SBJ/December 5-11, 2011/Franchises

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  • Gaglardi wants to help Stars find their way

    After nearly two years of being operated by the NHL, the Dallas Stars have a new owner.

    Tom Gaglardi, 43, was named owner of the Stars last month after a bankruptcy court in Delaware approved the sale of the team and confirmed a prepackaged bankruptcy plan. Upon approval of the sale, Gaglardi hired Jim Lites as the team’s president and CEO, a role Lites previously has held with the franchise.


    A Vancouver businessman, Gaglardi is the president of Northland Properties Corp., the largest family-owned hospitality company in Canada. He also holds a 50 percent ownership of the Western Hockey League’s Kamloops Blazers.
    Gaglardi spoke the day after a Dallas 4-1 win over Edmonton about the Stars’ transition and his plans for the club.

    Photo by: JAKE DEAN / DALLAS BUSINESS JOURNAL
    You like to watch hockey, but I also understand you like to play hockey (in a recreational league), is that right?

    GAGLARDI:
    I do. It’s our NHL and we play for our Stanley Cup, so it’s pretty serious stuff. You’re not allowed to fight — you’re supposed to get suspended — but there’s fights. And it’s competitive. It’s deemed non-contact, but you can get hurt in this league. It happens. I’ve managed to have three broken noses, two broken ribs and a separated shoulder. But in my 30-plus years of playing, it’s not that bad when you think about it. I’ve been fortunate. I don’t have a lot of injuries. I’ll confess with you: We know waiting for us in the locker room is a big Coleman cooler of beer, Molson Canadian.

    What is your first order of business as owner?

    GAGLARDI: I don’t think it’s any mystery that the team has lost its way as far as connecting with the fan base here. I believe in the market; it’s a huge market and growing demographic. For years, the building was full, and the Stars had a great fan base, but we have lost our way. It was probably due to the ownership circumstances, the economy has been a factor, and we just haven’t been winning enough. If you look at the great NHL franchises, they all have their cyclical, down periods, so this isn’t abnormal. I believe if we do the right things on and off the ice, we will have fans back in the building supporting the Dallas Stars, and that’s what we intend to do.

    What did you think about the attendance Monday night (11,458 announced for the game with Edmonton)?

    GAGLARDI:
    It wasn’t bad for a Monday night. In the past, there were a lot of comps and free tickets given to season-ticket holders and general public, and the past management favored that strategy, but as part of rebuilding the franchise, [interim president and CEO] Tony Tavares didn’t do that. It’s something I agree with — but it’s been kind of tough when you take that away. The building looks empty. But when you look at paid attendance year-over-year, it’s about the same.

    You are joining an elite group of sports owners in Dallas, with Jerry Jones, Mark Cuban, Nolan Ryan and the Hunt family. Do you feel any competition with them?

    GAGLARDI: I do feel competition. I say that because Dallas is very fortunate to have the teams that it has and the owners it has. I’m a lifelong Cowboys fan. It’s been a difficult last few years. There hasn’t been a lot of success, but I don’t know how you can say that Jerry Jones doesn’t live and breathe that team and go to every length he can to win. … The same as Mark: There’s no doubt that guy will do anything to win. Same thing with Nolan. I think we have great ownership in the city, and I think as a fan, all you can ask for is an owner that doesn’t care about anything else other than winning. I think my personality is different than other owners in Dallas, but I think one thing we do share is our passion to win. I will make the Stars the best franchise in the NHL, and I don’t think we are too far away.

    Do you care about the valuation of the Stars?

    GAGLARDI: If you look historically, the Stars have been a top-10-valued NHL team, and in some instances the top five. But I don’t think the way you go about this particular franchise, or any sports franchise, is to worry about those things. People say, “Gosh, you’ll lose some money,” and I say, “There’s no secret that the team is not making money today, but you can’t focus on that. You have to focus on the right things on and off the ice and making the best decisions that you can for the franchise.” … If we do the right things on the ice, the franchise will be where it should be. I’m a long-term owner; this is not a short-term deal. I’m 43 years old and I plan to own this team for the rest of my life.

    Candace Carlisle writes for the Dallas Business Journal, an affiliated publication.

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  • Sale seen as hope, not threat, for Jacksonville

    In March 2007, when Wayne Weaver nearly sold his Jacksonville Jaguars, the deal foundered in part because of the owner’s insistence that the potential buyer contractually agree not to move the team, financial and football sources said. The buyer, whom the sources declined to identify, agreed to try to keep the team in Jacksonville but would not put a guarantee in writing.

    No such guarantee is included in the team’s pending sale to Illinois auto parts magnate Shahid Khan, who has publicly said he plans to keep the team in the struggling market.

    Shahid Khan, with wife Ann, has said he plans to keep the Jaguars in Jacksonville.
    “Wayne’s legacy will be lasting, and I will always be grateful for Wayne’s trust and confidence in my commitment to the Jaguars, the NFL and the people of the Jacksonville community,” Khan said in a statement Tuesday, the day the deal was announced.

    Weaver echoed that sentiment in a tearful news conference, saying he expected his grandchildren to grow up Jaguars fans.

    Nevertheless, with the league eyeing Los Angeles and perhaps London and Toronto as relocation or expansion cities, speculation hit full tilt in the aftermath of last week’s sale announcement on what the Khan deal meant for the Jaguars, who have struggled mightily to sell out EverBank Field.

    Sources close to the league, which was instrumental in moving the process along, insisted the sale is a blessing for Jacksonville because Weaver had long talked about stepping down, which to the NFL cast a pall of uncertainty over the franchise.

