Update 6:45 p.m.: The deal is official. Peter Karmanos and Tom Dundon signed a purchase agreement for the sale of the Carolina Hurricanes last night. our earlier story is below, followed by the press release from the team.
According to reports, Carolina Hurricanes owner Peter Karmanos is on the verge of signing a purchase agreement with Tom Dundon that would transfer majority ownership to the Texas billionaire.
The agreement was reported to be near in Palm Beach, Florida on Thursday at the NHL’s Board of Governors meetings, capping off what had been a week of build up.
Team president Don Waddell said last week that, in addition to former Texas Rangers CEO Chuck Greenberg, Dundon and two other groups were interested in buying the team from Karmanos.
On Tuesday, The Athletic’s Pierre LeBrun expanded on the state of the negotiations.
This is the group that first gets to hear about potential ownership changes. The Hurricanes remain in contact with a few interested groups, I’m told, but there’s no question the clubhouse leader as of now is Dallas businessman Tom Dundon. A purchase agreement could be in place by the end of this week although it sounds like there was still work to do on it as of Tuesday. Current Hurricanes owner Peter Karmanos Jr. would be retaining a share in the team, according to a source, if the deal with Dundon goes through.
And know this, my understanding is that whatever communication the league has had with Dundon, it’s been made clear that the Hurricanes are to stay put in Raleigh. Dundon would not be buying the team simply to move them.
On Wednesday, TSN’s Bob McKenzie reported similarly promising news and put more emphasis behind the fact that the team would stay put in North Carolina.
That will spark a lot of “relocation” talk for the Canes, but it shouldn’t.
My strong sense is that the NHL remains fully committed to Carolina as an NHL market and if Dundon enters into an agreement to purchase the Canes, he’s doing so knowing full well the NHL would only approve it if the Canes stay put.
In other words, Raleigh is not the new Atlanta. Relocation is not an option for Carolina. Certainly not now.
That leads us to today, December 7. The NHL’s Board of Governors meetings are taking place in Florida and reports on the impending sale of the Hurricanes have been flying.
Late Thursday morning, after Karmanos met with Dundon, they presented their deal to the Board of Governors.
From there, details from the agreement started leaking out, including the value of the team, which was set at $500 million. That is $130 million more than the price tag Forbes placed on the team just two days ago.
It was already known that Karmanos’ intent was to remain a part of this franchise, which will ultimately happen if the reported agreement comes to fruition. The deal will let Karmanos control a 48% share of the club, despite giving Dundon the majority share (52%). In three years, Dundon will have the ability to buy the remainder of Karmanos’ shares.
Ultimately, Karmanos sold his team for his price and kept his word. He won. Hopefully, the Hurricanes and their fanbase will win, too.
The Day In Tweets
Just spoke with Peter Karmanos and new prospective @NHLCanes owner Tom Dundon. They just presented to the Board of Governors and according to Karmanos, they hope to have a decision of the sale of the franchise as soon as this afternoon. #TSNHockey— Gino Reda (@GinoRedaTSN) December 7, 2017
Hurricanes owner Peter Karmanos is currently meeting with Tom Dundon, the Canes prospective buyer. Should have news on the sale today.— Darren Dreger (@DarrenDreger) December 7, 2017
While Dundon is based in Dallas, he's told the NHL BoG & Bettman that he is committed to keeping the team in Raleigh.— Ian Thomas (@byIanThomas) December 7, 2017
Prospective #Hurricanes owner Tom Dundon, on the right, wrapped up meeting with current owner Peter Karmanos here in West Palm Beach. Announcement expected today on #Canes sale. pic.twitter.com/gRcpRuC86L— Frank Seravalli (@frank_seravalli) December 7, 2017
Karmanos expected to retain 48 percent share of the team in sale to Tom Dundon— Pierre LeBrun (@PierreVLeBrun) December 7, 2017
Told that @NHLCanes majority interest sale to billionaire Tom Dundon had a team value just shy of 500m. Pete Karmanos will retain just under 50% ownership to protect future growth in franchise values. @NHL @Sportsnet— Nick Kypreos (@RealKyper) December 7, 2017
Tom Dundon, if the purchase agreement goes through, would own 52 percent of the Hurricanes with an option in 3 years to buy the remaining 48 percent— Pierre LeBrun (@PierreVLeBrun) December 7, 2017
Frequently Asked Questions
What’s different about what Dundon is reportedly signing and what Greenberg had signed back in July?
