FORBES TRUTHINESS

Holy hell! Unless I’m off my nut, the latest information from Forbes suggests the Edmonton Oilers are in fact a license to print money–when they suck!

Incredible. The story is here, I’m not going to post the graph (click through and it is there) but the Edmonton Oilers are a money maker and it is an incredible story. During the elevator drop seasons 2009-10, 2010-11 and 2011-12, the Oilers were 8th, 5th and 7th in league income.

That’s bullet proof, baby. Am I wrong?

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32 Responses to "FORBES TRUTHINESS"

  1. Bar_Qu says:

    The recently scuttled deal for an new arena is looking less and less like a bad thing with each month of news the past while.

    Makes you wonder why Katz and co. were so willing to shoot themselves in the foot over $6 M/yr.

    I often say, would you rather be right or be happy? Because you ain’t gonna be both.

    And I think in the case of the Oilers’ mgt, unhappy would appear to be their choice.

  2. CrazyCoach says:

    I love how Forbes says that Katz is greedy for his own good. Not sure if his recent actions are a bluff or the final act of a man with nothing else to play. Hopefully he comes to his senses that this team belongs in Edmonton and will be top dog until eternity. A move to Seattle will translate into fewer fans and believe me, you might hit page 3 of the sports section if the Mariners and Seahawks aren’t playing.

  3. Lowetide says:

    I’ve never posted this–because I’m a fan and what the hell do I know–but are we absolutely certain he’s flush?

  4. ashley says:

    The Smid comp for Musil is strange. They kind of look alike, but otherwise are seemingly dissimiliar players. Smid has got to be one of the fastest skaters in the league. It is remarkable to see a massive body move that quickly. His short distance acceleration is incredible. World class. This has helped him cover up some of his errors, especially early in his career.

    Musil will have to play a much more intelligent positional game to succeed.

  5. ashley says:

    ^ Sorry, wrong thread.

  6. VOR says:

    LT,

    Are you asking if Katz is flush?

    I have wondered the same thing. I know lots of sources say he is a billionarie etc. But the thing is that would be based on some sort of personal net worth statement. You know, if we sold everything he owns and paid off all of his debts today how much would be left over – net worth. You can be paper rich and real world poor. For all we know Katz may have very serious cash flow issues and debt he is having trouble servicing.

    If you convert the wealth of Peter Pocklington at the top of his empire in 2012 dollars he was also a billionaire, on paper.

  7. Lowetide says:

    VOR: Yeah, exactly. Those Jets have a walking-around-money rich owner.

  8. Kris11 says:

    Maybe Katz should sell the team to someone who would move it to Edmonton?

  9. art vandelay says:

    … are we absolutely certain he’s flush?
    Anybody getting a $450M handout who quibbles over $6M/yr, which is a rounding error, is either broke, stupefyingly greedy or completely crazy.

  10. striatic says:

    art vandelay,

    i almost totally agree – since it it is quite possible that he is broke, stupefyingly greedy AND completely crazy.

  11. Dalton says:

    We should stop talking about Seattle like it’s worth talking about. There never WAS any f***ing Seattle.

  12. spoiler says:

    The flip side of this question is: how trustworthy are the Forbes numbers? I know Tyler Dellow puts little to no faith in them. Others too.

    Has Forbes improved their sources, or are they still guesstimating?

    And they may have the numbers wrong, but have the ballpark and the ranking correct.

  13. Clay says:

    If ever there was a long-suffering fan base that deserved a turnaround by their team…

  14. RexLibris says:

    Clay,

    What do the Flames’ fans have to do with this?

    ;-)

  15. Rebilled says:

    “We sell this building out ever night.’ thecaptainethanmoreau

  16. spoiler says:

    VOR:
    LT,

    Are you asking if Katz is flush?

    I have wondered the same thing. I know lots of sources say he is a billionarie etc. But the thing is that would be based on some sort of personal net worth statement. You know, if we sold everything he owns and paid off all of his debts today how much would be left over – net worth. You can be paper rich and real world poor. For all we know Katz may have very serious cash flow issues and debt he is having trouble servicing.

    If you convert the wealth of Peter Pocklington at the top of his empire in 2012 dollars he was also a billionaire, on paper.

    The 5 year long US economic downturn and margin-busting inflation can’t be helping to pay out the amount of leverage he used to expand his empire. Retail as a sector scares me right now. That said, in an ever-sickening, ever-aging population, he’s in the right gig.

    But everyone wants to maximize and/or guarantee profits, he might be flush and still making good dough. As for net worth… I suspect if he took Rexall public, he would make a pretty penny. Same if he sold it to a group like Buffet’s Berkshire or to some large private entity. It strikes me as a pretty recession proof enterprise. Isn’t that why we’re always complaining about the spiralling costs of health care–because the demand is so inelastic? He should be making money. Or maybe he has good cash flow but not the downpayment for the mortgage.

    An Empire builder’s primary tool is leverage. At the heart of it all, I think having the City pay for the rink frees up his cash to spend on the towers and surrounding development. With taxpayer money added to his own he could dream something big. He doesn’t just want to be a billionaire, he wants to be a multi-billionaire with a glittering jewel development branding his empire. It takes drive to do what he has done in his life, and I don’t think that drive has suddenly been satiated.

