Wednesday, July 21, 2010

Predators Future Looks Bright as Current Owners Buy Del Biaggio Shares

David Shoalts, a reporter for the Toronto Globe and Mail and a source of unending venom toward the Nashville Predators, wrote an article on July 16th that was headlined "Future of Preds, Stars Still Up in the Air".

Today, the future of the Predators was brought into focus.

And the future looks bright.

Today, Nashville Predators Chairman Tom Cigarran announced that the Predators ownership group had signed an agreement with the bankruptcy trustee Todd Neilson that was administering the William "Boots" Del Biaggio bankruptcy liquidation. That agreement will allow the ownership group to purchase the Del Biaggio interest for $15.2 million.

Del Biaggio had originally invested $25 million to purchase 27% of the Predators at the time of the sale by original owner Craig Leipold.

Del Biaggio was later found to have falsified his financial records and was convicted of fraud after filing for bankruptcy.

The concern about the Del Biaggio stake was that the bankruptcy trustee could possibly sell to an individual or group that was not local or would not be acceptable to the existing ownership group. If this had occurred, a potential conflict with the bankruptcy court would arise as the current ownership group had the right of refusal in accepting a new owner. This potential conflict has now been completely put to rest.

The ownership group had made it clear early on that they would attempt to buy the Del Biaggio interest. The question that was unresolved would be the valuation of that interest. What was a minority interest in the Predators worth? Obviously, it was worth more to the local owners than an outsider, but was it worth the full $25 million that Del Biaggio initially invested? And would the bankruptcy trustee accept an amount well below the initial amount of the investment by Del Biaggio?

Also in question was the ownership interest of Warren Woo, who was a 5% owner of the Predators through his investment with Del Biaggio through their investment company called Forecheck Investments. Would Woo want his interest bought out by claiming, rightfully so, that he was duped by Del Biaggio?

Woo is a thoughtful and knowledgeable man who was victimized by Del Biaggio. Woo could have asked that his interest be bought out by the existing ownership group.Would he do so?

Perhaps most importantly, would the NHL, the Nashville Sports Authority, and CIT, the Predators primary lender, forgo their claims against the Del Biaggio estate and free up the Predators to buy the Del Biaggio interest?

We now know the answers to those questions.

This acquisition of the Del Biaggio interest is nothing but positive for the Predators and their future in Nashville. The Predators will pay $5 million to the bankruptcy trustee this year and $5 million for each of the next two years under the terms of the agreement. This settlement removes the cloud of uncertainty over the ownership of the Predators and once and for all should shut the mouth of hacks like Shoalts that have continually harped on the "unsettled" nature of the the ownership group.

This also allows the team to remove some of the debt that had been accrued in the acquisition of the team from Leipold. This should mean more money available for hockey operations in the coming season, specifically, more money for player acquisition. Debt reduction has been a priority of the ownership group, and this move is a significant step in that direction.

Settling the ownership question should allow the current ownership group to bring in another partner if they desire. A year ago, Calgary businessman Brett Wilson, a personal friend and business partner with David Freeman, was prominently mentioned as a potential investor but stated that he was reluctant to consider a potential investment while the Del Biaggio ownership interest was in the hands of the bankruptcy court. That roadblock is now removed and frees the ownership group to pursue this option should they deem it appropriate.

The fact that Warren Woo decided to keep his investment in the team is telling. Woo is a savvy businessman and I have no doubt that he would have sought to exit the ownership group if he thought the investment in the Predators was unsound.

As part of the agreement, the Nashville Sports Authority, in a spirit of cooperation, released any further claims against the Del Biaggio estate, as did the NHL and CIT. This is significant, because if any of these entities had chosen not to release their claim, then this deal would not have happened. Each of these entities recognized the value of having the Predators operate without the encumbrance of the Del Biaggio bankruptcy hanging over the team.

Nashville has a hockey club that is owned by Nashvillians. This ownership group loves hockey, and they love Nashville. Chairman Cigarran was interviewed today on 104.5, a local radio station, and he said several things that should bring joy to the hearts of Predator fans. The money quote from Cigarran was:

"The investment of owning this team is not financial. It is for the good of this city and for the youth of this city."
This is a group of owners that love hockey. That has been evident by their words and their deeds. This ownership group also loves Nashville, and they believe that having hockey is good for businesses here and the city in general.

For hockey fans in Nashville, this is a winning combination.

This agreement still has to be given final approval by the bankruptcy judge overseeing the Del Biaggio case, but it is expected that this will occur.

When it does, the cloud of ownership uncertainty will be gone. The hockey club that competes hard and wins on the ice will have ownership that can devote their efforts to continuing to make this franchise the very best free of outside distractions. Ownership can devote their efforts to attracting more talent and retaining the stars that are already here.

This team is solid on the ice and in the front office. Always has been. Now they have gotten very solid in the ownership group.

Rock solid.

The future of the Predators has gotten much brighter.

Much to the chagrin of folks like David Shoalts.

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