[Hard Canadian]

Crosby named captain (youngest in NHL history) and Sundin signs a 2 year deal (worth $11 million).

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discuss.

[skippy the wonder dog]

I honestly don't think he would put the team in K-W. That's the very definition of small market.

I have to say that if the team goes into southern Ont, anywhere, it will only be a good thing for the Leafs, as it will shake things up.

[cferneyh]

It's not just as simple as paid $80M, got back $220M though, as the team was losing money every year. I'm sure he still ended up making money overall, but to suggest he nearly tripled his investment in 10 years is misleading.

And you don't think his accountants used these paper losses to mitigate his tax bill on whatever else he owned, or carried them forward to mitigate his tax bill on the sale of the franchise?!?!? C'mon!

Craig Leipold claims he lost $70 million during his ten years of ownership. That means he still made $70 million on a $80 million investment (notwithstanding the preferential tax treatment he got/ will get). Still a pretty sweet return if you ask me.

[tth_fan]

I honestly don't think he would put the team in K-W. That's the very definition of small market.

I have to say that if the team goes into southern Ont, anywhere, it will only be a good thing for the Leafs, as it will shake things up.

At least the fans who can't get tickets to Leaf games (whether they can't find any, or just can't afford them) will be able to see some pro hockey in that market.

[grimes]

It's not just as simple as paid $80M, got back $220M though, as the team was losing money every year. I'm sure he still ended up making money overall, but to suggest he nearly tripled his investment in 10 years is misleading.

And you don't think his accountants used these paper losses to mitigate his tax bill on whatever else he owned, or carried them forward to mitigate his tax bill on the sale of the franchise?!?!? C'mon!

Craig Leipold claims he lost $70 million during his ten years of ownership. That means he still made $70 million on a $80 million investment (notwithstanding the preferential tax treatment he got/ will get). Still a pretty sweet return if you ask me.

Well I'm not familiar with the specific tax laws in that state, and I agree the tax treatment is probably what makes this thing a good deal for him overall. Without that though it's not so rosy.

First, it's not just an $80M investment. For simplicity's sake, let's say the $70M losses happened equally over the 10 years. So that's $80M upfront, and operating losses of $7M per year for 10 years that he had to fund. Total investment over ten years is $150M, and in return he gets $220M. Now 220/150 is still 46%, but that doesn't take into account the fact that it's a ten year project. If, for example, instead of buying this hockey team, he invested his $80M in 1997, and then $7M per year for 10 years, into a stock portfolio that averaged a 10% annual return (not unreasonable), today he'd have $319 million, or $99 million more than what he got for the hockey team.

Did Leipold make money off this deal? Without a doubt. But in terms of a wise investment decision, owning a hockey team is still far from the top of the list (unless of course that team is the Toronto Maple Leafs, and maybe and handful of others).

[grimes]

I honestly don't think he would put the team in K-W. That's the very definition of small market.

I have to say that if the team goes into southern Ont, anywhere, it will only be a good thing for the Leafs, as it will shake things up.

I agree that a 2nd term in southern Ont would be great for the Leafs, and would definitely be supported. Frankly, the best place for the team would be right in their backyard, in somewhere like Mississauga, or at the old Downsview Air Force Base in the north end of Toronto. The market is easily big enough to sustain a 2nd team.

When Anaheim joined the league over a decade ago, they paid the Kings $25 million to waive their territorial rights. I have to think the Leafs would demand at least double that to allow Balsillie to move anywhere within their protected zone. Hence the reason for K-W. It's just outside of the 50 mile boundary from the ACC, and as of 2006 the Kitchener-Waterloo-Cambridge CMA had a population of about 450,000. Add in the fact that people from London, Hamilton, Burlington, Mississauga, etc, are all about an hour's drive away, and I don't think filling a building on a nightly basis would be problem. There's also good corporate support in the area with all the tech. companies. And then of course there's the fact that Balsillie may just want to put the team across the street from his house so that he can brag about it at the next billionaire's club meeting. Hell that's what I would want to do if I were him.

[cferneyh]

It's not just as simple as paid $80M, got back $220M though, as the team was losing money every year. I'm sure he still ended up making money overall, but to suggest he nearly tripled his investment in 10 years is misleading.

And you don't think his accountants used these paper losses to mitigate his tax bill on whatever else he owned, or carried them forward to mitigate his tax bill on the sale of the franchise?!?!? C'mon!

