To be fair to Ken Campbell and The Hockey News, I don't think he's that far off.
I believe Bill Gallacher is the leading candidate to buy the Stars, and $225 million sounds about right. But several sources today said that the deal is not close to getting done.
Some said the price of the team is too low, but I'm still struggling to get my head around that one. Tampa Bay just sold for a reported price of $110 million in March. Some speculated the actual cost with assumption of debt was closer to $170 million for the Lightning, but that's why these prices are hard to nail down sometimes. In Phoenix, I'm not sure they will even get $100 million for the Coyotes.
So what makes the Stars somehow worth tons more?
I do believe they are worth at least a little more, because of their arena lease, their ability to draw television revenue and the demographics of this area, which typically supports athletic teams fairly well.
But that much more?
Hicks told the media at a gathering in his office in February that the financials for the team as it stands right now weren't working. He said he has lent $85 million to the team and that he was tired of losing money. He said that if the team operates with a payroll of $50 million, it will probably lose money. In fact, he said all teams ``south of Pennsylvania'' will probably lose money if they don't get their spending in line.
When asked about a new owner and upping spending, Hicks said at the time: "If he goes to the cap, it will all come out of his pocket. We are losing money where we are now. It's not something to infer to the fans that once we get a flush owner we're going back to the cap. The only reason a guy would do that is because he wanted to win so bad he was uneconomical. I've done that. I know how that works."
So then why would a new owner come in and spend a great deal of money to buy the team (significantly in excess of $225 million, some say) if he has to be prepared to lose money right off the bat? The Stars are expected to keep ticket prices low in an attempt to fill the building next season, and that will only mean that creating revenue will be tougher. Some insiders predict that a new television contract will be a boon, despite low ratings, because sports stations need the programming, so maybe that's a reason for the optimism in the price.
Maybe this is all just part of the negotiating process and the team is trying to get a bidding war going, or maybe insiders really do believe this team could be worth close to $300 million. Forbes put it at $246 million in November, eighth highest in the league, and it has routinely been in the top seven in the past decade in the Forbes rankings. So there is obvious value there.
Gallacher is a well-heeled Calgary businessman and a huge hockey fan. Tom Gaglardi is part of a great family business out of Vancouver and also is a huge hockey fan. The two are the leading candidates to buy the team, and there could be more who are sniffing around and possibly trying to get involved. But I really think the group with Mike Modano, Jim Lites and Billy Quinn got out because the price started to get too high, and potential investors got a little nervous. There does seem to be a lot of risk in this deal right now.
You'd have to think that banks are going to be fairly skeptical about lending money to people who want to buy an NHL team, so maybe the only people who can try to buy this team are people who have large sums of their own money that they can invest.
And, of course, there is the question of the lenders. The Rangers, the Greenberg group and MLB all thought they had a deal done in January. The lenders didn't like the terms, and it still isn't done. That means that the Stars will have to go through a similar process. Once a buyer is found and a price is agreed upon, then the lenders have to say if they think the deal is fair. That's a big wildcard right now.
I've been told that Hicks Sports Group and the NHL have learned a lot from the Rangers sale _ that's one reason they're trying to do this so quietly. Hicks also put Galatioto Sports Group in charge of the sale, and they are one of the leading lenders to Hicks Sports Group. Because GSP will have a say in how the deal is structured, Hicks and the NHL believe they will be able to make the lenders happy and make the sale go more quickly.
So, yes, Gallacher could still be the buyer and this could get done fairly quickly. The people I've talked to say, however, that nothing is agreed upon yet.