Friday, January 11, 2008

Minnesota Majority Owner Selling

Ever since the Minnesota Wild expanded into the NHL in 2000, they have been owned by a group of businessmen known as Minnesota Sports and Entertainment LLC. They are a group headed by Bob Naegele who owns the majority share. Yesterday, it was announced that Naegele is selling his majority share to former Nashville Predator owner Craig Leipold. Naegele will remain on as a minority owner of this group that owns the Wild, their AHL affiliate Houston Aeros, the Minnesota Swarm of the National Lacrosse League, a catering business and is the building operator of the Xcek Energy Center (which is owned by the city of St Paul, Minnesota) where the Wild play, collecting revenue from all games, concerts and trade shows held in the arena. The purchase price for a majority share in this group is believed to be $260 million (larger than the purchase price for the entire Nashville franchise - not just a majority share).

While it is hard to buy and sell teams in the NHL today with negotiation usually lasting several months after the first announcement of a sale before the NHL approves the transfer, this sale is likely a safe one since Leipold is a known quantity to the league.

It is interesting that Leipold wants to stay in the NHL hockey business despite the problems he faced in Nashville. He recently sold the Predators for $193 million to a group of businessmen who claim to want to keep the team in Nashville, despite the fact the biggest investor in the group William "Boots" Del Biaggio was attempting to move the franchise to Kansas City as recently as this summer. Leipold sees Minnesota as a better opportunity than that of Nashville. Leipold claimed to have lost $70 million while running the Predators. In Minnesota, a profit is nearly assured. Minnesota has a better team, a stronger fanbase and stronger corporate support than Nashville.

The Nashville group has asked for and received concessions from the city of Nashville to help their financial situation and despite that the situation does not look rosy. Likely their revenue sharing cheque will be cut this season because Nashville does not have a high enough attendance to continue receiving it. Last year, Nashville was the largest recipient of revenue sharing, so this will be a significant hit. It is hard to imagine this Nashville group making a profit and it is hard to imagine the Minnesota Wild operating at a loss. Craig Leipold has made a strong improvement in the financial situation of the team he owns. The question that remains is whether the Nashville group can succeed where Leipold failed (and not for lack of trying). I suspect they will have significant problems and not last particularly long as an NHL ownership group. Craig Leipold does not have to worry about those problems any longer.

Here is the TSN story on the pending sale.

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