- Something you’ll hear if you work in pro sports long enough
Recent conversations with a handful of industry contacts made me wonder what makes NHL owners tick.
Pro hockey as we know it wouldn’t exist without franchise owners. So what compels someone who can have it all to get into a game where 31/32 fanbases melt down each season?
The average NHL team is worth $1.01 billion, according to data compiled by Sportico. The Toronto Maple Leafs rank first at $2.12 billion, while the Arizona Coyotes rank last at $465 million. Below are the values of the league’s 32 franchises, whose collective worth is $32.4 billion. (Click image for full list)
Few asset classes see sustainable double-digit annual growth. Major league sports teams are relatively safe investments but don’t appreciate that much in most years. Still, they aren’t subject to many of the market forces that exist in other industries, making them a smart investment for billionaires looking to diversify their holdings.
For cash flow
A well-run NHL team produces revenue via ticket sales, TV deals, merchandising, licensing and so forth.
Unlike other major leagues, the NHL is more gate-driven, especially in the US. This makes it somewhat more vulnerable to cyclical phenomena, such as how successful/appealing the on-ice product is in a given season.
Canadian and big-market US teams generate appreciable profits. Other teams, not so much.
To increase personal prestige
To be frank, there are many other asset classes that represent better long-term investments and produce more short-term cashflow.
So why do people buy NHL teams?
Like bottle service (if you make $50k/yr), sports cars (if you make $500k) and second homes (if you make $5M), it’s probably an ego thing.
If you’re reading these words you’ve likely once dreamt of making it to the NHL as a superstar player. The next best option, however, is to get tremendously wealthy in an unrelated business, buy your childhood team, staff it with the best and brightest, and win as many Stanley Cups as possible until you ride into the sunset.
Things don’t always work out that way.
We can think of many owners who’ve become household names on social media for the wrong reasons after buying into the NHL. But if your team does win the Stanley Cup, it must feel very, very sweet indeed.
