Forbes: Carolina Hurricanes last in NHL in franchise value; Hurricanes dispute figures

According to Forbes Magazine’s annual valuation of National Hockey League franchise values, the Carolina Hurricanes have fallen from 28th in 2015 to 30th this season with an estimated value of $230 million. Forbes’ calculations estimated that the Hurricanes’ value increased by 2% over 2015’s $225 million estimated valuation, but the team was leapfrogged by the Arizona Coyotes (9% increase) and Florida Panthers (league-leading 26% increase) to leave the Canes in last place among the 30 NHL teams.

The newest entry into the NHL, the Vegas Golden Knights, would rank 13th on the list based on their $500 million expansion fee, equal in value with the Dallas Stars and just behind the Pittsburgh Penguins ($570 million) and Washington Capitals ($575 million).

Forbes estimates that the Hurricanes lost a league-high $15 million last season, but they did not see a drop in the franchise value from 2015. All seven Canadian teams, affected by the drop in the Canadian dollar over the past year, saw their franchise values drop, led by a 7% decrease in the value of the Vancouver Canucks. The only American-based team to see a drop in franchise value was a 2% decrease in the value of the New Jersey Devils.

The Hurricanes were bought by an ownership group fronted by current majority owner Peter Karmanos Jr. in 1994 for $48 million. Revenue was estimated by Forbes to be $99 million, equivalent to last season’s number, and Forbes calculated the “wins-to-player cost ratio” as 84. According to their explanation, this number compares the number of wins per player payroll relative to the rest of the NHL, and indicates that the Canes achieved 16% fewer victories per dollar of payroll ($63 million, according to Forbes) compared with the league average during last season.

The Forbes numbers have been disputed by team executives for many years, and this year is no different. Hurricanes president Don Waddell, speaking to Chip Alexander of the News and Observer last week, was asked whether the Forbes numbers were accurate. Waddell dismissed them out of hand, saying “No, where do they get this stuff? We don’t know where they get these numbers.”

Comments made by Waddell during a November 18 press availability seem to reflect the team’s skepticism about the Forbes estimates. Waddell said that before the 2005 collective bargaining agreement was signed, roughly 70% of team revenues came from gate receipts, and that number is down to around 30% today, helped by a much more robust revenue sharing program administered by the league.

Speaking of the team’s finances, “I think it’s in the best shape it’s ever been in right now,” Waddell said. “We’ve had some pretty big losses over the years, and those losses were much smaller last year. This year will be even better.” Forbes’ reporting is at odds with Waddell’s comments, with the magazine estimating that the Canes’ 2016 operating loss was more than $3 million higher than 2015’s estimated $11.7 million loss. Forbes provided no information on whether they annualize their estimates, or whether they are reported via either fiscal or calendar year. Waddell’s comments reflected the fiscal year, which ends on June 30.

The N&O also reported last week that the Hurricanes and Centennial Authority have agreed to limit public reporting of Hurricanes finances to those numbers required by the team’s lease with the authority, not including television revenue numbers and NHL revenue-sharing data. The numbers that the Hurricanes will continue to report to the authority, and will remain public record, are those which deal with the arena itself and not the operations of the hockey team, including parking, advertising, and admissions revenue.

Waddell told the N&O that the change “eliminates all the other questions about people trying to guess are the Hurricanes and Gale Force making money or not making money.” Based on the N&O’s reporting, the numbers required by the team’s lease to be reported do not appear to have any bearing on the team’s financial situation, and are more relevant to understanding the building’s finances rather than the team’s.

Waddell’s comments seem to reflect that, in that since the Hurricanes are responsible for operating the arena in addition to running the hockey team, the finances could easily be mixed up and one confused for the other. The Canes’ rent to the authority is based on the arena’s finances, and is not affected by revenue directly to the hockey team that has no bearing on whether or not the arena itself makes money.