There are different levels to transaction agreements. Greenberg signed a “letter of intent,” which is exactly what it says: his intention is to buy the team. But it is non-binding, and was contingent on a number of factors, one of which was financing. He never came up with the financing, which basically made the whole thing dead in the water. Dundon is signing a “purchase agreement,” which is a binding contract to buy the team. It’s not an official sale, at least not yet; there is still vetting that needs to be done by the NHL, the banks, and so on. But Dundon’s purchase agreement is one step beyond what Greenberg signed. Essentially, unless something comes up that materially impacts the terms of the agreement, he’s contractually bound to buy the team.
Is Karmanos going to stay involved?
Yep, as he wanted to all along. Dundon is buying just over half of the franchise, with Karmanos owning the remainder. There will be an option for Dundon to buy Karmanos’ 48% share out in three years, which would make Dundon the sole owner of the team. But what’s noteworthy here is that, based on what’s been reported today, Dundon is doing this all on his own. There are no minority investors aside from Karmanos. This isn’t going to be a Nashville situation, where a bunch of people pool money to buy the team. Dundon is the sole party to the purchase. (In a way, it’s analogous to the Canes’ situation before Thomas Thewes’ death in 2008, just with the roles reversed: Karmanos will be the minority owner, and Dundon the majority owner.)
How much will Dundon pay for the team?
Well, that’s still up in the air. Karmanos’ valuation of the team was at roughly $500 million, including debt, and Dundon reportedly is going to assume a good chunk (if not all) of that debt. Between cash on hand and the debt assumption, Dundon’s stake will likely work out to between $250 and $300 million, but he won’t be writing a check to Karmanos for that entire amount.
So Karmanos was right all along?
It sure seems like it. He’s reportedly selling a chunk of the team for a price in line with his valuation. He did have multiple interested suitors. He is selling with the intention of keeping the team in Raleigh. Karmanos is many things, but he’s almost always brutally honest, sometimes to his detriment. In this case, though, he was right on the money, and the healthy (and understandable) skepticism that accompanied his public statements throughout this process was, fortunately, mostly unfounded.
Where does this leave Ron Francis and Don Waddell?
The Canes’ president and general manager were both hired by Karmanos, and given that he will retain a stake in the team, it seems likely that they will remain in place through the transition. Not to say they have lifetime employment guarantees, but it would appear unlikely that Dundon will come in and clean house.
So the team is staying put?
Yes, I think we can go out on a limb and say unequivocally that it will stay in Raleigh for the foreseeable future. McKenzie said yesterday that the NHL will not approve a sale if it believes Dundon is buying the Canes solely to move them elsewhere. Karmanos is still involved, and he’s expressed repeatedly the sentiment that both he and the league are committed to the Triangle. Given how dead on he was with the other conditions around the sale, he deserves the benefit of the doubt here.
Wither Quebec City?
I hear it’s lovely this time of year, and they still have a really nice arena. But the only Hurricanes going to Quebec City are the junior version that will play in their annual tournament in February.
DUNDON SIGNS AGREEMENT TO PURCHASE HURRICANES
Entrepreneur will take controlling interest in team, pending NHL approval
Don Waddell, President of Gale Force Sports & Entertainment, today announced that Dallas entrepreneur and philanthropist Tom Dundon has signed an agreement to purchase a majority stake in the National Hockey League’s Carolina Hurricanes. Pending league approval and the finalization of the sale, Dundon will take control of all team operations.
“I am thrilled to continue to build upon what Peter Karmanos started in Raleigh,” said Dundon. “The Hurricanes are a team on the rise, and I believe we have an opportunity to take the franchise to the next level. I’m ready to get to work.”
Dundon is the Chairman and Managing Partner of Dundon Capital Partners, a Dallas-based private investment firm. His investment activities have spanned the entertainment, healthcare, real estate and hospitality, technology, automotive and financial services sectors. He is the majority owner of Employer Direct Healthcare and serves as the co-chairman of Topgolf. He and his wife, Veruschka, have five children and reside in Dallas.
Peter Karmanos Jr., who originally purchased the franchise in 1994, will maintain an equity stake in the team. In 1997, Karmanos relocated the team to North Carolina, where it has captured three division titles, two conference titles and the 2006 Stanley Cup Championship. In 2015, Karmanos was inducted into the Hockey Hall of Fame in the category of Builder, in recognition of his more than four-decades of achievements and contributions to the sport.
“Tom has had tremendous success in business, and I fully expect that to continue as he takes control of the Hurricanes,” said Karmanos. “I look forward to working with him, and bringing another Stanley Cup to North Carolina.”