(UPDATE FROM ATLANTA SPIRIT’S MICHAEL GEARON BELOW.)
This might seem like a random question: But do you care what your sports franchises are worth?
I ask because Forbes Magazine just came out with NHL franchise values, and the Thrashers are ranked 29th out of 30 teams — and the only team behind them is the Phoenix Coyotes, who went into bankruptcy in May and are now operated by the league.
Forbes values the Thrashers at $143 million. “The owners of the Atlanta Thrashers [who also control the NBA's Hawks] have spent more time fighting with each other than their hockey team has with its opponents,” the article states. “The franchise has been forced to give bundles of tickets away to fill seats.”
The magazine, in a financial breakdown of the team, later references the lawsuits between the Atlanta Spirit owners, saying: “A nasty and continuous legal battle amongst the eight owners over the value of the Atlanta Thrashers and Hawks, along with Philips Arena [Atlanta Spirit, LLC owns all three entities], has resulted in the team turning to Goldman Sachs for investors. Seven of the eight owners want to buy out Steve Belkin but thought his $143 million asking price for his 30% stake in the assets was far too steep. The owners have spent over $10 million in legal fees and the team has run significant net losses the past two seasons because it has missed the playoffs.”
The Belkin matter may finally be nearing a resolution, as his recent losses in court to the other owners may finally prompt him to sell his stake in the franchises and arena.
Forbes rates franchise values annually (with teams often disputing the numbers). Generally speaking, Atlanta teams don’t do well. The financial ranking of NFL franchises came out in September and the Falcons ranked only 30th at $856 million. Yes, that’s a lot for you and me. But when five teams are valued at over $1 billion, led by the Dallas Cowboys at $1.5 billion, it’s easy to say why owner Arthur Blank is pushing for a new stadium, where he can generate more revenue than the Georgia Dome.
Forbes on the Falcons: “Led by rookie QB Matt Ryan the Falcons took the league by surprise last season, posting an 11-5 record and qualifying for the post-season. But that was not enough to overcome the loss of home town favorite Michael Vick and the recession. The Falcons drew just over 500,000 fans to the Georgia Dome last year — down 6% from 2007 — ranking 25th in the NFL overall. Also, Delta Air Lines, one of the team’s bigger sponsors, decided not to renew its contract this March. Given this backdrop, it is easy to understand why owner Arthur Blank sold a small piece of the team to four investors in July. Blank’s franchise has maxed out its valuation at the Georgia Dome and his chances of getting a new stadium are close to zero.”
Forbes has not valued NBA teams since December of 2008, when the Hawks came in at No. 21 ($306 million). NBA teams generally are worth more than NHL teams because of revenue from national television contracts that hockey doesn’t have.
Of Atlanta’s four pro sports teams, the Braves fared the best at 11th overall in Forbes’ survey in April. But their value of $446 million still ranked far behind the expected top teams: New York Yankees ($1.5 billion), New York Mets ($912 million) and Boston Red Sox ($833 million).
So here’s my question: Do you care about this? A case certainly can be made that franchise values feeds into owners’ spending habits and, therefore, the quality of the product. Let me know what you think and I’ll check back.
(UPDATE: Atlanta Spirit Michael Gearon emailed the following response when I asked him about the Forbes’ article and valuation.)
“I have great respect for Forbes as a premier business magazine but I have always viewed Forbes attempt at estimating sports teams values or peoples’ net worth as purely entertainment for its readers. I have never been able to reconcile where Forbes gets their financial information for sports values or for that matter peoples’ net worth. Is Trump really worth $2 billion as Forbes claims, or is it a lot less, which is what the NY Times claims. With respect to your 3 [questions], my comments are below:
1. Forbes financial information is not accurate. For example, the Thrashers don’t have any debt and the financial information doesn’t reconcile to ours. In addition, I have no idea where Forbes came up with our purchase price for the Thrashers as $80 million.
2. Does the ranking surprise me? I haven’t given it much thought except to say that it is the same as the Atlanta Falcons. Is the ranking a reflection on how they are run? I think Arthur Blank’s answer to that question would be no.
3. We have worked hard to separate the Belkin issue from either management or the teams. The Hawks have improved every year we have owned the franchise and are currently ranked in the top 6 in the NBA based on the start to our season. With respect to Thrashers, I had strong concerns last February; however, once [Ilya Kovalchuk] became captain and we made some trades, we had a very strong finish. I like our core young players as well as the addition of [Rick] Dudley in the front office. We are playing .500 hockey, are 5-2-1 on the road against some good teams and our franchise player has been out for 3 weeks.
With respect to Belkin, we had a major victory in court. The benefit to that win is that I have been able to sleep better at night. It certainly hasn’t impacted Kovy or Joe Johnson’s sleep. In other words, this has impacted us personally and it is not an issue that has impacted decisions we have made with either franchise. It seems that writers want to continue keeping this issue in the news when it was a 2005 story.