NHL expansion price of $500M called 'crazy' by Peter Pocklington
Owning a team more about ego than business, but still 'a lot of fun,' Peter Pocklington says
After months of speculation, the NHL has carefully opened the door to expansion. And in doing so, it set the opening bid at a staggering $500 million.
The question now is who on Earth would spend that kind of money to own a hockey team?
"It's crazy," said the former owner of the Edmonton Oilers, Peter Pocklington. When asked if a team is worth $500 million, he laughed. "No. Not even close."
Pocklington, who is probably best known as the man who traded Wayne Gretzky to the L.A. Kings, says the margins in the business of hockey are just too thin.
I got in for reasons of ego. I wanted to be the biggest nut on the block.— Peter Pocklington
"A lot of teams lose money. If you paid $100 million you're losing your backside, and I know a few of them who big time are."
So, why did he buy a team? At that question, the man they called Peter Puck softens a bit.
"I must admit, I got in for reasons of ego. I wanted to be the biggest nut on the block. It was a lot of fun. It was very exciting to be an NHL owner. Obviously now, with a price tag of $500 million you look at it differently."
Consider a couple of important factors.
- The last time the league expanded, it charged a mere $80 million to ownership groups trying to buy in.
A Forbes report found 19 of the NHL's 30 teams were worth less than $500 million. Only the Toronto Maple Leafs, the Montreal Canadiens and the New York Rangers are worth more than $1 billion. The Florida Panthers are valued at less than $190 million.
"It's a lot of money for an NHL franchise, that's for sure," said economics professor Allen Sanderson from the University of Chicago. There are far better ways to invest money than buying a sports team, but that's not why people buy them, he said.
"To buy an NHL franchise for $500 million, it's more of a vanity issue. You know, 'I'm not planning on making any money. I've got a lot of money to spend and I want a new toy.' And it's unlikely — not impossible, but unlikely — to generate a high rate of return at that price."
Sports management consultant Bob Stellick said the asking price is "mind boggling."
"Has Gary Bettman created such a good business collectively with TV rights and what have you that places like Winnipeg and Quebec City that went out of business when the NHL teams had $5-million Canadian payrolls can now afford $72-million US payrolls and $500-million franchise fees?"
Stellick said operating costs alone run a franchise about $125 million a year.
"That's a huge amount of money, and then you take the fact that the arena costs $300-400 million and a franchise fee at $500 million, you're now at a billion dollars to have the opportunity to earn a very slim amount of money afterwards."
Eager to buy in
And yet, all three of them agree there will always be someone willing to spend the money.
"There's bound to be somebody who wants to get rid of $500 million," said Sanderson.
"If you can afford it, go for it," said Pocklington.
Looking back, after years of controversy and legal troubles, did he really enjoy his time as owner as much as he'd hoped?
"More. I enjoyed it to the end of the Earth."