CHL franchise values

[sureLoss]

an interesting study paid for by CHL players wanting to be paid wages. The study is meant to help prove that CHL teams have enough money to pay the players wages.

http://www.tsn.ca/chl-franchises-wor...study-1.522306

According to the study the Hitmen are the most valuable CHL franchise worth close to $70 million.

The Calgary Hitmen are the most valuable franchise in Canadian major junior hockey, according to a study recently filed in an Ontario court as part of a lawsuit against the Canadian Hockey League.

According to a report on franchise economics filed in Ontario Superior Court in Toronto on June 14, the Hitmen are worth $68.95 million, tops among the 42 teams in the Ontario Hockey League and Western Hockey League.
The study — prepared by Kevin Mongeon, an assistant professor of sport management at Brock University — was commissioned by the lawyers for former junior players who say that CHL franchises are raking in millions of dollars from ticket revenue, corporate sponsorships and TV rights fees, and are worth tens of millions of dollars.

The former players have filed a lawsuit alleging major junior teams should be sharing more of their profits with players. The CHL, the umbrella organization that represents the OHL, WHL and Quebec Major Junior Hockey League, has argued that it is a development league featuring amateur student athletes. It has also argued that if it’s required to pay damages to the players, some teams may go out of business.

Mongeon wrote in his study that the Ottawa 67’s are the OHL’s most valuable team, worth $55.53 million. He said other valuable teams from the two leagues include the Edmonton Oil Kings ($51.06 million), the Mississauga Steelheads ($44.85 million) and the London Knights ($23.02 million).

Mongeon’s study does not include teams from the QMJHL. Ted Charney, a lawyer representing former junior players who are suing the CHL, hired Mongeon to conduct the study. Another law firm in Quebec is handling the case against the QMJHL and may conduct its own study of franchise values there.

Mongeon wrote that his study was not scientific, and that he relied on assumptions based on the confirmed sale prices of 11 CHL franchises since 1990. The professor created a rate of return model that accounted for a team’s market size.

For instance, the OHL’s Mississauga franchise, Mongeon wrote, sold for $4.56 million (expressed in 2015 dollars) in 2003 and $10.68 million in 2006, resulting in a 138 per cent return on investment.

“Complete and sufficiently publicly available revenue and cost data are rarely available to analyze and estimate franchise values,” Mongeon wrote. “Accounting regulations do not always attribute revenues and costs and can also make valuation estimates based on balance sheets difficult. Many team owners have a background in investment and business ownership suggesting CHL ownership is an investment vehicle.”

Mongeon did not respond to email and phone messages seeking comment.
His study is sure to draw scrutiny after he valued the Knights, a franchise that has repeatedly led the OHL in attendance in recent years and has a virtual monopoly in its market, for so much less than franchises in Ottawa and Mississauga, Ont., where major junior teams compete against NHL clubs for attention and sponsorship dollars.

[bigrangy]

soooooo Missisauga has gone from being worth 10.7 mil in 2006, all the way to 45 mil in 2016. you'd think investors would be falling all over themselves to buy these franchises if these values were accurate. there has to be something wrong with this analysis.

[smiggy77]

also they compare valuations and revenues but don't talk about costs and margins.

Kind of a baseless article.

[Resolute 14]

There is a fair bit of stupid both ways presented there. What really stood out to me was Sam Berg's afadavit claim arguing the Niagara Ice Dogs must be loaded with money because the team filled its arena beyond capacity from 2008-09 to 2013-14. The percent capacity argument is almost always made in disingenuous fashion, so I checked... the team played in an arena that sat less than 3000 fans in those years.


In terms of the guesswork involved there, it is very easy to see why the Hitmen would be the most valuable between the OHL and WHL. I would wager the Quebec Remparts would be the most valuable had the Q been included.

[dustygoon]

Originally Posted by Resolute 14

There is a fair bit of stupid both ways presented there. What really stood out to me was Sam Berg's afadavit claim arguing the Niagara Ice Dogs must be loaded with money because the team filled its arena beyond capacity from 2008-09 to 2013-14. The percent capacity argument is almost always made in disingenuous fashion, so I checked... the team played in an arena that sat less than 3000 fans in those years.


In terms of the guesswork involved there, it is very easy to see why the Hitmen would be the most valuable between the OHL and WHL. I would wager the Quebec Remparts would be the most valuable had the Q been included.

The valuation assumptions are brutal....one team sale every two years, etc. Sample size is useless to base anything upon. Then to use some IRR number based on market size?!

"Mongeon wrote that his study was not scientific, and that he relied on assumptions based on the confirmed sale prices of 11 CHL franchises since 1990. The professor created a rate of return model that accounted for a team’s market size.
For instance, the OHL’s Mississauga franchise, Mongeon wrote, sold for $4.56 million (expressed in 2015 dollars) in 2003 and $10.68 million in 2006, resulting in a 138 per cent return on investment."

[Mister Yamoto]

Just pay the players. The last thing I would want for the CHL is a players union and the strikes/lockouts/politics that go along with it.

It's pretty much a known fact that some teams are secretly paying top end players already. Just take that money and spread it around to everyone.

[N-E-B]

The CHL does not need a union and they definitely don't need to be paying their players. I look at it like going to school. Should universities be paying me to be pursuing my career? No. These kids still get summers off and can get a job working the summer while they go to "school" in the winter.

