SBD/Issue 177/Franchises

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  • Kroenke Introduces Proposal To Buy Rams At NFL Owners Meetings

    NFL Working With Kroenke
    To Make Him Next Rams Owner

    Stan Kroenke used the NFL owners meetings in Irving, Texas, to “introduce his proposal on meeting the league’s cross-ownership rules in his bid to purchase controlling interest in the Rams,” according to Jim Thomas of the ST. LOUIS POST-DISPATCH. Kroenke “made his plans known Monday afternoon when he met with the NFL’s finance committee.” At least two NFL team owners have indicated that Kroenke “was impressive in answering questions” from the committee. When asked how Kroenke will comply with cross-ownership rules, NFL Commissioner Roger Goodell said, “That’s still a little bit of a moving target. … But Stan has made it very clear that he wants to be compliant with NFL rules, and that he is willing to work towards finding a way to do that. And that’s what our (finance) committee’s willing to do.” League sources said that Kroenke “will not sell the Rams to his wife, Ann, as a way to satisfy the cross-ownership rules.” The NFL “wants Kroenke as the Rams’ next owner,” but work “remains to be done in order for Kroenke’s bid to be approved.” The finance committee “apparently has already asked him to tweak some parts of his proposal.” The Rams “originally were hoping that a vote on Kroenke’s bid could come in late July,” but that is “probably not going to happen.” Goodell: “I don’t expect another (league) meeting until August. We’ll continue to work on (Kroenke’s bid) over the summer, but it will be our hope to be able to address that prior to the start of the regular season” (ST. LOUIS POST-DISPATCH, 5/26).

    FULL STEAM AHEAD: In St. Louis, Bryan Burwell writes under the header, “Kroenke’s Bid To Purchase Rams Looks Like It’s Gaining Steam.” Burwell: “It appears that the league owners and commissioner Roger Goodell are going to do what we suggested a while ago: they seem willing to bend their so-called unbending cross-ownership rules to let a good friend into the club.” If the owners “decide to bend the rules as they’ve done in the past, it also tells an important story.” It “says that Kroenke will be a welcome member of the ownership fraternity, and a favorite son as well.” Kroenke has a “proven track record in the NBA and NHL” as owner of the Nuggets and Avalanche. He has “independent wealth from his own real estate empire, along with that real-estate expertise and the economic wherewithal to do what Jerry Jones has already done, which is build his own state-of-the-art football stadium” (ST. LOUIS POST-DISPATCH, 5/26).

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  • Warriors To Start Narrowing List Of Suitors; Ellison Included

    Cohan Will Begin Narrowing List Of Warriors
    Suitors To Three Or Four This Week

    The sale of the Warriors is advancing as Owner Chris Cohan this week begins narrowing seven initial suitors of the franchise down to three or four qualified bidders, according to sources. The three or four bidders selected by Cohan then will be allowed access to more detailed financial information followed by another round of bidding, which should begin shortly after Memorial Day. Cohan is being advised by Galatioto Sports Partners, with the team looking to eclipse the NBA franchise sale record of $401M set in '04 when Robert Sarver bought the Suns. Oracle Corp. CEO Larry Ellison reportedly is among the bidders for the Warriors. A sale agreement could be announced by the June 24 NBA Draft, though any deal must be approved by NBA owners (John Lombardo, SportsBusiness Journal).

    SOMETHING TO BUZZ ABOUT: In New Orleans, John DeShazier wrote if reports are true that Hornets minority owner Gary Chouest's bid to become the team's majority owner is on hold because he has "yet to put together an out-of-state group of minority owners that would purchase a portion of the team," then it is "just another reason to roll the eyes over the sale of the Hornets." DeShazier: "Shouldn't that minor detail have been ironed out a while ago? Or, if not a while ago, at least before anyone started publicly stating or privately leaking anything about a sale transfer? ... I'm thinking that issue shouldn't be an issue because Chouest should've known long ago whether he had people who wanted to play ball along with him or whether he'd have to play one on one" (NOLA.com, 5/25).

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  • Lenders Argue In Court That Rangers Sale Price Is Too Cheap

    Lenders Argue Rangers Are
    Worth More Than $575M

    MLB yesterday agreed to "terms on a $6 million credit line," allowing the Rangers to "keep operating after lenders raised objections to the team's proposed sale in federal bankruptcy court," according to Barry Shlachter of the FT. WORTH STAR-TELEGRAM. At the opening bankruptcy hearing yesterday, the lenders "attacked the 'pre-packaged, voluntary' Chapter 11 plan and asserted the team was worth more" than the proposed $575M offered by prospective owners Chuck Greenberg and Nolan Ryan. The attorneys alleged that the Greenberg-Ryan group "wasn't top bidder among three groups despite the blessing" of MLB Commissioner Bud Selig. If Selig backed a lower bid that "he considered better for the team's stability as well" as MLB, the lenders yesterday "made it clear that they want to recoup as much of their investment as possible by slowing down the bankruptcy process and possibly re-opening the bidding." Attorney Dennis Dunne, representing the Rangers' top four lenders, claimed that Greenberg "even lowered his bid at one point -- an assertion that Greenberg denied." Rangers attorney Martin Sosland told the court that "many baseball teams bleed red ink and the Arlington franchise was no exception," saying that team Owner Tom Hicks had lost almost $100M. Judge Michael Lynn yesterday "approved motions to maintain operations as well as monthly payments to two former players, Mark McLemore and Mickey Tettleton." Lynn said that both sides will "present arguments on the Chapter 11 reorganization plan on June 15 and he set July 9 as a possible date when the Rangers could emerge from bankruptcy" (FT. WORTH STAR-TELEGRAM, 5/26).

