A New Ownership Model

The Florida Panthers have been sold to a publicly traded company, according Ben Klayman reporting for Reuters News. Sports Properties Acquisition Corporation (SPAC) has agreed to buy the Florida Panthers hockey club, its home ice BankAtlantic Center, an arena management company that operates the BankAtlantic Center, and 139 acres of land surrounding the center for $240MM. As reported in my April 27th post A Potential New Owner in the NHL, the money making potential for SPAC is the 139 acres of undeveloped land, which the company plans to develop into a mixed use development called The City of OZ (no pretentiousness there!). Originally, the price was for the purchase was $230MM, but did not include the arena, which is owned by Broward County. The new deal includes the arena. This announcement comes on the heels of the announcement of Jacques Martin leaving his position of GM of the Panthers to move behind the bench of the Montreal Canadiens, and it is unknown if his departure is related to this purchase. SPAC has a high profile management group, including Tony Tavares, former President of the Washington Nationals and CEO of Disney Sports when they launched the Anaheim Ducks; former New York governor Mario Cuomo; Hall of Fame baseball player Henry Aaron; and Richard Mack, a senior partner at Apollo Real Estate Advisors. SPAC was rumored to be interested in acquiring other hockey teams, and their name had recently surfaced as being interested in the Columbus Blue Jackets.

The only other professional sports team with this type of ownership arrangement is the Green Bay Packers, although there are other outside entities that have ownership interests in professional sports team. In hockey, the MLSE, the operating group for the Maple Leafs, is 58% owned by the Ottawa Teachers Pension Plan. Most hockey clubs are owned by individuals or investment groups, and the purchase by SPAC represents the first ownership entity in the NHL that is a publicly traded company.

The issue that I raised in my post on April 27th is the central question about this type of ownership model, and that is who will be calling the shots for the operation of the Panthers? With this type of ownership model, the GM is going to answer to the board of a publicly traded company. Will the product that is put on the ice be affected by the best judgement of the GM or the board of SPAC, and what type of influence will the board of SPAC have on day to day management and operations of the club? Ostensibly, the main return on investment for SPAC will come from the development of the City of Oz, but the real estate market in South Florida has cratered. Suppose development doesn't occur for 3 to 5 years. The return that investors will get from their investment will be from the hockey club and other events at the arena. The Panthers have struggled on the ice and at the gate, failing to make the playoffs since 2000 and ranking 24th in attendance as of the end of the 2008 season, and the arena has not made money from non-hockey related events. What happens if the hockey club continues to struggle and loses money? How much patience will the management of a publicly traded company have in this scenario? I think this makes for a very interesting situation in South Florida, and it will bear watching as to how the club is operated in the coming seasons.

It is no secret that there are teams in the NHL that are struggling financially. Not every franchise is blessed to have local ownership that believes in their franchise and the local market as do the Predators. Jim Balsillie notwithstanding, there are not a lot of individuals that are willing to write a check to buy a franchise right now. It remains to be seen if this type of ownership model will become more prevalent in the NHL.