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Media & Entertainment Law

: Sports Biz

Possible Sale of Three NHL Clubs Highlights Difference Between Rich and Poor

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As the NHL Board of Governors gathers for its winter meetings, the sale of three clubs tops the agenda. The sale by the league of the Phoenix Coyotes is the most urgent since should a sale not close by the end of this month, the Commissioner Gary Bettman has said that the club is free to leave Arizona. Florida businessman Matt Hulsizer has been approved as a potential owner but he still needs a lease. There is no deal in place with the City of Glendale on a lease for the use of Jobbing.com Arena, which has been the major sticking point in the sale. Winnipeg, the 'yotes former home, is standing by with bated breath for New Years Day to arrive without Glendale's approval of a deal.

The other two sales on the agenda are the Sabres and the Stars. The Sabres are being sold to Terry Pegula, a businessman from western Pennsylvania who has lived in Buffalo and whose wife is from Rochester. The Stars, whose current owner Tom Hicks, is experiencing some financial difficulties with his investments in sports, may also have a sale to discuss although a buyer has not yet been disclosed.

What the sales also demonstrates is the current financial state of the NHL. What we have now, in year six post lock-out is a two-tiered league. On one side are seven clubs who generate a combined $241 million in operating income, with no club generating less than $13 million. On the other side are 16 clubs in the red, with six biggest money losers generating a combined $63 million in operating losses.

Why such a big disparity? Like Major League Baseball, the difference among clubs is primarily based on revenue from a club's local television contract and premium seating. Toronto, Montreal and Dallas each make at least $25 million from television and $40 million from seating. In contrast, clubs at the other end like Phoenix, Atlanta and Tampa Bay earned less than $10 million from television and less than $15 million from premium seating It's worthy of note that only one Canadian club, Ottawa, falls into the group of sixteen money losers.

Full post as published by Sports Biz on December 07, 2010 (boomark / email).