The Puck Stops Here

On the surface, this story seems a little bit weird. Venture capitalists offered to buy the NHL. Reportedly, Bain Capital Partners LLC backed by Game Plan LLC offered to pay $3.5 billion for the entire NHL at Tuesday's board of governors meeting.

How do I interpret this? I think that these people made the offer to the NHL (Gary Bettman?) and instead of completely dismissing it, he let them have their say at the meeting and the governors completely dismissed it. I think the fact that it took a couple days for the news to come out shows that this is not something the NHL is particularly proud to display into the media - but there is too much evidence to completely deny it also.

Does this mean there actually is $3.5 million outside of the NHL waiting to be invested in pro hockey in North America? Not at all. This is a venture capital move and nothing more.

Information about Bain Capital can be found here. I cannot find a similar website for Game Plan LLC -at least without some effort. Probably because the words "game plan" are quite commonplace. I do know that this is a company that has brokered the sale of several sports franchises including bringing the Ottawa Senators through their bankruptcy and selling them to Eugene Melnyk.

Venture capitalists most commonly raise start-up funds for promising high-tech companies. Their goal is to grow the company into something that can be sold for more than they spent on it. They rarely have any desire to hold onto a company for the longterm. They also buy companies that are in financial distress, either to build them back up or (more commonly?) to sell off their assets and close them down at a profit to the venture capitalists.

So what would be the business plan if I were a venture capitalist who bought the NHL? There are several potential plans. The one that scares me the most is the plan of buying the league and selling off its assets to close it down. I think when purchasing a large organization like the National Hockey League, it is probably the one that makes the most sense.

First thing I would do is end the lockout and then sell off some assets. NHL players (particularly Europeans) with large contracts could be sold to European teams. Guys like Jaromir Jagr, Alexei Yashin, Mats Sundin and Bobby Holik might command a pretty penny if they were sold to European teams. Free agents will be signed for whatever I want them to be signed for into whatever market I want them. Its not collusion, I am not competing with myself. Maybe we can still play some kind of Stanley Cup tournament this year involving all 30 teams.

The goal is to prop up the markets that have value but have not done well. Talent must be infused in places like Chicago, Los Angeles and of course the New York Rangers. Let them acquire the best available talent - guys like Sidney Crosby need to go to one of them. Big talents in smaller markets like Jarome Iginla and Roberto Luongo need to go there - this could be accomplished through "trades" since the league owns both teams or through a liberal new version of free agency. The smaller markets are only used to produce talent for the big markets. Care must be taken to not go too far, there must remain suspence as to which team will win the Stanley Cup. So no need to make the Rangers chances any bigger than those of the New York Yankees in baseball, but they must be a serious contender. As owner of the league, they can be given every break to ensure this happens. This is good for hockey TV ratings since there will be lots of coverage of Stanley Cup finals involving the largest cities in the US. No more Tampa Bay vs. Calgary finals that nobody notices.

Now we can sell off markets. The very weakest markets financially may be closed down altogether. Either that or after their talent is sufficiently depleted they can be sold to the AHL or something. They'd be excited to have an ex-NHL team or two - even if its the Carolina Hurricanes who now have a top scorer Kevyn Adams. The big successful markets need to be sold off one by one either to new NHL owners or to new owners in an upstart WHA type league. Markets that dont sell might be moved to Europe and sold or sold to AHL type leagues.

When all is said and done, the best talent in North America is placed in 10-15 teams that make up the new major pro hockey league which may or may not be called the NHL. There are significant talented players in Europe who never come to the North America at all.

Is this good for the hockey fan? Probably not, but it made huge money for my venture capital company.