Uncommon Sense Posted June 11, 2015 Share Posted June 11, 2015 SPORTSMONEY 6/09/2015 10:18AM Why Mario Lemieux wants To Sell The Pittsburgh Penguins The Pittsburgh Penguins have peaked. The great turnaround led by Mario Lemieux, who paid $107 million for the NHL team in 1999, is complete. Although some have speculated the Penguins will sell for six times the $107 Lemieuxs group paid in 1999, I doubt it. As Mike Colligan has so expertly pointed out in his three-part series on the Penguins, the team already has a new building, is set with a long term cable television deal with Root Sports that runs through the 2028-29 season and has been selling out every home game for years. The league also has its Canadian and U.S. media deals set for several years. In addition, it will be very difficult for the team to improve and be more than a two-round playoff team. Stars like Sidney Crosby and Evgeni Malkin are locked up in long term deals, and the teams payroll is among the highest in the league and has no cap space. How big a score would a sale mean for Lemieux? Assuming the sale would include the hockey team and lease to CONSOL Energy Center, but not the real estate development project at the former Civic Center, I figure a buyer would be looking at an enterprise value of $565 million or soabout four times revenue. Last November we pegged the value of the Minnesota Wild at $370 million, which was the precise enterprise value Matthew Hulsizer paid to get Philip Falcones stake the following January. The $370 million price worked out to 3.3 times trailing revenue. Both the Wild and Penguins play in new, state-of-the-art, single tenant arenas that are controlled by their NHL teams. But the Wild have been losing money while the Penguins are profitable. Selling now would be smart. Interest rates and equity valuations have been in a bull market for several years. Who knows how long it can last? Given the teams been profitable in aggregate during his 15 year ownership tenure, selling for $565 million would yield pure profitand a 12% compound annual return. Hall of Famers like Lemieux have a great knack of knowing when to shoot or pass. By exploring his options to sell, Lemieux is showing he has a knack for this off the ice as well. http://www.forbes.com/sites/mikeozanian/2015/06/09/why-mario-lemieux-wants-to-sell-the-pittsburgh-penguins/ Link to comment Share on other sites More sharing options...
-AJ- Posted June 11, 2015 Share Posted June 11, 2015 I don't understand how having stars like Crosby and Malkin limits the ability to go beyond two rounds. I understand their stupidly high cap hit, but it seems like a bad excuse to me. Link to comment Share on other sites More sharing options...
Piggy Bank Posted June 11, 2015 Share Posted June 11, 2015 Would Lemieux himself get $565,000,000? With 12% interest... the gain would be $67,000,000 after the first year. in 7 years, if the money was left to gain interest the entire time: it would total $1,249,035,000.... I would F***ing sell now too. Link to comment Share on other sites More sharing options...
Piggy Bank Posted June 11, 2015 Share Posted June 11, 2015 Move Malkin already.... Malkin for Backstrom and Carlson. Link to comment Share on other sites More sharing options...
Nuxfanabroad Posted June 12, 2015 Share Posted June 12, 2015 Good article. Already living in the past. That new bldg will quickly become more of an historical museum, than a sports stadium. Lemieux's shrewd, & will cash his chips. Link to comment Share on other sites More sharing options...
Rounoush Posted June 12, 2015 Share Posted June 12, 2015 Move Malkin already.... Malkin for Backstrom and Carlson. I'd hesitate even if it was just Malkin for Backstrom straight up. Link to comment Share on other sites More sharing options...
oldnews Posted June 12, 2015 Share Posted June 12, 2015 I don't understand how having stars like Crosby and Malkin limits the ability to go beyond two rounds. I understand their stupidly high cap hit, but it seems like a bad excuse to me. It is a weak excuse. They have no one to blame but their front office's absolutely horrible asset management. Link to comment Share on other sites More sharing options...
JeremyCuddles Posted June 12, 2015 Share Posted June 12, 2015 Buy low sell high. Business 101. Link to comment Share on other sites More sharing options...
SabreFan1 Posted June 12, 2015 Share Posted June 12, 2015 Lemieux has a partner. I've been reading that they don't get along. It's yet another reason for him to sell. Link to comment Share on other sites More sharing options...
