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Post by dreamcatcher on Mar 10, 2005 11:03:19 GMT -5
Panthers, Predators in financial ruin?
The Globe and Mail is reporting some teams may be in financial crisis and on the verge of financial ruin should the NHL lockout continue.
Each team was given $10 million as a lockout fund but in some cases it may not be enough. Some teams are using deposits from season-ticket holders, suite holders, club-seat holders and sponsors as operating capital instead of dipping into lines of credit at their banks or the lockout fund each team has deposited with the league. Should some of these creditors come demanding their money back, it could lead to serious trouble for a few teams. The Nashville Predators and Florida Panthers are two teams named that could be in serious financial troubles...there are more as of yet, unnamed.
Does this surprise any of us? Not likely....
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Post by toeblake on Mar 10, 2005 11:08:17 GMT -5
Like music to oue ears. I would like to see Florida move here.
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Post by dreamcatcher on Mar 10, 2005 11:16:28 GMT -5
Either will do for me my friend
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Post by jetblood on Mar 10, 2005 11:53:44 GMT -5
I think the TOOTOO train wants to come to Winnipeg.
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Post by dreamcatcher on Mar 10, 2005 12:49:39 GMT -5
I believe these two teams have become leading contenders to relocate....and wouldn't be at all surprised....if they've talked to Chipman et al....and even LESS surprised if David Asper hasn't received a voice message or two....or four.... ....you never know right...?
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Post by blackthorne on Mar 10, 2005 13:02:08 GMT -5
Dodd, I have a "funny" feeling you know more than you're telling us!
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Post by Paul on Mar 10, 2005 13:21:20 GMT -5
In my opinion, I believe the Predators will be more likely to re-locate from Nashville than the Panthers from Miami/Fort Lauderdale. The Predators had just recently parted ways with their ownership partner in Gaylord Entertainment (the company that had the arena naming rights). So, that financial backing isn't there like it once was and without the money from the arena deal with them, that will seriously hurt them. In southern Florida, without the Panthers playing, it's definitely hurting them financially. They are certainly among the weaker teams, but I maintain hope they'll make out okay. But right now, their future is not certain, otherwise they wouldn't be mentioned here. Remember that every team is hurting from this lockout, but to various degrees. In the case of the Predators and Panthers, it's just more alarming. Here's the article from today's The Globe and Mail. The Globe and Mail's hockey page (March 10): www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050310/NHLFINAN10/TPSports/HockeySeveral clubs on verge of penury More than one team could face financial crisis as liabilities outstripping revenueBy DAVID SHOALTS Thursday, March 10, 2005 - Page S1
Some National Hockey League teams are using deposits from season-ticket holders, suite holders, club-seat holders and sponsors as operating capital instead of dipping into lines of credit at their banks or the lockout fund each team has deposited with the league. This could lead to serious financial trouble.
If a large number of those creditors suddenly demand their money back, a possibility now that the 2004-05 season has been cancelled, more than one team could face a financial crisis if the amount owed is greater than what the team has left in its $10-million (all figures U.S.) lockout fund and lines of credit.
"I would suggest that any team that is using [its] work-stoppage fund and using that future revenue, that would not be a good position to be in," one NHL executive said. "If they're spending it and they don't have their [lockout] fund, that would be dangerous."
Documents obtained by The Globe and Mail show that the Florida Panthers already have a potential liability of almost $16-million, which is greater than their lockout fund. One year ago, in an independent audit of Arena Operating Company Ltd., the Panthers' subsidiary that runs the Office Depot Center, Deloitte & Touche said the financial condition of the club "raises substantial doubt about its and the Operator's ability to continue as going concerns."
There are also troubling signs with the Nashville Predators, who have spent at least some of their customers' money and also dipped into their lockout fund.
This could explain why the NHL invited the NHL Players' Association back to the bargaining table tomorrow. If there is a season this fall with the participation of the NHLPA, the teams can hang on to their customers' money.
The Panthers and Predators are among a group of teams at great risk because of their financial condition. A review of the 2002-03 season by Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, showed that six teams were responsible for 55 per cent of the $342.4-million in total losses claimed by 19 of the league's 30 teams.
Levitt did not identify the six teams. But a source familiar with the NHL's financial statements said the biggest losers were, in order, the St. Louis Blues, New York Rangers, Phoenix Coyotes, Mighty Ducks of Anaheim, Washington Capitals and Carolina Hurricanes.
While the Predators and Panthers were not among the worst six, they are part of another group of six teams identified by Levitt as claiming annual losses between $10-million and $19.9-million.
What would make the situation worse for the NHL from a public-relations standpoint is that the suite holders, club-seat holders, season-ticket holders and sponsors are unsecured creditors. If a team went bankrupt, secured creditors such as the banks would get their money first, potentially leaving the customers and sponsors with little or nothing.
