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Canadiens could fetch $500M plus
Published June 22, 2009
An agreement to sell the majority ownership of the Montreal Canadiens and the Bell Centre for between $506 million and $537 million (U.S.) could be announced as early as this weekend, according to financial and other sources familiar with the bidding process. It’s also possible that owner George Gillett will decide to sell only a minority share of the team and its arena, one of those sources said.
Gillett owns 80 percent of the Canadiens. Molson, which owns the remaining 20 percent, would retain its stake after a sale by Gillett.
Any decision this week would come as Montreal prepares to host the NHL draft on Friday and Saturday. The league’s board of governors is meeting in Montreal in advance of the draft, as well.
If a deal is completed anywhere near the $500 million figure, it would easily mark the highest-ever sales price for an NHL franchise and represent a significant cash-out for Gillett, who bought the team and arena for $232 million in 2001.
While it’s not certain that Gillett will be able to have a buyer ready for unveiling by the draft, sources said the sales process is quickly coming to a conclusion.
Publicly, Gillett, who declined to comment, has said he is simply going through an estate-planning process. But the financial sources contend that Gillett is close to selling the club he has owned for eight years, and a group of five to six bidders was being considered last week to own the historic franchise.
“His intent is to have the deal done by the draft,” one source said of Gillett.
The prospective Canadian buyers are being reviewed by Bank of Montreal. U.S. contenders are being assessed by Inner Circle Sports.
Bidders that have been identified in published reports include a team of Stephen Bronfman and Quebec’s Saputo family; the Molson family; and Quebecor Media.
What makes the package so appealing is the more than $44 million of annual cash flow ($50 million Canadian) generated by the team and through the Bell Centre, sources said. Gillett is widely credited with turning around a business that had been in the red and making the team and arena profitable.
However, he is also burdened by debts, numerous financial sources said, tied to the hockey business, his half-ownership of the Premier League’s Liverpool FC and a NASCAR team.
The $537 million upper-end price ($610 million Canadian) is the overall valuation for the team, including ownership of the arena. The value underscores that while certain NHL clubs are struggling to survive, like the Phoenix Coyotes, which filed for bankruptcy protection last month, others like the Canadiens are doing quite well and are still viewed favorably by buyers even in a down economy.
How much cash Gillett would receive in a deal is unclear because the buyer would presumably be assuming the large amount of debt the team carries, financial sources said. Nonetheless, a sale would be a huge victory for Gillett, who’d be able to get out from under at least some of the debt.