Craig Leipold claims he lost $70 million during his ten years of ownership. That means he still made $70 million on a $80 million investment (notwithstanding the preferential tax treatment he got/ will get). Still a pretty sweet return if you ask me.

Well I'm not familiar with the specific tax laws in that state, and I agree the tax treatment is probably what makes this thing a good deal for him overall. Without that though it's not so rosy.

First, it's not just an $80M investment. For simplicity's sake, let's say the $70M losses happened equally over the 10 years. So that's $80M upfront, and operating losses of $7M per year for 10 years that he had to fund. Total investment over ten years is $150M, and in return he gets $220M. Now 220/150 is still 46%, but that doesn't take into account the fact that it's a ten year project. If, for example, instead of buying this hockey team, he invested his $80M in 1997, and then $7M per year for 10 years, into a stock portfolio that averaged a 10% annual return (not unreasonable), today he'd have $319 million, or $99 million more than what he got for the hockey team.

While a 10% annual return is certainly reasonable in today's climate, you're conveniently leaving out the fact that from 2000 to 2002 the stock market dropped 43% (the largest drop in the last 50 years), so if you want to factor in the boom times you better factor in the bust times as well.

If investing in the stock market is a better investment than owning an NHL franchise, then why is a guy in Waterloo buying an NHL franchise for $220 million? Why did Mario take the Pens off the market? Why did the Oilers tell their unsolicited bidder to take a hike? Methinks these people (and/or their advisors) know a little more about the merits of owning an NHL franchise vs investing in the market than you do.

[grimes]

While a 10% annual return is certainly reasonable in today's climate, you're conveniently leaving out the fact that from 2000 to 2002 the stock market dropped 43% (the largest drop in the last 50 years), so if you want to factor in the boom times you better factor in the bust times as well.

If investing in the stock market is a better investment than owning an NHL franchise, then why is a guy in Waterloo buying an NHL franchise for $220 million? Why did Mario take the Pens off the market? Why did the Oilers tell their unsolicited bidder to take a hike? Methinks these people (and/or their advisors) know a little more about the merits of owning an NHL franchise vs investing in the market than you do.

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The Dow has basically doubled from 1997 to today, and that's just the Dow. Of course there are down-turns in the market, but any reasonably well educated investment professional can construct a well balanced portfolio to mitigate risk and produce an average annual return of 10% over the long term (and by well-balanced I'm not talking purely equity here). And plus if you have the kind of money to invest we've been discussing, you're not exactly logging onto E-Trade to short-sell Nortel stock every day. You're putting your money into private equity funds, where a 10% average annual return is not only reasonable, it's down right conservative.

Do you really think Balsillie paid $220 million for the Nashville Predators purely as an investment? No way in hell. The guy is a rabid hockey fan that has more money than he knows what to do with. There is no risk in this for him. If the NHL went under and he lost every penny of the the $220M, it would be no sweat off his back. I know you're a Leafs' fan but is it really that hard to believe that someone would buy a sports franchise at least partially because of their passion for the sport?

[tommygunn]

Still bitter that the Leafs knocked the Habs out of the playoffs eh?

cratch:
Knocked them out of the playoffs? Neither team made the playoffs this year.. :roll:

[tommygunn]

Do you really think Balsillie paid $220 million for the Nashville Predators purely as an investment? No way in hell. The guy is a rabid hockey fan that has more money than he knows what to do with. There is no risk in this for him. If the NHL went under and he lost every penny of the the $220M, it would be no sweat off his back. I know you're a Leafs' fan but is it really that hard to believe that someone would buy a sports franchise at least partially because of their passion for the sport?

Well said.. :thumb:

[cferneyh]

Do you really think Balsillie paid $220 million for the Nashville Predators purely as an investment? No way in hell. The guy is a rabid hockey fan that has more money than he knows what to do with. There is no risk in this for him. If the NHL went under and he lost every penny of the the $220M, it would be no sweat off his back. I know you're a Leafs' fan but is it really that hard to believe that someone would buy a sports franchise at least partially because of their passion for the sport?

First of all, I guess I was unaware that you know Balsillie personally and as such, can speak to his motivations one way or another (and I guess you know him better than Bettman).

Secondly, I find it comical that you feel he'd be just as happy to piss away $220 million as he would be to turn around and sell the franchise for $350 million in ten years. There is no bigger basketball fan on the planet than Mark Cuban, yet he has stated time and time again that anyone who thinks the money he puts into the Mavericks isn't because he expects a return on it, is a fool.

