NHL great Wayne Gretzky has been shut out in his attempt to have his investor group gain control of the storied Toronto Maple Leafs franchise.
Gretzky, who fronted private-equity powerhouse Providence Equity Partners and its $1.5 billion offer for the team and its corporate sibling, the Toronto Raptors of the NBA, had their shot at NHL ownership slapped aside by NHL Commissioner Gary Bettman, a source close to the situation said.
Providence and The Great One recently offered $1.5 billion for a controlling block of Maple Leaf Sports and Entertainment, which includes the Leafs and Raptors, the source said.
As in a typical leveraged buyout, they would have put down roughly 30 percent in equity and had their Maple Leaf Sports borrow the rest to finance the acquisition, the source said.
Despite having Gretzky as the face of the bidding group, Bettman would not bend the league rules that allow a team owner to borrow only up to 50 cents for every dollar of team value — and rejected the offer, the source said.
Another source close to the situation disagreed, saying it was not the NHL that slapped away the Gretzky/Providence bid.
With its 18-month-long attempt to sell its 80 percent stake in Maple Leaf Sports foundering, the Ontario Teachers’ Pension Plan yesterday said it was putting the sale on ice. It gave no reason for its change of mind.
An NHL spokesman said, “I’m not going to discuss it.”
Providence Equity , which owns a stake in the YES cable network, could not be reached.
There are good reasons the NHL might have been cautious about allowing Gretzky and Providence to put MLS in debt if they had acquired it for about a 12-to-13 times EBITDA multiple.
“I don’t blame Bettman. That’s the right decision,” a sports banker said.
Next year there will be collective bargaining with the players’ union, and the more profitable teams may pitch in more to compensate money-losing franchises, the banker said.
“What happens if there is a revenue sharing shift?”
Also, the NHL may consider moving a new team into Southern Ontario, near Toronto, and that could cut into Leafs’ ticket sales.
If Gretzky and Providence had reached a $1.5 billion deal, it would have been the largest price ever paid for a North American sports franchise, although it would have included two teams.
The “Great One” has been associated with those who have run afoul of league rules before.
When Gretzky was coach of the Phoenix Coyotes, his assistant, Rick Tocchet, was busted for running an illegal sports-betting ring, and pleaded guilty for promoting gambling and conspiracy.
There are several NHL teams that, despite the tight debt limits, are already in financial distress. This includes the New Jersey Devils, which when including the money it collects from Prudential Center events, is on track to lose $15 million this year.
Also, a source says the Ottawa Senators soon have a debt payment coming that may be challenging to meet.
The Dallas Stars, too, were sold this month in a pre-packaged bankruptcy.