You will be hard-pressed to find an NHL game on American national television or given much prominence in major newspaper sports sections during its season.
Large swaths of empty seats are commonplace at many arenas too. Meanwhile, the potential cost of labor has risen more than 25 percent in just two years since the league voluntarily shut itself down for a full season, ostensibly to curtail that kind of rapid salary escalation.
|Bill Davidson nearly doubled his investment by selling the Tampa Bay Lightning. (Getty Images)|
Put it all together and you have an industry that, at least on the surface, appears to be one that any businessman with half a brain wouldn't touch with a 10-foot hockey stick.
But for those who scratch a little deeper, NHL franchises have clearly become attractive properties, fetching sale prices that defy logic. In the last couple of weeks alone, two franchises sold for premiums considerably above their appraised values, and a third team's owners rejected a bid from someone willing to pony up the same way.
From the outside, it has tended to come across as irrational behavior. But to experts in sports economics, the recent surge of interest in NHL franchises is being interpreted as shrewd, calculated investment strategy that is likely to be emulated by others.
"The fundamentals that we're being told about these teams certainly don't support the sale prices we're seeing, but the numbers don't lie," said John Vrooman, a Vanderbilt University economics professor who specializes in professional sports franchise valuations.
"The true value of a team is reflected more in the purchase price than it is in the rhetoric. Owners always poor mouth and say they're losing money, yet these franchises appreciate at rates that make them a high-performing investment, way beyond what we would think."
Obviously. The Tampa Bay Lightning, who claim to have lost about $75 million in the last decade despite winning the 2004 Stanley Cup and selling out nearly every home game in the last two seasons, created the biggest jackpot by changing hands for a reported $206 million. That's nearly double what outgoing owner William Davidson paid for the team in 1999.
A few days earlier, the Nashville Predators, who are struggling to raise attendance to a level that would enforce their building lease and say they have lost $70 million since joining the league in 1998, went for $193 million. The franchise fee for former owner Craig Leipold was $80 million, $25 million of which was covered by the city.
And up in Edmonton, where the Oilers play in one of the NHL's smallest markets and buildings, a local suitor offered $185 million for a team valued by Forbes Magazine at about $160 million.
So what gives? According to the experts, there are several reasons NHL franchises have become so attractive to those who may not have more than just a slight affinity for the game of hockey, the most fundamental being the operating cost certainties achieved following the lockout by salary cap and revenue-sharing elements in the collective bargaining agreement.
Beyond that however, the NHL has exceeded revenue projections in both post-lockout seasons, coming back robustly with its core fans and sponsors and demonstrating the ability to make money despite the lack of a lucrative national television contract. And the NHL has been at the forefront of professional sports leagues in moving aggressively toward new-media content distribution.