SBD/Issue 102/Franchises

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  • Hicks Loaned $85M To Help HSG With Debt, Now Must Monetize Clubs

    Hicks Has Retained Galatioto
    To Study Sale Of The Stars
    Stars Owner Tom Hicks yesterday revealed that he lent $85M of his "own money to Hicks Sports Group over a two-year period that ended March 31, 2009, and that the Stars must operate under a tight budget if they want to be viable going forward," according to Mike Heika of the DALLAS MORNING NEWS. Hicks addressed the media yesterday for the first time since HSG announced it would look into selling the NHL team, and he said the holding group "took on too much debt because teams spent more than the budget allowed." Hicks said that he "now has to monetize the sports assets," including selling the MLB Rangers, "to pay down the debt." He noted that while Galatioto Sports Partners "will broker the sale, he and HSG will make all of the financial decisions." Hicks said that he has "not been made aware of any potential suitors and does not know if he or his family will retain any role in future ownership." Stars President Jeff Cogen pointed out that the team "would remain in Dallas no matter who buys it." Cogen: "The Dallas Stars aren't going anywhere. We are in the fourth-largest market in the country. ... We have a non-relocation agreement with American Airlines Center, and we're not going anywhere." Hicks noted that the Stars were "No. 1 in the NHL in revenue produced in the arena in 2002 after moving" into American Airlines Center, but are just 19th this season. Cogen said, "Revenue streams have dropped materially. The ability to sell the highest-priced tickets is more difficult. Our holes are in the most expensive seats, and I have convinced the boss that we need to roll back those prices. We'll take a step back to grow in the long term, which is the way we built this franchise." Hicks added, "Every team south of Pennsylvania has realized that they can't go to the cap. If they do, they'll lose money" (DALLAS MORNING NEWS, 2/9).

    PARTING SHOTS: Hicks yesterday also said that a sale of the Stars "could be completed within six months." He indicated that the Stars will "reduce ticket prices next season for lower-bowl seats between the blue lines," and stressed that the team "can be successfully under its current budget, and fans shouldn't expect a new owner to increase the payroll." Meanwhile, Hicks said that the timeline for the completion of the Rangers sale "is around Opening Day, assuming HSG's 40 lenders and Major League Baseball approve the deal." Hicks: "We wanted to do the Rangers first and then understand how much needed to be done with the Stars." He also reiterated that his investment in EPL club Liverpool is "unrelated to the Stars or Rangers" (ESPNDALLAS.com, 2/8).

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  • India's Mukesh Ambani Linked With Potential Liverpool Takeover

    Indian Billionaire Seen As Possible Candidate
    To Lead Takeover Of Liverpool
    EPL club Liverpool last night "emerged as a takeover target for the seventh-richest man in the world," Reliance Industries Chair & Managing Dir Mukeshi Ambani, as the "pressure mounted" on Liverpool co-Owners Tom Hicks and George Gillett to sell the club, according to Power, Hughes & Kidd of the LONDON TIMES. Reliance Industries and Sahara Group Chair Subrata Roy have "each tendered similar bids to pay off" Liverpool's $369.3M (all figures U.S.) debt "in return for a 51[%] stake in the club." Liverpool Managing Dir Christian Purslow last night "denied any knowledge of either bid," but sources said that approaches "began as early as November and that some preliminary talks have taken place." Each deal "requires the present owners make a commitment to take no dividends or expenses out of Anfield for three years to allow the club to resume a secure financial basis." One of the potential owners has also "indicated a willingness to allow supporters to take" a 10% stake in Liverpool. However, a source close to Hicks and Gillett said that the two would "reject on principle any bid that left them with less than 50[%] of the club's shares unless it involved either of them selling out entirely." A source close to RBS, Liverpool's banker, said that there has been "plenty of interest in Liverpool from investors," though Hicks and Gillett are "blocking all deals on the table because they refuse to budge on price." The source added that the bank's stipulation that the owners must pay off $155.8M of debt and "inject tens of millions of pounds into the club was intended to push them to an agreement with a new investor that would permanently stabilise Liverpool's finances." Power, Hughes & Kidd note a "number of other potential bidders include a Saudi Arabian consortium and a United States-based buyer, who is prepared to pay the [$155.8M] required by the lenders in exchange for" 40% of the club (LONDON TIMES, 2/9). ESPN SOCCERNET notes Reliance has "firmly distanced itself from claims that a bid has been tabled." Reliance spokesperson Sudeep Purkayastha: "There is no truth to the report. We deny it completely" (ESPNSOCCERNET.com, 2/9).

