The NHL’s Tampa Bay Lightning are on the verge of selling a minority interest to Arctos Sports Partners at a $1.4 billion valuation, according to someone familiar with the process.
Arctos is likely paying a limited partner discount of at least 20%, but it would be a record valuation for an NHL team, topping the $1 billion mark in the 2012 sale of the Toronto Maple Leafs to Rogers Communications and Bell Canada. On Tuesday, Michael Andlauer reached a deal to buy the Ottawa Senators for nearly $1 billion.
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The NHL and Arctos declined to comment. A representative for the Lightning did not respond to a request for comment.
The Arctos deal, which still needs to be approved by the NHL, required a special waiver from the league, as it exceeds the ownership cap rules for private equity. The NHL’s PE policy allows funds to buy non-voting minority stakes in a maximum of five different teams (same as the NBA, and one more than MLS.) The maximum that a single fund can own in an NHL team is 20%, and No franchise can have more than 30% of its equity owned by investment funds.
Arctos initially invested in the Lightning, as well as the Minnesota Wild, at the end of 2021. The new investment would push its stake beyond the 20% threshold. Arctos also owns interests in the NHL’s Pittsburgh Penguins and New Jersey Devils through its stakes in Fenway Sports Group and Harris Blitzer Sports & Entertainment.
Sportico valued the Lightning at $910 million in 2022, which ranks 15th in the NHL.
Former hedge fund manager Jeff Vinik bought the Lightning for $170 million in 2010 when the team was losing millions of dollars and ranked at the bottom of the NHL for attendance and revenue. The club has been a juggernaut on the ice with nine playoff trips over the past decade, including back-to-back Stanley Cup titles in 2020-21 and 2021-22. Vinik has also built a strong business off the ice, as revenue ranks in the top third of the NHL and attendance was third best in the NHL last season.
The team is a prime example of pro sports franchises prioritizing real estate investments. Vinik and the Lightning have played a principal role in the city’s $4 billion Water Street development. The 56-acre project from Strategic Property Partners, a firm co-owned by Vinik and Bill Gates’ Cascade Investment, includes office space, retail, residential and medical buildings.
Arctos is a sports-focused private equity fund owned and led by Ian Charles and Doc O’Connor. It recently disclosed assets of $6.64 billion, as of the end of 2022– a 69% increase from the year prior.
In addition to the Arctos investment in the Lightning, NHL owners have the approval of Bill Haslam’s purchase of the Nashville Predators on their current agenda. It’s a multi-year investment where Haslam moves from being a limited partner to controlling owner over two years. The deal values the Predators at roughly $875 million, but the final payment is at a valuation of more than $1 billion.
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