TBJ Report: Karmanos Selling 8% of Hurricanes

by Bob Wage on Sep 10, 2011 9:01 AM EDT in Hurricanes Newsstand

Carolina Hurricanes owner Peter Karmanos and head coach Paul Maurice share a chuckle. (file photo by Jamie Kellner.)

The Triangle Business Journal reported on Friday that Carolina Hurricanes owner Peter Karmanos is in the final stages of completing a deal that would relinquish 8% of his hockey team to a group of a "half a dozen" investors for over $20 million. The transaction has yet to be approved by the NHL and the legal paperwork is still in process.

According to the article, the owner will not release any names involved until after the deal is 100% approved and completed.

The report also states that Karmanos hired a consultant who valued the team at $240 million, a much higher figure than the Forbes estimate of $162 million late last year.

For comparison, Terry Pegula recently purchased the Buffalo Sabres for $175 million, (plus $14 million in liabilities) while the group from Winnipeg purchased the Atlanta Thrashers for $170 million. (They also had to pay the NHL a $60 million relocation fee which was allegedly split up between league owners.)

The final numbers will most likely be a bit different than reported above because 8% of $240 million is $19.2 million. Either the valuation is higher than $240 million, the actual cash investment is lower than $20 million, or the 8% ratio is a touch low.

Regardless of the details, the numbers are lower than what the owner was originally looking for. Earlier this year, Karmanos was hoping to sell 25% or more of the team to a dozen or more investors.

As we mentioned previously here on the blog, TBJ reported earlier that Karmanos created a holding company so he could guarantee these investors an annualized return of 3.5% if they wanted to opt out after five years. The report states that these types of guarantees are extremely rare in sports ownership.

Look for something to be finalized regarding this sometime fairly soon. Check out the entire TBJ article, (subscription required) at the following link:

Karmanos Finds Investors, selling 8% of stake in team

Tweet Comment 8 comments | 0 recs |

Do you like this story?

Comments

Was hoping for a bigger chunk to be taken on...

…but I guess some is better than none. I was hopeful that a big enough piece of the pie would be bought to enable a little less rigid of a budget… This certainly won’t change the way this team spends money – once a budget team, always a budget team I guess.

by caniacmum on Sep 10, 2011 10:39 AM EDT reply actions

Probably something of a trial run..

This will probably amount to something of a trial run for these initial investors. I’d imagine in at the end of the five years when they have to option to opt-out of the investment they’ll also be given the opportunity to increase the percentage they have invested. If things go well it over the next five years, it may also mean that the investors who were on the fence now may be more willing to get involved as well.

by Brynthe on Sep 10, 2011 11:23 AM EDT up reply actions

Well, better than 0%.

by hurricane9 on Sep 10, 2011 10:44 AM EDT reply actions

Not impressed, but not surprised.

As I’ve said all along, Karmanos isn’t going to find local millionaires interested in spending nine figures (or even in the high eights) to have no control over a franchise that is traditionally losing money and does well to even break even. Much better ways to invest your money, even in today’s economy.

Advance apologies if the contents of this sports-based post offended you. I'm just aiming to educate the masses. My law professor says they're asses.

Panthers '011: This is what we've been waiting for...we get to overpay the core of a 2-14 team!

by MichaelProcton on Sep 10, 2011 11:28 AM EDT reply actions

McProc you are correct

i mean in today’s economy, if this isn’t making money, unless you’re a hockey nut with money to burn, 8% is miraculous.

by emmarose on Sep 10, 2011 12:30 PM EDT reply actions

wonder if the investors are named maurice, rutherford and karmanos jr.

Of Maurice, Karmanos said: "I’m happy Paul is back but he’s going to be judged the same way as any other coach. We need to win more consistently."

by Sergeant Stinky on Sep 10, 2011 1:16 PM EDT reply actions

Well and to be honest

If i had 35 million laying around I’d put up 20 mill of it up to buy a chuck of the team ..for this reason…here in carolina the last place you’d ever expect a Pro Hockey team to be..has despite what struggles it has had…has done beter 7 out preformed other markets..as in and like ATL,or FLA..so and while i am NO math or accounting wizzard…just on that 2 observations even with a shaky economy would be a better bet/risk for the region…of course being a "hockey nut wouldn’t hurt either !! HeHehe..Be safe folks…and please don’t forget..9/11…Never Forget!!

9/11/01 - Never Forget !!
Long Live #63 The Condor
Go Canes & Checkers !!!

by CaniacSteve on Sep 10, 2011 2:21 PM EDT reply actions