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Wednesday, January 31, 2001
Gillett buys Canadiens for $183 million
Associated Press
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MONTREAL – Uh-oh, Canada. An American is the new owner of
the Montreal Canadiens.
|  | | New Canadiens owner George Gillett Jr. gives a thumbs up Wednesday alongside, from left, ex-Canadiens great Guy Lafleur, team president Pierre Boivin and Molson CEO Daniel O'Neil. |
George Gillett signed the papers Wednesday to become majority
owner of the most storied team in professional hockey.
Now he must convince Canadians that he's not their worst
nightmare – an American owner who will take the NHL's most
successful franchise south of the border.
Gillett wore a Canadiens tie and pin at the center-ice news
conference Wednesday announcing the $183 million deal to buy an
80.1 percent stake from Molson Inc. and the Molson Centre arena
where the team plays.
He then promised to return the "grandeur of this team" that
has won 24 Stanley Cups and epitomized the French-Canadian pride
and flair in hockey.
"Our vision is to restore the franchise as the greatest team in
hockey," Gillett said, insisting that the agreement and the NHL
served as significant safeguards against any possible move.
"We want to work with the fans and we want to work in harmony
with the Montreal community," he said.
That was the small dose of good news in a story many Canadians
awaited with dread. While other Canadian-based franchises have
moved to the United States, the loss of the Canadiens would tear
the social fabric of a nation that embraces hockey as the natural
expression of its combination of grace, ruggedness and competitive
spirit.
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Complete Bettman statement
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"We have been advised that Molson Inc. is proceeding with the sale of the Montreal Canadiens and Molson Centre. As with any proposed franchise sale, the League will conduct the appropriate investigation and ultimately will present the transaction to the Board of Governors for its review and approval. The process could take a number of weeks.
"I would like to repeat a statement I have made several times: The Canadiens will remain in Montreal. I have been advised that it is an express condition of the proposed transaction that the team will stay in Montreal, and it is my pledge that the condition will be enforced explicitly. I could conceive of no condition under which a relocation of the franchise would even be considered."
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"The Canadiens will remain in Montreal," NHL commissioner Gary
Bettman said. "I could conceive of no condition under which a
relocation of the franchise would even be considered."
Just having an American own the franchise, even with guarantees
it won't move anywhere, rankles many Canadiens already distrustful
of the direction the NHL has taken the sport.
They complain that only six of the 30 NHL teams are based in
Canada, and at least two others besides the Canadiens have warned
of a possible sale – and move – in recent years.
Canadian-based clubs pay higher local taxes than U.S.-based
clubs, and players get paid in U.S. dollars, while revenue from
ticket sales, broadcast rights and other sources comes in weaker
Canadian dollars.
Sitting with former teammates Yvan Cournoyer and Guy Lafleur,
Hall of Fame center Henri Richard said economic reality dictated
the sale.
The Canadiens "will stay in Montreal forever. I'm sure of that.
But the money is in the States. They're all paid in U.S. dollars,"
he said. "It's kind of sad, but there's not much you can do about
that."
The team was in New York to play the New York Rangers on
Wednesday night, a 4-2 loss for Montreal, but viewed the deal as a positive.
"It's good to see the owner wants to get the team back on
course," assistant captain Trevor Linden said.
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Canadiens better off
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To many Canadians it might seem like a sad day due to the discovery that the nation's most storied franchise can't be supported by a native. On the flip side, there's a dark reality behind all the Stanley Cup banners hanging from the rafters. The Canadiens pay more taxes on the Molson Centre than all the NHL teams in America combined. And while the revenues will still come in as Canadian dollars, this deal will at least allow for the team's management to think more in terms of American dollars.
Because the U.S. dollar buys more in Canada ($1 U.S. = $1.50 Canadian), a $10 million hike in the team's payroll by new owner George Gillett -- to him -- is simply a $10 million investment. If Molson wanted to make a $10 million investment, it would have to spend $15 million in Canadian funds. Psychologically, that gives an American owner the willingness to spend more to compete.
In that light, Gillett's intent to buy the team may make the Canadiens the most stable franchise in all of Canada.
The $183 million price tag for 80 percent of the team means that the Canadiens in in their entirety -- including the Molson Center -- are theoretically worth approximately $229 million. Forbes, which publishes franchise values, estimated that the team was worth $191 million in 2000.
-- Darren Rovell
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The City of Montreal provided a helping hand on Wednesday,
cutting the $7.3 million annual local tax bill by more than $2.6
million.
Molson President Daniel O'Neill and Gillett called the reduction
an important part of the deal, though O'Neill noted: "It's still
one of, if not the highest tax bill in the country."
Asked why he would want such an investment, Gillett spoke of the
chance to be part of a special franchise that has won a record two
dozen Stanley Cups.
"Know that my family and I are assuming this responsibility
with great seriousness, with great humility and with tremendous
respect for the history and tradition that makes this perhaps the
greatest sports franchise in history," he said.
The deal still requires NHL approval, which could take a month
or longer to secure.
Molson Inc., the brewing giant that took over the franchise in
1978, made keeping the Canadiens in Montreal a requirement of any
sale.
O'Neill said the company retained a special share with its 19.9
percent stake in the franchise to block any move. He also said
Gillett showed him a genuine desire to rebuild the franchise, which
has missed the Stanley Cup playoffs the past two seasons and is
danger of doing so again this year.
"He recognizes this is not simply any team," O'Neill said of
Gillett. "This is ... a very special organization, a great history
and part of a great Canadian heritage. We are entrusting him with
this treasure and I feel comfortable he will deliver."
O'Neill also noted that a lack of legitimate offers from any
Canadian company or individual eliminated questions about selling
to an American.
Gillett has an up-and-down career in business, at one point
heading the fourth largest ski-resort operator in the United States
and owning a major beef-processing company.
He also endured personal bankruptcy in 1992 after his holding
company, Gillett Holdings Inc., defaulted on $983 million U.S. of
junk bonds. Last year he led a failed attempt to buy the Colorado
Avalanche.
A native of Racine, Wisconsin, he describes himself as "a
sports fanatic since childhood."
He briefly held a 22 percent stake in the Miami Dolphins in
1966, and bought and operated the Harlem Globetrotters in 1967. He
also launched a chain of TV stations through Gillett Communications
Co.
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