Green Building Posted June 12, 2015 Share Posted June 12, 2015 It is a weak excuse. They have no one to blame but their front office's absolutely horrible asset management. This. The simplest explanation is usually the right one. They had a chance to be Chicago east and blew it. Link to comment Share on other sites More sharing options...
oldnews Posted June 12, 2015 Share Posted June 12, 2015 This. The simplest explanation is usually the right one. They had a chance to be Chicago east and blew it. Yes. theminister and I were discussing this elsewhere - in the Martin/Ehrhoff thread. When you look at the list of young defensemen alone that they squandered for a pathetic sum return it becomes fairly clear how incompetent that franchise's management is. Despres, Muzzin, Morrow, Samuelsson, Bortuzzo... not to mention the picks they spent on horrible rentals, year after year. Two 2nd round picks to rent a finished Douglas Murray for example. Rent Iginla for a 1st. Rent Morrow for Morrow. Just way too much wasted futures. They've been lit up in the playoffs perenially, and they've chased shiny forward assets instead of building a solid team from the back forward. Blaming Crosby and Malkin, or their contracts is nonsense. Link to comment Share on other sites More sharing options...
Ghostsof1915 Posted June 12, 2015 Share Posted June 12, 2015 That's what I call return on investment. Link to comment Share on other sites More sharing options...
MoneypuckOverlord Posted June 12, 2015 Share Posted June 12, 2015 thats pretty savvy, doubt he will get 6 times that, even if it only sells for 300 million he still made well you guys know... Link to comment Share on other sites More sharing options...
Nuxfanabroad Posted June 12, 2015 Share Posted June 12, 2015 Hossa screwed them pretty hard too. That guy was climbing into every dark car on the hwy, looking for a winner. Link to comment Share on other sites More sharing options...
Green Building Posted June 12, 2015 Share Posted June 12, 2015 Yes. theminister and I were discussing this elsewhere - in the Martin/Ehrhoff thread. When you look at the list of young defensemen alone that they squandered for a pathetic sum return it becomes fairly clear how incompetent that franchise's management is. Despres, Muzzin, Morrow, Samuelsson, Bortuzzo... not to mention the picks they spent on horrible rentals, year after year. Two 2nd round picks to rent a finished Douglas Murray for example. Rent Iginla for a 1st. Rent Morrow for Morrow. Just way too much wasted futures. They've been lit up in the playoffs perenially, and they've chased shiny forward assets instead of building a solid team from the back forward. Blaming Crosby and Malkin, or their contracts is nonsense. I have never been a fan of rental players. Most of the time they are wasted draft picks. Teams get caught trying to supplement a shallow free agency pool by jumping on a deadline deal. Not to mention that since all of this league parity has come about it has almost always been a sellers market. What are you going to do with 600 mil Lemieux? Keep the team, fire your management team and get back to Championship hockey. Link to comment Share on other sites More sharing options...
apollo Posted June 12, 2015 Share Posted June 12, 2015 Would Lemieux himself get $565,000,000? With 12% interest... the gain would be $67,000,000 after the first year. in 7 years, if the money was left to gain interest the entire time: it would total $1,249,035,000.... I would F***ing sell now too. How are you making 12% interest? Can u please let me know so I can do it with my money? Link to comment Share on other sites More sharing options...
KFBR392 Posted June 12, 2015 Share Posted June 12, 2015 Would Lemieux himself get $565,000,000? With 12% interest... the gain would be $67,000,000 after the first year. in 7 years, if the money was left to gain interest the entire time: it would total $1,249,035,000.... I would F***ing sell now too. I believe he owns the team with at least one other guy. I'm sure he probably didn't pay cash for his stake in the team either. I imagine there is some level of debt with the team - especially with a new arena being built somewhat recently. That's generally how a business operates. So as fun as it is to imagine.. I doubt mario would see anything remotely close to 565M cash in his pocket. That's not to say he wouldn't have made a significant return on his investment, but I'm sure it's not even in the same ball park. Also.. where is this 12% coming from (in op)? I want in on that. Link to comment Share on other sites More sharing options...
falcon45ca Posted June 12, 2015 Share Posted June 12, 2015 How are you making 12% interest? Can u please let me know so I can do it with my money? Beat me to it, I love how everyone who talks about investment brings out the 12%...like 12% is guaranteed just for investing....nevermind that 10 year annualized returns usually average below 5%. Link to comment Share on other sites More sharing options...
avelanch Posted June 12, 2015 Share Posted June 12, 2015 Would Lemieux himself get $565,000,000? With 12% interest... the gain would be $67,000,000 after the first year. in 7 years, if the money was left to gain interest the entire time: it would total $1,249,035,000.... I would F***ing sell now too. where the heck would you find 12% interest rates in the US? nowhere. the article says that he's had an average 12% return on investment per year since he bought the team if he sells right now at the price they believe he would get. lemieux would not get 12% interest on the 565 million after he sells. Link to comment Share on other sites More sharing options...
Pears Posted June 12, 2015 Share Posted June 12, 2015 That's some pretty serious profit. Anyone in their right mind would sell the team for that much. Link to comment Share on other sites More sharing options...
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