[transplant99]

Nobody makes these guys ply CHL hockey...not one of them.

This crap drives me nuts.

You want to be paid money to play hockey when you are 17 or 18? Go play pro hockey...nothing is stopping you.

You want to be exposed to playing the best hockey you can at that age, along with a university education paid for, and getting the eyes of all pro scouts on you when you play? Go to the CHL.

Its unreal how personal choices and responsibilities (and consequences and rewards contained within) have gone away, not just hockey but in everyday life.

[Monahan For Mayor]

The way I see it is the teams and players benefit each other. The team provides the players a platform to display there talents and possibly move into a situation to be paid. The players provide a service for the team that is providing them a opportunity to pursue their career/dreams. These guys definitely don't need to be paid.

[Alberta_Beef]

If the CHL was able to build in some kind of revenue sharing I would be okay with the players being paid some, but without revenue sharing teams like Swift Current, Kootenay, Owen Sound, Prince Albert and Brandon (maybe Moose Jaw too, their rank and value do not match) would likely be forced to fold. So unless there is some assurance that these franchises will be protected, I am not for this.

[PeteMoss]

Originally Posted by transplant99

Nobody makes these guys ply CHL hockey...not one of them.

This crap drives me nuts.

You want to be paid money to play hockey when you are 17 or 18? Go play pro hockey...nothing is stopping you.

You want to be exposed to playing the best hockey you can at that age, along with a university education paid for, and getting the eyes of all pro scouts on you when you play? Go to the CHL.

Its unreal how personal choices and responsibilities (and consequences and rewards contained within) have gone away, not just hockey but in everyday life.

Why on earth would this drive you nuts? This is pretty much exactly what the union/labour movement was about from the start. People earning tons of money for someone and not getting a fair wage.

If you aren't going to pay the kids - then why sell tickets and make revenue? Why do you pay NHL players? Is there some kind of magic reason why you being good at hockey at 17 is worth nothing, but being good at hockey at 18 is worth a lot of money?

[PeteMoss]

Originally Posted by dustygoon

The valuation assumptions are brutal....one team sale every two years, etc. Sample size is useless to base anything upon. Then to use some IRR number based on market size?!

"Mongeon wrote that his study was not scientific, and that he relied on assumptions based on the confirmed sale prices of 11 CHL franchises since 1990. The professor created a rate of return model that accounted for a team’s market size.
For instance, the OHL’s Mississauga franchise, Mongeon wrote, sold for $4.56 million (expressed in 2015 dollars) in 2003 and $10.68 million in 2006, resulting in a 138 per cent return on investment."

That Mississauga valuation is crazy. They draw no fans as they are about the 50th priority in the market. Its not like they are landing big sponsorship money or TV money. London or Kitchener are worth WAY more than Mississauga (and probably Ottawa as well which plays in a garbage arena).

[Oil Stain]

Originally Posted by transplant99

You want to be paid money to play hockey when you are 17 or 18? Go play pro hockey...nothing is stopping you.

Well the CHL is stopping you if you played there as a 16/17 year old.

The CHL shouldn't get to have its cake and eat it too. If you don't want to pay players that's fine, but you shouldn't actively get to block players from going on to play in the AHL.

Also, the scholarship is pretty restrictive I believe. I think it evaporates the minute a player goes pro.

[Da_Chief]

Originally Posted by transplant99

Nobody makes these guys ply CHL hockey...not one of them.

This crap drives me nuts.

You want to be paid money to play hockey when you are 17 or 18? Go play pro hockey...nothing is stopping you.

You want to be exposed to playing the best hockey you can at that age, along with a university education paid for, and getting the eyes of all pro scouts on you when you play? Go to the CHL.

Its unreal how personal choices and responsibilities (and consequences and rewards contained within) have gone away, not just hockey but in everyday life.

So the player is not allowed to make any money yet the team can make money on tickets, merchandise, concession stands etc. What a dumb way of looking at it.

Yes, the CHL does stop players from playing AHL pro hockey if a recent drafted player cannot make their NHL team.

Thats like saying; "You want to be exposed to playing the best hockey league in the world, along with a university education paid for, living perks, plus flying city to city in private jets, and getting admiration of fans? Go to the NHL but you don't get paid.

[Resolute 14]

Originally Posted by Oil Stain

Well the CHL is stopping you if you played there as a 16/17 year old.

The CHL shouldn't get to have its cake and eat it too. If you don't want to pay players that's fine, but you shouldn't actively get to block players from going on to play in the AHL.

Also, the scholarship is pretty restrictive I believe. I think it evaporates the minute a player goes pro.

The sponsorship does need its rules relaxed, though for players who aren't signed to NHL/AHL contracts - i.e.: decide to take a shot in the ECHL or in a non-top tier European league, they can play one year of pro before forfeiting the scholarship. The scholarships are also - unless there has been a recent change - restricted to universities. Trade schools and many colleges not included. That needs to change.

None the less, the WHL does pay its players a modest stipend (likewise, probably need to be raised and tied to inflation), pays for equipment, subsidizes the billets. Would all of these become taxable benefits? Also, good luck to the 16 year old having to file tax returns for four provinces and two states.

[Northendzone]

it is my understanding that most players get some "pocket" money; however, there are always rumours that some franchises will pay certain players "under the table".

there should be some middle ground where the players are paid a set amount that works for all clubs in the league.