Forbes announced their annual list of team valuations for the NHL. The Toronto Maple Leafs continue their reign atop the list, but what would it mean if another team came to Canada, and maybe even Toronto?
I spoke with Kurt Badenhausen, Senior Editor of Forbes, about the most recent valuations.
What factors are taken into consideration when valuing a team?
We look at past transactions. We are really digging into the finances of the teams. Really it comes down to revenues, and those are the hardest things to increase. We use tickets, television contracts, parking, sponsorship and concessions.
What lead to an increase in team values in the past year?
The new TV contract certainly helps. NBC is going to pay considerably more than in previous years.
Overall values are up, but that is largely because values of the top teams are continuing to make money. The top Canadian teams, and the Bruins, Red Wings and Rangers.
Teams at the bottom are really struggling. They are losing money, the value of the franchise is falling and they are being left behind.
The Phoenix Coyotes really stand out. But the Florida Panthers, St. Louis Blues and Columbus Blue Jackets all saw their values move down.
Other situations like the New Jersey Devils where they saw the value of the franchise down 17% by our calculations. They are really struggling under a mountain of debt that they borrowed to build their new arena.
Would moving teams out of American southern markets to Canadian cities improve the value the team values?
Absolutely. Look at the Winnipeg Jets, in moving from Atlanta to Winnipeg they increased their value 21% this year.
The economics of hockey are dramatically better in Canada right now then they are for these southern US cities. Toronto could certainly handle and support another NHL franchise right now.
Could you imagine the Coyotes moving from Phoenix to outside Toronto? The finances would be night and day. Absolutely there is room for more hockey in Canada. I could certainly see another franchise moving there.
Where would a second Toronto team fall in terms of value?
It all comes down to what kind of arena situation they had. Would they move into a modern arena with a lot of luxury suites and club seating? That is where the team would receive the revenue.
It would seem hard to challenge the Rangers, Leafs and Canadiens who have really separated themselves from the rest of the NHL in terms of finances and franchise values.
But a second Toronto team could certainly be in that next tier of teams. You look at the Red Wings, the Bruins, the Blackhawks and the Canucks. There is no question that a second Toronto team in a modern arena could be that valuable. This is twice as valuable as the Coyotes are right now.
How much would the Leafs value increase if they were a perennial playoff team?
You saw what happened with Vancouver running to the Finals last year. There is room to increase ticket prices dramatically in the playoffs. The Canucks grossed $40 million by going deep into the playoffs last year, they have to share a significant part of that with the NHL, but Toronto has a lot of room to generate in the neighborhood of $40 million with a playoff run.
If they can consistently be a Stanley Cup contender, then the sky is the limit in terms of revenue, with a significant part of it filtering down to the bottom line.
The playoffs are the place you can make the biggest bang for your buck. Your biggest expense, salaries, has already been taken care of in the playoffs.
The playoffs would be tremendously lucrative for the Maple Leafs.
Is the leagues growth sustainable?
At some point they run into the problem of big numbers. You look at the Toronto Maple Leafs, who have been supported incredibly well over the course of the last forty years when they have not had a lot of success on the ice.
Imagine if they are able to start making the playoffs consistently. There is still a lot of room for growth there. They can continue to increase the value of the franchise.
There still is room to grow for these teams at the top.
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