Sportico, a relatively new business publication focusing on sports, has entered the franchise valuation game. They’ve produced an article and an interactive visualization of the NHL team values.

NHL Valuations 2022: Leafs and Rangers Lead, Average Franchise Worth $1B

NHL Franchise Valuations Interactive Data Viz

The headline is the Toronto Maple Leafs are valued at over $2 billion, the highest of all 32 franchises. And you know who is last, as they always are. Sportico’s Kurt Badenhausen has this to say about the team everyone is talking about right now:

The NHL’s biggest unicorn—and not in a good way—is the Arizona Coyotes ($465 million), valued at more than 20% less than the Panthers [ranked 31st at $595 million]. But even their value is up 13% as they opened the 2022-23 season in a college arena on the Arizona State campus that seats 5,000 people. The move gets them closer either to a new building in Arizona or a relocation. Both would trigger a surge in value, and the $465 million serves as kind of put option on one of those two scenarios.

This rise in value of the Coyotes comes as the league saw a big rebound, averaging 9%. Of course, the Coyotes are not staying in their absurdly small arena, no matter how hard everyone tries to call it wonderful. This is merely a sign they’ve broken through the bottom of the barrel and hit rock. If the local option for a new arena comes to pass, they may surge in value. But if that doesn’t pay out, they’d cost much less than an expansion franchise for relocation purposes.

The article also details some of the Ottawa Senators situation:

The team has already interviewed sell-side bankers, according to multiple people, and there is significant interest in the franchise.

Sportico values the Senators at $655 million, up a league-high 21%. In June, the team signed a memorandum of understanding for a much-needed new downtown arena at the LeBreton Flats site. There are still many steps between the MeU and an arena opening, but securing that agreement in connection with the sale would likely drive the price even higher.

That would indicate that the Senators will almost certainly operate as they are until that arena is more set in concrete.

The visualization shows revenues for each team for the past three years, and reveals vividly the reality of the NHL. For all the talk of increasing television revenues and the big advertising push by the NHL, ticket sales are the overwhelming driver of success.

In 2020-2021, the Coyotes had the lowest revenue at $53 million, but the Leafs, topping the list when the stands were empty, had only $94 million. That’s the range of non-ticket revenue, and that won’t even pay half the players’ salaries. You can’t keep the lights on in the rink for very long without full stands, and the scale of the team’s revenue losses really does explain that advertising push.

With some signs in Canada during the preseason that selling tickets hasn’t been the easy job it used to be, and the looming possibility of a recession, is there any growth to come in ticket prices? Can this big rebound continue, as the NHL seems to hope given their salary cap projections? There’s only so many new TV contracts to be signed.

Growth can come from less prosperous teams that don’t currently sell out, and the Tampa Bay Lightning and the Colorado Avalanche are two good examples of teams that used to play to partly empty arenas, and now don’t.

And as always, in any NHL valuation, if you want to see succeed, just look at the LA Kings. There’s no better story than the original-six busting franchise who are the most valuable American team in the west, and it’s not close.

The article talks a lot about the attractiveness of investment in NHL teams. They rise in asset value, virtually guaranteed, and many teams make actual yearly profits more than in other sports.

Underlying this interest is a change the NHL made in 2021, allowing institutional investors to buy into teams.

The move by the league to welcome private equity investors underscores a shift in how North American sports franchises are owned, as Wall Street and other institutional money turns to sports as investment properties. Both teams [Minnesota Wild and Tampa Bay Lightning] are set to sell stakes to Arctos Sports Partners, a speciality private equity firm launched two years ago to target the sector.

One final note: it is bitterly amusing that the Sportico article cites the growing number of billionaires looking for trophy assets as one thing driving up the prices of sports franchises. Are richer sports teams or team owners what the world needs? Does the sport need these hyper-wealthy ego-driven owners? Forget the revolving door of boutique investors who have owned the Coyotes, the real case study in asset mismanagement is the Buffalo Sabres, valued at only $635 million and living off the sponsorship of Canadian corporations. They used to be the top TV market in America. And a decade-plus of decline has driven them down to the depths of the teams struggling in so-called non-traditional markets.

The Sabres are on the up on the ice and off, however, but it only took that decade of disaster on and off the ice to get there. The Senators are going to be sold to someone who should have a clear path to success. And one way or the other the Coyotes will rise up from rock bottom. But all of that is despite the single-owner systems those teams have “enjoyed”.

Give me the equity funds, the pension plans, the telecoms and the massive sports empire that owns the Kings over some ego-driven trophy hunter any day of the week. Successful stable teams are an economic benefit to the cities they’re in and to their own employees. Billionaires’ toys seem to always need public handouts and you never know when they’ll fire people just to feel powerful.