Finally, after years of speculation, the Carolina Hurricanes are officially out of the NHL’s relocation-rumor maelstrom.
Yesterday’s announcement that Tom Dundon will purchase a majority share in the team puts an end to the long-running drama surrounding Peter Karmanos’ protracted marketing of his team. But rather than completely replacing the uncertainty on PNC Arena’s fourth floor, now it’s replaced by another type of question: what will the Canes look like under different ownership for the first time in their 20 years in North Carolina?
It’s too early to say for sure, but in every transaction there are winners and losers. Let’s run down some of them here.
Winner: Peter Karmanos
Let’s get this out of the way first. Karmanos has a well-known penchant for putting his mouth in the way of his brain, but the only thing that can really be faulted in his sale of the Hurricanes is his negotiating through the media with Chuck Greenberg’s failed bid, which to be fair was leaked to the press without Karmanos’ involvement and led to him having to perform damage control when things fell apart.
(More to the point: we first heard Dundon’s name in connection with the Hurricanes on November 29. The deal was signed December 6. There’s a reason the successful deal only made it into the media when it was all but signed and delivered, and the unsuccessful one twisted in the wind for four months.)
But let’s review: Karmanos said that there were multiple parties interested in the team, and he was right: there were at least two, Greenberg and Dundon. He said that Forbes’ valuation of his team was way too low, that it was worth $500 million, and he was right: Elliotte Friedman reported last night that Dundon’s 52% stake will be based on a value of $460 million, with the remaining 48% valued at $550 million. He said that the team wouldn’t be sold to someone who would move it, and he was right: Frank Seravalli reported that Dundon’s purchase agreement includes a clause, apparently standard in NHL franchise transfers, that prohibits applying for a relocation for seven years.
In other words, everything Karmanos said was right on, even if how he said it was a little ham-handed. Oh, and since he’s staying on for another three years as a minority owner, he’s going to have dollar signs in his eyeballs when his share of that $650 million expansion check from Seattle hits the bank account in a year or two. He’s a millionaire businessman for a reason, and this process has proved it.
Winner: Tom Dundon
The Canes’ new owner buys into the league for less than Bill Foley did, and gets to hit the ground running without having to start from square one. Since he is Not Peter Karmanos, he gets a honeymoon period. And he is a relatively young (45 years old) billionaire, which means he has money and doesn’t quite hear Father Time coming for him the way Karmanos admitted over the past few years that he has. Karmanos’ goal for the last few years was to not lose money; Dundon’s goal is going to be to make money.
All this is to say that Dundon - who, remember, will have full control over the franchise, no doubt with Karmanos’ input but not with him as the final decision maker - should be able to implement changes that will be the franchise’s first real change of direction in many years, if not ever. It would seem to be a fait accompli that, assuming things go well, Dundon will buy Karmanos out three years hence. For too long, the Hurricanes have stagnated, and Dundon’s charge is to turn that around. The sooner, the better.
Loser: Don Waddell
Every ownership transfer, in any business, comes with an accompanying set of management changes, and it would be surprising if Waddell remains in his position for too long after Dundon takes over. Waddell and Karmanos had a natural connection through USA Hockey, and it stands to reason that Dundon will eventually want to bring in his own people to run the business.
This isn’t to say that Waddell did anything specific to force him out the door. On the contrary, it’s a testament to his business acumen that the Canes turned a profit last season despite averaging the lowest attendance in the NHL. It’s simply a recognition that these changes are commonplace after a change in ownership.
Winner: The NHL’s Growth Strategy
Dundon is coming into Carolina in much the same way Jeff Vinik did when he purchased the Tampa Bay Lightning. The fact that Karmanos commanded upwards of $500 million for a franchise in a non-traditional market with significant underperformance over the past few years is a rising tide that will eventually lift all NHL boats. There’s no doubt that Gary Bettman has taken more than a few arrows over the years, but when the NHL is committed to a market, they will do everything they possibly can to make it work.
