NHL's Power Play Continues as Penguins Seek Sale

NEW YORK (The Deal) -- The National Hockey League has come a long way in the last 10 years and, as has been the case with all professional sports leagues in the U.S., valuations are on the rise, along with interest from those wishing to join the exclusive club of owners.

So much so that real estate tycoon Ron Burkle and NHL hall-of-famer Mario Lemieux, the majority owners of the Pittsburgh Penguins, said late on June 3 that the two had hired Morgan Stanley  (MS) to advise the owners on a review of the team's options.

"We conduct periodic reviews of our business and, because we have received several inquiries about the franchise in recent years, we decided to engage Morgan Stanley for their insight and counsel," Lemieux and Burkle said in a joint statement. "After buying the team out of bankruptcy, ensuring its long-term future in Pittsburgh and creating a strong foundation for continued success, we believe it is time to explore our options."

One industry source said the team could be worth north of $500 million considering that it plays in a new stadium with a 30-year lease, has a strong local fan base and a swath of good players including Sydney Crosby, considered by many as one of the best offensive players in the league, signed under contract for the foreseeable future.

"It's definitely a more attractive franchise than the Coyotes," said the source referencing the sale in October of a majority stake in the Phoenix Coyotes that valued the league's worst-drawing team at $298 million. "But [the team] is really worth what someone is willing to pay for it. It's not a multiple of anything -- you really have to go with the stick value."

The team, which was purchased out of bankruptcy in 1999 by Yucaipa Cos. LLC founder Burkle and Lemieux, two creditors, drew an average of 18,000 fans in 2015, making it the 12th most popular team by home attendance, according to ESPN.com. It also plays in a state-of-art arena that opened for business just five years ago, the Consol Energy Center.

According to a team statement, the team has sold out 377 straight games, dating back to February 2007, and had led the NHL's U.S.-based teams in local television ratings for six straight years.

"Our goal all along was to solidify the franchise both on and off the ice," Lemieux said in the statement. "Our star players are signed to long-term contracts, they've got a deep and passionate [fan] base to support them, and I believe the Penguins are well-positioned for the future."

The Penguins, like many NHL teams, have come a long way since the late 1990s and 2000s when a host of teams filed for bankruptcy protection.

The Penguins were the first of a number of teams to enter the bankruptcy penalty box from 1998 to 2010.

In 2003 the Ottawa Senators and the Buffalo Sabers filed for bankruptcy. The Senators filed for bankruptcy-court protection in the Ontario Superior Court of Justice in 2003, listing C$166.2 million ($107.1 million) in liabilities and eventually exited to Eugene Melnyk, former chairman and CEO of Biovail Corp. While Biovail was acquired by Valeant Pharmaceuticals International (VRX) for $72 million, Melnyk still owns the team.

Oil mogul Terrence Pegula purchased the Sabers in February 2011 for $189 million and continues to be a sort of hero in Buffalo, N.Y., scooping up the National Football League's Buffalo Bills in early 2015 for $2.1 billion.

In 2009 Arizona's Phoenix Coyotes, one of league's least popular teams, filed for bankruptcy protection, eventually selling to George Gosbee and Anthony LeBlanc in 2013 for $140 million.

Gosbee and LeBlanc sold a 51% stake in the team on Oct. 10, for $152.5 million, giving the franchise a valuation of $298 million, 75% more than the team was worth just 14 months prior in a bankruptcy sale.

The Dallas Stars filed for bankruptcy in 2010 only to be sold for $265 million in November 2011 to Vancouver businessman Tom Gaglardi who still owns the team.

The power play for the NHL started in 2011 when the league signed a 10-year television and media deal for airing its games in the U.S. with NBC Sports Group, now owned by Comcast (CMCSA). The deal was reportedly worth $2 billion, and was followed by a 2013 deal between the NHL and Toronto's Rogers Communications  (RCI) worth C$5.2 billion to air games in Canada.

Since the signing of those contracts none of the league's 30 teams have filed for bankruptcy protection. The New Jersey Devils came close in 2013. But in August 2013, a group led by Apollo Global Management LLC  (APO) co-founder Joshua Harris acquired the Devils for more than $300 million.

The growing interest in the NHL and sports teams in general should continue to pique both buyer and seller interest. If the Coyotes and Penguins are a sign of things to come, those teams purchased out of bankruptcy could be next on the auction block.

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