 1986. In 1987, they sold the main car rental and leasing division back to Avis’s Employee Stock Ownership Plan for $750 million. In other words, they nearly tripled their investment from one year to the next by selling the company to its employees, presumably under the threat of dismantling the business and throwing those employees out of work, which is what LBO firms loved doing in the 80s. And that was just on one Avis unit -- the other units were sold off separately for additional return. The same story was repeated with Simmons Mattress and Gibson Greeting Cards, as chronicled in the "The Selling of the Presidency 2000" -- Wesray more than doubled its $120 million purchase of Simmons when selling it back to its own employees (again, after having divested ancillary units in separate transactions), and they made a killing of unbelievable proportions with Gibson, buying the company with $1 million of their own plus a borrowed $80 million, taking it public for a $290 million return ($66 million going to Simon alone), and leaving the entire $80 million debt within the company!
At least Chambers retired with his profits to become a philanthropist -- Simon continued to operate investment firms until his death in 2000.
Atlanta: Add to your program line-up, now holding majority ownership of the Thrashers, Altanta Spirit LLC. So who are the new owners of the Hawks, Thrashers, and the operating rights to their home, the Philips Arena? One third will be held by Boston financier and entrepreneur Steve Belkin. One third will be held, essentially, by UCG (United Communications Group). The third third is held by the FFOTTs (friends and family of Ted Turner) already mentioned, plus carpet company owner Bud Seretean. Already mentioned as well, Time Warner's TBS subsidiary will retain a 15% stake in the operation.
UCG is a privately-held company, held so privately that they brag (and rightfully so) that they have no outside investors. UCG owns eleven subsidiaries that produce highly specialized magazines and newsletters (many of the units also organize seminars and conferences around their publications, and one I believe produces related software). Three of UCG's six partners, Todd Foreman, Bruce Levenson, and Ed Peskowitz (the latter two the founders of UCG, and former minority owners of Ted Leonsis's Washington Caps), jointly hold their one-third of Atlanta Spirit. Because UCG is so closely and so privately held, no specific financial data is available on the company or its partners, at least not that I can unearth.
Steve Belkin heads a similarly private group of companies (and has for a similar length of time as the UCG partners, nearly thirty years) called TNG -- no, not The Next Generation, but the Trans-National Group. TNG specializes in affinity group marketing -- marketing services to groups of related people (AARP or AAA are good examples). Some of TNG's subsidiaries specialize in areas ripe for affinity group marketing -- real estate, travel, long distance communications. Though the net worth of Belkin or his group is completely unknown to the public, it is known that the group he put together to buy the NBA's Charlotte franchise was worth in the neighborhood of $4 billion -- the Atlanta group is biting off a bigger chunk of assets than Charlotte by getting a bigger-market NBA franchise and arena, plus the Thrashers. Belkin plans to act as owner of the Hawks with the assistance of Gearon pere, while Levenson of the UCG triumvirate will be the Thrashers' governor, with Turner's son-in-law Seydel helping him out.
Part 5 -- The Media Giants
Already listed based on the personal wealth of their owners, shareholders, or other major players, four NHL teams are owned by corporations (not including corporations created to own the teams or team-related concerns), a surprisingly small percentage. Not surprising is that all four of these corporations are media companies -- media giants, really -- conglomerates that specialize in vertically integrating media services, from the carriers of communications services (in this case, mostly cable companies), to the distribution channels that operate on those carriers (TV and cable channels and networks), to the content that is ultimately consumed by customers (movies, TV shows, and most importantly in this case sporting events).
Atlanta: Time Warner, the the outgoing owner of the Thrashers, is one of the largest media conglomerates in the world, if not the largest. They are a perfect example of how an intergrated media company works -- New Line Cinema releases The Return of the King, CNN and Time Magazine provide news features about it while HBO shows last year's The Two Towers on my Time Warner New York cable network. Little, Brown and other Time Warner book divisions and DC Comics didn't for some reason get in on the action, but Warner Brothers Records released the soundtrack album, Warner Home Video will release the DVD, and AOL puts up a web site or three, which you can access via RoadRunner. Every single one of these companies is owned by Time Warner. The whole idea is to control as much of the content and the ways it can be distributed as possible -- in the case of the Thrashers and Hawks, games are programming that feed other levels of distribution and synergize with other forms of content, especially via TWX's national cable networks, TBS (the unit that owns the sports franchises) and TNT. With the sale to the Atlanta Spirit group, TBS actually gets the best of both worlds -- by retaining a 15% stake, they retain access to the synergies their parent company really wants from them, and now do not have to worry about day to day operations and the vagaries of profit and loss, never among their primary reasons for getting into the business in the first place.
Rangers: Cablevision operates under the same principle as its competitor, Time Warner -- they own cable companies, cable networks, and some of the content that goes out over those networks and systems, like the Rangers and Knicks, playing in Madison Square Garden and carried across the continent on Madison Square Garden Network. They are more sports oriented than Time Warner's news and entertainment focus, synergizing in other directions, like their failed bid to sell electronic equipment on which their programming could be consumed (they sold The Wiz chain) and their desire to build their own satellite network to compete with the likes of DirecTV -- ironically, soon to be owned by MSG partner Rupert Murdoch. Via News Corp., Murdoch's empire is more like Time Warner's in scope and size, with a movie studio, original television production, myriad stations, newspapers, and magazines, and satellite networks abroad and in the US. His big leg up on TWX in the arena we are interested in is his ownership of sports networks, Fox Sports Net plus his piece of MSGN.
