For today's feature story, once again we'll visit the Canes Country email account and answer a letter from a fan. This is a recent email from John.
"First off, thanks for all the hard work you do on the blog. I read it everyday and love it! I have a question for you. With all the talk about Karmanos trying to sell a portion of the Hurricanes and the difficulty he seems to be having, I was wondering why he doesn't put a portion of the team up for sale to the public, like they did with the Packers in Green Bay? It seems to work for them. What are your thoughts about that?"
Well John, the short answer is, it's complicated.
I won't offer the pretense of being an expert on this subject, but after doing a bit of research, I can offer some basic information. The Green Bay Packers are the only publically owned major sports franchise in America. They were incorporated as a public, "non for profit" organization back in 1923.
Here is a quote from a Wikipedia article which will explain a bit more.
Green Bay is the only team with this form of ownership structure in the NFL; such ownership is in direct violation of current league rules, which stipulate a limit of 32 owners of one team and one of those owners having a minimum 30% stake. However, the Packers corporation was grandfathered when the NFL's current ownership policy was established in the 1980s, and are thus exempt. The Packers are also the only American major-league sports franchise to release its financial balance sheet every year.
There are a number of reasons why the Hurricanes can't or won't turn public like the Packers, with the major one being that it is probably against the NHL's bylaws. I've done some searching online and can't find exactly what the league's parameters are regarding ownership, but we have to assume that it's similar to what the NFL has in place. (Each team will have no more than 32 "owners" with one person owning 30% or more.)
But for the sake of argument, let's say that Peter Karmanos could set up some type of holding company which would allow for a large number of investors. The company would still be private, which means that Karmanos would dictate the stock price, although it could be written in the franchise bylaws that a third party would set the value. But unlike a true public company, Karmanos would still call all the shots.
It would take some big numbers to make the idea work. For instance, in order to raise $50 million, (about 25% of the value of the club) the team would have to sell 5,000 shares at $10,000 each. (Or 10,000 shares at $5,000 each). You get the picture.
While the season ticket holder base is probably over 10,000 strong, it would most likely be very tough to reach those figures. Then you would have the legal nightmare of setting up the framework of what rights the shareholders would have, if any, and how they could redeem their shares if they wanted to cash out. With privately held firms, it's not as cut and dry as selling public stock and there is usually not easy liquidity.
Also, instead of Karmanos being partners with 10 to 20 preselected millionaires, he would have to agree to be partners and share financial information with 5,000 or more fans.
A large number of locals owning a piece of the team would certainly solidify the franchise in the area, but it seems extremely unlikely, if not impossible, for it to happen here with the Hurricanes.
Cheers to the people in Green Bay who had the foresight to initiate their plan, almost 100 years ago. Many experts have said over the years, it's the only reason the Packers are still in Green Bay.
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