    ON THE WAY OUT: In Ft. Worth, Mitchell Schnurman reports after "drowning his sports teams in debt and taking the Texas Rangers into bankruptcy, Hicks still expects to walk away" with $75M from selling the team. Through a separate partnership detailed this week in court filings, Hicks stands to earn $5M in cash; a $53M note that pays 4.1% annual interest; a 1% stake in the Rangers; and the "elimination of $12.8 million in debt from 1998, which will be assumed by the new buyers." Hicks also will be granted the honorary title of Chair Emeritus with the Rangers for three years, "and if the side deal is challenged, the Rangers pledge to cover the legal costs" (FT. WORTH STAR-TELEGRAM, 5/26). Hicks yesterday admitted he will lose "a couple hundred million" on the Rangers and Stars. However, he said that he "expects to make it up when he sells" his 50% stake in EPL club Liverpool, and stressed that he "will be glad to exit the professional sports business." Hicks: "It's never been my primary business. And it's a business I no longer want to pay the price to be in." He noted that "one thing he won't miss is the publicity that comes with owning pro sports teams." Hicks: "It's a brutal invasion of privacy." He said his effort to sell the Stars is "quietly" progressing, and noted he could be a small partner with an incoming ownership group. Hicks also indicated that he "expects to sell" Liverpool within 12-18 months, and believes that the club could attract a sale price between $860M-$1.15B (DALLAS MORNING NEWS, 5/26).

    A LOOK INSIDE THE CLUBHOUSE: In Dallas, Case & Jacobson note the Rangers' bankruptcy filing includes "some of the details of the Rangers' business operations," as well as a "detailed peek at the effort to sell the team." The filing reveals that "at least 15 prospective buyers and investors executed confidentiality agreements to learn more about the Rangers." The Greenberg-Ryan group also includes "two leading" North Texas businessmen: former Energy Transfer Partners co-CEO Ray Davis and XTO Energy Chair Bob Simpson. Meanwhile, the filing also shows that "each of the Texas Rangers' 320 full-time employees gets 120 game ticket vouchers a season." The Rangers pay season employees "a total of about $62,500 per home game in hourly wages, not including overtime," and 22,000 Lexus vehicles "park free during the season thanks to a sponsorship between the auto brand and the team" (DALLAS MORNING NEWS, 5/26).

    ON A THIN LINE: ESPN.com's Buster Olney wrote if MLB approves a deal for the Rangers to acquire Astros P Roy Oswalt before the sale goes through, "you can bet that MLB will have some really, really, really angry folks in its ranks -- guys in suits holding pitchforks." Other teams have been "propping up the Rangers financially over the past year, and the feeling in some other executive suites is that Texas should not be allowed to take on payroll after creating its own financial trouble through decisions" like the Alex Rodriguez signing. Execs with other teams "don't believe a franchise that has been run this poorly should be able to spend other people's money until it gets its financial house in order" (ESPN.com, 5/25).

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  • Lightning Strike: Steve Yzerman Formally Introduced As New GM

    Vinik (r) Says Yzerman (l) Has Full Rein
    For All Hockey-Related Decisions

    The Lightning yesterday formally introduced Steve Yzerman as their new GM, and Owner Jeff Vinik said that Yzerman "will be responsible for all hockey-related decisions and report only to him," according to Damian Cristodero of the ST. PETERSBURG TIMES. Vinik said Yzerman, who has been a Red Wings Senior VP since September '06, "has full rein." Cristodero writes having "one voice at the top is welcomed relief" for the Lightning. Yzerman said, "With each conversation Jeff and I had, I liked his plan. In my opinion, I believe Jeff has a complete understanding of what has to be done here." It is believed that Yzerman signed a "five-year deal that makes him one of the league's highest-paid general managers." Yzerman said that he was "not given an ownership stake" in the franchise. Vinik said that he "will hire a CEO soon, but the CEO will be involved only in business matters" (ST. PETERSBURG TIMES, 5/26). The GLOBE & MAIL's James Mirtle notes Yzerman "will have the last word and be on his own at the top, handed the reins by a rookie owner to reshape what's become one of the league's more troubled franchises of late." A source said that "despite his relative inexperience, Yzerman received a five-year contract for $2.5 million a season, a deal on par with some of the NHL's top executives" (GLOBE & MAIL, 5/26).