Anaheim: What Disney lacks in carrying capacity (they don't own cable or satellite companies) is made up for in distribution channels and most importantly in content, with its huge and growing backlog of ever-popular Disney material (not to mention its enormous merchandising potential). The most important of the channels in the sports arena are the ABC network, once the leader in sports programming under the innovative Roone Arledge, and ESPN, the cable sports monolith. And with the NHL broadcast and cablecast rights in the US, Disney is a major major player, even though they don't directly carry the very team they own.
Flyers: Comcast is not in the same league as the other media conglomerates in the area of channels or programming, having to settle mainly for the Philadelphia area teams it owns and cablecasts regionally via Spectacor. But since their acquisition of AT&T's cable networks a few years ago, Comcast has the carrying capacity to rival or exceed the others, and their acquisition of broadcast rights for Chicago's teams signals plans to majorly expand their footprint in that area as well. That still doesn't translate in the kind of broad synergy Time Warner, Disney, and Cablevision enjoy, except on a local level, but the other media giants still have to contend with Comcast when it comes to direct distribution to end users (i.e viewers). As a Comcast shareholder, I suppose that makes me part owner of both the Flyers and Rangers (Comcast holds approximately 15% of Cablevision's outstanding stock, amazing since the two compete in so many areas).
Part 6 -- The Weak Sisters
So as we have seen, more than two-thirds of the NHL's franchises, twenty-two, are primarily owned by wealthy individuals (or the corporations they own and run) worth upwards of half a billion dollars or more per franchise. Another six, we see, are owned and operated by a group of individuals of indeterminate personal wealth but of business means that appear to put them in the same ballpark. That leaves only two franchises that are truly owned by fragile ownership groups.
Pittsburgh: Mario Lemieux put together a syndicate to save the Penguins from bankruptcy and keep them in Pittsburgh. A big part of the reason for their Chapter 11 status was their inability to pay Lemieux $25 million in deferred payments owed to him. Those very deferred payments were redirected toward Lemieux's approximately 35% ownership stake in the Penguins. But as a former player, even as one of the best former players ever, Lemieux simply does not have the personal means to keep his franchise afloat, not in the league's most antiquated arena, with no new arena deal in sight. How ironic is it that one of the few truly needy teams is needy because its principal owner earned his too-small fortune as a player, and yet capping players' earning ability is what will supposedly make the NHL financially viable in the future? [Note: I was unable to find a listing of Lemieux Group LP investors, so it is quite possible that there is a billionaire or near-billionaire hidden in there, as in the Flames' ownership group.]
Edmonton: After Peter Pocklington looted the Oiler franchise (to pay for his personal financial failures in other areas) by auctioning off perhaps the best group of players ever assembled, starting with Wayne Gretzky, the greatest player ever, he was forced by local pressure to sell the team. A group of 38 local investors bought it from him and continue to own it. I was able to obtain a list of the largest shareholders from this group and researched the nine who owned 5% or more each, their combined total adding up to nearly two-thirds of the team's stock. What I found was quite a shock -- nothing whatsover on seven of the nine, one (a 5% owner) who is the executive manager of a modest garage door firm (I can't tell if he owns it), and one, the Skyreach Equipment company that lent its name to the Oilers' home arena (for a price of course) until it changed this year to a different sponsor, that has gone bankrupt and was sold by the banruptcy court to its largest competitor for a cut-rate price. Other owners not on the list of top shareholders are Ron Hodgson, owner of a local car dealership, and comic book writer Todd MacFarlane. Here is a truly needy group of owners -- a group of owners that actually resembles a group of fan-owners. A group of owners that does not resemble any other in the NHL, even though all those others hold them out front and center as a reason to line their pockets even further.
So we see that the two truly needy franchises are in fact owned by a player and by what appears to be a cadre of fans (wealthy relative to most fans, but poor compared to the zillionaires who own every other NHL franchise). And yet, both teams struggle financially due primarily to poor arena deals rather than player salaries (relative to competing franchises), and are nevertheless worth more today than when they were bought, which means their investors would turn in a tidy profit in spite of it all were they to sell today (both of these subjects will be covered in depth in future articles).
These are the owners who will shut down the game. Those with net worths that we know are worth approximately $65 billion combined, and they are the owners of only 19 of the 30 teams (and that includes only the personal wealth of the primary figures behind corporate ownership, not the values of the corporations themselves). And they will shut down the game in order to make sure players only make a collective $930 million a year instead of the approximately $1.365 billion they make as a group today.
In order words, the looming CBA war that everyone expects will cost us all at least one full year of NHL hockey will be fought over $435 million per year, less than 1% of the combined net worth of less than two-thirds of NHL owners, probably closer to half or even a quarter of a percent were we to know every owner's true net worth. But the fight is even narrower than $435 million per year -- with Forbes reporting that NHL clubs claim a collective operating loss of a little over $120 million for the 2002-2003 season (that's operating income, which is not the true bottom line, and no one believes that includes many ancillary sources of income like arena concession sales or luxury box revenue), the CBA war is really about shifting about $300 million in earnings from the nearly eight hundred (mostly) millionaire players to the hundred or so hundred-millionaire or billionaire owners, instead of those hundred or so supposedly savvy business people finding a less contentious and ruinous way of reducing their losses (if they are indeed suffering losses in the first place).
[Disclaimer: I am just a fan, not a journalist. I did not do any investigative reporting to turn up any information in this article. All I did was look it up on publicly avaibable web sites. The veracity of the information in this article is only as good as the veracity of those on-line sources. While some numbers may be arguable, as the Forbes numbers often are, the intent of the article is to get you in the right ballpark, and I don't believe any of the figures presented are inaccurate in that sense, regardless of the source.
If you are reading this on the Ordinary Least Square weblog, links are provided within the text to the sources of all information. If you are reading this elsewhere and said links are not in force, please go to http://ordinaryleastsquare.typepad.com/dubi/ to access the version with active links.]
