If everything goes well, the Nashville Predators will have a new owner by the end of next month.
Team owner Craig Leipold said in a press conference this afternoon that the $220-million deal is scheduled to close with Canadian billionaire Jim Balsillie, co-chief executive officer of Blackberry maker Research in Motion, on June 30.
In an open and frank dialogue with reporters, Leipold’s eyes watered up, and he had to take a moment before finishing his remarks on why he was selling the team. Toward the end of the press conference, he said he loved the fans. “I’m not ready to leave,” he said. “I don’t like the way this is ending up. I’m not bitter about it.”
Leipold, clearly talking as a man whose days in Nashville were numbered, expressed his passion for building the team and seeing it succeed on the ice. He said he wished that he could have made the team work here as a business. After mounting losses and an inability to drum up more local corporate support, Leipold said it was time to pass the torch to someone else who might make the team a successful business. “I’ve come to the conclusion that I cannot make it work here,” he said.
The NHL still has to approve the deal, which includes signing an agreement with the league that stipulates that the team can’t be relocated for seven years. Balsillie wouldn’t sign that same agreement when he tried to buy the Pittsburgh Penguins late last year. He wasn’t at the announcement, providing only a statement for the press release.
“Having gone through a sale process previously, I am respectful of and aware of the due diligence required and board of governors approval before this deal can close,” he said in the prepared statement. “This is still Craig Leipold’s franchise until the deal is completed, so for me to comment at this time on any number of topics relative to the franchise would not be appropriate.”
But the possibility of whether and when the team could move is clouded because of the default clause in the team’s lease with the city. Because the team fell short of the average of 14,000 tickets per game, the team could put the city on notice June 19, and the city then would have a year to ensure the team gets to 14,000.
It was unclear whether the clause trumped the NHL agreement or vice versa. Leipold said that’s part of the due diligence. If the team doesn’t seek the default, it has to wait a year before it has another opportunity. He said he would talk to Balsillie about the issue. But during the press conference, Leipold said of maintaining the team, “I think he’s going to give it a chance.”
If the team doesn’t average 14,000 per game for another year, the team loses 25% of the revenue sharing, which was instituted after the 2004 NHL strike. Leipold put the potential loss of revenue at $3 million to $3.5 million, a tough loss for a team at the bottom of league revenue.
Even if the team made it to 14,000, that’s still shy of the league average of more than 15,000. And, it doesn’t mean the team would be profitable, Leipold said. The team lost $15 million this year as it threatened to go deep into the Stanley Cup playoffs, which had the potential of turning around corporate interest. That ended when the team lost in the first round.
Leipold said there is only one year in which the team made money and that was $640,000. In all, the team has lost about $70 million over nine seasons the Predators have played.
As he’s said a lot in the past years, the support from the corporate community has been lacking while the average fan support has been very strong.
When Gaylord Entertainment extracted itself from ownership in the team, Leipold went looking for local partners. He revealed that only one person stepped forward and it was for 5%.
“I made no inroads in getting local partners,” he said. “I was disappointed that we couldn’t’ get others to step up,” he said.
He said Belsillie approached him in January or February, which was too far removed from the Penguins deal sinking. But there was a rival group from in the U.S., which Leipold said helped improve the price for the Predators.
The Predators marketing people didn’t know about the discussion as they were pitching a naming rights deal. When they scored the deal with Franklin-based Sommet Group, Leipold went to Brian Whitfield, the company’s managing partner, to tell him of the possible sale and gave a chance to back out. Whitfield didn’t and decided to move forward.
In a prepared statement, Whitfield said it appears that the team has a tight contract to forestall relocation. “So, my take on the situation is that if Nashville and Tennessee get behind this Predator team in the way that it deserves, there won’t be a shortfall in ticket sales,” he said. “And if corporate Nashville gets on board here, there won’t be a shortage of corporate sponsorships for this great team.”