    I commented on the huge, expensive, grandiose nature of this project back in its infancy. That’s what happens to taxpayer money, imo. It gets frittered away on frivilous fancies rather than being employed with the full respect and fiscal discipline our coerced dollars deserve. Look at what we were thinking of building during a time of global economic uncertainty. Xana-freakin-du. Sorry Katz, Kublai Khan’t. Council for once, made the right move, although it took putting their backs to the wall.

    And one thing we’ve learned about Katz is that while he is a lawyer, an empire-builder, and a billionaire… a salesman he is not.

  17. spoiler says:

    I can see that if he was used US real estate to leverage his growth, the bust might’ve screwed over his finances real good.

  18. spoiler says:

    Wow. The WHL sure did a number on Johnson and the Winterhawks.

    Best line was on Sportsnet… Like trying to cure your dandruff with decapitation.

  19. El Duderino says:

    I have always suspected he could have money problems and is not an actual moneybags owner. Sort of jibes with him not wanting to open his books, could be embarrassing. Now Shawn Horcoff, there’s a guy with money. Only wants 57% of revenue with minimum guarantees and no risk. That’s the kind of partnership I dream of. Nasty owners.

    i

  20. CrazyCoach says:

    spoiler: Wow. The WHL sure did a number on Johnson and the Winterhawks.
    Best line was on Sportsnet… Like trying to cure your dandruff with decapitation.

    That was a pretty accurate quote, and they are right when they say there has to be more than what is being said now. I know these owners make a ton of money off these kids and this type of treatment strengthens the argument that the players need an association. They have given the death sentence to the Winter hawks developmental system and for what? Giving your captain a cell phone? Arranging for flights for parents to a hockey outpost that is Portland?

    I feel bad for Mike Johnston. I had the privilege of attending a couple seminars with him when he was still with the Canucks. Real classy guy. Asked him to come down to the locker room and say a few words to my team and he did. Wow, if you’ve never had the chance to see/hear/experience a pro coach address a team, you quickly see why these guys are pro calibre. Simply amazing. I hope his reputation isn’t hurt by this.

    I guess for me the real relief is knowing that my hometown PG Cougars will never be accused let alone investigated for extravagant gifts to their players. You’ll see Amnesty International at the CN Centre before a WHL investigator.

  21. maudite says:

    I think it’s more a gamble of trying to break the deal to get out of the subsequent development that he was committed for. He now has no meat on the plate at all. We are talking about building it anyway as well. He’ll just threaten to move enough, get us to build it and then still get a profitable deal out with zero commitment to developing anything. He’ll promise to keep the team here forever and they’ll hand him all the concerts to manage….

    It’s ridiculous but it might work out even better for him.

  22. nelson88 says:

    At risk of sounding like an old fart. Boy could the younger generation (and not just hockey players) learn something from those who have actually lived through hard times, wars, etc. An ability to put things in perspective that most folks today can’t really touch.

    http://espn.go.com/nhl/story/_/id/8687608/ted-lindsay-despises-badmouthing-gary-bettman-players-lockout

  23. sliderule says:

    I have a friend who owned a pharmacy and he told me Katz was buying up all these stores at more than they were worth.
    He explained he could do this as he arranged to get huge kickbacks from generic drug companies.This could be nearly a million or more per store.

    The provincial governments have been limiting these kickbacks and even talking about banning them.
    This could be putting a lot of stress on his empire.

  24. gcw_rocks says:

    I wonder about the Forbes calculations.

    Cost data, other than plyer salaries is very hard to come by. However, this study (http://law.marquette.edu/s3/site/images/sports/FacilityArticleIIed.pdf) claims in 2003 the average operating cost of an NHL franchise was $70M and, at the time, the average player salary was $1.64M. If you assume that all teams carry a 23 man roster, that means that on average $37.7M was for player salaries and $32.3M is related to other operating costs. The Oilers,who have to log the most miles in travel would certainly be expected to be at least average in other operating costs, if not higher. Adjusting for inflation, that would be $38-40M in 2012.

    Their player salary committments for this season would have been approximately $65M in real dollars. $65M plus $40M = $105M to operate the franchise.

    Now, I would assume Forbes has better data than I have been able to find, but it would not surprise me if they were optimisitic on operating costs since the Oilers wouldn’t make that data public. Regardless, what it tells me a new arena means the Oilers do not require a $6M operating subsidy, even if Forbes is low by $10M in other Operating costs.

    Shame on Katz for asking for one.

  25. russ99 says:

    The NHL isn’t usually so forthcoming with this data.

    But income by itself tells nothing, unless we see expenses, there’s no way to know if Katz is “rolling in it”.

    Also, he’s publicly stated that he’s broke even or had to put money in the franchise in the past.

  26. Bruce McCurdy says:

    Bar_Qu: I often say, would you rather be right or be happy? Because you ain’t gonna be both.

    That, sir, is sage advice. The NHL and NHLPA ought to think about that too.

    nelson88: At risk of sounding like an old fart.

