Leipold's Goodbye Note to Nashville

The Nashville Post, the publication that originally broke the news that Craig Leipold had completed an agreement to sell the Nashville Predators to RIM founder Jim Balsillie, has gotten hold of the letter that Leipold sent to season ticket holders, suite owners and sponsors explaining the "why" behind the sale.

It makes interesting reading:

Unfortunately, the success on the ice has not translated to success for me as business owner. Here are just a few facts as to why:

• The Nashville Predators tallied up 216 points in the last two seasons, fifth most in the NHL, yet because of below-average attendance, the team will still have a real cash loss of $27 million during that time. Additionally, that loss is despite receiving the most money in the league from revenue sharing. Over the last five years, the team has lost over $60 million.

• We’ve invested heavily in sales and marketing efforts, spending over $50 million in 10 years, most of that with locally-based businesses.

• Our average regular season attendance this past season was 13,589, up from the year before, but still 2,000 below the NHL average. A low turnout, combined with a low ticket price results in a poor financial situation.

• The new NHL Collective Bargaining Agreement with revenue sharing is not a cure-all. Each local market must still support its local team. In addition, this attendance does not qualify us for our full revenue sharing allocation under the collective bargaining agreement.

• While individual fan support has always been strong, we’ve worked aggressively to increase our local business support since Season Four. We’ve tried a variety of approaches with minimal success. Our records show today that corporate support for the Nashville Predators makes up about 35% of our season ticket base. The average in other markets is around 60%. During our first two years, approximately 4,000 businesses owned season tickets. Today, only 1,800 businesses have season tickets.

A couple of weeks back over at the NHL Fanhouse, a local Nashville blogger gently chided me for concluding that things weren't going well in Nashville based on local press reports, albeit nothing that I thought couldn't be cured without a deep playoff run.

But when the man who owns the franchise turns around and sells the team to a billionaire who is actively looking to import an NHL franchise to his hometown, I guess there's little sense in arguing the point anymore.

We should remember that Leipold was one of the owners who actually helped negotiate the terms of the current CBA. On the face of it, it might seem odd that an owner who helped create the league's new economic order would be the first to jump ship after the resolution of the lockout.

Then again, we ought to remember that for most owners, the game isn't so much about year-to-year operations as it is about franchise valuation.

In essence, this sale sets the floor for the valuation of an NHL franchise. Last November, Forbes pegged the current value of the team at $134 million. If the $220 million sale price quoted by TSN is accurate, that represents an $86 million premium on the Forbes estimate.

Even better, compare that to the last pre-lockout sale of the Anaheim Ducks, which netted Disney only $75 million when Henry Samueli purchased the team in 2005.

The bad news, of course, is for the fans in Nashville who have spent their money and screamed themselves hoarse cheering for this team. All I can say is that I'm sorry. You're not the first, and in the estimate of some, you won't be the last to have your hearts torn out.

Eric 02:30 PM

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Posted by: at May 25, 2007 03:32 AM

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