News that Charles Wang is negotiating to sell the New York Islanders was described as, “a perpetual sale in motion,” by one hockey industry insider. Basically, Wang has been looking to sell the Islanders for the past three years, ever since his Lighthouse Project fell through and it became clear he would not be able to build a new arena.
Wang has been speaking to prospective buyers ever since and NHL commissioner Gary Bettman, who seems to have an uncanny knack for finding buyers of flagging NHL franchises, is apparently doing everything he can to give Wang a viable exit strategy.
We realize this probably couldn’t come soon enough for most Islanders fans, but they may want to hesitate before they start popping corks and heralding a new era for the franchise. Because the reality is there are a couple of factors that will make selling the Islanders very difficult.
The first is Wang’s apparent insistence on getting $300 million, and not a penny less, for his team. It’s believed Wang could have sold the Islanders a number of times had he been willing to take south of $200 million for it, but he apparently has overvalued the franchise. Some reports insist Wang has lost $10 million per year in the 15 years he’s owned the team, but our industry insider suggests the annual losses could be double or even triple that. A money-losing team in a run-down building with no hope of a new one has not exactly attracted buyers with deep pockets. Remember, these people are billionaires precisely because they’re not in the habit of throwing good money after bad business ventures.
Which brings us to the second factor. The Islanders have a new building, you say? Yes, it’s true they will be playing out of the Barclays Center in Brooklyn in 2015. The only problem is the Islanders will be tenants in that building only. And with a 25-year “iron-clad” lease with Barclays, it’s not as though the Islanders have a whole lot of leverage here.
Our industry insider suggests the only way an NHL team can make money now is to have ownership, or at least management control, over the building. The Islanders have neither and though the team will receive an unspecified annual payment from the arena as part of the lease deal they won’t get much, if anything, in the way of concessions and with it being Brooklyn, there isn’t much to be made in the way of parking revenues. And when Katy Perry and Walking With Dinosaurs have the Barclays Center booked, the Islanders don’t see a penny of that revenue, nor do they get any of the reported $20 million per year in naming rights. Plus, they’re a secondary tenant, meaning they don’t even get all their preferred dates if they conflict with the Brooklyn Nets.
Now if Wang had, say, taken the Islanders to Kansas City and worked out a deal with the Sprint Center, things might be different. There the Islanders would be able to dictate terms of their arrangement with the Sprint Center that they simply don’t have the power to do with Barclays.
As far as prospective buyers, there doesn’t appear to be any firm purchaser at the moment. There is speculation that Wang is speaking with billionaire Nelson Peltz, who has displayed a Jerry Reinsdorf-like penchant for kicking tires, but rarely pulls the trigger on a deal to buy a team. Bruce Ratner, who is developing the real estate around the Barclays Center and is a part owner of the Nets is another possibility.
Bettman is apparently working very hard to make this happen for Wang, who has been a very loyal soldier among the ranks of NHL owners and has poured enough of his own money and passion into the franchise. But just because there is a report of Wang negotiating, it doesn’t necessarily mean the man who suggested sumo wrestlers as goalies, signed off on disastrous long-term deals and hired his backup goalie as GM is going anywhere soon.
Editor’s Note: Corrections were made to a description of the Islanders’ lease agreement and Wang hiring Mike Milbury as GM.