    I’d rather sound like an old fart than smell like one.

  27. godot10 says:

    sliderule:
    I have a friend who owned a pharmacy and he told me Katz was buying up all these stores at more than they were worth.
    He explained he could do this as he arranged to get huge kickbacks fromgeneric drug companies.This could benearly a million or more per store.

    The provincial governments have been limiting these kickbacks and even talking about banning them.
    This could beputting a lot of stress on his empire.

    Katz sold a significant chunk of his pharmacy business for cash (nearly a billion dollars) last year. Not the Rexall stuff, if I recall, but out of his supply relationship with the network of independent pharmacies he had relationships. with.

  28. spoiler says:

    gcw_rocks:
    I wonder about the Forbes calculations.

    Cost data, other than plyer salaries is very hard to come by.However, this study (http://law.marquette.edu/s3/site/images/sports/FacilityArticleIIed.pdf) claims in 2003 the average operating cost of an NHL franchise was $70M and, at the time, the average player salary was $1.64M. If you assume that all teams carry a 23 man roster, that means that on average $37.7M was for player salaries and $32.3M is related to other operating costs.The Oilers,whohave to log the most miles in travel would certainly be expected to be at least average in other operating costs, if not higher.Adjusting for inflation, that would be $38-40M in 2012.

    Their player salary committments for this season would have been approximately $65M in real dollars.$65M plus $40M= $105M to operate the franchise.

    Now, I would assume Forbes has better data than I have been able to find, but it would not surprise me if they were optimisitic on operating costs since the Oilers wouldn’t make that data public.Regardless, what it tells me a new arena means the Oilers do not require a $6M operating subsidy, even if Forbes is low by $10M in other Operating costs.

    Shame on Katz for asking for one.

    There is exchange rate costs to consider in the earlier data and the recent estimates.. Also, my understanding of the Forbes “operating income” is that is an EBITDA estimate, thus interest payments and taxes are not included, both of which could be significant.

  29. BlacqueJacque says:

    And this is why Council should stomp on Katz’s neck and make a low-ball offer on the arena and lower it every time he squirms.

    Greedy fucking prick. My taxes go to roads, parks and crime prevention.

  30. art vandelay says:

    If the Forbes numbers are correct, Edmonton taxpayers could buy the STL Blues for less than half the money they’re being asked for shovel into the new arena. In fact, looks like we could buy a couple of NHL franchises for the same money Katz expects to bend us over for. We could play one of the teams out of Londonderry Arena on weekdays, and Tipton on weekends.

  31. DeadmanWaking says:

    I guess I’m a dollar short and a day late, but at least I’m on topic for once lately.

    It wouldn’t surprise me that cash flow was an issue behind the scenes, whether Katz is solvent or not. No telling whether he is trying to keep the bulk of his powder dry for other mischief. The CBA situation adds uncertainty, as well.

    With a sand dune, it’s just one extra grain that triggers the slide. This was forgotten when it was reported that the Ryan Smyth negotiations ended just $100,000 apart.

    Ask yourself this. Between two rational negotiators, what’s the smallest final difference that can end in failure? Call this value C, for Captain Canada, or Kiss and Cry, or short and curly–as you wish.

    Let’s assume the value C is large enough to rub between your fingers. Given the definition of C, we know that as soon as the first offer is tendered by either side that brings the gap to a value less than C, the negotiation is now guaranteed to end successfully, without any further agreement. How? A coin flip, I guess. Or split the difference? Which means you know when making any offer that you’re automatically on the hook for an additional C/2. Of course, both sides just factor their belief state concerning the value of C into the numbers they float.

    Let’s say the team and the agency agree that a failure gap less than $300,000 has bad optics. They make a pre-agreement to automatically split the difference if the gap becomes lower than this value. Both sides table offers $150,000 shy of the position they’re willing to accept. Voila! Now the negotiation can’t fail with the two sides less than $300,000 apart. But even with this fiction, it’s still possible that if either side moved by one additional dollar, a failed deal might have consummated. We haven’t changed anything here with this PR fiction.

    Any value you can define for C disappears as fast as you can name it. In mathematics this is referred to as woolly thinking: the implicit belief in a value that can’t be named.

    Logically it has to be possible for a negotiation between rational parties to end with a difference as small as one cent, unless both sides have built in an optics-massage fudge factor.

    The only thing we know for certain is that Katz’s optics-massage fudge factor was less than the size of the final straw. And that final straw might have been some critical piece in a complex cash-flow management plan. Or just built in as an assumption to some complex financial model that’s expensive to update on the changed parameter, and you just get too damn frustrated to bother with the extra time and expense.

    Hmm, I could go home and update this incredibly complex model with no certainty we get a deal regardless, or I could just pop my adversary one in the kisser for grinding me on this small detail. At this point, if you’ve been paying attention in anger management school, you form the two-handing T signal and tap out for a cooling off.

    Who here hasn’t slept on the couch because of one misjudged word?

  32. spoiler says:

    Dellow’s refutation of Forbes’ alleged truthiness. Needless to say, Forbes looks pretty bad.

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