    BRINGING DOWN THE HAMMER: The London TELEGRAPH reports EPL club West Ham United players will be "asked to take a 25[%] pay cut by" new club co-Owners David Sullivan and David Gold. Sullivan "fears West Ham are heading for 'Armageddon' unless their dramatic measures are taken to reduce debts" of $171.4M, and he is "planning to make drastic reductions from the club's backroom staff, but his biggest fight will be trimming the club's wage bill." Sullivan: "I can't believe the contracts I've inherited. Every position is overpaid, whether in administration or on the playing side" (London TELEGRAPH, 2/9).

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  • Expected Target Field Revenues Allowing Twins To Boost Payroll

    New Revenue From Target Field Results In
    Busy Offseason For Twins
    Revenue from Target Field is funding the Twins' "unprecedented spending spree, which likely culminated" with the team's signing last Thursday of 2B Orlando Hudson to a one-year, $5M contract, according to John Shipley of the ST. PAUL PIONEER PRESS. Four offseason acquisitions, which account for $19M in new payroll, have "helped raise the Twins' payroll to the neighborhood" of $96M, roughly $30M more than their '09 Opening Day payroll. Twins GM Bill Smith said the team's ownership has "always been pretty well committed to spending a significant percentage of revenue on payroll, and that hasn't changed." Smith added, "Fortunately, with the move from the Metrodome to Target Field, we have some additional revenues -- and believe me, we've tapped well into that revenue stream." Smith said Twins President Dave St. Peter and Owner Jim Pohlad gave him the "go-ahead to pursue" the increase in payroll (ST. PAUL PIONEER PRESS, 2/7). However, Smith hinted that the Twins "have reached their payroll limit." Smith: "I think we're getting toward the upper extremes of where we can be" (Minneapolis STAR TRIBUNE, 2/6).

    STICKING TO THEIR PHILOSOPHY: In St. Paul, Kelsie Smith writes the Pohlad family has "long subscribed to the same payroll philosophy -- that 50[%] of the team's revenue equals the ballclub's payroll budget." Payroll for the upcoming season has "jumped so significantly because the team expects revenues in 2010 to grow correspondingly," and Jim Pohlad said that "that's really all it is." Pohlad: "We're going to try to put the best team on the field in the most prudent financial way." Meanwhile, the Twins "historically have shied away from deferred payments in contracts," and Pohlad "made a point to say that the organization doesn't want to change now" as the team continues contract negotiations with C Joe Mauer. Pohlad: "You're just kidding yourself (with deferred payments). Eventually, you have to worry about it, and at that point, it affects your current operation" (ST. PAUL PIONEER PRESS, 2/9). When asked "how long can the team sustain payrolls above" $90M, Pohlad said, "It's all a function of our revenue. We try to keep (the payroll) within 50 percent of our revenue range. So model-wise, it would indicate that it's sustainable." Pohlad added, "We're not going to spend the money just to spend the money, though. It wouldn't hurt if it dropped below [$90M], in my opinion, occasionally." Meanwhile, St. Peter noted that the team's season-ticket base has "risen from 11,000 full-season equivalents last year to more than 19,500 this year" (Minneapolis STAR TRIBUNE, 2/9).

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  • NBA Franchise Notes: Cavs Investor Still Trying To Finalize Sale

    In Detroit, Myers & Ellis noted Cavaliers Vice Chair David Katzman "has been trying to sell his share of the Cavs to a series of Chinese investors." While an agreement with Albert Hung was announced in December "with a price tag estimated as high as" $70M, NBA VP/Basketball Communications Tim Frank Saturday in an e-mail said that the deal "has not been finalized." Meanwhile, Myers & Ellis reported Katzman has been rumored as a possible candidate to buy the Pistons from Owner Karen Davidson, but he "could not purchase the Pistons if he still owned a part of the Cavs." If Katzman does purchase the Pistons, the sale "could be approved by the NBA quicker than normal because he already has been vetted as a previous owner" (DETROIT FREE PRESS, 2/7).

    Lakers' Revenues Will Be Flat This Season
    Due In Part To Salaries Of Odom, Gasol
    SCALING BACK: In L.A., Mark Heisler reported Lakers Owner Jerry Buss is "on an austerity kick," as "with no raise in ticket prices, this season's revenues will be flat, a word Lakers officials use as if it means Great Depression." The issue "goes back to" the '08 trade for C Pau Gasol, which "went down because Buss alone would take on as much as $90[M] more in salary and tax over three seasons." Buss "never intended to pay all that, assuming Lamar Odom ... would leave when his contract was up, cutting that $90[M] in half." But Odom was "so good last spring, they decided they wanted him back." Heisler noted the Lakers last season earned $40M in profit, but Lakers sources said that coach Phil Jackson "will be asked to take a pay cut" after this season (L.A. TIMES, 2/7).

