Saturday, May 5, 2007

Surprise! Local billionaire bids for the Oilers

If you ever had any lingering doubts that the Edmonton Oilers are a good investment, especially when you give them free arenas, Edmontonian billionaire Daryl Katz has come out of nowhere to bid for the team (not to mention that the Ontario Teachers' Pension Plan sniffing around, openly talking about investing into a possible Oilers+arena package)

Katz, is offering $145 million in an offer for shares of the company that owns the Oilers, although Forbes has the team pegged at $161.7 million. God knows how much that value went up with a brand-new, half-billion Oilers casino/restaurant/god-knows-what/arena facility in the team's pocket. Of course, the offer doesn't seem like much, although (as Tyler points out) there's a few Oilers investors eager to get out of the partnership, for reasons unknown.
Of course, I'm no Wizard of Finance (my biggest investments so far have included 100 shares of Stelco and a guitar amp, both purchased in a fit of pique), but I'd be shocked if the team sold for so little.

Adding to the weirdness is The Journal's part ownership of the team, and how a story involving a paper which is privy to the offer could be so sketchy on the details ("It's not known what additional conditions may be attached to the Katz bid, including whether it is contingent on securing 100-per-cent ownership of the team, or a simple majority stake.") I'm looking forward to hearing more dirt on this...

11 comments:

Art Vandelay said...

Doesn't Ontario Teachers already own one shitty hockey team?

Anonymous said...

So, with all the moaning about not being able to draw players to Edmonton, how does a flashy, megamansion-building, zillionaire owner change things? I hear Vinny L. might be available, perhaps Mr. Katz could send his Lear down to pick him up for dinnah at the fancy new digs...

One thing would change for sure -- no more excuses for spending anything less than the cap. $50 mil a year is a rounding error to this guy...

Anonymous said...

This is what media-types call a "feeler." This is an attempt by the Oilers to gauge the interest in the team and its market value, especially after a new arena announcement.

Katz is already knee-deep with the Oilers. By making an offer public, the ownership group gets to see if there are any REAL offers out there at a higher value.

Think about it:

1. His offer is lower than what the team is already valued at. Why?

2. Investor meetings with this kind of information are always confidential. This "insider" tip-off to the Journal (a co-owner of the team) is ridiculous because those 30 people in those meetings are more than capable of keeping a secret unless they want something public.

Example: We now know that Pronger was itching to be traded in January, which the EIG knew about at the time, but the public didn't find out about it until trade day. They easily kept that out of the press because they didn't want us to know about it.

My guess is this a feeler to see if anyone bites. It makes it look like some hot shot wants the team (which he's already an investor in; Katz owns Rexall).

- Bob

Alex said...

Just to clear up the "weirdness" with the lack of Journal information on the subject, Dan Tencer reports on his blog on hockeybuzz that the only Oiler executives that knew about this were Cal Nichols and Patrick Leforge. Apparently the rest of the owners and Oiler management didn't find out until the story hit the papers this morning.

Also, both sides are pretty pissed that this has been leaked to the press, which makes me wonder just how far into negotiations this thing actually is.

mike w said...

"Godot10" in Lowetide's comments thread shares some thoughts on why small-time investors might want out of ownership:

Because they are going to have to ante up in new capital probably at least three times what they had to ante up to save the team 10 years ago.

For the arena project, the EIG is going to have to come up with probably $100 million in NEW capital.

The EIG as currently constructed doesn't have the net worth to undertake a $500 million dollar arena/real estate project.

For an existing member of ownership group, the options are take the buyout, or put up 3 times or more in new money than what you put up 10 years ago.

Plus, if you want partners like pension funds in the arena project, the EIG has to clean up the 40-headed "monster".

The private equity, REITS, or pension funds brought into the arena project are going to want to have a EIG representative that can MAKE a decision and is well-capitalized without having to go back and consult with all the owners.

David S said...

"...Dan Tencer reports on his blog on hockeybuzz that the only Oiler executives that knew about this were Cal Nichols and Patrick Leforge. Apparently the rest of the owners and Oiler management didn't find out until the story hit the papers this morning."

Jeebus! Tencer? (spits) If any of you guys seriously believe that Darryl's offer wasn't a calculated and deliberate play on behalf of both himself and the whole EIG, then I have a great land deal for you in Florida. And yes, its a feeler.

Growing up in Rio Terrace, he took his dad's small chain of pharmacies and built an empire. This is one serious-ass businessman. He doesn't do anything without a plan and he plays to win. If he really wants this team, he'll buy it.

Steve said...

the only Oiler executives that knew about this were Cal Nichols and Patrick Leforge.

Maybe I'm out to lunch here, but why would Laforge be involved? He's management, not ownership. Wouldn't any Katz offer go to that board that Nichols chairs that was set up after Jim Hole was driven out of his leadership position all those years ago, rather than to the guy charged with running the business on behalf of the ownership?

kwyjibo said...

Oh please let Teachers buy the Oilers.

That would be the Edmonton kinship I've been looking for. Might lower the Leafs-hate a little since we'd all be in it together.

Alex said...

Maybe I'm out to lunch here, but why would Laforge be involved? He's management, not ownership. Wouldn't any Katz offer go to that board that Nichols chairs that was set up after Jim Hole was driven out of his leadership position all those years ago, rather than to the guy charged with running the business on behalf of the ownership?

Shrug. I dunno guys, I'm just quoting the Tencer blog. It's pure speculation, but it's really a lot more than we currently have at the moment.

Julian said...

Would the NHL really allow for the OTPP to own/co-own two franchises?

Hello Hemsky-for-Pohl.

Anonymous said...

By the way, how'd those guitar lessons/dreams/tours go for you?

Just curious.

James Gunner