Molson has "embarked" on a "global search" to sell its
controlling interest in the Canadiens and the Molson Centre
but is "firmly committed to remaining the primary corporate
partner of the team for a period of at least 20 years,"
according to Fisher, Lamey, Johnston & Jelowicki in a front
page report in the Montreal GAZETTE. Molson's sponsorship
pledge will be "worth more than" C$150M (US$101M) to the
team over the life of the commitment. Molson President &
CEO Daniel O'Neill said that while "no potential buyers have
been approached," he hoped to find a purchaser "within six
months." A price has yet to be set, but Forbes valued the
Canadiens at US$175M earlier this year, the sixth-highest
valued franchise in the NHL. The Molson Centre was built in
'96 at a cost of around C$230M. Molson, which has owned the
team since '78, has been looking for a buyer for the arena
since September, and O'Neill said, "During the course of the
search for a buyer for the Molson Centre it became clear
that our strategy would be more successful with a
transaction that would include both the Molson Centre and
the Montreal Canadiens." Asked why the team was for sale,
O'Neill added, "Given the current economic conditions in the
NHL, it is almost impossible to be a sole owner and deliver
a winning team." Molson Chair Eric Molson: "Our
shareholders have a right to expect a full return on their
investment. We also have an obligation to our fans to
provide them with a winning, competitive team." The team
missed the playoffs last season for the second straight
year. Team President Pierre Boivin noted that the team and
the arena together have posted losses of C$5M and C$7M in
each of the last two seasons (GAZETTE, 6/28). For the FY
ended March 31, the two assets reported an operating loss of
C$2.1M on revenues of C$142.1M (GAZETTE, 6/28). NHL
VP/Legal Affairs Bill Daly, on the sale: "We are pleased
about Molson's ongoing commitment, and we are confident this
process will be concluded successfully" (USA TODAY, 6/28).
MARKET FORCES: O'Neill added that the "financial
problems" plaguing Canada's NHL teams "were a factor in the
decision to sell the team to keep it competitive." O'Neill:
"Once you look at the competitive framework in which we
deal, the Canadian dollar, the taxes on the building, the
cost of building that arena, relative to what teams are
faced with in the [U.S.], it's a very difficult economic
equation to make work" (Toronto GLOBE & MAIL, 6/28).
SUITORS: Molson execs said that "a condition of any
sale would be a requirement for the team to remain in
Montreal." Toronto-based First Associates Investments
analyst Michael Palmer estimated that the Molson Centre is
worth between C$150-200M and Molson's controlling interest
in the Canadiens "around that number" (Toronto GLOBE & MAIL,
6/28). Possible suitors for the team and arena include
media and telecom firms Quebecor and BCE, although "neither
company was saying much yesterday." Also mentioned as a
possible bidder is former Canadiens player and GM Serge
Savard, who is "said to head" an investors group interested
in the sports assets (Montreal GAZETTE, 6/28). A Toronto
GLOBE & MAIL report floats Vivendi Universal, the new
company born from last week's Vivendi SA/Seagram merger, as
a possible suitor (Toronto GLOBE & MAIL, 6/28).
SIGN OF THE TIMES? In Toronto, Allan Maki writes that
Molson's decision "is yet another ominous sign about the
business of doing hockey business in Canada. ... Running an
NHL franchise in Canada ... costs more money than it's
worth, even if that franchise has won 24 Stanley Cups in its
history. And it is not a good sign for the five other
Canadian NHL teams" (Toronto GLOBE & MAIL, 6/28). Also in
Toronto, Jeff Blair wonders "who'd buy" the Canadiens
because they "operate at nearly optimum capacity." Blair:
"Where's the growth potential? ... The [NHL] is the closest
thing to an economic house of cards -- clearly living beyond
its means" (Toronto GLOBE & MAIL, 6/28). A Montreal GAZETTE
editorial calls Molson's decision to sell the team "a
stunning vote of non-confidence in the future of NHL hockey
in Montreal. ... If Molson can't make money on hockey in
Montreal, who can?" (Montreal GAZETTE, 6/28). SLAM! Sports'
Chris Stevenson writes that news of the sale "should shake
NHL executives down to the tips of the little tassels on
their loafers. If Molson -- Molson! -- is getting out of
their business, nobody in the game is safe" (SLAM! Sports,
6/28). In Montreal, Jack Todd: "Molson bailed. ... The
Canadiens are for sale because Molson decided it's time to
get out of Dodge." Todd adds that the move has "serious
implications" for the city of Montreal and other Canadian
NHL teams (GAZETTE, 6/28). The NATIONAL POST's Roy
MacGregor writes that Molson "wants out of a business that
is itself foaming at the mouth, a business where ticket
prices have long since moved beyond the reach of the working
class" (POST, 6/28). The TORONTO STAR's Damien Cox: "The
decision of Molson to sell the Habs highlights the reality,
which is that [NHL Commissioner Gary] Bettman has led the
NHL in such fashion that you can no longer profitably
operate a franchise [in Canada]. It can only succeed, the
evidence suggests, as a gimmicky entertainment product in
parts of North America where the game is rarely played.
How's that for a business plan?" (TORONTO STAR, 6/28).