    BEST MAN FOR THE JOB? In Charlotte, Tom Sorensen noted this season marks the fifth year that Michael Jordan has been with the Bobcats, and the team is "by far the best it has been." Jordan "has not been terrible," but he "remains a better celebrity than a managing partner of basketball operations." His lifestyle "probably doesn't lend itself to commitment," as you "can't do basketball between rounds of golf, hands of blackjack and out-of-town appearances" on NBC's "The Jay Leno Show." The Postolos Group Owner George Postolos is in talks to buy the Bobcats from Owner Bob Johnson. Johnson "undoubtedly would prefer to sell to Michael, who owns a piece of the team," but "how hard is Michael willing to work to acquire it?" (CHARLOTTE OBSERVER, 2/6).

    TAKE IT FROM THE TOP: The L.A. TIMES' Heisler wrote the Clippers "aren't cursed," rather "everything is explainable in two words: Bad management." The arrival of GM and former coach Mike Dunleavy "changed that," as he won Owner Donald Sterling's trust "as no one ever had." But Dunleavy last week resigned as coach, remaining as GM. Heisler: "Amazingly, it stayed changed as Dunleavy lost Sterling's trust, remaining in charge because of the money he was owed" (L.A. TIMES, 2/7).

    BRIDGE OVER TROUBLED WATERS: In Cleveland, Gabriel Baird reported the Cavaliers "have removed all water fountains" from Quicken Loans Arena, and "to get a drink of water at the arena, you must stand in line at a concession stand, where you can get a small courtesy cup of water for free or pay $4 for bottled water." Cavaliers Senior VP/Communications Tad Carper said that the team "took out the fountains in November to reduce the spread of bacteria and viruses that cause H1N1 flu and other illnesses." But officials from the NBA and the Int'l Association of Assembly Managers said that they are "not recommending that fountains be removed." NBA Senior VP/Basketball Communications Brian McIntyre said that he is "not aware of any other team that has taken this step," and he "did not know that the Cavs had removed fountains until he was informed by The Plain Dealer" (Cleveland PLAIN DEALER, 2/8).

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  • Franchise Notes

    Source Says Bettman Not Opposed To
    Oren Koules Buying Into Another Team
    The GLOBE & MAIL's David Shoalts writes the NHL has "probably not seen the last" of Oren Koules, who has agreed to sell his share of the Lightning to Jeff Vinik. An NHL source said that Commissioner Gary Bettman is "not opposed to Koules buying into another franchise." There are "at least half a dozen clubs for sale or looking for investors," and the source said that "a couple of them have shown interest in Koules." Meanwhile, Koules said of his time with the Lightning, "The part that hurts is when we finally got through the circus and got to concentrate on building, we had a pretty good team. Not seeing it to the conclusion is hard. I always dreamed every day of making the playoffs. We have a chance to make the playoffs and that's our goal" (GLOBE & MAIL, 2/9).

    COMING UP SHORT: ESPN.com's Scott Burnside wrote while Bob Gainey, who yesterday stepped down as Canadiens GM, "never failed to carry himself with impeccable grace and dignity," he "wasn't a particularly good GM." Not when it "came to transforming the Canadiens from a playoff team to a contender." In some markets, "getting to the postseason on a regular basis might have been OK," which the Canadiens did in four of the five seasons after Gainey was named GM, but "not in Montreal" (ESPN.com, 2/8). The GLOBE & MAIL's Roy MacGregor writes Montreal "always seemed to worship its long-time captain and now" GM, but the city "over the past year or so ... began to question its faith." The Canadiens' 100th-anniversary celebrations were "somewhat fouled by a coach's firing and a number of embarrassing situations involving young players" (GLOBE & MAIL, 2/9).

    SPECIAL GUESTS: In Philadelphia, Frank Seravalli reports the Flyers, "on behalf of Comcast-Spectacor, sent Rocky Balboa and Ben Franklin impersonators" to NHL HQs yesterday to "hand out soft pretzels and officially throw Philadelphia's hat in the ring to host the 2012 or 2013 All-Star Game and entry draft." The "rest of the NHL's event applications arrived in FedEx boxes." A source said that "up to 16 teams have applied for the All-Star Game and draft," and an announcement "could come as soon as the end of the Olympic break." Seravalli notes the NHL in December announced that this year's draft "will take place at the Staples Center" (PHILADELPHIA DAILY NEWS, 2/9).

    NEW PRICING PLAN: The CP's Shi Davidi reported the Blue Jays will "charge more for the cheapest seats" at Rogers Centre while "holding the line on most of their other tickets under a simplified pricing structure for the 2010 season." The structure includes a "modest bump of $2 per ticket for seats in the nosebleed sections," and also "divides tickets into two cost categories (premium and regular) instead of the previous four and reduces the different seating sections at the Rogers Centre from 12 to 10." The new premium prices are the "equivalent of last year's super premium prices while the regular category remains unchanged, except for the 500 level seating in both cases, which goes from $9 or $12, to $11 or $14." Forty-one games on the '10 schedule, "including all weekend matchups and all visits by" the Yankees and Red Sox, "are at the premium pricing level" (CP, 2/8).

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