But if the NHL opens for business this fall, even with replacement players, its teams have a good chance of hanging on to their customers' money. The league's customers and business partners could still demand refunds, since replacement players would demean the product, but the owners may be gambling that many of their unsecured creditors would stick with them.
A hint of the NHL's position came on Feb. 16, when commissioner Gary Bettman announced the cancellation of the season.
He was asked during the press conference if the league felt it now had to return millions of dollars in sponsorship payments. Bettman did not give a direct answer, but he did indicate the league's position was that it could hold on to the money.
However, this may explain the league's eagerness to get back to the bargaining table with the NHLPA. At the league's invitation, the players and owners will try again this week to reach a collective agreement for next season.
An executive from the NHL's head office, speaking on condition of anonymity, said the league does not have a strong position on the matter of how customers' money is handled. As long as refunds are made, the league feels "it's not an issue."
After the lockout started, NHL teams offered various incentives to their suite holders, season-ticket holders and sponsors to leave their money with them.
The incentives typically involved paying interest on the money plus offers of price freezes for next season.
The Panthers were particularly aggressive when it came to hanging on to their customers' money. They offered a price freeze for two seasons and free tickets to other events, and said 75 per cent of their 8,000 season-ticket holders accepted. But the catch is that those who accept are "locked in" and forfeit the right to monthly refunds with 2-per-cent interest.
Aside from a call for refunds, the danger in spending customers' money will come whenever the next season starts. That revenue is meant to finance operations for the following season, but if a team pays leftover bills from last season, its accounts could be dry when hockey returns.
Alan Cohen, co-owner and chairman of the Panthers, declined to discuss his team's financial situation. "That is just something I'm not going to address," he said.
The Predators have used up almost a third of their $10-million lockout fund. Predators owner Craig Leipold told The Tennessean, a newspaper in Nashville, that he used money from the fund to repay ticket-holders who asked for refunds. He said the $10-million fund grew to $11-million with interest and "we've still got $7-million or $8-million left."
However, if Leipold is paying refunds with his lockout fund, it raises questions about how much of the ticket money was spent.
Leipold told The Globe the team is using ticket money, but said he has enough financial resources to weather any storms. Leipold's wife, Helen, is the daughter of the late Sam Johnson, who founded the household products company S. C. Johnson & Son Inc., of Johnson Wax fame.
"They are permitting us to use their money during this period," Leipold said. "Our suite holders and everybody else has stayed in. Yes, I'm worried about [demands for refunds], and if they do, we're prepared to give them their money back."
Leipold said none of his ticket-holders or sponsors should be concerned about their status as unsecured creditors. "I don't think we're going to go bankrupt," he said. "We have an awful lot of money invested in this team. From a business standpoint, it would be irresponsible just to pick up and fold the franchise. We've got way too much money invested in it."
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Post by bigchris on Mar 10, 2005 13:24:51 GMT -5
I would prefer Florida because they have a great crop of prospects and an All-Star goaltender. Not to mention Keenan and Martin calling the shots, two proven winners.
The Preds will be a first round and out playoff team for years to come, (typical David Poile hockey that languished in Washington and Vancouver for over 20 years before Nashville,) but Florida will be a Cup contender within 3 years.
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Post by blackthorne on Mar 10, 2005 13:35:40 GMT -5
Aren't those southern U.S.-based NHL teams losing less money by not having an NHL season though?
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Post by Paul on Mar 10, 2005 13:43:20 GMT -5
In terms of operating and paying out the employees while a season is played under the economic model the NHL was last in... yes.
For just this cancelled season, NHL teams are losing less by not playing.
BUT... at the same time, without the season... the losses will eventually add up to more the longer the lockout continues. Without the games and the "war chest" eventually running out of money, those losses will be more than what money was worth saving without a season.
Bottom line is nobody wins here.
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Post by bigchris on Mar 10, 2005 18:06:49 GMT -5
In terms of operating and paying out the employees while a season is played under the economic model the NHL was last in... yes. For just this cancelled season, NHL teams are losing less by not playing. BUT... at the same time, without the season... the losses will eventually add up to more the longer the lockout continues. Without the games and the "war chest" eventually running out of money, those losses will be more than what money was worth saving without a season. Bottom line is nobody wins here. Except the city of Winnipeg of course... ;D
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Post by joelzillmanwpg on Mar 10, 2005 18:56:14 GMT -5
Except the city of Winnipeg of course... ;D You took the words right out of my mouth....
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Post by bigchris on Mar 10, 2005 19:59:31 GMT -5
You would be hard pressed to find anyone who wasn't thinking that same thing though...
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Post by blackthorne on Mar 10, 2005 21:55:48 GMT -5
I was this close to posting "Except for Winnipeg", but a cute girl started talking to me.
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Post by bigchris on Mar 10, 2005 23:48:18 GMT -5
Who needs chicks when you have the guys from Bad Boy Funriture? ;D
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Post by dreamcatcher on Mar 11, 2005 10:54:43 GMT -5
lmao
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