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According to Forbes, the Phoenix franchise is the least valuable in the NHL, worth just $134 million as of 2010.
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By Michael B. Sauter, 24-7 Wall St.
The owners of the Los Angeles Dodgers have recently agreed to sell the team, following a bankruptcy filing in June of this year. The team may sell for more than $1 billion ? the highest in baseball history and a premium on the $800 million value?Forbes?has assigned it in its annual ranking.
24/7 Wall St. set out to identify the teams that were likely to follow the Dodgers down a similar path. Teams lose money because they lose fans. Teams lose fans because they lose games. 24/7 Wall St. has identified teams that are on the brink of collapse by measuring long-term financial performance, as well as win/loss records and attendance.
The greatest single cause of a team?s long-term success is obvious: whether or not it wins games. A quick glance at profit and attendance shows that, generally, teams that do well enough to make the playoffs manage to have high ticket sales. Only a few franchises can fail to make the playoffs for more than a few seasons before their profits begin to suffer.
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Across the four biggest sports in the U.S., several teams have seen a massive decline in their attendance. While in some cases this is the result of moving to a new stadium with lower capacity, for the most part these teams simply do not win enough games. At the beginning of the decade, the Indiana Pacers were regular playoff contenders with high attendance, and they were profitable. For the past five seasons, they have lost more games than they have won. During that period, attendance has fallen by nearly 25 percent. The team has also lost money five years in a row.
According to?Forbes, 39 of the 122 professional sports teams lost money last year. Some have lost a few million only a handful of times and likely will perform well in the future. For others, the loss is in the tens of millions and represents yet another season without positive net income. The Phoenix Coyotes, which went bankrupt in 2009 and were bought by the NHL, have lost money for at least 10 years straight. In all, since 2001, the team has lost $118 million. Compared to the Dodgers? value of more than $1 billion, the Coyotes? estimated value in 2010 was $134 million.
24/7 Wall St. identified teams that lost money for several years, based on?Forbes?estimates of income and value. Win-loss records and attendance numbers for a ten-year period from ESPN were used to demonstrate a down trend in performance and poor fan support. 24/7 Wall St.?s pro teams on the brink of collapse had consecutive years of losing money, poor win-loss records and declining attendance.
These are the seven pro teams on the brink of collapse.
1. Phoenix Coyotes
- 10-year change in attendance: -16.40 percent (third-biggest decline in NHL)
- W-L record 10 years: 329-310-38-61 (sixth worst in NHL)
- Operating income (2010): -$20 million
- Year founded: 1972 (moved to Phoenix in 1996)
- Value: $134 million (the least valuable in the NHL)
The Coyotes are one of the newest teams in the NHL, having moved from Winnipeg in 1996. According to?Forbes, the Phoenix franchise is the least valuable in the NHL, worth just $134 million as of 2010. In contrast, the New York Rangers are worth more than three times as much. Between 2001 and 2010, the Coyotes lost money every single year, or a grand total of $118 million in losses over a nine-year period. In 2009, the losses were so high that the team declared bankruptcy. Eventually, the NHL ended up buying the team. Despite the fan draw of coach and hockey legend Wayne Gretzky, as well as making the playoffs two years in a row (after missing them six seasons in a row), attendance remains low.
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2. Minnesota Timberwolves
- 10-year change in attendance: -12.88 percent (sixth biggest decline in NBA)
- W-L record 10 years: 339-481 (sixth worst in NBA)
- Operating income (2010): -$7 million
- Year founded: 1989
- Value: $264 million (second least valuable in NBA)
The Minnesota Timberwolves have missed the playoffs seven years in a row now, and with the NBA season in jeopardy, that streak could extend to eight. Looking at the past decade, the team has the sixth worst cumulative record in basketball. In the past few years, the team?s performance has been even worse. The team has won 56 games combined in the past three seasons, a number that five teams have surpassed in past season alone. Minnesota has lost money every year but one since 2004, and it is bound to lose a lot more if the lockout continues.
3. Sacramento Kings
- 10-year change in attendance: -19.79 percent (third biggest decline in NBA)
- W-L record 10 years: 410-410 (12th best)
- Operating income (2010): -$10 million
- Year founded: 1945 (moved to Sacramento in 1985)
- Value: $293 million (seventh least valuable in NBA)
Compared to the other NBA teams on this list, the Sacramento Kings still have a legitimate shot at recovery in the next few years, but their past few seasons have certainly put the team in a tight spot. At the beginning of the decade, the Kings were in the middle of an eight-season streak of making the playoffs, and during the 2001-2002 season were considered one of the best teams in basketball. The team has not made the playoffs since 2006, however, and increasingly poor performance has been a major drain on ticket sales. Since the 2000-2001 season, attendance has dropped nearly 20 percent. Net income has dropped four years in a row, and the team lost money in 2009 and 2010.
Click here to read all the pro teams on the brink of collapse
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