Sports fans buy franchises all the time, but to sit there and assume that these guys are just as happy to lose all their money versus make a pretty penny is ridiculously naive.

Now, if you can find me a quote from a rabid sports fan/owner who was all shits and giggles when his/her franchise lost money year after year, I'll take it all back. But, uh, good luck.

[grimes]

First of all, I guess I was unaware that you know Balsillie personally and as such, can speak to his motivations one way or another (and I guess you know him better than Bettman).

Secondly, I find it comical that you feel he'd be just as happy to piss away $220 million as he would be to turn around and sell the franchise for $350 million in ten years. There is no bigger basketball fan on the planet than Mark Cuban, yet he has stated time and time again that anyone who thinks the money he puts into the Mavericks isn't because he expects a return on it, is a fool.

Sports fans buy franchises all the time, but to sit there and assume that these guys are just as happy to lose all their money versus make a pretty penny is ridiculously naive.

Now, if you can find me a quote from a rabid sports fan/owner who was all shits and giggles when his/her franchise lost money year after year, I'll take it all back. But, uh, good luck.

Obviously no one wants to lose money, but when you're worth a billion and a half dollars, losing a couple hundred million wouldn't exactly put you out on the street.

And yes, sports owners want to make money. All I am saying is that in situations such as this, money is not the only motivation, because if it was, there are far better investment opportunities out there (again, with a few exceptions, such as the Leafs).

[cferneyh]

All I am saying is that in situations such as this, money is not the only motivation, because if it was, there are far better investment opportunities out there (again, with a few exceptions, such as the Leafs).

With this, I will agree with you. However, I'd also suggest that there are many, many, many investments made by everyday people that are not just about the money, so while money may not be the only consideration, it is certainly the primary consideration, regardless of how much you have.

[grimes]

With this, I will agree with you. However, I'd also suggest that there are many, many, many investments made by everyday people that are not just about the money, so while money may not be the only consideration, it is certainly the primary consideration, regardless of how much you have.

I think we may still have to agree to disagree on your last point there, although really I guess it depends on your definition of 'primary.' From what I've heard of Mr. Balsillie, I believe that if he was given the choice between a team that is mediocre on the ice, but an absolute cash cow, or a team that just breaks even or turns a small profit, but wins him a Stanley Cup, he would take the latter. Obviously a lot of owners (MLSE leading the pack) don't subscribe to that philosophy, but I'd like to think there's at least a few out there that would.

[cferneyh]

I think we may still have to agree to disagree on your last point there, although really I guess it depends on your definition of 'primary.' From what I've heard of Mr. Balsillie, I believe that if he was given the choice between a team that is mediocre on the ice, but an absolute cash cow, or a team that just breaks even or turns a small profit, but wins him a Stanley Cup, he would take the latter. Obviously a lot of owners (MLSE leading the pack) don't subscribe to that philosophy, but I'd like to think there's at least a few out there that would.

On what basis would you make that assumption (From what I've heard of Mr. Balsillie)? Again, you talk as though you are somehow privy to Balsillie's motivations.

Also, I'm going to assume that being a smart guy, you understand that winning the Stanley Cup (and/or at least being a competitive franchise) is good for business.

To rehash Mark Cuban, he bought one of the worst run professional sports franchises around, and he singlehandedly turned it into one of the best NBA franchises. He didn't sit around and wait for a championship contender before making his purchase - he bought the team that was available, and made it a contender, and has watched the coin roll in. During his tenure the value of the franchise has risen from $280 million (in 2000) to $463 million. Revenue has gone from $60 million to $140 million. Why, I'd almost suggest that Mark Cuban - fanboy owner - might have known exactly what he was doing when he bought the team, and it wasn't a playtoy.

Clearly, with Balsillie's attempt to buy the Penguins, he didn't give a rat's ass which franchise it was, he just wanted an NHL franchise, and I'm expecting that given his businesses savvy, he's going to do the same with the Preds that Cuban has done with the Mavs.

Sorry grimes, but I simply don't see how you can seriously believe that he bought this franchise for fun, simply because he's a hockey fan. It's an investment....it just happens to be an investment in something he loves. We should all be so lucky.

And come to think of it, what does Balsillie's intentions have to do with whether or not Leipold got a half decent return on his investment? cratch: