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Monday, October 1, 2012

Rescue For The Islanders?

A group of European investors may be interested in buying and keeping the perennially money-losing New York Islanders in the New York metropolitan area, according to this New York Post report. I have previously predicted that bankruptcy might be an option for the Islanders, who reportedly have lost upwards of $20 million a year since the 2004-2005 owners' lockout. Bankruptcy would be one means of Islanders' owner Charles Wang achieving some sort of sale of the franchise (which this report states is Wang's objective and one he is "quietly" pursuing) and getting rid of the financial albatross. (The Post report by Larry Brooks and Josh Kosman cites a claim of $40 million in annual losses, of which I am skeptical. The National Hockey League has locked out its players and claimed financial hardship. Connect the dots.) The problem is that the franchise, which was one of the National Hockey League's model franchises both on and off the ice as recently as, well, 30 years ago, may not be saleable at any price. The Islanders franchise assuredly has dropped in value during his ownership, and may be barely viable financially at the Nassau Coliseum due to lease terms that prevent the Islanders from having the ancillary revenue streams most teams now enjoy. Who would buy a franchise without having a plan for a new arena in which those ancillary revenue streams (like arena luxury boxes) are available? (Incidentally, the Post report refers to the possible interest of real estate developer Ed Blumenfeld in buying the club and building a new arena, and claims former Islander legends Bob Nystrom and Denis Potvin are advising him.) Otherwise the franchise may be unsaleable to all but the most-motivated purchasers whose acquisition may be based on non-business considerations. The European investor group, being advised by another Islanders legend, Pat LaFontaine, may qualify as serious hockey aficionados. But the $300 million cited sale price for the franchise (which assuredly includes the cable television rights to the Islanders which are now wildly overvalued) is simply for the birds. Eric Dixon is a New York corporate and investigative attorney, financial commentator and strategist. He is on the board of directors of the financial think tank the Financial Policy Council.

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