    KEEP THE FAITH: In St. Petersburg, John Romano writes Lightning fans "have reason to believe in hockey again. After two ownership groups bailed. After three head coaches were fired. After two GMs were dumped. After all the vacant cash calls and all the empty promises, Yzerman has made faith a virtue again." For the "first time in a long while, it feels like there is harmony in the front office." For the "first time in a long while, it feels like this could be a hockey town." Romano: "When was the last time somebody of Yzerman's pedigree actually chose the Lightning?" (ST. PETERSBURG TIMES, 5/26). THE HOCKEY NEWS' Rory Boylen wrote, "With a good base of young talent and veteran producers, Yzerman has something with which to work in Tampa and, given his resume, Lightning fans can rest well knowing their franchise is finally in capable -- and prepared -- hands" (THEHOCKEYNEWS.com, 5/25). In Toronto, Damien Cox wrote Yzerman's hire "gives Tampa credibility in the marketplace, which is good news for the Bettman administration, which has been trying to stabilize this franchise for years" (THESTAR.com, 5/25).

    MOTOR CITY BLUES: In Detroit, Helene St. James writes the Red Wings "lost an important member of their front office" yesterday. Not having Yzerman with the franchise in "any capacity is going to require a period of adjustment" (DETROIT FREE PRESS, 5/26). Red Wings Owners Mike and Marian Ilitch yesterday in a statement said, "Today is a difficult day for us, just as we know it is for Red Wings fans everywhere. ... This is not easy -- we're having a difficult time, frankly, because Stevie's been with us from the start and we consider him part of our family" (Red Wings). In Detroit, Chris McCosky notes Yzerman "drove to the Ilitches' house last night to deliver the news in person." The Red Wings "will miss Yzerman's presence," but the franchise "as a whole isn't severely stung by this." The Red Wings "will continue to roll on smoothly and successfully as long as" Exec VP & GM Ken Holland is at the helm (DETROIT NEWS, 5/26).

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  • Blackhawks Emerging As Model Franchise, Both On- And Off-Ice

    Blackhawks' Business And On-Ice
    Success Making Them A Model Franchise

    The Blackhawks, who advanced to the Stanley Cup Finals Sunday after sweeping the Sharks, have "combined several elements -- both on the business side and on the ice -- to build a model franchise for today's NHL game," according to Darren Eliot of SI.com. Perhaps it was the "classic case of a perfect storm -- a young, upcoming marketable team with a change in management personnel and philosophy -- but the Blackhawks' regime acted swiftly." The franchise "did more, rather than less, increasing television and ancillary programming, improving community visibility and interaction and upping the output and focus from an-in-house public relations standpoint." The Blackhawks "didn't wait to let the team sell itself all by itself." From "top-to-bottom, the Blackhawks set best-in-class practices in motion, matching the development of a quickly improving team." Eliot: "Aggressively getting out in front of their product with a sense of purpose has made all the difference and it will reap benefits for years to come" (SI.com, 5/24). NHL Commissioner Gary Bettman: "What has happened in Chicago makes clear that Chicago has always been a hockey town. When a franchise goes through a tough period, it can tax the relationship a franchise has with its fans, but it can come back and come back in a big way. ... Look at how quickly it came back" (CHICAGOTRIBUNE.com, 5/25). Bettman, when asked if the Blackhawks' success helps the league, said, "I think it is great the Blackhawks have thrived and rejuvenated. I'm thrilled for the fans. I'm thrilled for Rocky Wirtz and John McDonough, but you can't use that to overgeneralize one way or another on the basis of the whole league." Bettman said Wirtz and McDonough have "reconnected this great Original 6 franchise with the fan base." Bettman: "Not only did they reconnect, we're seeing the next generation of young fans connecting with the team as well. You're seeing it here in a building of 22,000 people, predominantly people wearing jerseys. There are a tremendous number of young people here becoming the culture of our game, and the Blackhawks culture" (CHICAGOBUSINESS.com, 5/25).

    GET IT WHILE IT'S HOT: In Chicago, Jennifer Delgado reported Blackhawks fans "spilled into sports stores" after Sunday's win. Chicago Sports & Novelty Manager Myra Cisneros: "We always carry a bit of merchandise, but this time, we can't seem to keep it in stock." Clark Street Sports co-Owner Arthur De Leon: "We've had numerous people that have said they've never watched hockey before and now they're looking for a shirt. We've had a lot of new customers." Blackhawks Senior Dir of Market Development & Community Affairs Peter Hassen said that "more than $50,000 worth of playoff merchandise has been sold at the Blackhawks' kiosk in Woodfield mall, Michigan Avenue store and United Center outlets" (CHICAGO TRIBUNE, 5/25). Meanwhile, sales of Blackhawks Stanley Cup Finals tickets on StubHub "have more than tripled since last week," and the average price has climbed to $710. StubHub Corporate Communications Manager Joellen Ferrer said that Stanley Cup Finals ticket sales are "outpacing NBA Finals sales" (Illinois DAILY HERALD, 5/25).

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