Ice Hockey: Leafs most valuable team in hockey.

Maple Leafs No. 1 - in value
Team worth $325 million, Forbes says
Peddie disputes figures: `Not even close'
Nov. 11, 2005. 05:20 AM
KEN CAMPBELL
SPORTS REPORTER


Maple Leaf Sports and Entertainment president Richard Peddie had a predictable reaction to a Forbes magazine story that has the Maple Leafs awash in money, both in terms of revenues and franchise value.

"Don't we wish," Peddie said. "It's not even close, not close at all."

In its Nov. 28 issue, Forbes reports that the Leafs are the most valuable team in the NHL at $325 million (all figures U.S., unless otherwise indicated), that their operating income has been $85 million over the past five years and that the 86 per cent increase in the value of the franchise over that time is tops in the league.

Peddie was quick to denounce both the income and franchise-value numbers, saying Forbes doesn't have access to MLSE's or any other organization's financial numbers. Peddie said the $85 million operating income was a number he didn't recognize. He said the actual operating profit is much less once you account for taxes and the fact that MLSE pays $27 million (Cdn.) per year on its debt.

"When you whittle it all down, the profit is not comparable to the Fortune 500 companies out there at all," he said. "This is a thin-profit business — it really is thin. If I were running a big Fortune 500 company, they would be giving me a lot of trouble for how low our bottom line is."

Forbes acknowledged that it doesn't have access to the Leafs' financial reports, but said it conducts numerous interviews with sports bankers and verifies its figures based on recent transactions, such as the sales of the New Jersey Devils, Vancouver Canucks and Mighty Ducks of Anaheim. Michael Ozanian, who co-wrote the piece, said Forbes' numbers are sound, particularly for franchise value.

"I had a banker tell me he could find a buyer and sell the Maple Leafs tomorrow for $300 million, so I think $325 million is very reasonable," Ozanian said. "We do know that last year, with a lockout looming, the Devils sold for $125 million. The guy (Jeffrey Vanderbeek) paid that knowing he likely wasn't going to have hockey for a year. Just ask somebody, `What's a better deal, $325 (million) for the Maple Leafs, including the revenue they get from the building, or $125 million for the Devils?'"

Peddie said it's irrelevant to discuss the value of the Leafs without rolling it into the value of the Air Canada Centre and the Raptors because the organization's strength is in how all the components fit together.

"The interesting question is, what is Maple Leaf Sports and Entertainment worth? — and I don't know," Peddie said. "We're not for sale right now."

Peddie did acknowledge that the $39 million salary cap has been a boon to all NHL teams, including the Leafs. Not only do they save about $30 million in player salaries, but fixed costs make a company far more attractive to potential buyers.

"I think the new collective bargaining agreement was very good for enterprise value," Peddie said. "We saw that in the NBA."

But it's not simply market forces and a salary cap that have made the Leafs so successful, the New York-based Ozanian said.

"For a couple of years, people have been pointing out that (the Leafs) are really doing a good job up there," he said. "It's one of the top hockey markets in North America and they've usually been going a couple of rounds in the playoffs. They don't have a crazy payroll. They've got a lot of good things going up there."

Ozanian predicted the viability of at least two NHL franchises will become a relevant topic very soon.

"The two places where I think there will not be teams in two years are Carolina and Atlanta," Ozanian said, "and I still need more convincing in Florida and Nashville."