The Bain NHL Takeover Continues?

Have you read anything recently about the proposed takeover of the NHL by Bain Capital? Me neither and I find that strange.

When the proposed $3.5 billion takeover bid was announced it was viewed by some as just a PR stunt but isn't publicity normally part of a PR stunt? I have to assume that the folks at Bain could have gotten more PR out of their bid if PR was really what they were after.

We are talking about a $3.5 billion takeover here. The fact that there hasn't been more written about it makes me think that some things must be happening behind the scenes. I've written about the Bain takeover before and my feelings on the subject have not changed. In fact some of the recent developments have made my belief even stronger.

Weeks ago USA Today ran an article about a fan who wants the fans of the teams to buy the league. The fan idea seemed idiotic but the fact that they tried to compare it to the Bain offer seemed more geared to smear the Bain offer than to present this fan offer in a good light.

The NHL filed two complaints against the players association (NHLPA). Both complaints are geared toward making replacement players in the fall a reality. If the NHLPA is successful in blackballing replacement players and if the agents are told that if they represent a replacement player then they will be decertified by the NHLPA - then it becomes harder for the NHL owners to field replacement players that will be anywhere near acceptable to the paying customers.

If the level of talent is less than or equal to an NCAA college level then why wouldn't the fans just skip the NHL games and go to a local college game?

Replacement players are the linchpin of the owners plan to drive the players association into a deal that is acceptable to the owners. Without replacement players then the league is shut down for a second season or a deal has to be made that will make people wonder why the league shut down for a whole season just to return to a status quo.

If the replacement players plan increasingly looks like a non-starter then the owners on the fence become more and more susceptible to an offer from Bain Capital.

Everyone refers to a team as a franchise. And who happens to be experts in franchises? Yep - Bain Capital who along with Texas Pacific Group and Goldman Sachs Capital own Burger King (one of the grand daddies of franchise operations).

There are 30 franchises and Bain just needs 15 to wrest control of the NHL. With 15 franchises Bain could elect their own commissioner and do lots of stuff to make their dream a reality.

Think about this. Currently there are nine franchises with values below $117 million, which include teams like the Edmonton Oilers, Carolina Hurricanes, Pittsburgh Penguins, Nashville Predators, Atlanta Thrashers and Anaheim Mighty Ducks (who recently sold for just $50 million). If Bain was to offer this lower tier of franchises a premium for their clubs - say an average of $150 million per franchise - then it would cost them just $1.2 billion to gain control over better than 25% of the league (I'm assuming that Anaheim wouldn't change hands because their ownership change has yet to be approved).

Some teams would never sell because the NHL has been a cash cow for them but you have to think that Bain could get 15 teams to agree to a deal behind the scenes. I think this behind the scenes dealmaking is going on as we speak.

Bain has to keep negotiations silent because they need to announce a solid block of owners willing to sell in order to make their hostile takeover of the NHL a reality. This may be a case of the less you read the more that's going on.