And it pays off handsomely for the other owners; let’s say the Calgary Flames can’t resolve their arena issues and Murray Edwards sells the team rather than relocating. How much would they be worth? $800 million? A billion? “If Carolina got $500 million...” is going to start every conversation in NHL boardrooms for the next five years, at least. Bettman works for the owners, and he’s come through for them time and again. This is another feather in his cap.
(Also, although this doesn’t count for anything other than pride, it matters that the NHL won’t be faced with the awkward possibility of having to move championship banners to a city that didn’t win them.)
Winner (for now): Ron Francis
The general manager’s job just got easier and much harder at the same time. Under Karmanos, the charge has been to hold the line on costs, leading to bargain-basement shopping for the likes of Josh Jooris and Lee Stempniak on the free agent market. Most of what the Canes have spent money on has been their own assets: lengthy contract extensions for the likes of Jaccob Slavin, Brett Pesce, Victor Rask, et al., with extensions this summer for Jeff Skinner and Noah Hanifin just over the horizon.
In theory, Dundon’s deeper pockets should allow Francis to make moves without having quite as much of an eye on the bottom line; acquiring salary in trades, for example. But why isn’t this a slam-dunk win for Francis? With new ownership comes new expectations, and Dundon has zero history with Francis the way Karmanos did. Francis will need to get on board and make sure he’s in alignment with any philosophical or directional changes that Dundon makes at the top, and not everyone can make that pivot successfully.
Loser: Bill Peters
He’s already on thin ice with a healthy segment of the fanbase, and again, new ownership may not be quite as patient with a team that’s quite obviously stagnating. Francis may not want to let Peters go, but the adage that it’s easier to fire the coach than it is to fire 20 players is apropos here, and depending on how quickly Dundon demands results, Peters could be the sacrificial lamb. The clock on Peters’ tenure is already ticking as it is, and it could start ticking a lot faster if things don’t turn around once Dundon’s purchase is complete. Billionaires don’t spend millions on acquisitions to see their investment putter around aimlessly.
Winners: Hurricanes Fans
Karmanos brought a team to town that won a championship in less than a decade. But his ownership following that pinnacle had ground the forward momentum of the club to a near-standstill, and it was well past time for an infusion of new energy. Dundon brings that, and deserves every opportunity to improve things. Yesterday was a new start, one that’s long overdue, and Canes fans can finally feel realistically positive about the future for the first time in God knows how long. Even without making one tangible change, Dundon’s mere presence is a big win for the NHL’s longest-suffering fans.
Loser: Quebec City
It will be held in reserve for another relocation (read: dangled as ransom for a new arena deal) down the road, but the Hurricanes were likely the Quebec capital’s best chance to get a team back. Now that ship has sailed, and they find themselves as Canada’s version of Kansas City: a great arena without a flagship tenant. The cratering Canadian dollar over the past few years - it’s stabilized somewhat, but at about 80 cents rather than near at-par where it was in 2012 and 2013 - makes moving a team to Canada almost certainly a money-losing proposition. (Consider that when the Atlanta Thrashers moved to Winnipeg in 2011, the Canadian dollar was near an all-time high of about $1.06.)
Again, going back to a point above, the NHL’s goal is consistent growth. Moving a team to a saturated market, one that will likely cost the league revenue in the long run given the circumstances, is going to be an absolute last resort. And, what the heck, let’s take a gratuitous shot on the way out the door: it just feels damn good for a bunch of North Carolina good ol’ folks to tell a Canadian market to stick it, doesn’t it?
Winner: People who don’t want to drive to Charlotte or Norfolk to go to a Topgolf
Tom Dundon is in the ownership group of Topgolf, which has long looked for a spot to place one of their outposts in this market. A deal to put one at Cary Towne Center fell through a couple of years ago. But if they don’t find a spot now, Dundon’s doing this all wrong.