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Remember That Billion Dollar Mark I Mentioned?

March 9, 2023, 8:54 PM ET [14 Comments]
Jeremy Laura
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It was actually in a comments section. There have been 4, now 5, instances of trying to raise 1 billion dollars by the league/board of Governors and teams.

CBS reported that the league borrowed 1 billion to give each team access to 30 million. Depending on which version you read, this money went into payroll, utilities, avoidance of default etc.

The Senators are up for sale. There are random tweets and “snippets” that say a bidding war could raise 1 billion dollars. Then you’ve had Bettman mention adding2 new franchises. Any guesses on the updated cost to buy a franchise? So thus far there’s a 1 billion dollar loan in 2021, a team for sale hoping to hit 1 billion dollars, and 2 franchises being explored which will probably cost around the billion dollar mark. Note these are all 1 time boosts that don’t go toward HRR. And now there’s a lawsuit.

Now you have 20 teams plus NHL corporate all suing for a billion dollars in loss. Who are they suing? 5 different insurance companies. Now, the billion dollars is mentioned, but it’s not saying who is claiming what as far as losses. Just that “government mandates” and building upgrades were causes for the loss. Obviously, this is where things get muddled.

The new lawsuit cites “damage to property” in part of the language. Essentially, we found out that fan attendance made up for 50% of HRR (including concessions and parking). But, protocols put into place varied by state and country. We saw multiple large businesses relocate to Florida and Texas where lockdowns were ended earlier than many other states. However, proving which of the guidelines instituted were demanded and which were voluntary gets tricky. Regardless, the number of 1 billion floats up again.

Loss in cable subscriptions is cited by Bally (Diamond sports) in its 8.6 billion dollar bankruptcy paperwork so far. This is where it gets a little convoluted. Disney bought Fox sports and entertainment for 70 billion and sold off the sports. They also own ESPN. I’m scratching my head as to why they didn’t keep everything in house. Bob Iger’s return after less than 2 years just saw an announcement of 5.5 billion in budget cuts, 7k jobs in the U.S. and 20k worldwide. It also saw the split of ESPN and ESPN+ from the Disney brand. Disney is claiming a loss of 2.4 million subscribers and so the separation is part of the “where are we losing the most?” 3 parts now stand - Disney Parks, Disney Entertainment and ESPN. We saw Netflix announce an “end to sharing passwords” to try and boost the subscriber base, it backfired and is being rethought.

So what does all this mean? It means that every company involved in the move from NBC to Disney and Sinclair is showing losses. No one is mentioning inflation as a temporary factor. Of course people are going to spend less on entertainment if groceries cost more etc. common sense should at least point that direction. Last night’s game was on TNT, ESPN+ and ESPN have some of the other games. TNT announced on the panel last night that they have the playoffs. No mention of Sinclair.

In reality, it looks like the playoffs are set with the Turner networks while Disney and ESPN look at adjustments and Bally looks at Bankruptcy(Disney + shelved multiple projects originally slated for this year after screenings and budget reports). However, unless free streams are opened up like they have in the past the playoffs could see a drop off. The last report saw ratings down from 445k to 330k since last year. Sinclair has announced that some payments to teams/franchises will be missed as part of their filing.

The pandemic saw the NHL viewership for playoffs down 68% by the final rounds. The NBA was down 74%. TNT isn’t the “hottest” in streaming properties as people switch from Cable to streaming. Verizon is trying to get a foothold and gave Disney+ for free, Comcast gave the Peacock app for free to subs. At this point, so many numbers are flying around that it’s almost impossible to make any sense of it. The only consistency is the “B” word, as in Billion. In the world of NHL finance, that seems attached to nearly every release at this point.
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