by PuckStopsHere on 11/14/09 at 01:57 PM ET
Alan Cohen led a group of Florida businessmen in purchasing the Florida Panthers from Wayne Huizenga of Blockbuster Video fame in 2001. Since that point, the Panthers have been one of the have not teams. They have failed to make the playoffs during Cohen’s ownership. According to Forbes Magazine the Florida Panthers have the fifth least value in the NHL and faced the second largest operating losses last year (beaten only by the Phoenix Coyotes). As a result, Alan Cohen decided he wanted out.
Over the summer, Cohen agreed to sell the team to Sports Properties Acquisition Group. This is a publicly traded company set up with the purpose of buying a sports franchise. Should they fall to do so by the end of the year (which appears likely), they will be dissolved and money will be returned to shareholders. The sale was to be for $240 million and included the Panthers franchise, the BankAtlantic Center where they play and some surrounding real estate.
The NHL turned down this purchase lacked a primary owner with a substantial equity stake. In other words, when the Panthers lost money it was not clear who would pay it. The NHL could be stuck with a team that was abandoned by ownership.
Alan Cohen was tired of paying for Florida Panthers losses and he decided to get out. He is leaving the team to his major partners in his 2001 purchase (Cliff Viner and Stu Siegel). Probably the deal is not for a significant amount of money. It is Cohen getting out and leaving things to the partners that remain. The partners have little choice but the either buy him out and assume any losses on the team or to give up their ownership and lose any equity they have in the Florida Panthers. These men are both Florida businessmen who probably never had any desire to be more than minority partners in a local ownership group of an NHL team. With the majority partner departing, they are forced to accept a bigger role than they ever wanted in an effort to not “lose their shirt” in this investment. This is remarkably similar to what happened with the Phoenix Coyotes. It was Steve Ellman and some minority partners (including Wayne Gretzky) who bought the Coyotes in 2001. When Ellman was tired of financing the team, he bowed out and was bought out by minority partner Jerry Moyes in 2006. Moyes was never interested in being the majority owner of an NHL hockey team, but he found himself in that position as he attempted to save his investment. By 2008, Moyes was unable to finance the team and that led to the past summer’s bankruptcy and eventual sale to the NHL.
This is one way that the NHL has found “money marks” - a pro wrestling term for people who have spent their savings to try to keep failing wrestling promotions alive. The NHL makes a profit while depleting the savings of some of the weaker franchise owners - often people who had no desire to be majority owners. They were intending to be minority partners in local ownership groups, but circumstances found them thrust into majority positions when the people above them abandoned the team. This leaves the NHL with weak teams owned by weak reluctant owners. There is almost no way for that team to succeed in those circumstances.
If you check most mainstream hockey media sites (i.e. tsn) you will find no mention of the Florida Panthers potential sale. This isn’t the kind of story the NHL wants to see promoted. If this pattern of thrusting reluctant minority owners into majority positions of weak franchises is understood by potential investors, it could hurt the other weak NHL teams. The NHL is looking for minority partners to help Oren Koules run the Tampa Bay Lightning. How long until Koules gets out and the minority partner is left as the sole owner? How about other local ownership groups such as Nashville? Should those minority owners be feeling a bit anxious if they do not want to be stuck financing the losses of the team as a majority owner?
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