    Jacksonville has struggled because of the city’s hurting economy and relatively small population. At 1.35 million as of 2010, Jacksonville in MSA population ranks ahead of only New Orleans, Buffalo and Green Bay among NFL markets. The city’s unemployment rate of 10 percent in September stood above an 8.8 percent rate for metro areas nationally for the month, according to the Bureau of Labor Statistics.

    Financial advisers sit out this NFL acquisition

    The Jacksonville Jaguars sale is unique in its structure among recent team acquisitions in having been executed without the assistance of financial advisers. Not using financial advisers, once commonplace, is almost unheard of now, given the escalating price of sports franchises.

    The Jacksonville situation is rare in part because the buyer, Shahid Khan, nearly bought the St. Louis Rams last year. As a result, he emerged as a well-known potential acquirer of sports teams, and teams in other leagues made overtures to him in the last 18 months, a source said. In addition, the Jaguars have been floated for sale since at least 2007, meaning word was already out that the team could be bought.

    Until the spring, Jaguars owner Wayne Weaver had retained Galatioto Sports Partners, but his agreement with the firm expired at that time. He did not retain another firm and handled the sale talks himself. Those talks with Khan began in earnest a few months ago but became serious only in the weeks leading up to the announcement, sources said.

    Khan also did not use a financial adviser, though he retained the law firm Proskauer, which is well-connected in sports.

    — Daniel Kaplan
    In 2005, the Jaguars put tarps on 9,700 seats in their 76,000-plus-seat stadium so those seats would not have to be counted toward sellouts, which are required for teams to avoid having home games blacked out on local TV. Nevertheless, the Jaguars, who have also struggled on the field in recent years and fired coach Jack Del Rio last week too, have consistently battled blackouts in the last half-decade. While the team has avoided blackouts the past two seasons, it had seven blackouts in 2009 and three in 2007.
    Financially, the team should be on firmer financial footing with the league’s new 10-year collective-bargaining agreement, meaning there is little chance of triggering a provision in the team’s lease that would allow the club to leave if there are three straight unprofitable years. The lease runs through 2029 and would currently cost nearly $50 million to break.

    That said, financial sources contend that might be a small price for Khan to pay if a much better economic paradigm is offered elsewhere — though all sources agree he will almost certainly try to make it work in Jacksonville for at least the next few years. The price he’s paying, a bit over $750 million, is hardly outlandish when many teams are thought to be worth more than $1 billion. In fact, $750 million was the price Weaver wanted in 2007, but the buyer at the time declined to move up from $725 million, another reason that deal broke off, the sources said.

    Khan tried to buy the St. Louis Rams last spring, before then-minority partner Stan Kroenke exercised his right of first refusal and acquired the club. At the time, the league had concerns about Khan in part because of Internal Revenue Service investigations into his tax shelters and how he planned to borrow against his company, Flex-N-Gate, to buy the team.

    Sources said the IRS matters are resolved and Khan is borrowing using Flex-N-Gate’s existing lines of credits. The Jaguars have $110 million in debt Khan is assuming (meaning cash paid is a little more than $640 million) and he will add another $40 million of debt against the club.

    The NFL hired JPMorgan Chase to review Khan’s financials and present its findings to the NFL finance committee this week, with full ownership expected to vote on the deal Dec. 14. That quick turnaround from announcement to formal vote is unusual and suggests the NFL has been closely involved with the process. Weaver, in fact, said he expected the finance committee to unanimously approve the deal.

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  • MLSE brings live-game streams to Xbox 360

    Maple Leaf Sports & Entertainment has partnered with Microsoft to stream its three live sports television channels — Leafs TV, GolTV Canada and NBA TV Canada — to Microsoft Xbox 360 video game consoles. The content will be available to users within MLSE’s league-mandated broadcast territories: Ontario for Leafs TV and all of Canada for GolTV Canada and NBA TV Canada.

    The organization will be the first in North America to offer a live-game streaming service to in-market users across a gaming console.

    Chris Hebb, senior vice president of broadcast and content for MLSE, said the group does not expect the service to generate substantial revenue but, rather, will test the market for streaming over gaming consoles.

    “We want to see if there is an incremental audience on the Xbox that we have not been reaching,” Hebb said. “The next generation has grown up with gaming consoles as a main platform for consuming media, and it’s our job to be there.”

    Xbox users will download MLSE’s free application, branded “Real Sports” after the organization’s sports bar in downtown Toronto. Within the application, users can subscribe to each channel individually, and the subscription price is $7 a month per channel. All channels are available in high definition.

    Hebb said MLSE hopes to eventually release a la carte pricing for individual games, as well as bundled pricing for all three channels, but he did not give a timeline for the release of additional price points.

    Leafs TV carries the NHL Toronto Maple Leafs and AHL Toronto Marlies games; NBA TV Canada carries Toronto Raptors games; and GolTV Canada carries Toronto FC, La Liga and Bundesliga games, as well as Brazilian and Colombian soccer games.

    MLSE withheld its mobile and digital streaming rights in its television negotiations with local carrier Rogers Sportsnet. In December 2010, the organization began streaming Maple Leafs games on mobile devices to in-market customers. In October, Rogers began broadcasting live Maple Leafs games on the Rogers on Demand Online platform.

    “We have three TV channels operating 24/7, so it’s a case for us about what platforms we can deploy them on,” Hebb said. “We don’t know if this is something [customers] will embrace or will ignore.”

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