Image by Getty Images via Daylife
When the Canadiens were sold to Gillett in 2001, there wasn't another buyer around and back then the team was a relative bargain. It's hard to see somebody buying the team today, at a 50-75% premium.
The team is firing on all financial cylinders, revenues are high, but the potential to up the earnings is rather limited and the buyer is acquiring a mature business with more downward risk, than upward potential.
That's why the owner had to hire a consulting group in order to help identify and pursue possible suitors.
All the potential buyers who's names are being bandied about by the newspapers, had the opportunity to buy the team back in 2001 and passed. Given the new set of circumstances today, it's even more unlikely that they will come back to the table and pay even more for the team, given the present economic era of uncertainty.
The Quebec finance minister has pooh-poohed the idea of the Caisse de Depot (the province's pension fund) providing financing, which makes the deal even more unlikely, given the frozen credit markets. This decision is hard to understand. The Caisse lent $140 million dollars to Gillett to buy the team in 2001 and the loan was completely repaid. With the credit markets the way they are now and without the Caisse's involvement, the buyer will have to commit over $400 million in cash to get the deal done.
Let's review some of the personalities mentioned as potential saviors.
GUY LALIBERTE
The owner of the Cirque de Soleil is certainly rich enough to do the deal, but is unlikely to do so, unless he can wring some big time concessions out of the owner, an unlikely event. Mr. Laliberte seems to be going in the opposite direction, cashing out some $600 million by selling part of the Cirque to Arab interests. Cirque President, Daniel Lamarre, scotched the idea of a permanent show in Montreal, based on economics when the Casino/Cirque deal in the Peel basin died. The Cirque, according to him, went on to bigger and better things. Today, expansion of the Cirque into Russia is a priority and a huge financial and creative undertaking, likely to exhaust the company's energy and focus.
Also, Mr. Laliberte's acrimonious divorce is hanging over him and a high profile purchase of the Canadiens, doesn't seem like a good idea.
CELINE DION/ RENE ANGELIL
The Quebec chanteuse is wealthy, but alas, not wealthy enough. She's definitely no Oprah. Rene Angelil has already stated that the project is of no interest to them.STEPHEN BRONFMAN
The last remaining member of the Bronfman family in Montreal is a lightweight, without the power or the money to pull off a deal of this magnitude. Charles Bronfman, the ex-owner of the Expos, moved out of the city to New York years ago. He has stated in the past, that his purchase of the Expos in 1968 was based on his love of the city. Now that he's gone, there's no more motivation.
Aside from that, the once mighty fortune of the Bronfmans is not what it once was. It has been battered by a terrible merger with Vivendi SA and the misadventures of Edgar Jr. in the entertainment field.
PIERRE-KARL PELADEAU
Son of Quebec scion, Pierre Peladeau, Pierre-Karl is fighting his own battle to keep his print and media business profitable. PK has a small fortune, but unfortunately started out with a big fortune, it's hasn't been easy since his father's death. I don't know if those proposing his name read the same newspapers as I, but the financial situation at the company needs to rebound in light of the 'Quebcor World' subsidiary bankruptcy. The newspaper business, which the company is heavily involved in, doesn't look rosy and the company's stock price of $17 is way off the $48 high. PK certainly doesn't have the time or inclination to make a move on the Habs and it's unlikely that his shareholders or bankers would appreciate the adventure.PAUL DEMARAIS
The owner of the powerfully diversified Power Corporation is perhaps the most unlikely buyer of the Habs. Mr. Demarais is no publicity hound, if anything quite the opposite. He is more attuned to living life in the rarefied atmosphere of the rich and famous (he is best friends with President President Nicholas Sarkozy and is said to have engineered his rise to power.) Ownership of the Habs would thrust Mr. Demarais into the limelight and make him responsible to the hoi-polloi for the goings on at the Canadiens. Mr. Demarais is a an unabashed and activist federalist, largely reviled by nationalists as someone who has sold out his people and made money on their backs by controlling Quebec's business world. He could never don the cloak of neutrality that would be required of the owner of the Montreal Canadiens.
JEAN COUTU
Forced out of retirement to help turn around his company's deteriorating fortune, triggered by a disastrous expansion into the USA, it's unlikely that he'd be interested in the team at this point. His company reported a whopping $397 million dollar loss in the last quarter.LINO SAPUTO
The Saputos are deeply involved with their first love, soccer and are also unlikely buyers. Their dream of owning a franchise in the North American premier soccer league, the MLS went unrealized when they balked at paying the $40 million expansion fee.
$400 million for the Canadiens, I don't think so!
JIM BASILLE
So that leaves the front runner, Jim Basillie, who's dream of owning a NHL franchise in southern Ontario has been dashed on too many occasions by Mr Bettman and friends. Maybe he's ready to 'settle' for the Canadiens, but Mr. Gillett knows his phone number and has probably already called. The fact that there are no rumours of an impending deal, speaks ominously to his interest.I hope I'm wrong, he'd be a fabulous owner/operator.
The very last idea being floated is that of a group of investors who can be cobbled together, a la Expos. Without a lender and in the present tight credit market, $400 million is an impossible number and given that Gillett is selling the team to raise cash, a balance of sale is out of the question.
