In a letter to Nashville Predators season ticket holders, suite owners and sponsors, team owner Craig Leipold explained why he is selling the team and confirms that it is being sold to Jim Balsillie, co-chief executive officer of Blackberry maker Research in Motion.
A press conference is scheduled for 2 p.m. this afternoon to announce the sale. Balsillie won't be in town to be at the press conference.
In his letter, Leipold stated that the team will have a $27-million real cash loss over the past two seasons because of below average attendance even though the team tallying up a total of 216 points, the fifth best in the NHL.
"Additionally, that loss is despite receiving the most in the league from revenue sharing," he wrote. "Over the last five years, the team has lost over $60 million." Leipold stated that the team has spent $50 million over 10 years in sales and marketing efforts mostly with local business and still, the attendance has fallen short. "A low turnout, combined with a low ticket price results in a poor financial situation," he wrote.
So in the end analysis, Leipold said he had to make "one of the most difficult decisions of my personal and professional life" and that is to sell the team. "It's time to give someone else a chance to take the Nashville Predators to the next level in terms of local business support," he wrote.
He didn't address that question of the potential for moving the team in the coming years. Presumably, that issue will brought up at the press conference.
Below is the full text of Leipold's letter:
To Predators’ Season Ticket Holders, Sponsors, Suite Holders
June 25, 2007 will mark the 10-year anniversary of the awarding of the NHL franchise to Nashville that became your Nashville Predators. It’s been an incredible 10-year journey for me. I can’t tell you enough how much I appreciate your strong emotional and financial support of the Nashville Predators. You are a big part of the team’s on-ice success. On behalf of the entire franchise, I thank you.
Ten years ago, I couldn’t call myself a hockey expert. Today, my family and I are as passionate and competitive about the game as the most hardcore fans.
When the franchise began, I said we would run it as a business in order to be successful. We developed a game plan both on and off the ice. We became an integral part of the community, especially downtown Nashville. We made sure we had some fun. And, we indicated that making a huge profit was not a top priority – but we certainly didn’t make plans to lose a significant amount either.
As part of those plans we developed a loyal fan base – every team should be fortunate enough to have a Cell Block 303 and the loudest arena in the league. We built a team that the community could be proud of on and off the ice. We grew our hockey skills exactly as general manager David Poile outlined, using the draft as a foundation and then supplementing at the appropriate times with trades and free agents. We gave back to the community – well over $2 million in grants and in-kind donations through the Nashville Predators Foundation. We created an entertaining in-arena atmosphere for every game night. And, we did it all while keeping our ticket prices near the bottom of the league.
Unfortunately, the success on the ice has not translated to success for me as business owner.
Here are just a few facts as to why:
• The Nashville Predators tallied up 216 points in the last two seasons, fifth most in the NHL, yet because of below-average attendance, the team will still have a real cash loss of $27 million during that time. Additionally, that loss is despite receiving the most money in the league from revenue sharing. Over the last five years, the team has lost over $60 million.
• We’ve invested heavily in sales and marketing efforts, spending over $50 million in 10 years, most of that with locally-based businesses.
• Our average regular season attendance this past season was 13,589, up from the year before, but still 2,000 below the NHL average. A low turnout, combined with a low ticket price results in a poor financial situation.
• The new NHL Collective Bargaining Agreement with revenue sharing is not a cure-all. Each local market must still support its local team. In addition, this attendance does not qualify us for our full revenue sharing allocation under the collective bargaining agreement.
• While individual fan support has always been strong, we’ve worked aggressively to increase our local business support since Season Four. We’ve tried a variety of approaches with minimal success. Our records show today that corporate support for the Nashville Predators makes up about 35% of our season ticket base. The average in other markets is around 60%. During our first two years, approximately 4,000 businesses owned season tickets. Today, only 1,800 businesses have season tickets.
While my heart and my love of the game tell me we can still be successful, the facts outlined above suggest otherwise. I’ve reached the only possible conclusion and it’s one of the most difficult decisions of my personal and professional life.
Later today, I am announcing an agreement to sell the Nashville Predators franchise and Powers Management to Jim Balsillie. We plan for the sale to be final in early July after a short period of due diligence and approval from the NHL Board of Governors.
I’ve carried the franchise as far as it can go from a business standpoint. It has been well-reported that we have attempted to attract local ownership since 2002. The truth is, we had only one serious inquiry in that time from someone who was interested in a small minority share of the team. Jim Balsillie is interested in full ownership.
It’s time to give someone else a chance to take the Nashville Predators to the next level in terms of local business support. Last week’s announcement that the Sommet Group has signed on as a naming rights partner for the arena is a strong first step in the right direction. The new energy and leadership of Jim Balsillie will be another.
Jim Balsillie is co-CEO of Research in Motion, the company which developed the Blackberry device. He is an avid hockey fan who still plays recreationally. I know he is dedicated to putting a great team on the ice.
The past 10 years have laid a foundation, but there’s still much to be done to both build corporate support and to win a Stanley Cup. I know Jim shares my passion for the game and my commitment to a strong franchise to pursue the greatest trophy in sports.
Despite the financial challenges we faced, owning this franchise has been the thrill of a lifetime. I’ve made many friendships here in Nashville. It’s been an exciting 10 years, and as I move on from the ranks of team ownership, I’ll always remain a fan.